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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
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Speaker 2: This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news the Bloomberg Business Week Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.
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Speaker 3: And now as someone who's also participating in the festival here but first a little bit of setup. You might recall yesterday how we talked about how an estimated eleven percent of global greenhouse gas emissions are due to tourism, and that's predicted a double by twenty fifty. It's the year that scientists have forecast as the tipping point for all sorts of ecological disasters worldwide. Aviation actually accounts for two percent of all carbon dioxide emissions and twelve percent of all CO two missions from transportation. Stockin tourism and airplane travel fix its emissions problem. Some argue that the answer is one hundred for scent sustainable aviation fuel, and that'll play a big role curbing our long haul international flights too, will certainly be something that you have to keep an eye on as well. Our next guest thinks about this constantly. He's participating in a panel at the Bloomberg Green Festival about fueling airlines, decarbonization a journey. Please to welcome Ryan Speeds. He's managing director of sustainability at Alaska Airlines. He's here at the Bloomberg Green Festival in Seattle. Ryan, welcome, good to see you. Thank you so much. It's great to be here. Okay, So, sustainable aviation fuel, it kind of sounds too good to be true.
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Speaker 4: What exactly is it?
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Speaker 3: Because right now it's just a tiny, tiny, tiny portion of the fuel that airlines use.
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Speaker 5: Yeah, saffer, sustainable aviation fuel is. Yeah, it can be almost like a miracle drug, but that doesn't exist in any quantities that we really need today. Sustainable aviation fuel can be made from things like fats, increases, oils. That's primarily what we're seeing today. But the next generation of those things is really where the fun science comes into play and where the carbon emissions comes down quite a bit.
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Speaker 3: Is it always made of by products or are there certain crops that it could be grown just for producing this?
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Speaker 5: So we haven't seen any crops grown directly for producing it. You're usually using byproducts, But the future technologies is actually all about pulling CO two out of the air and transforming that with renewable energy and renewable hydrogen.
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Speaker 6: Into jet fuel.
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Speaker 5: It's something that can be dropped right into two planes today, which is really exciting. Right, You're not worried about, you know, taking the farm and making it into fuel. Okay, I mentioned it's just a drop in the bucket right now. The aviation fuel management software provider I six Group says that only one tenth of one percent of all jet fuel that's used worldwide is sustainable aviation fuel, and that has remained level in the last four years. You know, that number is definitely growing. It's it's certainly we're seeing in about one percent right now, and we're actually having demand much more every day. And so what we're seeing and what the challenge is is how do you scale up an industry that is three to four times more expensive in the industry that exists today. And so you know, we're thinking about technologies and investments and where can we, as an airline which doesn't have incredibly robust margins, spend our dollar wisely and spend the dollar of our guests wisely. So we're making the right choice for them, but also the planet really challenging.
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Speaker 3: So one gallon of sustainable aviation fuel is literally three to four times more expensive conventional.
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Speaker 4: Yeah, that's right. Okay, where are you getting it right now?
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Speaker 5: So primarily we're getting it out of a group in Montana that's doing FATS oils and esters, and we're sending that to our Los Angeles Airport and sent Francisco report.
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Speaker 4: How do you bring these costs downs? It's a great question.
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Speaker 5: One is investment, but really the idea here today is finding great partners. So innovation happens in a lot of places, and that's why the Bloomberg Greenfest being here is an amazing opportunity to meet with our partners, Folks like Microsoft, folks like Amazon that have a vested interest in how do they bring their emissions down when they're traveling for it with their employees, and so finding those partnerships to help us offset that green premium is part of it. It's the deal with any scaling operation, right, how do we get more We need to induce more demand and we need to kind of keep that train rolling and having partners that.
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Speaker 3: Help us long with but are you just able to induce that demand by getting large corporate customers to pay more no, and.
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Speaker 5: That's actually a really exciting thing that Alaska has done. So we've engaged our guests on this journey as well. Back in December, we offered a promotion that if you bought sustainable aviation fuel with US, you got some elite qualifying miles. We sold over a half a million gallons of staff in December alone.
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Speaker 4: In May of.
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Speaker 5: This year, we just offered that to our guests to do it in the bypass, So the first US company to do that. Where when you're buying your ticket, if you want to offset a piece of your flight five, ten, twenty percent, you can do that. You can help contribute, and every sort of piece helps. That's not the only thing as well, right, it's not just how do I get a guest to help me pay for this, or how do I find a corporate to help me balance this.
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Speaker 6: It's also thinking about policy.
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Speaker 5: Policy is incredibly important, and one that we've seen on the federal level with the Inflation Reduction Act has certainly helped. We want to take that a step further. We see credits expiring, how do we extend those? So there's so many levers that we need to be really engaged with and at Alaska we.
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Speaker 3: Are does the lever need to be pulled by the government out by governments outside of the US as well as by governments in the US.
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Speaker 5: You're seeing both, right, So in Europe it's much more of a stick approach. Okay, mandate on percentages of staff that you have to use. That's just sort of come into place. So we'll see how that market develops. Obviously, we're a much more caret focused market here in the US, and so you see incentives for building you and see incentives for delivering, and those are a different approach, and we're both going to see how this plays out.
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Speaker 4: But I think both.
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Speaker 5: Are really important, and so it's exciting to see how this industryal growing.
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Speaker 3: You sometimes hear terminology that doesn't exactly match what people think it means. So when you talk about sustainable aviation fuel, is it is it actually sustainable?
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Speaker 4: Yeah?
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Speaker 5: I mean you look at the life cycle, the science is certainly there behind it and not. But the challenge is is not all saff is equal, right, Each one might have a different carbon content or a life cycle carbon emissions associated with it. And so explaining that level of detail is challenging. We're always trying to think about it, not in just gallon, a dollar per gallon, but dollar per ton. How much does it cost to reduce a ton of CO two? And we're thinking about that number, and that's what our guests are thinking about, and that's what our corporate clients are thinking about.
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Speaker 3: So what's the byproduct that's created when an engine burns sustainable aviation.
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Speaker 5: Fe it is CO two, So it's still burning it. The thing about sustainable aviation fuels, you're looking at the entire life cycle of how the fuel is actually made, right, whether you're pulling you know, fossil fuels out of the ground, which is traditional jet fuel, or you're using some lower carbon material in the production and process and transportation of that fuel. So at the end of the day, you're still burning some CO two, But if you look at the full life cycle, you much reduce the SAPA.
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Speaker 3: So how much does it decrease the carbon output of a traditional flight if it's still emitting CO two?
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Speaker 5: Yeah, so you're looking at, you know, with with SAFF today, about forty percent reduction if you're putting that a plane.
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Speaker 4: In the total life cycle.
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Speaker 5: Our hope is to get up to eighty or one hundred percent with the e fuels that we talked about earlier.
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Speaker 3: Is this the only part of the solution when it comes to it, is it is the fact that airlines have on the climate.
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Speaker 5: It's the I would say it's the short and medium term solution for many flights and the long term solution for long haul flights. We believe in battery technology, but we believe that there's an opportunity for hydrogen to play a part. But those things don't scale quite at the same rate. If you think about flying from here in Seattle to New York, by the time you land today or if you took that flight, the weight of the aircraft has gone down tremendously. If you do that with batteries, it's still the same weight. So you're really fundamentally fighting against something that's physics. And so we think that for those short and medium term medium hall flights, new technologies will absolutely start to take take hold. Staff will be there for the long term.
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Speaker 4: What about hydrogen.
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Speaker 5: You know, we made an investment and actually donated a plane to zero obvious, so they're.
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Speaker 3: Looking at Yeah, we're joined by the CEO and founder later on the program.
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Speaker 5: Yeah, it's super exciting and an incredible talking to that we're all anxiously waiting for. You know, that's a technology where we think, hey, there's some promise here. There's still a lot of infrastructure challenges with hydrogen. There's still a lot of how do I get that to my airport? But we are investing and encouraged by it. But we'll see where it plays out.
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Speaker 3: Not to mention the production of the actual hydrogen and perks and be energy intensive too.
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Speaker 5: Very energy intensive. But that's the case with all these fuels at this point, right and so we're encouraged by renewable energy obviously dominating every new piece of energy that's going in the market, and that would help on the hydrogen side as well.
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Speaker 3: So right now, if you look at the fuel usage of Alaska airlines, what portion is sustainable aviation?
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Speaker 4: To you?
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Speaker 5: We are about one percent, And like most airlines here in the US, our goal is by twenty thirty. To hit a ten percent goal will be a challenge without all of those levers pulled at the.
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Speaker 4: Same Is it a realistic goal? I think it is. I think it is.
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Speaker 5: I think the challenge is today, right, So there's need. You know, we're speaking on stage with John from Sky Energy and Microsoft on how do we get this plant built? So I think that there are absolutely opportunities to get us there.
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Speaker 3: Not going to say it's going to be easy. It's also if you think about the sustainability element. You said, do you have a facility in Montana that you work with and then you have to get that fuel then to the West coast? Yeah, that's not exactly you know, carbon neutral.
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Speaker 5: Right, it's the infrastructure challenges, it's its own beasts. Especially here in the Pacific Northwest. We have some real challenges with getting staff into SEATAK. So how do we solve those working with policymakers, working with partners, working with traditional oil and gas to solve some of those challenges. But yeah, I mean most people don't ask where they're getting their jet fuel from in the start.
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Speaker 4: Yeah, that certainly makes sense.
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Speaker 3: Do you think that we'll start to see traditional energy companies that make conventional aviation fuel get into this market?
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Speaker 4: You know, I think they've dabbled.
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Speaker 5: I think they're a bit waiting on the sidelines to see is the demand really there?
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Speaker 4: Is it?
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Speaker 6: Yeah?
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Speaker 3: It sounds like it is, because if the goal is ten percent twenty thirty that the demand is there.
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Speaker 5: The demand is the intention is there, right, but the demand to pay for it is still development, right, and that I think that'll be the biggest challenge.
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Speaker 4: And honestly, if you're looking at the loan gas markets.
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Speaker 5: They're worried about their margins too, so they're doing they're.
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Speaker 4: Doing what they need to do well.
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Speaker 3: One of our Bloomberg Intelligence Commodities analyst, Mike mclohan always says, the cure for high prices is high prices. So if you have something that's high priced, you get more people coming into that market. It's just basic economics.
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Speaker 4: Right.
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Speaker 3: Do we get to a point where you get so many people coming into the market because they see demand for it that you see price to fall in the coming years.
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Speaker 5: Absolutely, And that's where I think engaging our guests and engaging corporates and telling those stories about the demand that we have will encourage and will, you know, hopefully the incent production in the places.
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Speaker 6: That we need it in the mass.
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Speaker 3: Ryan Spiece, Managing director of Sustainability at Alaska Airlines, here from the Bloomberg Green At Festival in Seattle. Ryan, thanks so much for joining us. Thank you, sus Muek really do appreciate it.
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Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us Live weekday afternoons from two to five pm Eastern Listen on Apple car Play and then brout Auto with a Bloomberg Business ad or wants us live on YouTube.
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Speaker 4: Well, you know how the saying goes.
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Speaker 3: This person needs no introduction, and it certainly stands true for our next guest. We are going to give her an introduction anyway though. Gina McCarthy is a former us EPA administrator under President Obama and the first White House National Climate Advisor appointed by President Biden. Gina is managing co chair of the America Is All In Coalition. It's a coalition of leaders assembled in support of climate action here in the United States, which is also led in supported by Michael Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies. Gina also an operating advisor at Pegas's Capitol Advisors and a senior advisor at TPG Rise Climate Fund. There's a lot more, but we'd run out of time if I read it all. Bottom line, she knows a ton about energy and climate change. She's with US here in Seattle at the Blue Green Festival. Gina, how are you great?
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Speaker 4: Great? How about yourself doing well?
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Speaker 7: The busy place.
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Speaker 4: It looks like it's a buzz. Hey. The energy's great, isn't it? Yeah?
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Speaker 6: It really is.
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Speaker 4: What's the most important clean? Yeah, Okay, there we go. I like that.
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Speaker 3: What's the most important conversation today involving climate change?
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Speaker 6: Well?
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Speaker 7: Probably it begins with an admittance that we're not doing as well as we can and we've got to scale walk And I think that really then lends itself to talking a lot about partnerships. You know, we have a lot of good companies that are here represented, but honestly, we need more partnerships, both across the US and internationally to really tackle this at the scale that it deserves.
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Speaker 4: What type of partnerships?
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Speaker 3: Because I was just t speaking with Ryan's Speeds over at Alaska Airlines, and they're really relying on corporate partners yes to drive the change in sustainable aviation fuel because it costs three to four times as much per gallon than conventional fuel, So he wants the companies to pay more because they want to travel samely for business.
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Speaker 4: Is that the type of partnership.
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Speaker 7: You mean, I think it is about public private partnerships, you know, so, I mean clearly, the Inflation Reduction Act was an opportunity to give some public money to drive a whole lot more private investment, and we have to stop thinking that way. I don't think it's either or. I actually think it's those partnerships that are going to drive this in a way that actually provides meaningful scaling of this opportunity, not just in the US but globally.
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Speaker 3: Okay, where's the government involvement? You mentioned the Inflation Reduction Act? Yes, in your view, is that just the tip of the iceberg? Do we need more that?
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Speaker 7: Well, we saw our immediately after that happened, we saw the EU start driving new changes in Germany. So it's begun to take off, and people are realizing that it's a way for the public and private sector to really join together so that they both.
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Speaker 6: Of them can win.
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Speaker 7: This is not about, you know, spending so much money in the private seat that you can't afford to do the deals. This is about how do we make these deals affordable by connecting public and private. But there's still a lot of opportunities for private companies to accelerate their markets, and they're going to take advantage of that, and we should let them.
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Speaker 3: You've worked in both Republican and Democratic administrations. Why and when did the idea of climate change become so political in your view?
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Speaker 8: You know, it started off being pretty political because it took.
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Speaker 7: A whole lot longer time than it should have for us to recognize that this was a legitimate issue. And so now, of course it still remains fairly political. But honestly, the politics starts to move out when you realize that the kind of technologies and opportunities we have today are going to make people's lives better. If it's going to keep us healthier, it's going to save us money, if it's going to create real jobs, which is what we're seeing today. The politics may still be there, but it doesn't have the pun news.
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Speaker 3: To how much speaking of politics of America remains all in if it elects Trump in November, given his promises to eliminate what he calls the ev mandate, target offshore wind and pull the US out of the Paris Climate Agreement.
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Speaker 7: Look, I have every expectation that what he said he's gonna do, he's gonna do so that should give you your answer. I don't see the United States so globally the kind of progression we need on climate if we don't elect someone who understands climate and wants to move those issues.
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Speaker 4: And in your view, that is not the former president, that is that is correct.
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Speaker 3: I want to welcome in Carol Masser, who just came running from the Green stage.
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Speaker 4: Great panel.
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Speaker 8: Yes, thank you very much because I did not want to miss talking with you.
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Speaker 7: Oh, thank you.
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Speaker 8: And we were just talking with Cara Hurst over to Amazon and also super Bird of the NWNBA and just the importance of platforms. But I'm listening to you guys, first of all, pleasure to meet you. You too about politics? Are you scared in terms of what might happen in November?
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Speaker 7: And I think everybody should because what's at stake is not just climate, which is the existential challenge of our time, but it's fundamentally our democracy.
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Speaker 8: Well, and it's interesting that you're right you talk about because are you concerned from climate? First of all, that we would go off in a very different direction, We would be more isolated because climate obviously has no quarters, right, so y never before we needed to work together with everybody you know, we were.
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Speaker 7: Just talking about that it's gonna take public private partnerships, and it's gonna take the US and the other developed world to start investing in the developer world if we want to make this work, and those investments can't be cold, they can't be more natural gas. They've got to be the shift to clean energy and transportation that we know we can do well.
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Speaker 8: It is interesting because we know the US called out of the Powis Agreement under Donald Trump, then President Donald Trump if he threatened to do it again if he's elected in November. You have pointed though, in terms of climate progress that's made by states, by cities, like the local level I think about we're going to be talking about the mayor of Seattle, like the local level really matters too.
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Speaker 7: You know, that's really what Bloomberg's America All In program.
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Speaker 4: Is all about.
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Speaker 7: And it's more than five thousand people are joining together, and that's because sub national governments matter. If you remember when Trump was president before, the effort was to make sure that states and cities stood up and held the ground and kept moving forward, and that's exactly what happened. So we need to make sure that we're not going back again and revisiting that we need to actually keep moving forward with all of the breadth of expertise and experience we now have that says that we can win this climate battle if we have the courage to stand up against folks that are deniers and stop really supporting those folks who know what the future needs to be.
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Speaker 3: You were talking about the Inflation Reduction Act, the investment in clean tech manufacturing, clean energy products projects under biden fed by the IRA. How much of that endures regardless of what happens at the polls in November. How durable is the investment that's been unleashed by the IRA and other policies that could be carried back if Trump wins the White House?
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Speaker 4: Like, how vulnerable is it?
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Speaker 6: Yeah?
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Speaker 7: When you look at the money, we're talking about something like three hundred and sixty one billion dollars right, right, And this is just the start. This is a ten year program. We just had a second birthday.
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Speaker 6: I think.
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Speaker 7: Yeah, So we have a long way to go. And we're talking about job growth that's in the plus three hundred thousand plus new jobs. Right. These things matter to people. Human beings care about this, and so these are benefits that people can see and feel and taste. So that's why I believe this going will there be challenges, absolutely, I expect that under a republic Look at administration, you're going to see lots of folks wanting to pull that out. You're already seeing bills in Congress being proposed to get rid of this and that.
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Speaker 6: But when push.
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Speaker 7: Comes to shove, we have more money going to Republican districts that are now building the manufacturing plants that they don't want to shut down.
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Speaker 6: So if they want.
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Speaker 7: To go against their own constituents and their benefits, then then more power to them if they want to risk it. But I don't think that's going to be the case. I think we're going to hold the fort. We'll lose some. There'll be challenges I think internationally, not just about pulling out of the NATO even, but these are the things, the lodge, things that we have to think about that could be at.
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Speaker 8: Risk thirty seconds genes. I'm thinking about it. Everybody who's listening. Yet, what's the one thing every individual take politics out should be asking themselves when.
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Speaker 7: It comes to the climate, what do they want as the future for the kids that they see right now as the challenges that they're facing. We can no longer hide from the climate impacts. But what we can do is grab the clean energy future for our kids. That's how we're all going in.
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Speaker 8: It's certainly something we think about, right you have young kids. I have a twenty one year old. We definitely think about it. Thank you so much and all the work that you've done. Really appreciate it. Jada McCarthy, I'm so glad I squeezed it on.
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Speaker 4: You read run out of time? If I read all title, it's really impressive.
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Speaker 8: But why we wanted to talk to you to.
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Speaker 3: Former in the US EPA administrator under President Obama, the first White House National Climate Advisor, apported by President Biden once again, she's part of the coalition co chair of America is All In Coalition, which is supported by Michael Bloomberg.
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Speaker 8: Do you know something about the environment and climate change and all the work We're just going to say that.
00:20:47
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live each weekday. He's starting at two pm Eastern on Apple, car Play and ANDROYD Auto with the Bloomberg Business ad You can also listen live on Amazon elect from our flagship New York station, Just say Alexa playing Bloomberg eleven thirty.
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Speaker 8: We are at the Bloomberg Green Festival live in Santle, Carol master Long with Tim Stanevik. Now we are here because of the city's impressive legacy of environmental leadership. They have had a focus on really building out a clean energy economy and really investing also in their communities, healthy, well connected communities.
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Speaker 3: And yet, unlike other cities in the nation, it's struggled to come back after the pandemic. Earlier this year at Bloomberg News reporting that the daily worker foot traffic was it half of pre pandemic levels. In office vacancy rates, you'aring thirty percent thanks to a remote work world.
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Speaker 8: All right, Well, joining us with more on the eighteenth most populous city in the United States and its citizens, and on all the role really cities play when it comes to climate change in green policies. Is Seattle may Or Bruce Harrell Live at the Bloomberg Green Festival.
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Speaker 4: Thank you so much for finding.
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Speaker 8: Time for us, Thanks for having me and being part of this festival. You're just off a panel here at the Green Festival about the world of cities. We're just talking to Jane McCarthy about the importance of town city states playing climate change. Talked to us about your priorities when it comes to making your city greener.
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Speaker 6: Well, a few things.
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Speaker 9: Number one, and I think you've heard the cliche now mayors get things done, and it's more than a cliche. Is actually how we are going to transform our climate battles.
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Speaker 6: I believe that we are what we work with.
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Speaker 9: For example, in our building emissions performance standard and legislation that I proposed at the past, we look at our buildings which is a high polluter, and we said we will reduce our carbon emissions by twenty seven percent by twenty thirty. And this is at the same time we're trying to get better foot traffic down there, supporting small businesses. Amazon is based here obviously, and the e commerce has changed lying abbots and where people go and live and play. And so at the same time, that is when you demonstrate your values. And so if we believe that this war against climate change is real, as we do, then this is the time to start to staying out our plate. And so I think cities are best position to this. And I said earlier on the panel. You know, I have one of the greenest I think the greenest governor and through Jay Insley in the country, and so we have a good ecosystem of climate warriors. Helps, right and absolutely it helps, and so so on. From a state law perspective, they could do, they could pass policy that make sure we're all working in unison with each other. But cities have the flexibility to go even further. And so that's what we try to do there and everything that we do. I you know, transportation, of course, you know we're we're doing some incredible things in transportation. So I think cities are the best position to get it done.
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Speaker 4: Let's talk about transportation.
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Speaker 3: In the two days I've been here, I've taken the bus, the light rail, the monorail.
00:23:46
Speaker 4: It's been pretty great.
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Speaker 3: But this is still a city where a lot of people say they need a car.
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Speaker 4: How do you how do you change that?
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Speaker 9: So so I proposed a one point five to five billion dollar leve of transportation to look at our whole ecosystem.
00:24:02
Speaker 6: And it's all about choice.
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Speaker 9: And you know, cars are getting smaller and they're becoming electrified, and so we don't have an anti car campaign, which a lot of cars are getting bigger, a lot of cars are getting well yeah, U the four to the.
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Speaker 6: Truck is still yeah.
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Speaker 9: So you know, if your point is we're still car dependent social war, We're looking at decades and decades of a culture in a country that's built out of Michigan and looking at what GM and other companies have built. You know, these are legacy organizations. So there's an ecosystem. And I don't pit cars against bikes. There's literally hundreds of millions of dollars in here for everyone. In terms of building protected bike lanes. A person eighty five years old may not ride a bike. We lead with transit, we lead with safety, we lead with equity. So I think here in Seattle we're demonstrating this car versus bikes war, if you will, that we do it in a very civilized way, realizing that there still may be single modes of transportation i e. Cars, they could get smaller and they're electrified. But this fight against climate change should be a unifying element.
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Speaker 6: I talked openly about race.
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Speaker 9: I talked openly about socioeconomic differences. When people are hungry and you're talking about saving the planet, Yo, can you get their attention. You can when you change the narrative for it being a unifying and uplifting fight against climate change.
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Speaker 6: And that's working here in Seattle. Ar Hart.
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Speaker 8: Let me ask you about that, because as a mayor, you've got to look at all of your citizens. And I too have walked around the city. I've walked down Pike Street. Your city's not alone in terms of dealing with homeless, a large homeless community. We see it certainly in New York City. Back home, I also think about office occupancies right people are staying home, they're working from home. Remote work is still a thing post pandemic. Like New York and some other major cities, you have a lot of your offer those buildings that are vacant. How do you balance climate? I mean, that's our future, but how do you focus it against all of that too? That that's pretty challenging.
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Speaker 6: It is very challenging. So the first question I think we try to answer is to get.
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Speaker 9: People downtown an example, if they're working from home, what drives people to downtown active?
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Speaker 6: There are certain things you cannot.
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Speaker 9: Get through ecommerce, and again we're the home to Amazon, so we use forty commerce. You can't get a beautiful art show or beautiful song, or you can't buy that, and so we activate areas. You can't get daycare online or to speak, and so we're looking at the new downtown.
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Speaker 6: If you will.
00:26:40
Speaker 9: Two things is it has to be activated that meets people's needs. And so you have a workforce that have young children, you should have daycare services, affordable daycare services, and close proximity. People are very attached to their pets, so I asked the question how many dog parts should we put around certain areas because with COVID they got used to being around their pet all day. These are real examples how you could activated downtown.
00:27:02
Speaker 6: More people are going to live downtown.
00:27:03
Speaker 9: I have about one hundred thousand people living downtown right, so we're looking at I passed the legislation.
00:27:07
Speaker 8: Convert what was it before the pandemic?
00:27:10
Speaker 6: Oh, that never has been pretty consistent. These are residents.
00:27:12
Speaker 9: But what I did was I proposed the legislation to convert office buildings to residential buildings. Acceleration of permits a lot of incentives to do that. Because we think more people will live downtown. You want to say something to.
00:27:26
Speaker 3: Yeah, I just want to jump in real quick because I want to talk about the equity part of this, because Carol and I stayed downtown at a hotel and we were actually told by the front desk working at the hotel avoid part of Third Avenue when you're out there. I did go buy it on the bus. At what point do we get to do? We come back here and the front desk manager no longer says to us avoid this, and he was saying it because of people. They are using drugs on house people.
00:27:52
Speaker 4: And I saw a large police presence as well. But how do you fix that?
00:27:55
Speaker 6: So let's not doj that that topic.
00:27:59
Speaker 9: Hack in this country with the introduction of fentanylinoipio, it is killing our country.
00:28:06
Speaker 6: It is a health issue.
00:28:07
Speaker 9: I have zero desire just to arrest them when they go in jail, to come right back and go right back to the spot I have to make arrest. Of course, we will make arrest, and we are making arrest based on someone presents a threat aparm. The health system in our country is such that I don't have control over that. Most cities do, not a few cities. I think Berkeley has our own health department. Is you'ld usually run by what's called the continuum of care, which is a county, so money goes to the county. What COVID showed us is that cities can be more nimal. Moneys went directly to the cities and they could get things done. So right now there's just mini mayors, including myself, looking at how do we restructure the health strategies in our cities, because you are right, people are dying there. You know, you could buy a fentanyl pill for fifty cents and they're committing crimes. Is worth to habit and so right now, I mean we've recovered, We've been doing some incredible work getting these people off the streets. Now we have to openly, I think, redesign the system, and we have to We're a rich city. Let's just be we're one of the wealthiest per capital cities. And when you don't have the proper safeguards for people falling through the cracks, that's what they will do. And that's what you're seeing is people that could not in a meritocracy, could not find their way to success. And there could be a host of issues they're dealing with, whether it's mental illness and who knows what the challenges are. So we're going upstream. We now invest in pre K brain development between zero and four.
00:29:30
Speaker 6: We're looking at the middle schools and the high schools trying to find the triggers.
00:29:34
Speaker 9: But what you're seeing out here is the result of again a successful city, people falling through the cracks in a broken down health system, and we're trying to implode that right now to get them the help they need and get them off.
00:29:44
Speaker 8: So if you could change one more thing that you think would get them off the streets, what would it be.
00:29:49
Speaker 9: Well, I'd like to have control, the ability to control the health dollars to get them treatment.
00:29:54
Speaker 6: They are sick, and you don't arrest a sick person. You treat them to trint them healthy.
00:29:59
Speaker 9: And realizing we are bad people as well, so we're not afraid to make arrest to get the bad people off the streets.
00:30:04
Speaker 6: So if I had one thing to do, would be too.
00:30:07
Speaker 9: And we're working on this is to redesign the health strategies on these PBC dying on the streets.
00:30:11
Speaker 3: You know what, Housing is also part of this conversation. It's part of the sustainability conversation, it's part of the green conversation. The cost of housing here is astronomical like in many parts of the country. What are you doing in terms of encouraging developers, working with developers to build affordable housing to house some of these folks.
00:30:28
Speaker 9: Yeah, so I passed the largest housing levee last year in our country's history, is nine.
00:30:33
Speaker 6: Hundred and seventy million dollars. And in that it's all about affordable housing.
00:30:36
Speaker 9: It's making sure the teacher, the barista, the healthcare worker can live in the city. We create incentives through a tax and centers, if you will, to make sure that we reached you know, thirty fifty sixty percent of area median income for people to live right here in the city. The fact of the matter is is again we are a rapidly growing city. I have wealthy people moving here. Supply and demand dictates housing prizes. So my relationship with other cities becomes critical as well, because I want people to be sheltered, preferably in Seattle. But I have to realize the economics a session that it makes it a little tough tough here, you know, with the meat and house being nine hundred thousand to a million. You know, my wife and I have three children, and when I look at and one just got married three weeks ago. So we're in their house hitting and thinking, wow, you have to come up with one hundred thousand dollars to make a down payment here, and so you.
00:31:25
Speaker 6: Look at mom and dad for that congratulations. It's a real problem. So we get as creative as possible.
00:31:32
Speaker 9: You know, we talk about the terms called apodments or micro units. We relax our standards for detached dwelling units and dados oudho's attached detached to look at single families owning building. More So, we're being as creative as possible to make it affordable.
00:31:49
Speaker 6: But we are going and supplying the man.
00:31:51
Speaker 4: That's just the reality of it.
00:31:52
Speaker 8: What do you make of kind of citizen dissatisfaction with the country? You see you playing out as we make our way to the November presidential election. Right, we talked about the economy doing okay, although we you know, see some softness in the labor market. I'm continuing, but what do you make of that disconnect that maybe we're not realizing some of the struggles of our citizens.
00:32:12
Speaker 9: So this, this is what concerns me. And then in the context of climate change, is that our younger generation, they understand the needs to protect our planet. They are getting dissatisfied when they see potential leaders that they somewhat feel like they're just there's a disconnect. And you know, I've I've won four elections in the city. I know how to debate.
00:32:32
Speaker 6: The one thing I never do, I never just denigrate my opponent.
00:32:35
Speaker 9: I just figure they're they're they're applying for the same job I'm applying for.
00:32:39
Speaker 6: This is what I have to offer. They have another brand, that's fine.
00:32:42
Speaker 9: But what you're seeing is this debate that I think and I'm not even taking sides. I think that it's such a turn off for the younger generation, like, ah, I forget, forget those two guys.
00:32:52
Speaker 6: I'm gonna I'm going to disengage. That will hurt our country.
00:32:57
Speaker 9: What I want to see is one person says, you know what, I respect your opinion, but this is what I'm going to do for this country, and we're losing that. So leaders like myself elected leaders. We have to be louder than that radioactivity that we see the younger generation being so turned off. I talked to all three of our kids about this that that scares me.
00:33:18
Speaker 3: We only have thirty seconds left, but we got to get you awigh in on the presidential election because there are two men who have a lot of so called double haters. Yeah, does double haters double haters don't like potential voters who don't like haven't heard of that?
00:33:32
Speaker 6: Double haters? Yeah?
00:33:33
Speaker 3: Yeah, it's what the pollsters are talking about right now. Does President Biden need to step aside to make room for the candidate?
00:33:39
Speaker 9: So so you know, I'm not going to appine on that right now. I'm supporting Biden. I'm a Democrat. That's just i'llwear that. I've developed somewhat of a relationship with him, so I'm not calling on him to step aside. He had an awful debate heat by his own mission, but I listened to him speak the other day and he was just as punchy as ever. And so I'm not calling I know a lot of people are doing that right now, and I respect everyone's opinion, so h but I'm not on that bandwagon. It's especially this late in the game, by the way, So I'll just say lead it.
00:34:10
Speaker 6: That leave it at that.
00:34:13
Speaker 9: My biggest concern again is a younger generation the double haters, as you describe.
00:34:17
Speaker 8: It so well, and you wonder about the younger generation. Maybe they're looking for a younger candidate right to vote four like going forward.
00:34:25
Speaker 9: Since I'm not part of that generation, I won't speak for them.
00:34:29
Speaker 2: Brother Mac.
00:34:33
Speaker 8: The journal, Now about you?
00:34:35
Speaker 9: Let me drive?
00:34:36
Speaker 2: No, no, no, please, I'll.
00:34:42
Speaker 8: I want to drive.
00:34:43
Speaker 7: It's good question.
00:34:50
Speaker 2: This is the drive to the clothes well on Bloomberg Radio.
00:34:58
Speaker 8: All right, everybody, we're just eighteen minutes away from the clothes on this Thursdays. I heard from Charlie Telli back in New York. We've got a bit of a rotation underway. Investors moving out of some of those big CAF names, kind of some jocking for position, if you will, off of that weaker, softer inflation print, and so maybe not as much interest in some of the big cap names that have been on them.
00:35:18
Speaker 3: It's funny because traditionally when you see a dropping the yields like we're seeing today. Yeah, but now big tech is considered a safe haven, so then we start dropping yields.
00:35:26
Speaker 4: They're moving into small caps. The Rust two thousand, I mean, it's best safe so far. This see at risk hear?
00:35:31
Speaker 8: Yeah, which is interesting.
00:35:32
Speaker 4: All right, So let's see what Melissa wants.
00:35:34
Speaker 8: I know exactly, Well, it takes is twenty four hours for the shift. Melissa Auto is with us. She is TMT analyst at S ANDP Global Visible Alpha, and she joins us from New York City. Melissa, interesting day, A big inflation print certainly our focal point. What's your explanation of the trade and what's going on right now?
00:35:53
Speaker 9: Hi?
00:35:53
Speaker 1: Thank you. The CBI did and was encouraging, and what it did was with the potential for a September rate cut back on the table, which is essentially a catalyst for what you're seeing in terms of that rotation from large cap into small cap, particularly for the tech sector.
00:36:16
Speaker 3: It's wild to be calling, you know, megacap tech. This idea of a safe haven. You know, traditionally, when you know, when you see rates fall, it's good for tech companies. That's traditionally how it's been. How do you explain the rotation today?
00:36:32
Speaker 1: It's you know, I think coming into this earning season, companies, particularly in the tech sector that have performed very well in the first half, who've seen their valuations start to look either fully valued or a little bit stretched, are going to have to beat expectations not just in the quarter, but in terms of their guidance in order to maintain the momentum and their stock prices. If they don't, there may be some volatility ahead.
00:37:03
Speaker 8: You know what's interesting too, And I wonder, you know, Melissa, if we get to the point that if things are slowing down and the Fed says it's okay, or getting closer to cutting rates, at some point, do we start to think, oh, wait, we're slowing down slower growth that might show its way in terms of earnings. We could see more people maybe out of work, and so we have to think about the slower growth story as well.
00:37:28
Speaker 7: Is that part of it.
00:37:31
Speaker 1: We'll see what the jobs look like tomorrow. I think what we've seen so far is that the Fed's done a decent job of maintaining a relatively good balance between the jobs numbers and getting inflation to move on a downward trajectory. So you know, we'll see I think.
00:37:50
Speaker 3: Step by step, Melissa, you mentioned the first half of the year, I mean double digit gains for the S and P five hundred and an ASDAC right, more than thirty records for the.
00:38:02
Speaker 4: S and P five hundred so far this year. What does the second half look like?
00:38:08
Speaker 1: Yeah, that's the million dollar question right. You know, that's the thing that I'm gonna be laser focused on this earning season is I can't wait to hear when a lot of these megacap companies are gonna guide to what sort of commentary they're gonna make, how the outlook may or may not shift. Currently, expectations are looking pretty robust for the second half. We'll see, you know, what sort of guidance the companies give that will enable there to be sustainability of that or some upside to that. But if not, we could be in for some volatility.
00:38:44
Speaker 8: Yeah, it is interesting. I mean, the VIX we've talked about at being low. I haven't looked at the Vics yet today, but it's certainly we've seen it low historically. When there's a lot of complacency. It makes me a little nervous. What are the biggest risks at this point? Is it the earnings fundamentals? Is it politics? Or is it just that we've had such a run up in stocks already this year that it just we need to kind of settle down a little bit. What are the biggest risks in your view?
00:39:09
Speaker 1: And I think from my perspective, it's missing expectations so companies that come in, even if they fundamentally deliver a decent quarter and guidance, if it is below what the market has priced in, they could be punished for that. And we saw it. We started to see indications of it last quarter where you know, especially some of these smaller, lesser known companies, we were seeing that, and I think, you know, if we start to see that happening in the large and megacap stocks, that that might be a signal.
00:39:45
Speaker 4: Well, it's interesting.
00:39:46
Speaker 8: A Bloomberg gay to the magnificent seven megacaps headed toward the biggest loss in July of twenty twenty three, an equal weighted version of the S and P five hundred, so Nvidia maybe carrying the same half as like a dollar tree, it actually jumps.
00:39:59
Speaker 3: So so the rotation out of big tech we're starting, So I mean, is that good news to you that we're starting to see the rally broaden out a little bit?
00:40:09
Speaker 6: You know, it'll be interesting.
00:40:10
Speaker 1: I'm excited for this earning season to kick off with Netflix. The Netflix will set the tone for the for the rest of the big megacaps. You know, when I think, when I look at the numbers SMP Global Visible Afriic consensus is looking for thirty eight point eight billion dollars in revenues at a twenty five percent margin. Let's see what Netflix comes out with, what sort of commentary they give around the outlook, you know, what their ad supportive business is going to do, and how they are thinking about that margin for the rest of the year. I think that'll be a really critical data point.
00:40:46
Speaker 3: Hey, Melissa, how are you thinking about politics and political risks? You mentioned that it's certainly something that's on your radar, but but how are you thinking about it second half of the year.
00:40:55
Speaker 1: Markets are terrible at discounting for political risks, so I'm not really sure, you know. I think basically, what I think most investors try to do is just focus on the numbers and see where the upside is, especially relative to expectations.
00:41:13
Speaker 8: All Right, we're gonna leave it on that note, Melissa, Thank you so much. Really appreciate your input today. Melissa Auto, she is TMT analyst and joining us of course on zoom in New York City. Great to get check in with her. She is TMT Alice at S and P Global Visible Alpha. I just want to get that correctly.
00:41:30
Speaker 2: This is the Bloomberg Business Week podcast, available on.
00:41:34
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00:41:36
Speaker 4: You get your podcast.
00:41:38
Speaker 2: Listen live weekday afternoons from two to five pm Eastern on Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Journal
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
00:00:08
Speaker 2: This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news the Bloomberg Business Week Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.
00:00:27
Speaker 3: And now as someone who's also participating in the festival here but first a little bit of setup. You might recall yesterday how we talked about how an estimated eleven percent of global greenhouse gas emissions are due to tourism, and that's predicted a double by twenty fifty. It's the year that scientists have forecast as the tipping point for all sorts of ecological disasters worldwide. Aviation actually accounts for two percent of all carbon dioxide emissions and twelve percent of all CO two missions from transportation. Stockin tourism and airplane travel fix its emissions problem. Some argue that the answer is one hundred for scent sustainable aviation fuel, and that'll play a big role curbing our long haul international flights too, will certainly be something that you have to keep an eye on as well. Our next guest thinks about this constantly. He's participating in a panel at the Bloomberg Green Festival about fueling airlines, decarbonization a journey. Please to welcome Ryan Speeds. He's managing director of sustainability at Alaska Airlines. He's here at the Bloomberg Green Festival in Seattle. Ryan, welcome, good to see you. Thank you so much. It's great to be here. Okay, So, sustainable aviation fuel, it kind of sounds too good to be true.
00:01:30
Speaker 4: What exactly is it?
00:01:31
Speaker 3: Because right now it's just a tiny, tiny, tiny portion of the fuel that airlines use.
00:01:36
Speaker 5: Yeah, saffer, sustainable aviation fuel is. Yeah, it can be almost like a miracle drug, but that doesn't exist in any quantities that we really need today. Sustainable aviation fuel can be made from things like fats, increases, oils. That's primarily what we're seeing today. But the next generation of those things is really where the fun science comes into play and where the carbon emissions comes down quite a bit.
00:02:00
Speaker 3: Is it always made of by products or are there certain crops that it could be grown just for producing this?
00:02:06
Speaker 5: So we haven't seen any crops grown directly for producing it. You're usually using byproducts, But the future technologies is actually all about pulling CO two out of the air and transforming that with renewable energy and renewable hydrogen.
00:02:18
Speaker 6: Into jet fuel.
00:02:19
Speaker 5: It's something that can be dropped right into two planes today, which is really exciting. Right, You're not worried about, you know, taking the farm and making it into fuel. Okay, I mentioned it's just a drop in the bucket right now. The aviation fuel management software provider I six Group says that only one tenth of one percent of all jet fuel that's used worldwide is sustainable aviation fuel, and that has remained level in the last four years. You know, that number is definitely growing. It's it's certainly we're seeing in about one percent right now, and we're actually having demand much more every day. And so what we're seeing and what the challenge is is how do you scale up an industry that is three to four times more expensive in the industry that exists today. And so you know, we're thinking about technologies and investments and where can we, as an airline which doesn't have incredibly robust margins, spend our dollar wisely and spend the dollar of our guests wisely. So we're making the right choice for them, but also the planet really challenging.
00:03:13
Speaker 3: So one gallon of sustainable aviation fuel is literally three to four times more expensive conventional.
00:03:19
Speaker 4: Yeah, that's right. Okay, where are you getting it right now?
00:03:22
Speaker 5: So primarily we're getting it out of a group in Montana that's doing FATS oils and esters, and we're sending that to our Los Angeles Airport and sent Francisco report.
00:03:32
Speaker 4: How do you bring these costs downs? It's a great question.
00:03:34
Speaker 5: One is investment, but really the idea here today is finding great partners. So innovation happens in a lot of places, and that's why the Bloomberg Greenfest being here is an amazing opportunity to meet with our partners, Folks like Microsoft, folks like Amazon that have a vested interest in how do they bring their emissions down when they're traveling for it with their employees, and so finding those partnerships to help us offset that green premium is part of it. It's the deal with any scaling operation, right, how do we get more We need to induce more demand and we need to kind of keep that train rolling and having partners that.
00:04:08
Speaker 3: Help us long with but are you just able to induce that demand by getting large corporate customers to pay more no, and.
00:04:13
Speaker 5: That's actually a really exciting thing that Alaska has done. So we've engaged our guests on this journey as well. Back in December, we offered a promotion that if you bought sustainable aviation fuel with US, you got some elite qualifying miles. We sold over a half a million gallons of staff in December alone.
00:04:31
Speaker 4: In May of.
00:04:32
Speaker 5: This year, we just offered that to our guests to do it in the bypass, So the first US company to do that. Where when you're buying your ticket, if you want to offset a piece of your flight five, ten, twenty percent, you can do that. You can help contribute, and every sort of piece helps. That's not the only thing as well, right, it's not just how do I get a guest to help me pay for this, or how do I find a corporate to help me balance this.
00:04:55
Speaker 6: It's also thinking about policy.
00:04:57
Speaker 5: Policy is incredibly important, and one that we've seen on the federal level with the Inflation Reduction Act has certainly helped. We want to take that a step further. We see credits expiring, how do we extend those? So there's so many levers that we need to be really engaged with and at Alaska we.
00:05:12
Speaker 3: Are does the lever need to be pulled by the government out by governments outside of the US as well as by governments in the US.
00:05:18
Speaker 5: You're seeing both, right, So in Europe it's much more of a stick approach. Okay, mandate on percentages of staff that you have to use. That's just sort of come into place. So we'll see how that market develops. Obviously, we're a much more caret focused market here in the US, and so you see incentives for building you and see incentives for delivering, and those are a different approach, and we're both going to see how this plays out.
00:05:39
Speaker 4: But I think both.
00:05:40
Speaker 5: Are really important, and so it's exciting to see how this industryal growing.
00:05:44
Speaker 3: You sometimes hear terminology that doesn't exactly match what people think it means. So when you talk about sustainable aviation fuel, is it is it actually sustainable?
00:05:53
Speaker 4: Yeah?
00:05:54
Speaker 5: I mean you look at the life cycle, the science is certainly there behind it and not. But the challenge is is not all saff is equal, right, Each one might have a different carbon content or a life cycle carbon emissions associated with it. And so explaining that level of detail is challenging. We're always trying to think about it, not in just gallon, a dollar per gallon, but dollar per ton. How much does it cost to reduce a ton of CO two? And we're thinking about that number, and that's what our guests are thinking about, and that's what our corporate clients are thinking about.
00:06:22
Speaker 3: So what's the byproduct that's created when an engine burns sustainable aviation.
00:06:25
Speaker 5: Fe it is CO two, So it's still burning it. The thing about sustainable aviation fuels, you're looking at the entire life cycle of how the fuel is actually made, right, whether you're pulling you know, fossil fuels out of the ground, which is traditional jet fuel, or you're using some lower carbon material in the production and process and transportation of that fuel. So at the end of the day, you're still burning some CO two, But if you look at the full life cycle, you much reduce the SAPA.
00:06:51
Speaker 3: So how much does it decrease the carbon output of a traditional flight if it's still emitting CO two?
00:06:56
Speaker 5: Yeah, so you're looking at, you know, with with SAFF today, about forty percent reduction if you're putting that a plane.
00:07:02
Speaker 4: In the total life cycle.
00:07:03
Speaker 5: Our hope is to get up to eighty or one hundred percent with the e fuels that we talked about earlier.
00:07:08
Speaker 3: Is this the only part of the solution when it comes to it, is it is the fact that airlines have on the climate.
00:07:15
Speaker 5: It's the I would say it's the short and medium term solution for many flights and the long term solution for long haul flights. We believe in battery technology, but we believe that there's an opportunity for hydrogen to play a part. But those things don't scale quite at the same rate. If you think about flying from here in Seattle to New York, by the time you land today or if you took that flight, the weight of the aircraft has gone down tremendously. If you do that with batteries, it's still the same weight. So you're really fundamentally fighting against something that's physics. And so we think that for those short and medium term medium hall flights, new technologies will absolutely start to take take hold. Staff will be there for the long term.
00:07:56
Speaker 4: What about hydrogen.
00:07:58
Speaker 5: You know, we made an investment and actually donated a plane to zero obvious, so they're.
00:08:01
Speaker 3: Looking at Yeah, we're joined by the CEO and founder later on the program.
00:08:04
Speaker 5: Yeah, it's super exciting and an incredible talking to that we're all anxiously waiting for. You know, that's a technology where we think, hey, there's some promise here. There's still a lot of infrastructure challenges with hydrogen. There's still a lot of how do I get that to my airport? But we are investing and encouraged by it. But we'll see where it plays out.
00:08:24
Speaker 3: Not to mention the production of the actual hydrogen and perks and be energy intensive too.
00:08:28
Speaker 5: Very energy intensive. But that's the case with all these fuels at this point, right and so we're encouraged by renewable energy obviously dominating every new piece of energy that's going in the market, and that would help on the hydrogen side as well.
00:08:40
Speaker 3: So right now, if you look at the fuel usage of Alaska airlines, what portion is sustainable aviation?
00:08:45
Speaker 4: To you?
00:08:45
Speaker 5: We are about one percent, And like most airlines here in the US, our goal is by twenty thirty. To hit a ten percent goal will be a challenge without all of those levers pulled at the.
00:08:56
Speaker 4: Same Is it a realistic goal? I think it is. I think it is.
00:08:59
Speaker 5: I think the challenge is today, right, So there's need. You know, we're speaking on stage with John from Sky Energy and Microsoft on how do we get this plant built? So I think that there are absolutely opportunities to get us there.
00:09:12
Speaker 3: Not going to say it's going to be easy. It's also if you think about the sustainability element. You said, do you have a facility in Montana that you work with and then you have to get that fuel then to the West coast? Yeah, that's not exactly you know, carbon neutral.
00:09:24
Speaker 5: Right, it's the infrastructure challenges, it's its own beasts. Especially here in the Pacific Northwest. We have some real challenges with getting staff into SEATAK. So how do we solve those working with policymakers, working with partners, working with traditional oil and gas to solve some of those challenges. But yeah, I mean most people don't ask where they're getting their jet fuel from in the start.
00:09:43
Speaker 4: Yeah, that certainly makes sense.
00:09:45
Speaker 3: Do you think that we'll start to see traditional energy companies that make conventional aviation fuel get into this market?
00:09:53
Speaker 4: You know, I think they've dabbled.
00:09:54
Speaker 5: I think they're a bit waiting on the sidelines to see is the demand really there?
00:09:58
Speaker 4: Is it?
00:09:59
Speaker 6: Yeah?
00:09:59
Speaker 3: It sounds like it is, because if the goal is ten percent twenty thirty that the demand is there.
00:10:04
Speaker 5: The demand is the intention is there, right, but the demand to pay for it is still development, right, and that I think that'll be the biggest challenge.
00:10:11
Speaker 4: And honestly, if you're looking at the loan gas markets.
00:10:14
Speaker 5: They're worried about their margins too, so they're doing they're.
00:10:17
Speaker 4: Doing what they need to do well.
00:10:18
Speaker 3: One of our Bloomberg Intelligence Commodities analyst, Mike mclohan always says, the cure for high prices is high prices. So if you have something that's high priced, you get more people coming into that market. It's just basic economics.
00:10:30
Speaker 4: Right.
00:10:30
Speaker 3: Do we get to a point where you get so many people coming into the market because they see demand for it that you see price to fall in the coming years.
00:10:37
Speaker 5: Absolutely, And that's where I think engaging our guests and engaging corporates and telling those stories about the demand that we have will encourage and will, you know, hopefully the incent production in the places.
00:10:50
Speaker 6: That we need it in the mass.
00:10:51
Speaker 3: Ryan Spiece, Managing director of Sustainability at Alaska Airlines, here from the Bloomberg Green At Festival in Seattle. Ryan, thanks so much for joining us. Thank you, sus Muek really do appreciate it.
00:11:02
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us Live weekday afternoons from two to five pm Eastern Listen on Apple car Play and then brout Auto with a Bloomberg Business ad or wants us live on YouTube.
00:11:15
Speaker 4: Well, you know how the saying goes.
00:11:17
Speaker 3: This person needs no introduction, and it certainly stands true for our next guest. We are going to give her an introduction anyway though. Gina McCarthy is a former us EPA administrator under President Obama and the first White House National Climate Advisor appointed by President Biden. Gina is managing co chair of the America Is All In Coalition. It's a coalition of leaders assembled in support of climate action here in the United States, which is also led in supported by Michael Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies. Gina also an operating advisor at Pegas's Capitol Advisors and a senior advisor at TPG Rise Climate Fund. There's a lot more, but we'd run out of time if I read it all. Bottom line, she knows a ton about energy and climate change. She's with US here in Seattle at the Blue Green Festival. Gina, how are you great?
00:12:02
Speaker 4: Great? How about yourself doing well?
00:12:04
Speaker 7: The busy place.
00:12:05
Speaker 4: It looks like it's a buzz. Hey. The energy's great, isn't it? Yeah?
00:12:08
Speaker 6: It really is.
00:12:09
Speaker 4: What's the most important clean? Yeah, Okay, there we go. I like that.
00:12:13
Speaker 3: What's the most important conversation today involving climate change?
00:12:17
Speaker 6: Well?
00:12:18
Speaker 7: Probably it begins with an admittance that we're not doing as well as we can and we've got to scale walk And I think that really then lends itself to talking a lot about partnerships. You know, we have a lot of good companies that are here represented, but honestly, we need more partnerships, both across the US and internationally to really tackle this at the scale that it deserves.
00:12:41
Speaker 4: What type of partnerships?
00:12:42
Speaker 3: Because I was just t speaking with Ryan's Speeds over at Alaska Airlines, and they're really relying on corporate partners yes to drive the change in sustainable aviation fuel because it costs three to four times as much per gallon than conventional fuel, So he wants the companies to pay more because they want to travel samely for business.
00:13:00
Speaker 4: Is that the type of partnership.
00:13:01
Speaker 7: You mean, I think it is about public private partnerships, you know, so, I mean clearly, the Inflation Reduction Act was an opportunity to give some public money to drive a whole lot more private investment, and we have to stop thinking that way. I don't think it's either or. I actually think it's those partnerships that are going to drive this in a way that actually provides meaningful scaling of this opportunity, not just in the US but globally.
00:13:31
Speaker 3: Okay, where's the government involvement? You mentioned the Inflation Reduction Act? Yes, in your view, is that just the tip of the iceberg? Do we need more that?
00:13:38
Speaker 7: Well, we saw our immediately after that happened, we saw the EU start driving new changes in Germany. So it's begun to take off, and people are realizing that it's a way for the public and private sector to really join together so that they both.
00:13:53
Speaker 6: Of them can win.
00:13:54
Speaker 7: This is not about, you know, spending so much money in the private seat that you can't afford to do the deals. This is about how do we make these deals affordable by connecting public and private. But there's still a lot of opportunities for private companies to accelerate their markets, and they're going to take advantage of that, and we should let them.
00:14:16
Speaker 3: You've worked in both Republican and Democratic administrations. Why and when did the idea of climate change become so political in your view?
00:14:25
Speaker 8: You know, it started off being pretty political because it took.
00:14:28
Speaker 7: A whole lot longer time than it should have for us to recognize that this was a legitimate issue. And so now, of course it still remains fairly political. But honestly, the politics starts to move out when you realize that the kind of technologies and opportunities we have today are going to make people's lives better. If it's going to keep us healthier, it's going to save us money, if it's going to create real jobs, which is what we're seeing today. The politics may still be there, but it doesn't have the pun news.
00:15:00
Speaker 3: To how much speaking of politics of America remains all in if it elects Trump in November, given his promises to eliminate what he calls the ev mandate, target offshore wind and pull the US out of the Paris Climate Agreement.
00:15:14
Speaker 7: Look, I have every expectation that what he said he's gonna do, he's gonna do so that should give you your answer. I don't see the United States so globally the kind of progression we need on climate if we don't elect someone who understands climate and wants to move those issues.
00:15:33
Speaker 4: And in your view, that is not the former president, that is that is correct.
00:15:37
Speaker 3: I want to welcome in Carol Masser, who just came running from the Green stage.
00:15:41
Speaker 4: Great panel.
00:15:41
Speaker 8: Yes, thank you very much because I did not want to miss talking with you.
00:15:44
Speaker 7: Oh, thank you.
00:15:45
Speaker 8: And we were just talking with Cara Hurst over to Amazon and also super Bird of the NWNBA and just the importance of platforms. But I'm listening to you guys, first of all, pleasure to meet you. You too about politics? Are you scared in terms of what might happen in November?
00:16:02
Speaker 7: And I think everybody should because what's at stake is not just climate, which is the existential challenge of our time, but it's fundamentally our democracy.
00:16:13
Speaker 8: Well, and it's interesting that you're right you talk about because are you concerned from climate? First of all, that we would go off in a very different direction, We would be more isolated because climate obviously has no quarters, right, so y never before we needed to work together with everybody you know, we were.
00:16:30
Speaker 7: Just talking about that it's gonna take public private partnerships, and it's gonna take the US and the other developed world to start investing in the developer world if we want to make this work, and those investments can't be cold, they can't be more natural gas. They've got to be the shift to clean energy and transportation that we know we can do well.
00:16:52
Speaker 8: It is interesting because we know the US called out of the Powis Agreement under Donald Trump, then President Donald Trump if he threatened to do it again if he's elected in November. You have pointed though, in terms of climate progress that's made by states, by cities, like the local level I think about we're going to be talking about the mayor of Seattle, like the local level really matters too.
00:17:12
Speaker 7: You know, that's really what Bloomberg's America All In program.
00:17:15
Speaker 4: Is all about.
00:17:16
Speaker 7: And it's more than five thousand people are joining together, and that's because sub national governments matter. If you remember when Trump was president before, the effort was to make sure that states and cities stood up and held the ground and kept moving forward, and that's exactly what happened. So we need to make sure that we're not going back again and revisiting that we need to actually keep moving forward with all of the breadth of expertise and experience we now have that says that we can win this climate battle if we have the courage to stand up against folks that are deniers and stop really supporting those folks who know what the future needs to be.
00:17:59
Speaker 3: You were talking about the Inflation Reduction Act, the investment in clean tech manufacturing, clean energy products projects under biden fed by the IRA. How much of that endures regardless of what happens at the polls in November. How durable is the investment that's been unleashed by the IRA and other policies that could be carried back if Trump wins the White House?
00:18:18
Speaker 4: Like, how vulnerable is it?
00:18:20
Speaker 6: Yeah?
00:18:20
Speaker 7: When you look at the money, we're talking about something like three hundred and sixty one billion dollars right, right, And this is just the start. This is a ten year program. We just had a second birthday.
00:18:32
Speaker 6: I think.
00:18:33
Speaker 7: Yeah, So we have a long way to go. And we're talking about job growth that's in the plus three hundred thousand plus new jobs. Right. These things matter to people. Human beings care about this, and so these are benefits that people can see and feel and taste. So that's why I believe this going will there be challenges, absolutely, I expect that under a republic Look at administration, you're going to see lots of folks wanting to pull that out. You're already seeing bills in Congress being proposed to get rid of this and that.
00:19:09
Speaker 6: But when push.
00:19:10
Speaker 7: Comes to shove, we have more money going to Republican districts that are now building the manufacturing plants that they don't want to shut down.
00:19:23
Speaker 6: So if they want.
00:19:24
Speaker 7: To go against their own constituents and their benefits, then then more power to them if they want to risk it. But I don't think that's going to be the case. I think we're going to hold the fort. We'll lose some. There'll be challenges I think internationally, not just about pulling out of the NATO even, but these are the things, the lodge, things that we have to think about that could be at.
00:19:48
Speaker 8: Risk thirty seconds genes. I'm thinking about it. Everybody who's listening. Yet, what's the one thing every individual take politics out should be asking themselves when.
00:19:55
Speaker 7: It comes to the climate, what do they want as the future for the kids that they see right now as the challenges that they're facing. We can no longer hide from the climate impacts. But what we can do is grab the clean energy future for our kids. That's how we're all going in.
00:20:13
Speaker 8: It's certainly something we think about, right you have young kids. I have a twenty one year old. We definitely think about it. Thank you so much and all the work that you've done. Really appreciate it. Jada McCarthy, I'm so glad I squeezed it on.
00:20:23
Speaker 4: You read run out of time? If I read all title, it's really impressive.
00:20:28
Speaker 8: But why we wanted to talk to you to.
00:20:30
Speaker 3: Former in the US EPA administrator under President Obama, the first White House National Climate Advisor, apported by President Biden once again, she's part of the coalition co chair of America is All In Coalition, which is supported by Michael Bloomberg.
00:20:42
Speaker 8: Do you know something about the environment and climate change and all the work We're just going to say that.
00:20:47
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live each weekday. He's starting at two pm Eastern on Apple, car Play and ANDROYD Auto with the Bloomberg Business ad You can also listen live on Amazon elect from our flagship New York station, Just say Alexa playing Bloomberg eleven thirty.
00:21:07
Speaker 8: We are at the Bloomberg Green Festival live in Santle, Carol master Long with Tim Stanevik. Now we are here because of the city's impressive legacy of environmental leadership. They have had a focus on really building out a clean energy economy and really investing also in their communities, healthy, well connected communities.
00:21:24
Speaker 3: And yet, unlike other cities in the nation, it's struggled to come back after the pandemic. Earlier this year at Bloomberg News reporting that the daily worker foot traffic was it half of pre pandemic levels. In office vacancy rates, you'aring thirty percent thanks to a remote work world.
00:21:40
Speaker 8: All right, Well, joining us with more on the eighteenth most populous city in the United States and its citizens, and on all the role really cities play when it comes to climate change in green policies. Is Seattle may Or Bruce Harrell Live at the Bloomberg Green Festival.
00:21:52
Speaker 4: Thank you so much for finding.
00:21:53
Speaker 8: Time for us, Thanks for having me and being part of this festival. You're just off a panel here at the Green Festival about the world of cities. We're just talking to Jane McCarthy about the importance of town city states playing climate change. Talked to us about your priorities when it comes to making your city greener.
00:22:11
Speaker 6: Well, a few things.
00:22:11
Speaker 9: Number one, and I think you've heard the cliche now mayors get things done, and it's more than a cliche. Is actually how we are going to transform our climate battles.
00:22:22
Speaker 6: I believe that we are what we work with.
00:22:25
Speaker 9: For example, in our building emissions performance standard and legislation that I proposed at the past, we look at our buildings which is a high polluter, and we said we will reduce our carbon emissions by twenty seven percent by twenty thirty. And this is at the same time we're trying to get better foot traffic down there, supporting small businesses. Amazon is based here obviously, and the e commerce has changed lying abbots and where people go and live and play. And so at the same time, that is when you demonstrate your values. And so if we believe that this war against climate change is real, as we do, then this is the time to start to staying out our plate. And so I think cities are best position to this. And I said earlier on the panel. You know, I have one of the greenest I think the greenest governor and through Jay Insley in the country, and so we have a good ecosystem of climate warriors. Helps, right and absolutely it helps, and so so on. From a state law perspective, they could do, they could pass policy that make sure we're all working in unison with each other. But cities have the flexibility to go even further. And so that's what we try to do there and everything that we do. I you know, transportation, of course, you know we're we're doing some incredible things in transportation. So I think cities are the best position to get it done.
00:23:41
Speaker 4: Let's talk about transportation.
00:23:42
Speaker 3: In the two days I've been here, I've taken the bus, the light rail, the monorail.
00:23:46
Speaker 4: It's been pretty great.
00:23:48
Speaker 3: But this is still a city where a lot of people say they need a car.
00:23:52
Speaker 4: How do you how do you change that?
00:23:55
Speaker 9: So so I proposed a one point five to five billion dollar leve of transportation to look at our whole ecosystem.
00:24:02
Speaker 6: And it's all about choice.
00:24:03
Speaker 9: And you know, cars are getting smaller and they're becoming electrified, and so we don't have an anti car campaign, which a lot of cars are getting bigger, a lot of cars are getting well yeah, U the four to the.
00:24:15
Speaker 6: Truck is still yeah.
00:24:18
Speaker 9: So you know, if your point is we're still car dependent social war, We're looking at decades and decades of a culture in a country that's built out of Michigan and looking at what GM and other companies have built. You know, these are legacy organizations. So there's an ecosystem. And I don't pit cars against bikes. There's literally hundreds of millions of dollars in here for everyone. In terms of building protected bike lanes. A person eighty five years old may not ride a bike. We lead with transit, we lead with safety, we lead with equity. So I think here in Seattle we're demonstrating this car versus bikes war, if you will, that we do it in a very civilized way, realizing that there still may be single modes of transportation i e. Cars, they could get smaller and they're electrified. But this fight against climate change should be a unifying element.
00:25:14
Speaker 6: I talked openly about race.
00:25:16
Speaker 9: I talked openly about socioeconomic differences. When people are hungry and you're talking about saving the planet, Yo, can you get their attention. You can when you change the narrative for it being a unifying and uplifting fight against climate change.
00:25:32
Speaker 6: And that's working here in Seattle. Ar Hart.
00:25:34
Speaker 8: Let me ask you about that, because as a mayor, you've got to look at all of your citizens. And I too have walked around the city. I've walked down Pike Street. Your city's not alone in terms of dealing with homeless, a large homeless community. We see it certainly in New York City. Back home, I also think about office occupancies right people are staying home, they're working from home. Remote work is still a thing post pandemic. Like New York and some other major cities, you have a lot of your offer those buildings that are vacant. How do you balance climate? I mean, that's our future, but how do you focus it against all of that too? That that's pretty challenging.
00:26:09
Speaker 6: It is very challenging. So the first question I think we try to answer is to get.
00:26:13
Speaker 9: People downtown an example, if they're working from home, what drives people to downtown active?
00:26:19
Speaker 6: There are certain things you cannot.
00:26:20
Speaker 9: Get through ecommerce, and again we're the home to Amazon, so we use forty commerce. You can't get a beautiful art show or beautiful song, or you can't buy that, and so we activate areas. You can't get daycare online or to speak, and so we're looking at the new downtown.
00:26:39
Speaker 6: If you will.
00:26:40
Speaker 9: Two things is it has to be activated that meets people's needs. And so you have a workforce that have young children, you should have daycare services, affordable daycare services, and close proximity. People are very attached to their pets, so I asked the question how many dog parts should we put around certain areas because with COVID they got used to being around their pet all day. These are real examples how you could activated downtown.
00:27:02
Speaker 6: More people are going to live downtown.
00:27:03
Speaker 9: I have about one hundred thousand people living downtown right, so we're looking at I passed the legislation.
00:27:07
Speaker 8: Convert what was it before the pandemic?
00:27:10
Speaker 6: Oh, that never has been pretty consistent. These are residents.
00:27:12
Speaker 9: But what I did was I proposed the legislation to convert office buildings to residential buildings. Acceleration of permits a lot of incentives to do that. Because we think more people will live downtown. You want to say something to.
00:27:26
Speaker 3: Yeah, I just want to jump in real quick because I want to talk about the equity part of this, because Carol and I stayed downtown at a hotel and we were actually told by the front desk working at the hotel avoid part of Third Avenue when you're out there. I did go buy it on the bus. At what point do we get to do? We come back here and the front desk manager no longer says to us avoid this, and he was saying it because of people. They are using drugs on house people.
00:27:52
Speaker 4: And I saw a large police presence as well. But how do you fix that?
00:27:55
Speaker 6: So let's not doj that that topic.
00:27:59
Speaker 9: Hack in this country with the introduction of fentanylinoipio, it is killing our country.
00:28:06
Speaker 6: It is a health issue.
00:28:07
Speaker 9: I have zero desire just to arrest them when they go in jail, to come right back and go right back to the spot I have to make arrest. Of course, we will make arrest, and we are making arrest based on someone presents a threat aparm. The health system in our country is such that I don't have control over that. Most cities do, not a few cities. I think Berkeley has our own health department. Is you'ld usually run by what's called the continuum of care, which is a county, so money goes to the county. What COVID showed us is that cities can be more nimal. Moneys went directly to the cities and they could get things done. So right now there's just mini mayors, including myself, looking at how do we restructure the health strategies in our cities, because you are right, people are dying there. You know, you could buy a fentanyl pill for fifty cents and they're committing crimes. Is worth to habit and so right now, I mean we've recovered, We've been doing some incredible work getting these people off the streets. Now we have to openly, I think, redesign the system, and we have to We're a rich city. Let's just be we're one of the wealthiest per capital cities. And when you don't have the proper safeguards for people falling through the cracks, that's what they will do. And that's what you're seeing is people that could not in a meritocracy, could not find their way to success. And there could be a host of issues they're dealing with, whether it's mental illness and who knows what the challenges are. So we're going upstream. We now invest in pre K brain development between zero and four.
00:29:30
Speaker 6: We're looking at the middle schools and the high schools trying to find the triggers.
00:29:34
Speaker 9: But what you're seeing out here is the result of again a successful city, people falling through the cracks in a broken down health system, and we're trying to implode that right now to get them the help they need and get them off.
00:29:44
Speaker 8: So if you could change one more thing that you think would get them off the streets, what would it be.
00:29:49
Speaker 9: Well, I'd like to have control, the ability to control the health dollars to get them treatment.
00:29:54
Speaker 6: They are sick, and you don't arrest a sick person. You treat them to trint them healthy.
00:29:59
Speaker 9: And realizing we are bad people as well, so we're not afraid to make arrest to get the bad people off the streets.
00:30:04
Speaker 6: So if I had one thing to do, would be too.
00:30:07
Speaker 9: And we're working on this is to redesign the health strategies on these PBC dying on the streets.
00:30:11
Speaker 3: You know what, Housing is also part of this conversation. It's part of the sustainability conversation, it's part of the green conversation. The cost of housing here is astronomical like in many parts of the country. What are you doing in terms of encouraging developers, working with developers to build affordable housing to house some of these folks.
00:30:28
Speaker 9: Yeah, so I passed the largest housing levee last year in our country's history, is nine.
00:30:33
Speaker 6: Hundred and seventy million dollars. And in that it's all about affordable housing.
00:30:36
Speaker 9: It's making sure the teacher, the barista, the healthcare worker can live in the city. We create incentives through a tax and centers, if you will, to make sure that we reached you know, thirty fifty sixty percent of area median income for people to live right here in the city. The fact of the matter is is again we are a rapidly growing city. I have wealthy people moving here. Supply and demand dictates housing prizes. So my relationship with other cities becomes critical as well, because I want people to be sheltered, preferably in Seattle. But I have to realize the economics a session that it makes it a little tough tough here, you know, with the meat and house being nine hundred thousand to a million. You know, my wife and I have three children, and when I look at and one just got married three weeks ago. So we're in their house hitting and thinking, wow, you have to come up with one hundred thousand dollars to make a down payment here, and so you.
00:31:25
Speaker 6: Look at mom and dad for that congratulations. It's a real problem. So we get as creative as possible.
00:31:32
Speaker 9: You know, we talk about the terms called apodments or micro units. We relax our standards for detached dwelling units and dados oudho's attached detached to look at single families owning building. More So, we're being as creative as possible to make it affordable.
00:31:49
Speaker 6: But we are going and supplying the man.
00:31:51
Speaker 4: That's just the reality of it.
00:31:52
Speaker 8: What do you make of kind of citizen dissatisfaction with the country? You see you playing out as we make our way to the November presidential election. Right, we talked about the economy doing okay, although we you know, see some softness in the labor market. I'm continuing, but what do you make of that disconnect that maybe we're not realizing some of the struggles of our citizens.
00:32:12
Speaker 9: So this, this is what concerns me. And then in the context of climate change, is that our younger generation, they understand the needs to protect our planet. They are getting dissatisfied when they see potential leaders that they somewhat feel like they're just there's a disconnect. And you know, I've I've won four elections in the city. I know how to debate.
00:32:32
Speaker 6: The one thing I never do, I never just denigrate my opponent.
00:32:35
Speaker 9: I just figure they're they're they're applying for the same job I'm applying for.
00:32:39
Speaker 6: This is what I have to offer. They have another brand, that's fine.
00:32:42
Speaker 9: But what you're seeing is this debate that I think and I'm not even taking sides. I think that it's such a turn off for the younger generation, like, ah, I forget, forget those two guys.
00:32:52
Speaker 6: I'm gonna I'm going to disengage. That will hurt our country.
00:32:57
Speaker 9: What I want to see is one person says, you know what, I respect your opinion, but this is what I'm going to do for this country, and we're losing that. So leaders like myself elected leaders. We have to be louder than that radioactivity that we see the younger generation being so turned off. I talked to all three of our kids about this that that scares me.
00:33:18
Speaker 3: We only have thirty seconds left, but we got to get you awigh in on the presidential election because there are two men who have a lot of so called double haters. Yeah, does double haters double haters don't like potential voters who don't like haven't heard of that?
00:33:32
Speaker 6: Double haters? Yeah?
00:33:33
Speaker 3: Yeah, it's what the pollsters are talking about right now. Does President Biden need to step aside to make room for the candidate?
00:33:39
Speaker 9: So so you know, I'm not going to appine on that right now. I'm supporting Biden. I'm a Democrat. That's just i'llwear that. I've developed somewhat of a relationship with him, so I'm not calling on him to step aside. He had an awful debate heat by his own mission, but I listened to him speak the other day and he was just as punchy as ever. And so I'm not calling I know a lot of people are doing that right now, and I respect everyone's opinion, so h but I'm not on that bandwagon. It's especially this late in the game, by the way, So I'll just say lead it.
00:34:10
Speaker 6: That leave it at that.
00:34:13
Speaker 9: My biggest concern again is a younger generation the double haters, as you describe.
00:34:17
Speaker 8: It so well, and you wonder about the younger generation. Maybe they're looking for a younger candidate right to vote four like going forward.
00:34:25
Speaker 9: Since I'm not part of that generation, I won't speak for them.
00:34:29
Speaker 2: Brother Mac.
00:34:33
Speaker 8: The journal, Now about you?
00:34:35
Speaker 9: Let me drive?
00:34:36
Speaker 2: No, no, no, please, I'll.
00:34:42
Speaker 8: I want to drive.
00:34:43
Speaker 7: It's good question.
00:34:50
Speaker 2: This is the drive to the clothes well on Bloomberg Radio.
00:34:58
Speaker 8: All right, everybody, we're just eighteen minutes away from the clothes on this Thursdays. I heard from Charlie Telli back in New York. We've got a bit of a rotation underway. Investors moving out of some of those big CAF names, kind of some jocking for position, if you will, off of that weaker, softer inflation print, and so maybe not as much interest in some of the big cap names that have been on them.
00:35:18
Speaker 3: It's funny because traditionally when you see a dropping the yields like we're seeing today. Yeah, but now big tech is considered a safe haven, so then we start dropping yields.
00:35:26
Speaker 4: They're moving into small caps. The Rust two thousand, I mean, it's best safe so far. This see at risk hear?
00:35:31
Speaker 8: Yeah, which is interesting.
00:35:32
Speaker 4: All right, So let's see what Melissa wants.
00:35:34
Speaker 8: I know exactly, Well, it takes is twenty four hours for the shift. Melissa Auto is with us. She is TMT analyst at S ANDP Global Visible Alpha, and she joins us from New York City. Melissa, interesting day, A big inflation print certainly our focal point. What's your explanation of the trade and what's going on right now?
00:35:53
Speaker 9: Hi?
00:35:53
Speaker 1: Thank you. The CBI did and was encouraging, and what it did was with the potential for a September rate cut back on the table, which is essentially a catalyst for what you're seeing in terms of that rotation from large cap into small cap, particularly for the tech sector.
00:36:16
Speaker 3: It's wild to be calling, you know, megacap tech. This idea of a safe haven. You know, traditionally, when you know, when you see rates fall, it's good for tech companies. That's traditionally how it's been. How do you explain the rotation today?
00:36:32
Speaker 1: It's you know, I think coming into this earning season, companies, particularly in the tech sector that have performed very well in the first half, who've seen their valuations start to look either fully valued or a little bit stretched, are going to have to beat expectations not just in the quarter, but in terms of their guidance in order to maintain the momentum and their stock prices. If they don't, there may be some volatility ahead.
00:37:03
Speaker 8: You know what's interesting too, And I wonder, you know, Melissa, if we get to the point that if things are slowing down and the Fed says it's okay, or getting closer to cutting rates, at some point, do we start to think, oh, wait, we're slowing down slower growth that might show its way in terms of earnings. We could see more people maybe out of work, and so we have to think about the slower growth story as well.
00:37:28
Speaker 7: Is that part of it.
00:37:31
Speaker 1: We'll see what the jobs look like tomorrow. I think what we've seen so far is that the Fed's done a decent job of maintaining a relatively good balance between the jobs numbers and getting inflation to move on a downward trajectory. So you know, we'll see I think.
00:37:50
Speaker 3: Step by step, Melissa, you mentioned the first half of the year, I mean double digit gains for the S and P five hundred and an ASDAC right, more than thirty records for the.
00:38:02
Speaker 4: S and P five hundred so far this year. What does the second half look like?
00:38:08
Speaker 1: Yeah, that's the million dollar question right. You know, that's the thing that I'm gonna be laser focused on this earning season is I can't wait to hear when a lot of these megacap companies are gonna guide to what sort of commentary they're gonna make, how the outlook may or may not shift. Currently, expectations are looking pretty robust for the second half. We'll see, you know, what sort of guidance the companies give that will enable there to be sustainability of that or some upside to that. But if not, we could be in for some volatility.
00:38:44
Speaker 8: Yeah, it is interesting. I mean, the VIX we've talked about at being low. I haven't looked at the Vics yet today, but it's certainly we've seen it low historically. When there's a lot of complacency. It makes me a little nervous. What are the biggest risks at this point? Is it the earnings fundamentals? Is it politics? Or is it just that we've had such a run up in stocks already this year that it just we need to kind of settle down a little bit. What are the biggest risks in your view?
00:39:09
Speaker 1: And I think from my perspective, it's missing expectations so companies that come in, even if they fundamentally deliver a decent quarter and guidance, if it is below what the market has priced in, they could be punished for that. And we saw it. We started to see indications of it last quarter where you know, especially some of these smaller, lesser known companies, we were seeing that, and I think, you know, if we start to see that happening in the large and megacap stocks, that that might be a signal.
00:39:45
Speaker 4: Well, it's interesting.
00:39:46
Speaker 8: A Bloomberg gay to the magnificent seven megacaps headed toward the biggest loss in July of twenty twenty three, an equal weighted version of the S and P five hundred, so Nvidia maybe carrying the same half as like a dollar tree, it actually jumps.
00:39:59
Speaker 3: So so the rotation out of big tech we're starting, So I mean, is that good news to you that we're starting to see the rally broaden out a little bit?
00:40:09
Speaker 6: You know, it'll be interesting.
00:40:10
Speaker 1: I'm excited for this earning season to kick off with Netflix. The Netflix will set the tone for the for the rest of the big megacaps. You know, when I think, when I look at the numbers SMP Global Visible Afriic consensus is looking for thirty eight point eight billion dollars in revenues at a twenty five percent margin. Let's see what Netflix comes out with, what sort of commentary they give around the outlook, you know, what their ad supportive business is going to do, and how they are thinking about that margin for the rest of the year. I think that'll be a really critical data point.
00:40:46
Speaker 3: Hey, Melissa, how are you thinking about politics and political risks? You mentioned that it's certainly something that's on your radar, but but how are you thinking about it second half of the year.
00:40:55
Speaker 1: Markets are terrible at discounting for political risks, so I'm not really sure, you know. I think basically, what I think most investors try to do is just focus on the numbers and see where the upside is, especially relative to expectations.
00:41:13
Speaker 8: All Right, we're gonna leave it on that note, Melissa, Thank you so much. Really appreciate your input today. Melissa Auto, she is TMT analyst and joining us of course on zoom in New York City. Great to get check in with her. She is TMT Alice at S and P Global Visible Alpha. I just want to get that correctly.
00:41:30
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