# Microsoft and Chevron Sign 20-Year Power Deal For Texas Data Center

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 22 Jun 2026, 23 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/c5351eb0-7676-4bc5-8803-b4710110e6c2/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Paul Sweeney and Scarlet Fu -Kevin Crowley, Bloomberg News Big Oil Reporter, discusses Chevron Corp. signing a 20-year deal with Microsoft Corp. to provide natural-gas fired power for a proposed West Texas data center. The proposed plant, Project Kilby, is expected to start producing power by 2028 and will ramp up to 2.67 gigawatts over time, enough to power more than 530,000 Texas homes. -Sam Fazeli, Bloomberg Intelligence, Director of Research for Global Industries and Senior Pharmaceuticals Analyst, discusses AbbVie agreeing to buy Apogee Therapeutics for $10.9 billion to bolster its anti-inflammatory drug portfolio. The acquisition is expected to close in the third quarter and reflects a roughly 49% premium to Apogee’s closing price of $90.38 on Thursday. -Spencer Liberman, Bloomberg Intelligence Analyst, Industrials and Materials, discusses CRH agreeing to acquire US construction services company Arcosa for $8.5 billion in what is a record deal for the Irish building materials provider. -Dennis Lockhart, Former Atlanta Fed President, discusses the life of Alan Greenspan. Alan Greenspan, the former Federal Reserve chairman, has died at the age of 100 due to complications of Parkinson’s disease. Greenspan served as Fed chief for 18 years, from 1987 to 2006, and was known for guiding a record US economic expansion, but his legacy was later dimmed by the financial crisis that erupted after he stepped down. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
[0:10] Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
[0:14] Speaker 1: Eastern on Apple Coarcklay and Android Auto with the Bloomberg
[0:17] Speaker 1: Business App. Listen on demand wherever you get your podcasts,
[0:21] Speaker 1: or watch us live on YouTube.
[0:23] Speaker 2: Pretty interesting deal out there in a world of energies
[0:26] Speaker 2: as we think about AI, that's been one of the
[0:28] Speaker 2: gating issues we've all come to learn that, Okay, you
[0:31] Speaker 2: can build all these data centers, but you've got to
[0:33] Speaker 2: figure out how to power them.
[0:34] Speaker 3: You can't.
[0:34] Speaker 2: You know, you're going to have to need new and
[0:36] Speaker 2: flexible energy sources. So here's a piece of news today,
[0:40] Speaker 2: Chevron signed a twenty year deal with Microsoft to provide
[0:43] Speaker 2: natural gas fired power for a proposed West Texas data center.
[0:48] Speaker 2: So that's pretty cool there. Let's get talked to the
[0:51] Speaker 2: reporter from Bloomberg News on that story. Kevin Crowley, a
[0:53] Speaker 2: Bloomberg News, a big oil reporter, talk to us about
[0:56] Speaker 2: this deal here, Kevin, it seems like.
[0:59] Speaker 3: We've seen what I need to see more and more.
[1:01] Speaker 2: Of these, and is this kind of the blueprint for
[1:03] Speaker 2: the future.
[1:05] Speaker 4: It could be, Yeah, Chevron. Chevron, according this a platform
[1:08] Speaker 4: for the future. I mean really, it's a new business
[1:10] Speaker 4: for for them. I mean, as you know, they're a
[1:12] Speaker 4: big oil and gas company. They're not in the power
[1:14] Speaker 4: industry until until now. And it's it's it's really to
[1:19] Speaker 4: take advantage of the very, very cheap and abundant natural
[1:23] Speaker 4: gas that exists in West Texas. This h this data
[1:28] Speaker 4: center is being built right in the heart of the
[1:31] Speaker 4: Permian Basin, which which probably know, is the biggest oil
[1:34] Speaker 4: field in the country. But with that oil comes a
[1:37] Speaker 4: lot of natural gas as a as a byproduct, and
[1:40] Speaker 4: there's actually so much natural gas out there at the
[1:43] Speaker 4: moment that it it can't be taken away, overwhelms the
[1:48] Speaker 4: pipeline capacity and and so it's it's it's either burned
[1:51] Speaker 4: off as waste or it's or companies have to actually
[1:55] Speaker 4: pay people to to take it away.
[1:57] Speaker 5: So so Chevron and.
[1:58] Speaker 4: Microsoft I think we'll well, this is a good competitive
[2:02] Speaker 4: advantage here. We can use this gas to to build
[2:05] Speaker 4: a big power plant that will then they will then
[2:08] Speaker 4: power a data center. The I mean the disadvantage is
[2:15] Speaker 4: the location here is very very remote. It's about four
[2:18] Speaker 4: hundred miles west of the Dallas for Fort Worth area.
[2:25] Speaker 4: But the cheap power is definitely a competitive advantage of
[2:30] Speaker 4: this project.
[2:31] Speaker 6: Okay, so it sounds like, you know, it's getting some
[2:34] Speaker 6: value out of something that would be disposed of any way.
[2:38] Speaker 3: That sounds great.
[2:39] Speaker 6: Does that mean that there's no risk, no concern about
[2:44] Speaker 6: locals to the extent that there are any locals living
[2:46] Speaker 6: near the premium basin or any nearby communities facing higher
[2:51] Speaker 6: utility bills.
[2:53] Speaker 4: No, So Chevron say this is one hundred percent behind
[2:56] Speaker 4: the meter. So this is the There is no utility
[3:01] Speaker 4: even connected with this project, So this is this is
[3:03] Speaker 4: this is purely Chevron building the taking their gas, building
[3:09] Speaker 4: the power station, and then using that power to to
[3:14] Speaker 4: for the data center. I mean, it's a very it's
[3:16] Speaker 4: a very remote, sparsely populated area anyway. But they insist
[3:20] Speaker 4: that there's absolutely no impact on the on the on
[3:24] Speaker 4: the local on the local rate payers at all, which
[3:27] Speaker 4: which I think makes this they stay claim anyway, makes
[3:30] Speaker 4: this makes this project unique. It's rare for data center
[3:35] Speaker 4: of this scale to be to not utilize grid power
[3:40] Speaker 4: or have the involvement of a utility.
[3:42] Speaker 6: If that's the case, how come we didn't get something
[3:45] Speaker 6: like this sooner? Why did it take so long.
[3:47] Speaker 4: These are big projects, they cost they cost a lot
[3:49] Speaker 4: of money. And and it's and it's new. I mean,
[3:52] Speaker 4: Chevron is not is not a utility, is not a
[3:55] Speaker 4: is not a power producer. The other thing I think
[3:58] Speaker 4: is is so far big tech companies have preferred to
[4:02] Speaker 4: build data centers near to two larger population centers. And
[4:07] Speaker 4: the other thing is as well, is early on you know,
[4:10] Speaker 4: these companies did did prefer to to use to use
[4:14] Speaker 4: renewables uh and to to lower the emissions of those
[4:18] Speaker 4: data centers. But now there does seem to be a
[4:21] Speaker 4: movement towards an actual gas given the given the scale
[4:26] Speaker 4: that we now see ahead of us.
[4:28] Speaker 2: Kevin, you got thirty seconds left. Tell us why this
[4:30] Speaker 2: is a new business for Chevron.
[4:33] Speaker 4: Chevron's in the oil and gas business. They're not they're
[4:34] Speaker 4: not in the power business really until now. But they
[4:37] Speaker 4: think this can, this can diversify their revenue streams, provides
[4:41] Speaker 4: a bit more, a bit more of a reliable it's
[4:43] Speaker 4: it's not as it won't be a cyclical as the
[4:46] Speaker 4: as the oil and gas business, but also takes advantage
[4:49] Speaker 4: of some of some of their some of their key
[4:50] Speaker 4: competitive advantages. Chevron's already in the permium. They know how
[4:54] Speaker 4: to how to build build big projects, and they they
[4:58] Speaker 4: have the gas, so so I think it's within their
[5:02] Speaker 4: skill set, you know, unlike some other companies like BP
[5:05] Speaker 4: and Shell, which which got into power about five or
[5:09] Speaker 4: six years ago.
[5:12] Speaker 5: Unsuccessfully.
[5:14] Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
[5:20] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[5:24] Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
[5:27] Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
[5:31] Speaker 1: get your podcasts, or watch us live on YouTube.
[5:34] Speaker 2: It is Monday, which means it's oftentimes merger Monday, and
[5:38] Speaker 2: it often involves the healthcare industry, and that is exactly
[5:40] Speaker 2: what happened today. ABBYV agreed to buy appigy Therapeutics for
[5:44] Speaker 2: ten point nine billion dollars in cash, by the way,
[5:47] Speaker 2: to bolster its anti inflammatory drug portfolio. If you can't
[5:51] Speaker 2: make it in the lab, go buy it. That's what
[5:53] Speaker 2: I know about the form of business. Sam Fazzelli joins
[5:55] Speaker 2: us here give us a little bit more detail. His
[5:57] Speaker 2: Director Research for Global Industries. I don't think that title
[5:59] Speaker 2: exists anymore. We have to update that. Senior Pharmaceuticals analyst
[6:03] Speaker 2: over there at Bloomberg Intelligence. What's that TV doing here?
[6:06] Speaker 2: Sam talked to us about this deal.
[6:09] Speaker 7: Sure, title wise, make a couple of you like, you know,
[6:12] Speaker 7: I'm how easy with titles.
[6:16] Speaker 3: Yeah, drug drug.
[6:17] Speaker 5: Bars, there you go, drug boss. Yes.
[6:19] Speaker 7: What they're doing here is that they're already the probably
[6:22] Speaker 7: the biggest player in the space of immunology and inflammation
[6:27] Speaker 7: through their first day started with him Ira, became the
[6:30] Speaker 7: biggest drug, and now they've got sky Rizzy and and
[6:34] Speaker 7: ri in Voke, which are both for either psoriasis or
[6:39] Speaker 7: authritis pretty much similar kind of related or diseases. Now
[6:45] Speaker 7: this is you know, we keep talking about obesity one
[6:47] Speaker 7: hundred billion, blah blah blah. If you add up the
[6:50] Speaker 7: numbers that app is going to have these two drugs,
[6:52] Speaker 7: we're approaching well over fifty billion dollars. So you don't
[6:55] Speaker 7: need to be an obesity to make these kind of
[6:57] Speaker 7: revenues because there's so many people to suffer on these things. Here,
[7:00] Speaker 7: they're buying another drug that adds to the portfolio, that
[7:03] Speaker 7: gives them access to the exema market otherwise known as
[7:07] Speaker 7: atopic dermatitis, and it's a pretty good fit. Lots of
[7:11] Speaker 7: questions as opposed to whether it's the right drug to
[7:14] Speaker 7: have had. Is there another better competitor? But AV has
[7:16] Speaker 7: spoken they're putting up their cash.
[7:19] Speaker 6: I mean, Paul might have answered my question here, But
[7:21] Speaker 6: the fact that it's all cash, does this mean that
[7:23] Speaker 6: AVI is making this acquisition from a position of strength.
[7:27] Speaker 6: It's on the offensive in the same way that we
[7:28] Speaker 6: talk about Eli Lilly making acquisitions from a position of strength.
[7:34] Speaker 7: Yeah, I mean, scot most farmer companies right now, if
[7:37] Speaker 7: I look through the list, I can't pick one that
[7:40] Speaker 7: is having trouble generating cash, even Pfiser, I mean I don't.
[7:44] Speaker 5: I don't.
[7:45] Speaker 7: I'm not having a go at Pfizer specifically, but even Pfizer,
[7:48] Speaker 7: where the share price is halved, is the peaks.
[7:49] Speaker 5: Of the pandemic.
[7:51] Speaker 7: We are e ending up with a company that's still
[7:53] Speaker 7: generating a lot of cash and their leverages are relatively low,
[7:57] Speaker 7: so they can go and do these things without too
[7:58] Speaker 7: much trouble. That these guys have thirty zero percent operating margins,
[8:04] Speaker 7: So these are very cash rich companies and the cash
[8:08] Speaker 7: speaks volumes.
[8:09] Speaker 2: So what's what's the next new thing in your world
[8:13] Speaker 2: send that we need to be focusing on. I mean
[8:15] Speaker 2: do we still have room to grow in the obesity front?
[8:18] Speaker 2: Is there breakthroughs in cancer? I know you go to
[8:21] Speaker 2: all these conferences. What's the next thing that you think
[8:23] Speaker 2: global wall sheets should be looking at in your space?
[8:26] Speaker 8: Yeah?
[8:26] Speaker 7: I mean, Paul, I keep talking about biology is evolving
[8:30] Speaker 7: at a breakneck speed and it's not just a cliche
[8:34] Speaker 7: thing to say. At the end of the day, science
[8:37] Speaker 7: is really really cracking into some of the minuci of
[8:41] Speaker 7: how these diseases are slightly different from each other. So
[8:44] Speaker 7: the next big thing is are all of these patients
[8:47] Speaker 7: suffering from the same reason or biology that's making them movies?
[8:52] Speaker 7: Is there some subgroups that need to be treated differently?
[8:54] Speaker 7: So that's one area. Neuroscience is one. Can I plug
[8:58] Speaker 7: a podcast that we have on bio Vaneguards of Healthcare
[9:01] Speaker 7: Vandguards of Healthcare a couple. I think it's this week
[9:05] Speaker 7: or now it was last week that the conversation with
[9:10] Speaker 7: the head of development at Bristol Myers where we talked
[9:14] Speaker 7: about this and neuroscience is a big one because the
[9:17] Speaker 7: brain has been a black box until I mean, it
[9:19] Speaker 7: still is a bit of a black box compared to immunology,
[9:22] Speaker 7: for instance, But there's a lot more science and biology
[9:26] Speaker 7: that's being understood, and therefore that's a frontier that I
[9:28] Speaker 7: think we're going to see quite a lot of evolution
[9:30] Speaker 7: and new drugs and ideas coming up in see.
[9:33] Speaker 6: And one area that I'm really interested in is women's health.
[9:36] Speaker 6: And we've seen menopause become a very big industry now
[9:40] Speaker 6: that the FDA has removed the black box warning on
[9:43] Speaker 6: hormone replacement therapy in the US, we've seen demand for
[9:47] Speaker 6: these estrogen products, estrogen patches, creams, Gells, skyrocket.
[9:52] Speaker 3: That's in the US. What does it look like elsewhere
[9:54] Speaker 3: in Europe, for instance, or in Asia.
[9:57] Speaker 7: I think x US hasn't been as much of a
[10:01] Speaker 7: contentious issue here.
[10:03] Speaker 5: It's to your replacement therapy.
[10:04] Speaker 7: Of course, everybody worries about taking a hormone for life
[10:07] Speaker 7: or for an extended period of time. And these are
[10:10] Speaker 7: active agents, right, so they're not just passive. So you
[10:15] Speaker 7: do need to be careful with using them and making
[10:19] Speaker 7: sure you have enough information that suggests that the benefit
[10:22] Speaker 7: out bays there is kind of thing in this case,
[10:23] Speaker 7: in HRG case, in the majority of cases it does.
[10:26] Speaker 7: So Europe has been less problematic for this, and certainly
[10:32] Speaker 7: instead of taking supplements. People should be taking well tested
[10:35] Speaker 7: and tried pharmaceuticals. So and I think, but Scarlett, to
[10:39] Speaker 7: your point, women's health has been one area where I
[10:42] Speaker 7: don't think there's been enough attention paid to it. Some
[10:45] Speaker 7: people blame the fact that majority of pharma executives are mailed,
[10:49] Speaker 7: therefore they don't think about it.
[10:51] Speaker 5: I don't think you should think like that.
[10:52] Speaker 7: I think the removal of a black box warning here
[10:55] Speaker 7: does enable to start thinking, oh, well, maybe we can
[10:58] Speaker 7: do something more. Now, stay with us.
[11:02] Speaker 3: More from Bloomberg Intelligence coming up after this.
[11:08] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[11:12] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[11:15] Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
[11:18] Speaker 1: you get your podcasts, or watch us live on YouTube.
[11:22] Speaker 3: M and A Monday.
[11:23] Speaker 2: We had a big deal in the construction business, the
[11:27] Speaker 2: building material business. So we're gonna get right to that.
[11:30] Speaker 2: James Wilcock, Bloomberg UK Politics Reporter. See our h to
[11:36] Speaker 2: buy rival Arkosa in a building material firm's biggest deal ever.
[11:41] Speaker 2: So big deal. Spencer, talk to us about this transaction.
[11:44] Speaker 2: I don't think many people know of these two companies
[11:46] Speaker 2: talk to us about these companies and what they're trying
[11:48] Speaker 2: to do with this deal.
[11:50] Speaker 5: Yeah, yeah, thank you for having me on.
[11:51] Speaker 9: So c r H one of the largest global materials producers,
[11:54] Speaker 9: may make aggregates, cemant concrete staff, your presence here in
[12:00] Speaker 9: the US as well as in Europe.
[12:02] Speaker 5: We're listed in London.
[12:03] Speaker 9: Have moved to a US primary listing only increasing their
[12:07] Speaker 9: US exposure. Like you said, Arcosa a US competitor, large
[12:11] Speaker 9: in the aggregates business. And then while on the structural
[12:13] Speaker 9: solution side, so making a variety of infrastructure items, light poles,
[12:19] Speaker 9: traffic signs, large equipment that goes kind of over highways, roads, bridges,
[12:23] Speaker 9: things like that, as well as wind turbines. So very
[12:26] Speaker 9: large combination here this morning. We'll really kind of deep in.
[12:29] Speaker 9: CICHS is tied to the US as well as our
[12:31] Speaker 9: aggate's portfolios. So now the largest US aggregates producer about
[12:35] Speaker 9: two hundred and sixty five million tons per year. A
[12:38] Speaker 9: very large deal here, the largest in their history. Very inquisitive,
[12:41] Speaker 9: about thirty eight acquisitions last year alone, but mainly Bolton's
[12:44] Speaker 9: that was about four billion total. So we're not used
[12:46] Speaker 9: of seeing these large deals by cich but it's not
[12:49] Speaker 9: too surprising given that they like to kind of build
[12:51] Speaker 9: their portfolio through acquisitions and they're not scared of kind
[12:54] Speaker 9: of dipping their toes into different alleys.
[12:56] Speaker 5: Very large, wide variety of a portfolio they have.
[13:00] Speaker 6: So given all this, Spencer, how does this fit in
[13:02] Speaker 6: with the outlook that you and your team have published
[13:05] Speaker 6: on global building materials for the second half of this year.
[13:09] Speaker 3: How does this bigger SEERH fit into it.
[13:12] Speaker 9: Yeah, so Syrix the largest obviously producer, but really the
[13:15] Speaker 9: aggregates is kind of where we see the most strength.
[13:17] Speaker 9: Agrates are very durable material, really used in highways, roads, bridges,
[13:21] Speaker 9: and then construction because of their the primary ingredient for concrete.
[13:25] Speaker 5: So this bolster is their portfolio.
[13:27] Speaker 9: We've seen a lot of competitors move to the US,
[13:29] Speaker 9: move into the US, a lot of competition on the
[13:32] Speaker 9: aggregate side, and you see Vulcan and Martin Marietta really
[13:34] Speaker 9: change their portfolios to be very aggregates focused. You have
[13:37] Speaker 9: competitors in Mexico like Semex, even Cementos Argos talking about,
[13:41] Speaker 9: you know, getting their foot in the door with aggregates
[13:42] Speaker 9: in the US. So acquisitions are becoming very competitive and
[13:46] Speaker 9: this is CICH.
[13:46] Speaker 5: Kind of leaning into that. We have a good outlook
[13:48] Speaker 5: for the agregates as well.
[13:49] Speaker 9: Allow of this to be infrastructure givens the US obviously
[13:52] Speaker 9: spending on roads, bridges, and highways near record highs from
[13:55] Speaker 9: the infrastructure build in twenty twenty one. There's of a
[13:57] Speaker 9: new built right now coming through that could pass here
[14:00] Speaker 9: for even more funding, so CH really leaning into that.
[14:03] Speaker 9: And then you have kind of the solutions side, the
[14:05] Speaker 9: structural side, which is infrastructure, so you've like the data
[14:08] Speaker 9: center build out, things like that, and the energy infrastructure
[14:10] Speaker 9: around that. CH is now a player in that as well,
[14:13] Speaker 9: so they've said before they're working on over one hundred
[14:15] Speaker 9: data center projects currently. That's the smaller part of the
[14:17] Speaker 9: portfolio still, but that's growing and that's got to high
[14:19] Speaker 9: demand and those are quick turns, so those projects turned
[14:21] Speaker 9: into shovels in the ground, as you would say, very quickly.
[14:25] Speaker 5: So it's a good growth avenue for them. But leaning
[14:27] Speaker 5: into aggregates.
[14:28] Speaker 9: Not surprising, but given the size of an acquisition historically
[14:31] Speaker 9: bolt on acquisitions, this is a very large one for them.
[14:34] Speaker 2: US construction services business here, as you mentioned, there's a
[14:37] Speaker 2: lot going on out there. Is it a fragmented industry
[14:41] Speaker 2: is a consolidated industry. What are we going to see
[14:43] Speaker 2: more deals like this?
[14:44] Speaker 6: Do you think?
[14:46] Speaker 5: Yeah?
[14:46] Speaker 9: The construction services very fragments it, and CH is a
[14:49] Speaker 9: large player in that. Most like I've mentioned earlier, most
[14:51] Speaker 9: of the other players are really on the material side.
[14:54] Speaker 9: Ch is accepted that they want to be the vertically
[14:56] Speaker 9: integrated player, the largest in the space. So you can
[14:59] Speaker 9: can you know, kind of contract them for your asphalt paving.
[15:03] Speaker 9: They will provide the asphalt for that as well the equipment.
[15:05] Speaker 9: So they want to be the one stop shop for
[15:08] Speaker 9: their customers. Other producers have moved away from that model.
[15:11] Speaker 9: You know, they've sold off those businesses, they've moved away
[15:13] Speaker 9: from the concrete. They really want to focus on aggregates,
[15:16] Speaker 9: and that's where we see some of the strongest pricing power,
[15:18] Speaker 9: strongest demand trends, very durable even in down cycles. Aggregates
[15:22] Speaker 9: can still get pricing growth while you know, concrete, cement,
[15:25] Speaker 9: asphalt can see pricing declines or flat pricing for years.
[15:28] Speaker 9: So leaning into that and then what the service is offering,
[15:31] Speaker 9: kind of their vertically vertical integration really separates them. Still
[15:35] Speaker 9: traded a discount of their peers on a multiple basis.
[15:38] Speaker 9: When you look at some of the pure play aggregates
[15:40] Speaker 9: names just because the demand and the pricing is there,
[15:42] Speaker 9: and then series do that have that, but they are
[15:45] Speaker 9: now the largest producer of agates in the US, and
[15:47] Speaker 9: then they're bolstering their portfolio and they'll continue to acquire.
[15:50] Speaker 5: It looks like.
[15:52] Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
[16:00] Speaker 1: Listening to the Bloomberg Intelligence podcast. Catch us live weekdays
[16:03] Speaker 1: at ten am Eastern on Apple, Cocklay and Android Auto
[16:06] Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
[16:10] Speaker 1: get your podcasts, or watch us live on YouTube.
[16:13] Speaker 2: Alan Greenspan, the former Federal Reserve chairman, has died at
[16:16] Speaker 2: the age of one hundred. He served for eighteen years
[16:20] Speaker 2: as FED chairman. We've been using the morning here to
[16:23] Speaker 2: chat with members of Global Wall Street to get their
[16:25] Speaker 2: thoughts on mister green Span and his legacy and his
[16:28] Speaker 2: term in office. Dennis Lockhart Joints is here, a former
[16:31] Speaker 2: Atlanta Fed president on Zoom from Atlanta. Dennis, thanks so
[16:35] Speaker 2: much for joining us here. We'd love to get your
[16:37] Speaker 2: thoughts on your perception of Chairman Greenspan and his legacy.
[16:43] Speaker 8: Oh I didn't work with him directly, but I certainly
[16:46] Speaker 8: heard a lot about him and his style of managing
[16:49] Speaker 8: the Federal Open Market Committee when when I was there
[16:53] Speaker 8: at the FED, certainly a great chair eighteen and a
[16:58] Speaker 8: half years, I would say for fifteen of those eighteen
[17:03] Speaker 8: and a half years he presided over the great moderation
[17:06] Speaker 8: and his overall approach to policy was very successful, as
[17:13] Speaker 8: so often happens, sometimes long periods of success, So the
[17:19] Speaker 8: seeds of trouble. That's the insight that Hyman Minsky had,
[17:25] Speaker 8: and I agree with it, and I think in the
[17:28] Speaker 8: last three years of Alan Greenspan's tenure he may have
[17:34] Speaker 8: not seen the signs of the coming real estate crisis
[17:38] Speaker 8: and perhaps relied too heavily on his basic belief in
[17:46] Speaker 8: the market system and his light touch in terms of regulation.
[17:51] Speaker 6: Ira Jersey, or chief Interest rate Strategist, was just saying
[17:54] Speaker 6: that Greenspan understood the markets in a way that more
[17:56] Speaker 6: recent federal Federal Reserve chairs haven't.
[18:00] Speaker 3: Do you think that played a role in his, perhaps.
[18:04] Speaker 6: His tenure, especially in the last three years, laying the
[18:06] Speaker 6: groundwork for some of the things that happened starting in
[18:09] Speaker 6: two thousand and seven.
[18:12] Speaker 8: Yes, I do, and he not only understood the markets.
[18:15] Speaker 8: I think he understood the economy at a detailed level
[18:19] Speaker 8: when I was there. As part of his legend was
[18:22] Speaker 8: that he could recite very arcane data from particular sectors
[18:28] Speaker 8: a fucking sector or the housing sector. He knew quite
[18:35] Speaker 8: literally hundreds of data streams or data series intimately and
[18:44] Speaker 8: really understood the economy. So I think that can sometimes
[18:49] Speaker 8: breed confidence as things are turning in a way. That's
[18:54] Speaker 8: what happened, Dennis.
[18:56] Speaker 2: We now how they knew. Chairman of the Federal Reserve
[18:58] Speaker 2: Kevin Walsh. The market heard from mister Walsh for the
[19:01] Speaker 2: first time last week with this statement and with the
[19:04] Speaker 2: press conference. What was your takeaway?
[19:08] Speaker 8: I thought he made a strong start to his incumbency
[19:11] Speaker 8: in the chair's job. I went into the meeting thinking
[19:16] Speaker 8: he might have to choose between being a change agent
[19:20] Speaker 8: or being a kind of institutionalist who respected the collaboration
[19:27] Speaker 8: and the collegiality of the FAED. He managed to, I think,
[19:33] Speaker 8: serve both of those masters. In his first meeting, he
[19:37] Speaker 8: was forceful and reaffirming the commitment to bringing inflation down.
[19:42] Speaker 8: He launched his five task forces. I thought it was
[19:47] Speaker 8: it got to be almost humorous when he said we
[19:50] Speaker 8: have a task force for that in the press conference,
[19:54] Speaker 8: but you know, he showed that he is going to
[19:57] Speaker 8: try to reform and improve things about the way the
[20:02] Speaker 8: institution works, but do it in a collaborative way. And
[20:08] Speaker 8: I thought that was impressive how he was able to
[20:13] Speaker 8: pull that balancing act off.
[20:15] Speaker 6: Yeah, in some circles people were saying that there's a
[20:17] Speaker 6: task for the task force for that was kind of
[20:20] Speaker 6: a drinking game, or could be a drinking game, albeit
[20:23] Speaker 6: at about two thirty in the afternoon. When it comes
[20:26] Speaker 6: to the hawkish hold that we got on Wednesday, there
[20:30] Speaker 6: are a lot of questions heading into that FED meeting,
[20:32] Speaker 6: Dennis about whether Kevin Worsh spoke for the committee. He
[20:36] Speaker 6: definitely spoke for the committee. Did he speak for himself
[20:38] Speaker 6: you think in being that hawkish.
[20:42] Speaker 8: Well, one of the things I was watching for as
[20:45] Speaker 8: we went into the press conference is whether he would
[20:48] Speaker 8: be clear when he was speaking for the committee and
[20:51] Speaker 8: clear when he was speaking for himself. And there was
[20:54] Speaker 8: only one or two incidents where he had to make
[20:56] Speaker 8: that point clearly, and I think he did it. I
[21:02] Speaker 8: think that maybe we have to read between the lines
[21:05] Speaker 8: his choice of not submitting a forecast and a dot
[21:10] Speaker 8: was speaking for himself. At the same time, he characterized
[21:15] Speaker 8: the way the committee came out as reflected in the SEP.
[21:20] Speaker 8: It turned out in this press conference the SEP is
[21:24] Speaker 8: the only thing we really had that gives you a
[21:26] Speaker 8: sense of the mind of the committee looking forward, and
[21:29] Speaker 8: that to me was very clearly hawkish.
[21:33] Speaker 2: Dennis, we have oil continuing to come down, and a
[21:36] Speaker 2: lot of folks would say, all right, inflation problems fixing itself.
[21:39] Speaker 2: Others saying, whoa, whoa, whoa, We've got more. It's more
[21:41] Speaker 2: than energy out there in terms of inflationary pressures. How
[21:44] Speaker 2: do you think the FED should look at inflation these days?
[21:48] Speaker 8: Well, certainly the FED you look at inflation broadly, using
[21:53] Speaker 8: you know, an approach that's I don't know, more like
[21:59] Speaker 8: a wide array of inflation data, as opposed to focusing
[22:05] Speaker 8: on a single data point like PCE core PCE headline.
[22:13] Speaker 8: My own view is that we should be cautious about
[22:15] Speaker 8: assuming that oil prices snap back to the pre war levels.
[22:22] Speaker 8: I think there are a lot of reasons to just
[22:24] Speaker 8: be concerned and worried that the price pressures will persist
[22:29] Speaker 8: and conceivably the improvement we've seen in the last few days,
[22:34] Speaker 8: depending on how the negotiations go, could reverse. So you know,
[22:39] Speaker 8: I'm being very cautious about predicting that oil prices are
[22:43] Speaker 8: going to come down and the world is going to
[22:44] Speaker 8: revert to pre work conditions.
[22:49] Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
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