Major Storm to Test Power Grids Across Much of US This Weekend

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1:26deep in the work that moves the business. Let's create smarter business. IBM. Bloomberg Audio Studios.

1:36Carol Massar:Podcasts, radio, news. This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenevek on Bloomberg Radio. All right, folks, let's get to what is top of everyone's mind, and that is the winter storm stretching from the southern Rockies to New England. It is expected to impact at least 170 million Americans, including everybody around the table and certainly here at our New York Bureau.

2:18Carol Massar:Let's get the latest. Bloomberg News energy reporter Josh Saul back in the house with us. So where are we? Has it gotten any better? Still going to snow, Josh? It's still going to snow. It's going to snow a lot. We're going to see up to a foot of snow here in New York City on Sunday. I might cancel my kids' basketball game. But snow is already following in the Rockies. And what's amazing about this one is it's such a huge part of the United States. This will affect up to 170 million people. It's going to stretch 1 ,500 miles. And a big test will be Texas on Monday morning. Why Texas is such a test?

2:55Is it because of what happened there a few years ago? Is it because of the concerns with the power lines freezing there? What is it? It's partly because we saw so many deaths in such an intense power grid emergency almost five years ago. But Texas is not used to extreme cold. So when you have a polar vortex, you know, pressing down from the Arctic like we have, that's going to put a lot of stress on the state. The state's power grid is expecting a demand peak of 84 gigawatts. That's not just going to be a winter record. It's going to get close to a summer record. And that much demand is going to be tough for the grid to keep up with.

3:34Wait, can you just explain? 84 gigawatts, we hear kilowatt hours, is sort of like what our own home energy use is measured in gigawatts we hear in relation to AI. So gigawatts are the big boys. One gigawatt is roughly the output of one nuclear reactor. So if you think of, you know, the nuclear power plant in The Simpsons, 84 of those, you know, producing power across Texas.

3:56Carol Massar:You know what? You've made my day. You've made my week. You've made my year by that reference. Hey, listen, Texas, though, we go back to 2021, right? That was when we it was just really rough. Texas, I have a lot of family in Texas. It's not an area that usually has to deal with this kind of weather. You know, the president was out and I want to bring this into it, Josh, because you follow the environment and he put out on social record cold wave expected to hit 40 states. It's rarely seen anything like it before. Could the environmental insurrectionists please explain whatever happened to global warming?

4:27Carol Massar:What do you say to that? Because my understanding of global warming is, yes, the planet is getting warmer, but there's also extreme movements when it comes to weather overall. And that is certainly what we've seen. That's right. Right. So global warming is one term. Climate change is a more accurate, broader term, because what climate change does is it makes for more erratic swings in temperature and more types of extreme weather. So sometimes that can be global warming, a warming and a drying, making for more intense wildfires, for example. But it can also do things like make hurricanes more powerful by making more moisture in the air so those swirling winds pick up more water out of the ocean.

5:08Carol Massar:And that's what we've seen in terms of intensity of storms, whether it's winter storms, whether it's hurricanes, and they're also happening in places that they didn't used to happen before. Right. And actually, with this storm, the fact that there's so much cold air pushing down out of the north, the reason it's able to come so far south and this storm is going to be striking Texas is because the jet stream is not keeping that polar vortex contained the way it normally would. You'd have to get a full-time weather reporter, not a power reporter, to explain whether that's a result of climate change.

5:36But those kinds of weather patterns, it is what's making these storms so intense. Well, I'm going to throw a power question your way and talk a little about energy use. We know it's expected to increase, of course, as people turn up their heat when it gets colder outside and more heat is needed. Here in New York City, Con Edison, much of the lines for power lines are buried underground in New York City. Is that an advantage in a storm like this? Yeah, for sure. Buried lines in a storm are much more secure. That's going to be better for in places like California, which is working to bury its lines.

6:10That's better for preventing wildfires. And in a place like New York City, having the lines underground means they're less likely to freeze, get overloaded, have a tree fall into them, get knocked out in that way.

6:21Carol Massar:All right. Going to leave it there. Hey, Josh, thank you so much. And you've done this keeping us up to date throughout the week. Appreciate it. Josh Saul, Bloomberg News energy reporter. Stay with us. More from Bloomberg Businessweek Daily coming up after this. They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life.

6:59Carol Massar:LifeMD, it's just getting good. Visit LifeMD.com slash goodlife. Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto, without all the bugs or the confetti. Retirement accounts? Yep. High-yield cash? Yes, again. They even have direct indexing.

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8:15And I asked him, how can companies use AI to its fullest potential to create smarter business? My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side. For example? If anybody has more than 10 % of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30 % more productive today with the goal of being 70 % more productive. Yeah. Wow. So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We're happy to bring out all our learnings, including what needs to change in the process, because the biggest change is not technology.

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9:23You're listening to the Bloomberg Business Week Daily Podcast.

9:37Carol Massar:All right, so let's add it all up. Because we have had a jittery week when it comes to the market, moving sometimes off of those common social media posts from President Trump, and kind of keeping uncertain geopolitics top of mind for investors. We've definitely seen that play out. and raising kind of the question of whether that could undo some of the stock momentum that we've seen over the past three years. We've had three years of double-digit gains. And there is a question, is that it? Or do we have more momentum to the upside? Well, it kind of reminded you of this conversation between JPMorgan Chase Chair and CEO Jamie Dimon and Bloomberg Host and Carlisle Co-Founder and Co-Chairman David Rubenstein.

10:14This was just last week. Yeah. And here's the part where Jamie Dimon addressed what could bring about a possible turn in the cycle. There are chances to have a problem somewhere, somehow, The biggest unknown is geopolitics. And it's not like, you have to be dangerous, careful what you talk about. It's not like that's going to determine what the economy does in 2026, but it is a moving tectonic plate. Well, there you have it. JP Morgan, CEO Jamie Dimon, earlier this month with Bloomberg host and Carlisle co-founder and co-chair David Rubenstein. That was at the US Chamber of Commerce. That full conversation will be featured in an upcoming episode of Peer to Peer Conversation with David Rubenstein on Bloomberg.

10:55Carol Massar:All right. Curious to see what our next guest has to say about the geopolitical climate, what it means for investing in 2026. Andrew Cry is back with us, chief investment officer at Crescent Grove Advisors. They've got over$5 billion of assets under management as of the end of June. He joins us from Milwaukee. A lot to talk about. Do you even think about what might bring the next turn, significant turn in U.S. markets or the next crisis, financial crisis? Of course. Yeah, we're always risk aware in terms of how we allocate portfolios and think about what's on the horizon. But are you more so in this environment?

11:32Carol Massar:I understand that we're always thinking about risk and we have to do that with any kind of portfolio management. But is there something about this environment? I don't think 2026 got off or began like we all thought it would. Yeah, I think that's a fair comment, right? I think there's been an uneasiness about the general rally in the S &P 500 just feeling like whether it's the labor market starting to fragment somewhat last year, or at least seeing signs of softening the Fed moving to cut interest rates in sort of a meaningful way and taking out insurance against a downside scenario. I guess there are different elements that you could point to and say, yeah, this just doesn't feel right to have such a buoyant stock market against the backdrop where it feels like the macro is a little bit fragmented.

12:15And then, of course, you had tariffs. You had policy uncertainty, which has now rolled forward into a different type of policy uncertainty, a different type of geopolitical concern. So, yeah, I see the point on that. But I would say we're constantly risk aware, right? At least we aspire to be. So then in terms of the awareness that you have right now, where is it with in relation to other risks, risky atmospheres or risky times that you've seen just in the last couple of years? Where does this time stand? Well, I would think about maybe what we saw in Japan this week is an interesting way to come at set aside the Greenland, you know, in Davos news with Trump and kind of the issues with the administration around Greenland and wanting to annex it or whatever the case may be there.

12:57But I think what was more interesting, and you saw Ken Griffin and others, really high-profile folks, talking about the spike in yields that we saw in Japan. And then we saw this build in term premium to the tune of about 10 basis points, which doesn't seem like a lot. It's sort of wonkish in the way that you think about that from a 10-year Treasury perspective. But to us, that's a big concern moving forward here. Do you see an untethering of the long end of the yield curve, potentially? or is this an early warning sign that you could see a real steepening or at least just the long end of the yield curve moving higher.

13:30You get higher discount rates then, which flow through and ultimately in sort of a 2022 type scenario, I think is an analog where you see higher rates ultimately catalyzing a derating of stocks. And in particular, those really highly valued tech names or growth names, let's say writ large that have been leading the market for several years Now, that to us becomes the cascading, you know, one, two, three punch sort of thing as it relates to where the risks are on the horizon here. So we're watching that really closely.

13:59Carol Massar:Well, Andrew, on that, you know, we've got a story on the Bloomberg about this quiet quitting of U.S. assets. Also, maybe you could call it the sell America trade. And we've been looking at some of the flows. So has Bank of America. Investors are pouring cash into emerging market funds at a record pace. They're sending EM stocks to a record gauge. Asian tech shares driving that rally. The flow of funds from Europe to India to diverse away from U.S. treasuries has added impetus to that EM rally fueled by robust global growth and political shifts in Latin America. I mean, are you advising investors to participate in that shift?

14:33Carol Massar:And we look at, you know, some of the flows, the amount of money going international compared to what we are seeing in the U.S. or Europe and Japan. It's pretty stark. And maybe some say it's small amounts, but it's not something that we've seen in a while. And I think we would point to a couple different things there, that this week being an interesting, I guess, an interesting example here of the catalyst around why that's occurring, just the policy uncertainty that can be created by the administration. And then as much as anything, we would kind of set aside the Greenland specific, you know, issues at hand here.

15:10We would say, ultimately, this is just another force to galvanize Europe in particular, but to galvanize really the rest of the world around feeling like they don't want to be antagonized by the U.S. administration or put into a corner from a policy perspective, which then ultimately will have trade ramifications and tariff ramifications, etc. So, you know, that then catalyzes whether you see in a public sense these pension funds selling their treasury holdings, which was really a drop in the bucket. But you just see, to your point, this more insidious effect of selling U.S. assets because, you know, moving into things like gold, because they don't want to be exposed to the potential ramifications of U.S.

15:45policy.

15:46Carol Massar:Good stuff. Andrew Cry over at Crescent Grove Advisors. Thank you so much. This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say, Alexa, play Bloomberg 1130. Well, folks, you can all take a deep breath. Take a sigh. I can't believe this is actually happening. As you said, the TikTok on TikTok has been one to watch. It's really been a years-long saga over the future of TikTok's American operations.

16:24Carol Massar:We've talked about it a lot here at Bloomberg. Finally, finally, it seems reaching a conclusion, the social media platform saying that its US Arm has been bought by a consortium led by Oracle formalizing the deal outlined by the Trump administration back in September. What I love about this story is all the little people who are involved in this, because it's not really just one entity, is it? Oh, there's a lot of moving parts. Yeah, there's a lot of moving parts. That's why we have Alexandra Levine here. She's Bloomberg News technology reporter. She joins us here in the Bloomberg Businessweek studio.

16:56So who owns this thing? That's what we want to know.

16:59Carol Massar:So, you know, not a lot has actually changed. and you said it was a year-long saga. This has actually been going on for seven years. The folks who are now going to be owning this new U.S. TikTok joint venture are the same names that were floated back in the fall and then also earlier last year. So we know that Silver Lake, we know Oracle, and we know MGX are the three leading investors. Who's MGX? MGX. And who are they? They are a Saudi investment firm. And so they are, you know, they are, I think, one of the only ones, if not the only one, that's not actually an American investor. So when we're talking that this new venture is majority American investors, that is what we mean by this.

17:43Carol Massar:But so the owners are this group, and then also we've got existing ByteDance affiliates. And what we basically know is that not a whole lot is, even though the ownership is changing for some parts of this TikTok U.S. business, what people who are using the app are actually going to be experiencing is not going to be all that different. Why not? Why isn't it going to be? Because I thought the algorithm is the special sauce. So, you know, give us the details on who has that and who has rights to it and how they got it from ByteDance and how that works. Sure. U.S. TikTok users are not going to need to download a new app.

18:21Carol Massar:That's, I think, more what I meant when I was saying that the experience won't be different. However, ByteDance is going to be leasing a copy of its algorithm to this new U.S. joint venture. And that joint venture is going to be responsible for retraining the algorithm on U.S. user data. This is all very wonky. So is the U.S. user data, like is the algorithm going to be as impressive moving forward? Because that is the special sauce. It's a great question. And I think that's what everyone is waiting to see is are we going to be seeing different things on the app? One thing that's really important to note about these new owners is that this new U.S.

18:56Carol Massar:joint venture is responsible for content moderation. So they're going to be the ones deciding what people are seeing on the app. If there is any sort of change as far as what people are seeing on the app, my big question is, will we know? See, what I'm curious about is, where are the servers? Who has access to all of this? And my understanding is ByteDance, I mean, it complies with the national security law that mandates ByteDance reduce its ownership of TikTok US to less than 20%. But there's still ownership. So are they just silent owners and they have no say? How do we know that copy? I'm sorry, this is going to sound like Homeland.

19:30Carol Massar:But it's like, how do we know that copy of the algorithm doesn't have some backdoor entry for ByteDance? How do we trust that technology, which is considered to be this incredible algorithm? How do we know that it really is safe, secure, and that basically the Chinese government or Chinese companies still can't access, certainly, personal data of Americans? The idea with this new entity is that the entity, and especially Oracle, which is a longtime TikTok partner, Oracle is going to be sort of the trusted security guard that is supposed to be able to let everybody else know that TikTok is, in fact, complying with the law.

20:08Carol Massar:I think there's a lot of questions around how that will be communicated to the American public, if it will be communicated to the American public. And to your point, ByteDance does have ownership of key parts of the business, even beyond just leasing this copy of the algorithm. them. I think one really important thing to note is that ByteDance is still going to be in charge of TikTok Shop, which is basically the e-commerce arm that is turning TikTok into a huge shopping destination in the U.S. They're also going to be in charge of the advertising business, which is a very lucrative piece of their empire.

20:37Why did China agree to do this?

20:40Carol Massar:China, you know, China hasn't said quite as much throughout this entire process as President Trump has. Most of what we know about the deal has come just from the words of the White House and from the words of TikTok itself. I think that a lot of people looking at this are seeing that China comes out with a win here, that Trump comes out with a win here. Content creators, of course, come out with a win here, but especially China in this case, because ByteDance is still going to be involved in the most important parts of this business. We should say in a social post, the president, President Trump, that is thanking Chinese President Xi Jinping for, quote, working with us and ultimately approving, end quote, the TikTok deal.