Trump Wants Tech Giants to Pay for Power. They’d Love To.

0:00Carol Massar: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. LifeMD, it's just getting good. Visit LifeMD.com slash goodlife. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work.

0:50Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships, and traditional expectations around masculinity can quietly wear men down, often without clear warning signs. In Season 3 of The Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of The Visibility Gap, a podcast presented by Cigna Healthcare.

1:32Carol Massar:Bloomberg Audio Studios. Podcasts. Radio. News.

2:00Carol Massar:Stenevek on Bloomberg Radio. You probably heard about this, President Trump and the governors of several U.S. northeastern states agreeing to push for an emergency wholesale electricity auction that would compel technology companies, Tim, to effectively fund new power plants. This is about the power grab that we are seeing. And we've often talked about how we're all paying higher prices because there is so much demand for energy right now. Yeah, we're seeing this move markets. I'm just pulling up the S &P 500. And the top decliners in the S &P 500 are energy companies. Constellation down 11%. Vistra down 7.8%.

2:34It's an unprecedented plan. It seeks to address those growing tensions without simultaneously hiking utility bills for homes and businesses. I want to bring in senior editor for technology and strategic industries for Bloomberg News, Michael Shepard. He joins us from Washington, D.C. This news breaking late yesterday. We're seeing the market reaction today, the president at the White House with some of these executives and with a governor of Pennsylvania earlier today. Mike, what exactly is going on here? What is the plan here? Well, the plan is, and Carol gave a quick snapshot of it, the idea is to force these tech companies to pay more for the energy that their data centers will need.

3:18Now, force is a big word here because the data center companies have also been asking for this for quite some time. Really, the advent of the AI boom really forced them to reckon with their electricity needs and really come to grips with the notion that the grid right now and power supply right now from utilities will not nearly be enough. We've seen that supply-demand imbalance really show up in our utility bills. The cost for retail electricity in September rose 7 percent. And from January last year to last August, it was up 10.5 percent for residential customers. That's the most in more than a decade.

4:00And the people we're feeling are really in these areas where data centers are being built the most. And what the agreement today sought to do was address the grid operator where that is happening with the greatest frequency. and that is PJM Interconnection. They oversee the grid in roughly a dozen states, and that includes Virginia and Pennsylvania and Ohio. And these are places where data centers are being built more and more. Virginia happens to be the place in the world that has the highest number of data centers. So consumers and retail customers in those areas have already been seeing the electricity prices rise, and it's becoming an election issue too.

4:42Carol Massar:Yeah, no doubt about it. Mike, what I don't understand, and as our team reports out, you've got Amazon, Microsoft, Alphabet, Meta, OpenAI, already collectively investing in the development of several gigawatts of new power. So I'm trying to understand, so what's the difference? What are they going to do? Why will they pay up? Why will they make this commitment? What's different between the investments they've been making and what they're being asked to do here? Well, the investments they've been making in those data centers, the data centers really measured in terms of computing power comparable to what we see for electricity.

5:20They both use the word gigawatt. So when Amazon says it's going to invest in a five gigawatt data center, that means it will need electricity comparable to five nuclear power plants. But a lot of times the electricity generation is not there in place. And that's what this forced auction is designed to try to do, to raise the funds from the buyers, namely the tech companies, for the grid operator PJM Interconnection to be able to then fund over the next decade the actual construction of more power plants. Now, this will not provide immediate relief, though, for consumers, because like any infrastructure project here in the U.S., it will take some time.

6:05So why then are we seeing shares of Constellation, Vistra and other providers of energy lower? It doesn't necessarily change the amount of electricity that will be bought from these providers of electricity. So help explain the market reaction here. Well, the market reaction for them, it's interesting. In this case, the investors are looking at the pricing power that these utilities may ultimately have. will they be able to continue to see the rate increases that retail and residential customers have been experiencing and that these companies have been able to profit from?

6:42Carol Massar:But, Mike, I do wonder that if these big tech companies get involved in the auctions and are paying for power, do they go to the top of the list when it comes to power demand? Like, I just do wonder how that plays out. Well, this auction would actually be laid out at a wholesale level, and it really is aimed at the tech industry. And the idea is that you get the tech companies to pay a billion or more at the auction to agree to buy electricity over a 15-year period at that price. The grid operator, PJM, would take that money in and then be able to invest it. But in return, the tech companies get a stable source of energy.

7:26So if they see some peaks, they'll still be paying that same price that they've agreed to over a 15-year period. So it does work out for them in a way.

7:36Carol Massar:Okay, I'm just going to tell you. Tim's a super smart guy. I consider myself fairly smart. Like, I think we just still don't under—do you understand totally this? I'm not getting—I'm going to be honest, Mike. I'm not getting it 100%. Yeah. I'm not completely understanding the market reaction. We have GE Vrnova higher on, I guess, optimism over wind turbine sales as a result of this. Yes, we have gas turbine sales. Excuse me. Sales. Thank you. And yeah, so I mean, it's just it's kind of all over the place still for me. Yeah. And I think the difference really is that PJM is actually the grid operator and Constellation and others like Dominion Resources.

8:12They provide the energy that goes into the grid. So they're kind of different entities, yet they are connected together. together. And the concern is that if you're at the actual power plant, power generation location, you could be seeing increased competition for the scarce resource that you currently manage right now.

8:30Carol Massar:See, and that to me is kind of the interesting story, right, Mike? In just 30 seconds, nothing really changes in the short term. We're still going to see over demand versus what's out there in terms of energy supply. Well, that's right, especially, Carol, as we see more of these data centers come online. And it is increasingly a political issue. We saw New York Governor Kathy Hochul take on tech companies over this earlier this week, saying that data center operators would have to bear more of the burden of their own electricity needs unless they can show that they are generating more jobs in the given region in New York where they might be going into place.

9:05Sounds like wind, solar. We need it all. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

9:15Carol Massar: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. LifeMD, it's just getting good. Visit lifemd.com slash goodlife.

10:11Carol Massar: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. It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit ibm.com slash smarttalks.

11:04For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships, and traditional expectations around masculinity can quietly wear men down, often without clear warning signs. In Season 3 of The Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of The Visibility Gap, a podcast presented by Cigna Healthcare.

11:35Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. All right, let's get into the global market trade. I am curious to see what our next guest has to say about what Jamie Dimon had to say, along with David Rubenstein there. With us is Leslie Marks. She's Chief Investment Officer, Equities at McKinsey Investments. They've got about$175 billion in assets under management. She joins us from Toronto. Leslie, happy Friday. Good to have you here.

12:07Carol Massar:A little wacky. Yes, indeed. But I do want to address what Jamie Dimon had to say about what would be maybe the next financial crisis. It might. He doesn't expect it to be like the great financial crisis in 2008. He talked about geopolitics. That's one of the big risks in the market. I think it's certainly a risk. And what makes it a big risk for the market is because it's very difficult to position or to anticipate. So it creates almost a bit of a randomness. And so getting ahead of that risk means that you have to be mindful of how you're positioned for many different scenarios. And that's where, you know, diversification, all of the sort of golden rules of investing really come into play to prepare for that event before you have visibility on that event.

12:56I don't understand, though, because, OK, the U.S. bombed Iran last year. Russia's invasion of Ukraine continued. There was the escalation of tensions in the Middle East. And the S &P 500, if you were to go to sleep in January of 2025 and wake up December 31st, you were up close to 20 percent on the year. Here we are. President Maduro was taken in the middle of the night by U.S. forces and brought to the United States. There's talk of involvement in Iran now. There's talk of taking over Greenland by the United States and markets aren't really reacting. So how is geopolitics a risk?

13:37Carol Massar:Well, first of all, I do think that that has been a bit of a surprise for investors to see that the market is not really reflecting the increased potential for geopolitical risk. So I would say, myself included, I've been a little bit surprised at the strength in markets coming into the year. So then we have to question, you know, why is that? What is really driving the market? I think the reality is, is what's driving the market is the prospect for greater earnings. And that does tend to be the most important driver for medium to long-term performance. Geopolitical can create short-term risk and short-term volatility.

14:14Carol Massar:But what the market is really trading on right now is the prospect that we have strong tailwinds from monetary policy, fiscal policy, and a productivity boom that is pretty much fueled by the use of artificial intelligence in businesses across multiple sectors. So it's an earnings story that is really driving the outlook and the press behavior that we've seen year to date. Totally get that, right? And, you know, we're going to be watching the earnings this season, right? What the CEOs have to say, what their forecasts are for the year. Having said that, are there certain geographical or geopolitical plays beyond that, whether it's Canada, whether it's Europe, right, which has been building up defense, building up some of their industries?

15:00Carol Massar:I mean, as everybody kind of looks inward, is there certain plays that you think might be out there for investors? Well, I'm sure you've heard from lots of guests about the prospect of broadening out this market rally, which had been primarily technology driven. And we are certainly in that camp. In that sense, we also see that broadening out, expanding across geographies, because the U.S. is primarily a stock market that is driven by technology and the consumer. But when you think about the prospect for other sectors like materials, financials, defense, some of the more value oriented sectors, the bigger plays in those sectors are, as you pointed out, in other parts of the world, most notably Canada in the materials sector and defense and financials in Europe.

15:49Carol Massar:So there are lots of opportunities in other parts of the world and investors have been rewarded by focusing in an outsized way on U.S. equities for many years now. But what we saw in 2025, and we expect that to continue in 2026, is leadership to come from other areas of the world. And I'll take that back to my point around earnings. Guess what? 2026, the biggest earnings growth that we're expecting is coming from emerging markets first and Canada second. So investors really do need to think more broadly. Hey, just got 30 seconds here. And I think we'd be remiss if we didn't ask you about the energy story, the Bloomberg exclusive about, you know, President Trump pushing for emergency power auction to support the AI boom and have technology companies be participants and help pay for all of this.

16:40Carol Massar:Just quickly, again, about 25 seconds. Is there an investment play that you think? Because stocks, depending on the name, some are up a few, but a lot are down today. Just quickly. Well, I think that the most important part is actually the macro in that. It's the fact that technology plays are continuing to become more capital intensive. They have very high multiples because of the high free cash flow and the lower capital intensity. As that shifts, those multiples will come down. And that, again, increases the thesis around broadening out across markets. You're listening to the Bloomberg Business Week Daily Podcast.

17:17Carol Massar:Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Interesting story today on the Bloomberg. We talk a lot about AI and crypto and other things that are disrupting our world. But there's something that's going on that's really creeping, I feel like, increasingly into our narrative. We're talking about the once-distant threat of quantum computing that has prompted one of the most closely followed market strategists to walk away from Bitcoin, underscoring how doubts over the token security are creeping into mainstream portfolio thinking.

17:54Carol Massar:And Tim, we're talking about Christopher Wood. He's the global head of equity strategy over at Jeffries, removing a 10 % allocation to Bitcoin from his model portfolio. So you do wonder... Because of these quantum computing fears, right? Right, that it could undermine the cryptocurrency. So there's that going on. There's some other stuff going on. Yeah, also this week, the Senate Banking Committee delaying its discussion of a digital asset bill amid debate over the treatment of stable coins, with Coinbase Global actually pulling its support for the latest version. Curious what our next guest has to say about this.

18:24Maya Vujinovic is CEO of Digital Assets at the publicly traded microcap FGNX. It's got a microcap of about$126 million. It trades under the ticker FGNX. It's an Ethereum treasury vehicle. It acquires its stakes. It builds around Ethereum and Ether. She joins us from Miami. What is your position on this market structure, Bill? Well, first of all, it's a timely question, a very important one, because, you know, in the U.S., we are all about innovation. And I think what the rest of the world has seen is that without that innovation, we simply don't progress. So I think what's interesting is that many people don't talk about is, you know, which we've seen in crypto, if you've been in it for a while, is that banks are essentially greedy and that's okay because everybody's protecting their own territory, right?

19:13You're talking about the idea here of the stablecoin. It's a big bill, but you're specifically focused on the part where the legality or the allowance of these companies being allowed to pay as a result of people holding their stablecoins on their platforms, right? Offer rewards, if you will. Exactly correct. Exactly correct. I mean, yield-bearing stablecoin products really compete with deposits. Right. And so that's that's just the bottom line. And so I do think that banks just have need time to figure out where they fit into this and how they play the market. Wait, but what is your position on it?

19:50Are you supportive of the bill? Because it was a big surprise to see Brian Armstrong pull the support of the current bill. No, I'm not. I think, you know, what was proposed until about yesterday, because that actually puts us back. Right. And so we need to see something forward. We need to see clarity. We need to see clarity not only to your point about stable coins, but we really need to see it around tokenization. We need to see it around DeFi. And so, you know, I think until now we've been thriving under this administration and I'd rather have it as it is now than have something that is going to be completely stringent and allow us not to kind of evolve.

20:29And even as a dad at FGNexus, right, we are looking at this very closely because, you know, most stable coins already live on Ethereum. And so we positioned around Ethereum because of those reasons. And so it really would benefit all of us if we had some clarity around, you know, securities and tokenization.

20:45Carol Massar:But we need some more rules, wouldn't you say? Yeah, absolutely. I do. I do think we need rules. Now, if you've had a bunch of crypto, right, OGs and kind of maybe a purist in that sense, they would say, we don't need rules. We can just operate, you know, all on Bitcoin. Well, that was the original premise, right? This whole idea of being outside the, you know, financial establishment. So it is kind of fascinating to see this is kind of where we're going. And you do wonder, okay, then I don't know, what is it? Or how does it operate. Yeah, I love this conversation. And I think you guys are really nailing up something that a lot of people don't talk about.

21:22I still think that it's not a thought, right? It's all on chain. Bitcoin still does live outside of the financial system. And so, you know, their lightning network is there. There is a somewhat of a utility to Bitcoin, right? It's also seen as a digital gold. So, you know, reality is blockchain is separate, right? You've got Bitcoin blockchain and then you've got other blockchains and those blockchains are extremely useful not just for you know stable coins and passage of our genius act but really for tokenization and everything else that we can be doing and even then later for ai right and blockchain and ai and what that potentially could do so i think there are two different things that we should be looking at and i and i don't think actually that the kind of the world where bitcoin lives and and that community really wants to be kind of separate from everybody else to some extent, you know, is going to go extinguished.

22:15Right. I mean, those there is a space for kind of institutional and there's a space for native users as well. Your big bet is not on Bitcoin. It's on Ether. And if we look at the market for Ether, it's a fraction of the market cap for Bitcoin, but it's still the second biggest cryptocurrency out there. Why are you betting on Ether and not Bitcoin? Why is that the right move to make with this crypto treasury vehicle? Yeah. Also a great question. Look, I came into a space for Bitcoin and I'm staying in it because of further evolution of Bitcoin and other coins, such as Ethereum. And reality is most stable coins and DeFi is on Ethereum.

22:53That's, you know, you can have other tokens come, you can have Hyperliquid and Solana and others, right? But reality is right now where we see the most adoption is with Ethereum and where you see most the defi liquidity which by the way ties directly into the market structure bill and the clarity act is really on ethereum and so we chose that because it's a yield-bearing asset at fg nexus we thought about hey you know i was a early proponent of basically saying that that's cannot stay a debt they have to evolve as a business in early days i wasn't really much liked for that people thought well i know this is crazy you can only be a debt and there's only business for that But reality is for us at FGNexus, I said from the beginning, we are wanting to do this, participate in the ecosystem.

23:41Ethereum is a clear winner for stablecoins and for DeFi. And we are going to evolve, right, and potentially looking at a number of different optionalities.

23:50Carol Massar:One thing I want to ask you, though, and I do wonder, Maya, is I'm looking at Ether down about 32 % from late August. Bitcoin's down about 24 % from last May. I mean, last October, excuse me. So we've definitely seen this come under pressure. This is happening in an administration, a year where you have a very favorable administration, a president whose family is involved in this space. So like if we're seeing the pressure in this environment, I just I don't understand how it can do really well longer term. Yeah, I think it's fair what you're saying. And I think it's a real question. However, though, I don't see innovation and I don't see rails stopping.

24:37The price has been a bit of a choke point, that's for sure. But the actual infrastructure is just it's really just continues, continuing to be built. The growth of those stable points, the growth of the DeFi, the growth and the demand for tokenization of the real world assets. Every day I get a project or two on my desk that is wanting to do something in this space. And so I agree with you that the price is kind of lagged. But I think it's also because look, look at the last year that we've had. It's just been continuously up and down for various reasons. Stay with us. More from Bloomberg Businessweek Daily coming up after this.