NASA Set to Launch Crew to Moon for First Time in 50 Years

Summary

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Bloomberg Businessweek Podcast Summary

Episode: NASA Set to Launch Crew to Moon for First Time in 50 Years
Date: April 1, 2026
Hosts: Carol Massar, Tim Stenovec
Special Guests: Ed Ludlow (Bloomberg Tech), Rebecca Humkus (London Business School, Duke Corporate Education), Andrew Czarowski (Morgan Stanley), Ben Gagnon (Keel Infrastructure CEO)

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Overview

This episode delivers live coverage and analysis of NASA's historic Artemis 2 mission—America’s return to crewed lunar flight after more than half a century. Reporters provide on-the-ground scene-setting from Kennedy Space Center just hours before launch. The hosts and guests also discuss the mission’s technical and geopolitical significance, explore the implications of current global conflicts and energy shocks, touch on AI's economic impact, and feature interviews with key industry voices in finance and tech transitioning from crypto to AI infrastructure.

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Key Discussion Points and Insights

1. Artemis 2: Humanity’s Return to the Moon

With Ed Ludlow reporting live from Kennedy Space Center

• Launch Preparation:

  • The Artemis 2 crew departed Kennedy Space Center and were en route to Launch Pad 39B in the "Lunar Bus MNL" RV (02:54).
  • SLS (Space Launch System) fueling completed by 1pm local time; all systems were tracking for launch at 6:24pm ET pending weather (02:54–03:37).

• Weather Considerations:

  • 80% favorable launch weather; team is cautiously optimistic but vigilant for lightning risks due to hydrogen fuel and towering launch pad structures (03:45–04:49).
  • “On board the base of the SLS system is a rocket that is powered by hydrogen…and the lightning risk is very real. That's why there are three 600ft tall lightning towers around the launch pad, because lightning likes to find the highest point.” — Ed Ludlow (04:22)

• Significance Compared to Past Launches:

  • SLS+Orion is “the most powerful human-rated, human certified system to ever launch from Earth” at 8.8 million pounds thrust (05:04–06:13).
  • Unlike SpaceX’s Starship, SLS is crew-rated; Starship is “nowhere close to carrying humans at this moment in time.”
  • Artemis 2 is a critical test for over-budget, delayed NASA ambitions; the program has its origins in the Bush-era Constellation initiative, was deprioritized under Obama, and revived under Trump (06:45–07:54).

• Why Go Back? Geopolitics and Resources:

  • Renewed lunar interest driven by:
    • Geopolitical competition with China, which aims to land on the moon by 2030 (08:10).
    • The moon’s potential for minerals, oxygen, and as a platform for launches to Mars.
    • “That is a space race for the modern era.” — Ed Ludlow (08:11)

• SpaceX's Role and IPO:

  • Starship may one day play a role in lunar travel as an “orbital tug” for Artemis (09:36–10:37).
  • SpaceX’s confidential IPO filing is motivated by the need to fund ambitious projects, especially space-based data centers (09:36–10:37).

• Elon Musk’s Perspective:

  • Musk is generally gracious towards industry peers’ achievements. “Space is really difficult…and so when others have made breakthroughs...he’s taken to social media and being complimentary.” — Ed Ludlow (10:45)

2. Macro Volatility: Leadership in Uncertain Times

Interview with Rebecca Humkus, Author of "Survive, Reset, Thrive" (19:02–23:56)

• Business Strategy Amid Volatility:

  • “Uncertainty is much more challenging...our playbooks are built for downturns or upturns, but not this kind of multi-layered crisis environment.” — Rebecca Humkus (19:10, paraphrased)

  • The war in Iran pushes leaders into scenario planning—outcomes depend on duration and extent of conflict. Impact on energy prices (above $4/gallon) creates a negative feedback loop for consumer sentiment, inflation, and Fed options (22:08–22:52).

  • “If we stay above $4 a gallon for the rest of the year, that’s about an extra $1,000 tax on the average consumer.” — Rebecca Humkus (22:17)

  • Leaders must move beyond reacting to headlines and focus on extracting actionable storylines from diverging data points (23:19–23:47).

3. Financial Market Response to Crisis

Interview with Andrew Czarowski, Morgan Stanley Asset Management (24:28–32:14)

• What Will Move Markets:

  • Presidential speeches unlikely to provide clarity; “I don't expect Trump to kind of heighten things right now, but I don’t expect to get any clarity that is ultimately too credible.” — Andrew Czarowski (25:01)

• Fed vs. White House:

  • Markets are watching geopolitical outcomes far more than monetary policy. “Trump trumps the Fed...the Fed’s hands are tied at this point.” — Andrew Czarowski (28:16)

• Oil Markets and Global Growth:

  • Oil price spikes are a supply shock; U.S. somewhat insulated, importers are much more exposed. Volatility will primarily hurt the “low end consumer” (27:05–28:04).

• AI’s Impact on Productivity and Labor:

  • Gains from AI “are still in the first inning” but will increasingly disrupt white-collar jobs. (30:04)

• Portfolio Strategies:

  • Favors front-end Treasuries (~3.75% yields), agency MBS, and commercial mortgage-backed securities for stability amid uncertainty (31:21–32:14).

4. Crypto Miners Transition to AI Infrastructure

Interview with Ben Gagnon, CEO Keel Infrastructure (formerly Bit Farms) (34:44–42:19)

• Strategic Pivot:

  • Keel is winding down its bitcoin holdings to reinvest in high-performance computing (HPC) and AI infrastructure (35:33–36:24).

• Rationale:

  • The energy infrastructure business earns higher returns and multiples from AI/HPC than from bitcoin mining alone (37:36–38:22).

  • “Not only are you making more money on the revenues for HPC, but you also get a significantly higher multiple. And so the combination of those two creates a tremendous shareholder value creation opportunity.” — Ben Gagnon (38:13)

• Data Center Industry Growth:

  • Expects U.S. data center capacity to surge as AI (especially GPU demand) accelerates, projecting potential growth to 230 gigawatts by 2030 (41:25–42:06).

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Notable Quotes

• Ed Ludlow (on launch significance):
  “This is a system that's only flown once before 2022, in an uncrewed mission. It's a program that is over budget and behind in literally years. So there is a lot riding on this. This is the big dress rehearsal for America and NASA's ambitions to return Americans humans to the moon.” (05:44)

• Rebecca Humkus (on uncertainty):
  “We always frame our brains that the unknown is negative or bad. But uncertainty can actually be an amazing time to grow a company and for many, many reasons.” (19:37)

• Andrew Czarowski (on current market focus):
  “Trump trumps the Fed...the Fed’s hands are tied at this point.” (28:16)

• Ben Gagnon (on industry transition):
  “For us, as an energy infrastructure company that is trying to create the foundation for the core weaves, the Nebbyses, the Amazons and the Googles to come and deploy their compute faster and operate without interruption at scale, this just made a really good representation not only of where we are as a business, but also how we want to serve our customers in this new world.” (39:07)

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Key Segments & Timestamps

• Artemis 2 Launch Coverage and Scene-Setting: 02:21 – 11:30
• Global Uncertainty & How Leaders Navigate It (Rebecca Humkus): 18:38 – 23:56
• Market Response to Iran War & Oil Shocks (Andrew Czarowski): 24:28 – 32:14
• Crypto Mining's Pivot to AI Infrastructure (Keel Infrastructure): 34:44 – 42:19

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Memorable Moments

• Ed Ludlow’s vivid description of the risk and anticipation at Kennedy Space Center, including interplay between technology and unpredictable Florida weather.
• Rebecca Humkus reframing uncertainty—as an opportunity, not just a risk—for business leaders.
• Ben Gagnon explaining the logic behind pivoting from Bitcoin mining to AI infrastructure, and the meaning behind their new name, Keel Infrastructure.

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Useful For:
Anyone seeking a rapid yet thorough understanding of why the Artemis 2 mission matters, how macro volatility affects business and markets, and how digital infrastructure companies are strategically pivoting from crypto to AI/high performance computing.

Note:
Content skips non-editorial material, focusing on original interviews and live reporting.

Transcript

[Carol Massar]

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[Tim Stenovec]

Bloomberg Audio

[Carol Massar]

Studios podcasts Radio News this is Bloomberg

[Bloomberg Announcer]

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 Massar and Tim Stenovec on Bloomberg

[Tim Stenovec]

Radio Hours away from sending NASA astronauts back to the moon, they are, well, kind of around the moon, I should say. They are poised to lift off this evening on a 10 day journey that will slingshot them around the moon, marking humanity's return to the lunar vicinity for

[Carol Massar]

the first time, Tim, in more than half a century.

[Tim Stenovec]

So it's been a long time.

[Charlie]

He's got a front row seat to it all. Bloomberg Tech co host Ed Ludlow. He's at Kennedy Space center in Florida. Ed set the scene for us. What's going on around you and where are these astronauts as they do make their way to the vehicle to head Head to the launch pad.

[Ed Ludlow]

Yeah. The crew left Kennedy Space center in the last 15 minutes. They got into their modified, what's essentially an RV, the Lunar Bus MNL, on their way to the pad. And it's so difficult. There's no certainty in space, guys. Right. Especially when human life is involved and this is a human crew. But everything is tracking you. You know, the fueling of the SLS rocket and launch system was completed at about 1pm local time. And you know, we are tracking as best we can to 6:24pm Eastern Time to take off. And I am not a meteorologist, as I said to Tim earlier on Bloomberg television, but you know, the biggest factor probably is the weather.

[Tim Stenovec]

Well, how is the weather? That's why I wanted to go, because that is such a big factor of whether or not these things happen.

[Ed Ludlow]

Yeah, Officially, you know, the weather office, the meteorologists and NASA assign 80%, 8, 0% favorable conditions. And what we're looking for right now out here at KSC is cumulus clouds that are within the vicinity of Launch Complex 39B, essentially the cumulus cloud. You're looking for two things. Can that cloud evolve into a rain cloud? That is a factor. But, but in proximity to sls, if we do launch, what would the effect of SLS and the Orion spacecraft atop it going through cumulus cloud mean? You know, on board the base of the SLS system is a rocket that is powered by hydrogen as the fuel and oxygen is the accelerant oxidizer. And the lightning risk is very real. That's why there are three 600ft tall lightning towers around the launch pad, because lightning likes to find the highest point. So all of this is very real. But it's weird. Like everyone is very chill, very confident, cautiously optimistic.

[Charlie]

How's it different? Well, how is it different than other. You've been to quite a few of these and not necessarily directly related to what this crew is doing, because this is a first in 50 years. But how does this compare to other launches that you've been to?

[Ed Ludlow]

Well, many of the launches that I've been to have been SpaceX. Right. And they've been Falcon 9. Different technology, different design, different fuel, different size. If we go with Artemis 2 tonight, the combined SLS system with the Orion Spacecraft, it's a 322 foot system that has solid motor rocket boosters on the side capable of 8.8 million pounds of thrust at liftoff. That makes it the most powerful human rated, human certified system to ever launch from Earth. And like on paper, Space X's Starship, which I've seen as well, you know, is capable of much more power and thrust. But, you know, starship is nowhere close to carrying humans at this moment in time. So. So that's the significance of it. And this is a system that's only flown once before 2022, in an uncrewed mission. It's a, it's a program that is over budget and behind in literally years. So there is a lot riding on this. This is the big dress rehearsal for America and NASA's ambitions to return Americans humans to the moon.

[Tim Stenovec]

So I want to go back to Matt Miller, who kind of, I think approached him, approached me.

[Charlie]

I was not happy.

[Tim Stenovec]

He was like, you know, he put his iPhone in my face and just said, hey, you know, we had less than this. You know, when the, when astronauts and when NASA first went to the moon, I mean, why is it so complicated? There been so many problems. Why is it cost so much? Why, you know, taking out inflation? But why has it been, why is this such a big deal when we've

[Carol Massar]

already been to the moon?

[Ed Ludlow]

There's two. There's a distinction there, Carol. Right. There's what's happened in recent history and there's what's happened in history in recent history. The Artemis program was hit by technology delays. For example, when they did the wet dress rehearsal of the system in February, they had a lot of issues with. Hydrogen is a great fuel for this use case. But because of the molecular composition of hydrogen, it requires very big tanks and it tends to leak. So that has been one issue that they've had to get over in the recent term. Artemis was first supposed to go into 2017. It didn't encounter delays. Then we had the COVID era, eventually went in 2022. Now in history. Why have we not tried to go back to the moon since the Apollo era? Well, it just wasn't really a priority for any of the administrations of the day since 1972. You. The Artemis program has its origins in the Constellation program that the George W. Bush administration launched in 2005. But when Obama took office, he wasn't that interested in the moon. It wasn't until Trump won where America through NASA as the agency became refocused on this goal.

[Tim Stenovec]

But why, why is it important to have this goal? And I want to bring in too. I know we've talked with you about this or we've talked with the team about this. What China is up to, like what's. Why is it that everybody wants to kind of have some access to the moon? Again,

[Ed Ludlow]

yeah, there's two parts to it. There's the political or the geopolitical. China has a stated ambition to get to the moon by 2030. NASA has accelerated its ambitions to return Americans and allies to the moon as early as 2028. That is a space race for the modern era. And then there is the resources. You know there are minerals, there is oxygen, there is carbon within the moon's surface and within the moon that are useful to kind going forward. And the final kind of part B of that is that you know, NASA still holds ambition to take Americans to Mars and launching from Mars. Establishing a resources base, a fueling base on Mars makes it easier than getting through Earth's atmosphere because of the differential in gravitational field and pull. So those are all real stated reasons for NASA going after this.

[Charlie]

And I want to go somewhere where we went a little earlier on Bloomberg Tech and that's to speak Space X. This in the context of Space X filing confidentially for an ipo. You had that piece along with Bailey Lipschultz a Bloomberg exclusive about the timing of this. You mentioned Starship. Space X is Starship and a lot of the launches that you've been to have been for Falcon 9 spaceship. SpaceX is huge. Starship. Could, could Starship do what Artemis 2 is doing if Starship carried humans?

[Ed Ludlow]

Yes. I mean specifically for Artemis what we reported 10 days ago and then the NASA administrator confirmed is there is a proposal on the table from SpaceX to come in and change how Artemis would run. In SpaceX's proposal, SLS would carry Orion, the spacecraft into low Earth orbit. Starship would dock with Orion in low Earth orbit and push it the rest of the way to the moon before going down to the moon's surface. The ipo. What I understand from sources Bailey helped me in the reporting of that is that SpaceX filed confidentially for its IPO last night, right? Notified the SEC. But their rationale for going public is simply they need money to fund their future business plan for space based data center. And there Starship's at the heart of it as well if that's ever going to work. Falcon 9 is not capable of carrying a data center in satellite form factor into orbit. Only Starship could do that. And the economics of that are measured on a dollar per kilogram basis. That's all anyone cares about. SpaceX is yet to prove that bid.

[Charlie]

How do you think Elon Musk is watching tonight's launch? I think he'll probably weigh in on X but how do you think he's Watching it,

[Ed Ludlow]

you know, Elon Musk typically is complementary of his colleagues in industry and their achievements in the domain of space. He often will say, you know, space is really difficult. And what Space X did, particularly in the early days where they were on the cusp of bankruptcy and failure, you know, that is very hard to do. And so when others have made breakthroughs, including Jeff Bezos Blue Origin, by the way, he's taken to social media and being complimentary of it, you will have seen, you know, over time he shared social media posts about the Artemis program and you know, it wouldn't be a surprise if he came out and wished them congratulations. But again, there is no certainty that we're going to go at 6:24pm Eastern time. There is a good chance and so we have to wait and see what happens. I know that's frustrating.

[Tim Stenovec]

Yeah, it's just kind of how it goes, right? It sometimes goes right down to the wire. Hey, before you go, if we may, we wanted to ask you about another story involving Microsoft and Chevron. Microsoft and exclusive talks with Chevron, the integrated oil giant and the investment fund engine number one of our long term deal that would underpin a giant power plant in West Texas providing electricity to a large data center campus. Is this just another sign of our times in terms of the AI and data center build and making sure you've got the energy to power it?

[Ed Ludlow]

Yeah, I mean the hyperscalers I.e. amazon, Microsoft and Google maybe with Oracle thrown in there too, are the biggest corporate buyers of energy. In, in the data center context, you need to have control of the grid electricity, but how that electricity is generated can vary. You just need to guarantee supply. And basically all these data centers that have been announced on paper, which we've been over, right, Carol, they have not yet got the energy supply on paper to match them. But in the context of what's going on with the Iran war, for example, people have come to realize nat gas or gas is much more applicable to data centers at the moment. That seems to be the direction of travel as opposed to like how long it's going to take us to get nuclear sources, you know, other traditional carbon fuel based sources of generating electricity.

[Charlie]

I mean, it just seems though that, that this is the bottleneck when it comes to getting these data centers online.

[Ed Ludlow]

Yes. And also, you know, the issue is, right, the data shows us the Bloomberg data because of that deep investigative piece last year in zip codes where you build a data center. Right now energy prices have gone up. The counter argument from the hyperscalers themselves and from economists is that if you have big corporate buyers of electricity who buy at wholesale prices up front, it will be deflationary in the long run, provided that the supply exists. And right now it doesn't exist. This administration has put deregulation and expedition of permits at the heart of its AI strategy for that reason, to get this stuff built, interesting stuff.

[Charlie]

We go around the world with him. I know space with him.

[Tim Stenovec]

You think he's going to put on an astronaut suit?

[Charlie]

I think those are reserved for the four astronauts.

[Tim Stenovec]

All right, all right. This time around. Ed Ludlow, Looking forward to your continued coverage. Bloomberg Tech co host Ed Ludlow at Kennedy Space center in Florida.

[Charlie]

Stay with us. More from Bloomberg businessweek Daily coming up after this.

[Carol Massar]

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[Tim Stenovec]

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[Carol Massar]

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[Bloomberg Announcer]

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[Tim Stenovec]

We do want to mention There are some headlines coming from the Iranian President releasing letter as was promised to the American people. Addressing the American people, he said Iran never pursued aggression, his word telling Americans to look past the rhetoric. Also to Americans, the Iranian president u s ties among the most misunderstood. So again, a few letters, a few headlines. I should say crossing the Bloomberg terminal. There are other media outlets who are also giving the entire letter and I'm just looking at one the full text to the people of the United States of America and to all those who, amid a flood of distortions and manufactured narratives, continue to seek the truth and aspire to a better life. Iran, by this very name, character and identity, is one of the oldest continuous civilizations in human history. Despite its historical and geographical advantages of various times, Iran has never in its modern history chosen the path of aggression, expansion, colonialism or domination.

[Charlie]

We'll continue to bring you headlines. There's a lot more here as we do get them in the meantime, just to hit on something that Charlie hit on just now. The Pentagon doubling its fleet of Air Force A10 attack planes in the Middle East. That's an aircraft that support advancing ground troops. This according to the New York Times, the air force dispatching 18 so called Warthog aircraft to join the roughly 1 dozen A10? S already in the region that US commanders have used to attack Iranian boats and Iran backed militias in Iraq. This according to two Pentagon officials. According to the New York Times, I

[Tim Stenovec]

just want to go back to the end of this letter and it says today the world stands at crossroads. Continuing along the path of confrontation is more costly and futile than ever before. The choice between confrontation and engagement is both real and consequential. Its outcome will shape the future for generations to come. Again, this is from the Iranian President. Throughout its millennia of proud history, Iran has outlasted many aggressors. All that remains of them are tarnished names in history while Iran endures resilient, dignified and proud. So this is again the pieces of the puzzle that we try to figure out. What comes next in the US War in Iran.

[Charlie]

Well, this is the environment that not just the US Is navigating right now, but it's also the environment that business leaders are navigating. Trying to understand the backdrop of a quickly changing situation. Higher energy prices in a world increasingly looking inward.

[Tim Stenovec]

Yeah. And something that we talk about. Do you look through it or do you have to start now thinking and factoring it into your strategy? Rebecca Humkus is with us. Lecturer at the London Business School and faculty at Duke Corporate Executive Education. Previously served as a fellow at the White House's President Council of Economic Advisers. Author of Survive, Reset, Thrive, Leading Breakthroughs Growth Strategy in Volatile Times. She's here in studio. Thank you. Sorry. As we constant. You know, this is.

[Rebecca Humkus]

We are in volatile times. Yes.

[Tim Stenovec]

Well, tell us what you do. Talk to leaders and how they are they managing through, like the US War in Iran or what are they saying to you? What's top of mind?

[Rebecca Humkus]

I think the challenge is that this is not a black or white situation. We really have our strategic tools and playbooks are very much geared towards good times and bad times. Like, are we in an upturn? Are we in a downturn? And it sounds silly, but actually downturns are easier environments for executives to grow through. There is very standard playbooks that work. They know what to do. Uncertainty is much more challenging. Right. And that's why we're seeing so much unease and hesitation right now.

[Charlie]

Is this a downturn?

[Rebecca Humkus]

See, I don't think it is. And I think that's the challenge. Our brains are framed to see things that we can't explain and especially that we can't predict as negative. We can't really help it. And if you think about even how we talk to each other about uncertainty, we tend to always frame it as something bad. We're asking each other as leaders, how are you handling uncertainty or dealing with uncertainty or managing uncertainty? We always frame our brains that the unknown is negative or bad. But uncertainty can actually be an amazing time to grow a company and for many, many reasons. But we need to stop framing the unknown as something that's bad. So if you want me to, I could make a very bear case right now. The bears have plenty of data to make a very bear case. But, you know, the bulls have some pretty good data, too. The challenge with data right now is we can't build linear models of what's going to happen next. So tell me the story you want me to tell and I can make the data somehow tell you that story.

[Tim Stenovec]

But that's interesting because, you know, we were Kidding and talking before, you know that before the war, we were constantly having conversations around AI And I think you mentioned stagflation, like we were starting to look at that lower growth in a higher interest rate or a higher inflationary environment. So in terms of what is the fundamentals if you back out the war, or is that even crazy to do anymore? Because things are going to be longer term impacted as a result of this war.

[Rebecca Humkus]

The challenge with any prediction right now is it comes down to the duration and the devastation caused by the war. So when we went into this, there were many who believed it would be a couple of weeks. Anyone I work with, executives in energy or based in the Middle east, never thought it would be a couple of weeks. So most knew this would be six weeks, maybe a couple of months, which is looking unfortunately like that's what we're going to see. So if the duration is relatively short and the devastation to energy and asset fields there is relatively light, then we could see through this. And I think that's what the Fed is telling us in the last meeting. And that's what many executives are doing right now. But you are forced now to build a model for the other case where the duration is several months to until the end of the year and devastation to energy assets is much higher. Then we have this, what we call this negative doom loop, right. Is if consumers are more uneasy, which they are during a period of a war, and we have consumer sentiment, we know that that means foot traffic goes down. That means we need to change things that we're doing across all the spaces that affect consumer goods. Then of course, energy prices go into inflation. Inflation goes up. But I'm more uneasy about my job because of a combination of AI and economic uncertainty. So all of these things start fueling each other and then it becomes a very difficult job for the Fed to

[Charlie]

help us solve $4.06 a gallon, almost $4.07 a gallon. That's the latest from AAA. It's the highest going back to August of 2022.

[Rebecca Humkus]

And the math is quite, you know, there's, if you want to do the simple math there, if you. We stay above $4 a gallon for the rest of the year, that's about an extra thousand dollars tax on the average consumer. Now for the year. For the year.

[Charlie]

I would be shocked if we did stay above $4 a gallon.

[Rebecca Humkus]

Me too. But it's, you know, even if the war ends this weekend, it will be a couple of months before we see oil come back down to that $60 target. There are a lot of reasons why it was there before. And so things don't adjust automatically. So again, even if we have a couple more days, which doesn't look like it will, we're talking a couple of months.

[Tim Stenovec]

Do you care about data points or the economic data points that continue to come at us do leaders? Because you got us manufacturing activity expanded in March by the most since 2022. U.S. retail sales rebounded by more than forecast in February. A broad events. Consumers stepping up spending after a slow start to the year read on private payrolls. U.S. companies added more jobs than expected last month, suggesting the labor market may be stabilizing. We just have about 40 seconds left. I mean, I mean that's real data. Do we trust it? Do we believe it?

[Rebecca Humkus]

Do we, we trust all of the data. But we need to separate the headline from the storyline. We need to separate the K shaped economy, which consumers are spending, which ones are not, you know, what type of manufacturing sectors. And our job is to say this is the headline, but this is a storyline that matters to me. These are the test and learns, what we call these feeding learning loops that I need in the market. So that's what leaders need to do. Nothing can build a linear model. Not one data point is going to tell you a story. We have to build a storyline that matters for you. Right.

[Tim Stenovec]

And it shapes what you do.

[Rebecca Humkus]

Right.

[Tim Stenovec]

It shapes everything in terms of spending or holding back or what have you. Thank you. Sorry that we're a little bit shortened but come back soon.

[Rebecca Humkus]

I will.

[Tim Stenovec]

We would love you from London or right here, Rebecca Humkus, lecturer at the London Business School, Faculty at Duke Corporate Executive Education. We mentioned her book Survive Reset, Thrive, Leading Breakthrough Growth Strategy in Volatile Times.

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[Charlie]

Well, from the president's speech to what investors will be watching out for on that, we welcome Andrew Czarowski, Morgan Stanley investment and management Strategic Income Portfolio Manager, joining us from Boston. I want to start where we left off from Kaylee and that speech the president is set to give tonight because markets are, I wouldn't say on edge right now, but they're really looking for clarity from the President, whether we're talking about the equity market, the bond market, or about what's going on with commodities and specifically oil. What are you watching out for tonight to hear from the President.

[Andrew Czarowski]

Yeah, to be honest with you, I'm not expecting to get much in the way of clarity after the speech tonight. I mean we know that obviously it seems like the administration is looking for a out of this conflict, but there's two other sides to this as well. There's Israel, there's Iran and kind of, you know, what everyone wants, I think doesn't exactly line up. So I think Trump is looking to kind of calm markets, calm, calm the US Economy. But I don't think he's going to be able to do that until we actually, I think people have been, there's been a couple of head fakes this over the course of the last month. And so I think that investors, I don't expect Trump to kind of heighten things right now, but I don't expect to get any clarity that that is, is ultimately too credible.

[Rebecca Humkus]

All right.

[Tim Stenovec]

So stuff continues it sound Andrew, let me ask you. Jamie Dimon said yesterday on Fox that the US Needs to permanently remove any threats from Iran, a call that comes as you know, we've seen the markets bounce in hopes of a swift resolution to the conflict. We know that that can change depending on the headlines and what the messaging is. Do you agree or you know, even if that means a longer battle between the United States and Iran and more volatility and fallout in the markets and maybe even, you know, more of a longer term impact.

[Andrew Czarowski]

Yeah, I think what the administration will ultimately do is as, as it becomes less and less politically popular. We know obviously oil prices have risen dramatically. The longer this goes on, the more it's going to ultimately hurt Republicans in the midterms. And so I think that's the, that's the thing that I don't expect there to be a complete resolution that ends with a, you know, ultimately when I don't expect us to stay in for months and months because I think ultimately the longer it goes on, the more painful it will be for Republicans in the polls. And I think the administration is looking for an out and will look to get out as, as soon as they can in any way they can.

[Charlie]

But getting out and back to this point about the Strait of Hormuz, because you look no further than what the oil market is doing. And yes, equities are rallying and they've rallied for the past couple of days, but we're still above $100 a barrel for, for Brent. So Andrew, it seems like the oil market is sending this message that we're not totally convinced that there's going to be de escalation and ships will be going through the Strait of Hormuz anytime soon.

[Andrew Czarowski]

Yeah, I think that the oil, the oil tremors are going to linger a lot longer than I expect the kind of US military to be involved in this conflict. We that if you look at the futures curve, the curve is inverted. And oil prices are ultimately supposed to come down over the coming months as the conflict hopefully comes to a resolution. But this is going to have lasting impacts. It's already, it's going to have an impact on the US Consumer. We had a weak low end consumer that's going to be even further weakened by this conflict. And we know there's kind of tax returns that were supposed to help boost that consumer, but this is kind of dramatically eating into some of those gains that we're supposed to be getting to start the year. So I think that it's, the US Is a little more isolated because we are energy exporters. We, we produce, you know, we produce oil. But if you're an energy, pure energy importer, this is going to have a much bigger impact on your economy. And there's obviously, I think that's going to have a much greater impact on global growth than it will on the US Growth, but it's going to have a big impact on the low end consumer here as well.

[Tim Stenovec]

Andrew, in your notes you shared with our producer Talia, you basically say Trump trumps the Fed. I mean, what matters right now, right, is what comes out of the White House, what it may be, not just on the war, but just, just in general. Any policy.

[Andrew Czarowski]

Yeah, I mean the Fed's hands are tied at this point. Obviously we don't even have Kevin Warsh kind of getting through Congress yet. But there's nothing the Fed can do to combat an oil price shock. This is a, this is a supply shock, not a demand driven shock. It'd be one thing if the economy was booming so much and that was causing the oil price spike. That's not what we have here. So the Fed is going to look through this. Other central banks though, don't have the same dual mandate that the Fed does. And I expect as the year goes on and we get to the end of the year, into 20, 20, 27, the Fed eventually will be able to focus on the labor market. Now over the next couple of months and quarters, they don't have that luxury. Inflation is going to rise. The, the thing is, the Fed was we were heading for kind of 2% inflation before this had happened. We were kind of rolling off some of those tariffs a year ago, not rolling them off, but they were rolling out of that kind of base impact there and then. So we had a 2.4% headline CPI. There was a kind of reliable trend that was going towards 2, 2% as the housing market was continuing to slow. That was going to weigh CPI and bring us down to that 2% number. But the Fed's hands now they have to kind of sit on them until we get some sort of resolution here. The Fed can't hike, the Fed can't cut in the, in the face of, you know, 100 plus dollar oil that's going to feed through to a lot of other places in the, in the inflation spectrum.

[Charlie]

Andrew, if we were, you know, we spent a lot of time in this conversation talking about the war and the macroeconomic backdrop as a result of the, the war. If we were doing this five weeks ago, we'd be probably talking about AI and productivity because that's what Fed chair Jay Powell is asked about over and over again. And he gives this answer that, that I think is really honest, which is we actually don't know what it's going to do. So I'm asking that question to everybody we get a chance to talk to what does it do to productivity in this country?

[Andrew Czarowski]

Yeah, I mean, I think you make a great point because just a few weeks ago the focus obviously wasn't on the Iran war, it was on the impact of the labor market from AI, the impact on productivity. I think that right now it's, we're still in the first inning of seeing these productivity gains. I think they will come, but I think that a lot of companies like ourselves are in the, in the kind of trial phase. You're kind of using this as a, as a co pilot, as a sidekick, and then you're getting some gains from that. But more and more white collar jobs I expect to be disrupted over the coming years. I think it's just going to be, I don't think it's going to be some kind of linear move either. But I think we're at a point now where it's still very early stages, but the impact on the labor market I expect to keep getting worse and worse over the next 12, 24 months. I think right now companies are, you know, you had a lot of companies that were kind of hoarding this labor coming out of the pandemic. And now I think people are looking at, okay, how much, how much, how much can we replace with AI over the coming months? And is 75% of what a human can replace good enough?

[Tim Stenovec]

So Andrew, just got about a minute left here. So model portfolio, has it changed much do you think? This year kind of where we are right now. Are you positioning and starting to think about the second half of the year? Like what should investors be doing here?

[Andrew Czarowski]

Yeah, I think investors should, should take advantage of the 50 basis point or so back up in treasury yields we saw on the front end of the curve. Look, I don't think there's a scenario where the Fed as I was mentioning is hiking anytime soon. I think it's a free option for bond investors right now to buy that kind of two year, two year treasury around 3,7375. That's pricing in essentially no, no cuts over the next two years. And so to that's a safe place to kind of hide out. And then my kind of macro view plays out which is that the labor market continues the weakened. You're going to get a tailwind there. I think going out the risk spectrum a little to agency mortgage and commercial mortgage backs is is a great place to kind of hide out if you want either no credit risk in government agency mortgages. Use that backup we've seen in mortgage spreads and treasury yields that you can get mid fives yield there and we think that's attractive. And then commercial mortgage backs you can get high single digits and that that's our kind of favorite credit space.

[Tim Stenovec]

All right, good stuff, Andrew. Thank you so much. Andrew Czarowski, Morgan Stanley Asset Management Strategic income portfolio manager, joining us there from Boston.

[Charlie]

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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[Andrew Czarowski]

Yep.

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[IBM Representative]

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[Charlie]

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 three 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.

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[Charlie]

Shares of Bit Farms, until recently was a crypto mining company, closed higher by 6% yesterday. The company reported revenue of $229 million, up 72% year over year, an operating loss of $150 million.

[Tim Stenovec]

Well, the bigger news, however, is that of as of today, it's no longer Bid Farms. It's now called Keel Infrastructure and it's focused on high performance computing and AI infrastructure. And instead of being based in Canada, it's redomicile to the United States. So lots of changes going on and we've got a great voice to talk about why it's happening and why it's happening now.

[Charlie]

Ben Gagnon is here. He's the CEO of Kiel Infrastructure. He joins us here in the Bloomberg Interactive Brokers studio. Welcome. Lots of changes. I want to start with the fundamental one and that's the one about pivoting from crypto to infrastructure and high performance computing. Are you completely done with crypto?

[Tim Stenovec]

Crypto?

[Ben Gagnon]

So we've completely decided to walk away, but it's not completely wrapped up. We're going to continue to wind down the exposure throughout this year, but you know, we're not investing another dollar into Bitcoin, into crypto, into Bitcoin mining. 100% of all of our investments is all HPC.

[Charlie]

And how much bitcoin do you still have?

[Ben Gagnon]

We have about 2400 bitcoin on the balance sheet right now that, you know, we'll look to sell off this year and reinvest in hpc.

[Charlie]

And what's the timeline for. For reselling that? Actually it was funny because you were as charging Charlie was going through the price chart just now. You were commenting how it's really cool to see bitcoin up there with the S&P 500 and oil and a decade ago you would never have imagined that you'd be in a place like this. That said, bitcoin has been under pressure this year. It's off of those highs from last October. How are you going to unload it and when are you going to unload it?

[Ben Gagnon]

Well, the great thing about us is that we're sitting on such robust liquidity. We have about $500 million of liquidity right now. So it's more than twice the budget or about twice the budgeted capex that have. We have to get us through the next couple of phases as we work towards lease executions at our site. So there's no pressure to sell the bitcoin. We're just going to take a disciplined approach to wind it down over time. And we're still optimistic that bitcoin is going to rally off these lows and we're going to have better opportunities to sell in the coming months.

[Tim Stenovec]

Why all the changes?

[Ben Gagnon]

Why all the changes to HPC and I, you know, from our perspective, we actually haven't changed that much as a business because we've always been an energy infrastructure company. It was just in the past what we did was we used bitcoin mining to monetize our energy. Energy. Now there's just a higher value use case for the energy. And with energy being the real bottleneck on HPC and AI, there's a real opportunity right now to solve really valuable problems and create a tremendous amount of value for shareholders by moving away from bitcoin and reinvesting it all in hpc.

[Tim Stenovec]

So in essence you actually had a customer of your other services, which was energy. Right. By doing the bitcoin. Bitcoin mining, correct?

[Public Representative]

Yeah.

[Ben Gagnon]

So I mean bitcoin mining is like a buyer of energy of last year resort.

[Carol Massar]

Right.

[Ben Gagnon]

So you can, you can sell your energy to bitcoin at any point in the day. And, and it just, it's very simple, easy business, but you don't want to do it anymore. It's because the value is not there compared to HBC and AI. We can create so much more value for shareholders by doing the transition. And if you look at how the public bitcoin miners are valued because the underlying volatility in bitcoin they don't really have a big multiple. They usually trade around maybe a three to five times multiple. But in the data center, so space the traditional data splinters like the digital realties and the equinoxes, they trade somewhere between like a 20 or 30 times multiple. And so not only are you making more money on the revenues for hpc, but you also get a significantly higher multiple. And so the combination of those two creates a tremendous shareholder value creation opportunity.

[Charlie]

So do you see yourself as a peer or is the aspiration to be a peer of Core Weaver Nebbys a NEO cloud?

[Ben Gagnon]

So, you know, this all kind of boils down to why we renamed ourselves Keel Infrastructure. A keel is the bottommost part of a ship.

[Charlie]

Are you familiar with this, Carol?

[Tim Stenovec]

A sail. You know what I said in the newsroom, I said, yeah, keel really important to keeping a ship going in water, but when it's out of water, unless you have, you know, a frame around it, it just topples. So I was just curious, but go ahead, take it away.

[Ben Gagnon]

I mean we like the, the representation of what that was. Right. This is a structural piece, it's essential, it's foundational, but it's largely invisible below the waterline. And it's also the thing that translates energy into forward motion. And so for us, as an energy infrastructure company that is trying to create the foundation for the core weaves, the Nebbyses, the Amazons and the Googles to come and deploy their compute faster and operate without interruption at scale, this just made a really good representation not only of where we are as a business, but also how we want to serve our customers in this new world.

[Charlie]

What would you accept the label as a NEO cloud?

[Ben Gagnon]

You know, we don't want to be a NEO cloud, we don't want to own the compute. One of the things that is just incredibly expensive about this HPC and AI world is the compute. And it's four times to six times more expensive to buy the compute as it is to just build a dataset.

[Charlie]

Jensen knows this.

[Ben Gagnon]

There's a reason why their stock has done so well over the last 10 years. Years. And you know, I think if you're looking at as an investor, how do you get access or how do you get exposure to HBC and AI after Nvidia has outperformed Bitcoin over the last decade?

[Tim Stenovec]

Yeah.

[Ben Gagnon]

Where are you going to get your next opportunities? I think a lot of the public bitcoin mining companies who are doing the transition to HBC and I last year had tremendous rallies and success by signing leases and by signing contracts and be able to get started. And so for, you know, investors who are looking, looking at the space now, you know, these companies who are building out the infrastructure, who are doing the transition, represent a significant opportunity to get in on the ground floor before a lot of this value is actually created and delivered.

[Tim Stenovec]

You know, you're not alone, though. I feel like we've had other companies who were doing bitcoin mining and said, yeah, but we're really moving aggressively into data centers. So it's going to get more and more crowded. And at some point, I have to believe, we have to believe that there's going to be some leveling off. You talked about the valuations before. That valuation play. That is so much more than what you guys have had. How long do you think that lasts? Like, how long a year is that a play? And how do you figure that out?

[Ben Gagnon]

So, you know, the data center industry has been growing consistently for decades. If you take a look back over the last couple of years, with more of the traditional data center space, it was growing about 11% year over year for well over a decade. Decade. So this is an industry that's constantly shown, even as the cost goes down, the supply just continues to ramp up.

[Tim Stenovec]

But the chips do get more efficient. Like, we keep hearing that. Right? That plays into certainly the cost and the productivity of it all.

[Ben Gagnon]

Absolutely. The chips keep getting more efficient every year, but that doesn't mean that people are taking data centers down. They just keep putting new ones up with more and more efficient chips. And so the supply just grows exponentially. And when you look at the space right now, you know, there's a lot of banks and analysts out there that are saying by the year 2030, if you're going to be able to deploy all the GPUs that Nvidia is producing and all the GPUs that companies like Meta and Amazon and Google have committed hundreds of billions of dollars to. You're going to need about 230 gigawatts of capacity in the U.S. i mean, that is a tremendous amount of capacity relative to where we are now and just relative. Relative to the entire grid.

[Tim Stenovec]

If they're right. If they're right, come back. This is really fascinating. And let us know how things are going. Really appreciate it. Ben Gagnon. He is, of course, the CEO of Keel Infrastructure, joining us right here in our Bloomberg Interactive Broker Studio.

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