Big energy getting bigger

Summary

Podcast Summary: Unhedged – "Big energy getting bigger"

Date: June 4, 2026
Hosts & Guests: Rob Armstrong (Host), Oliver Barnes (US Deals Correspondent), James Fontanella-Khan (US Finance Editor)
Main Theme:
The episode explores the blockbuster NextEra–Dominion deal, unpacking why energy giants are merging, the central role of AI-driven power demand, and the complex regulatory and political dynamics influencing the sector.

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Episode Overview

The Unhedged team breaks down the year’s biggest utility deal: NextEra’s all-stock acquisition of Dominion. The hosts dissect the business logic behind the merger, explore how the explosive growth of AI and data centers is reshaping the energy landscape, and scrutinize the political and regulatory tightrope companies must walk as power, innovation, and affordability collide.

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Key Discussion Points & Insights

1. The NextEra–Dominion Deal: Scale, Geography, and Power (02:13–06:13)

• Deal Scale:

  • NextEra (the world's largest listed utility by market cap) to acquire Dominion in a deal valuing Dominion at ~$67B equity ($120B enterprise value).
  • "It's the biggest deal of the year ... framed as a merger, but really it's an acquisition." – Oliver Barnes (02:13)

• Geographic Footprint:

  • NextEra is rooted in Florida (via Florida Power & Light, serving ~10M customers).
  • Dominion dominates Virginia and the Carolinas.
  • The merger links non-overlapping territories, creating a power giant dominating the US East Coast.

• Business Model:

  • Core: Regulated utilities (monopoly rights with profit limits, serving consumers/businesses).
  • Growth: Non-regulated power generation; NextEra is a renewable energy powerhouse with national reach.

2. The AI/Power Demand Explosion: Data Center Alley and Beyond (05:29–07:28)

• Why Merge? Scale to Meet AI Demands

  • "We're going through an AI revolution, particularly in America and, by the way, particularly in Virginia." – Rob Armstrong (05:34)
  • Data center construction (especially in Virginia's "Data Center Alley") is driving unprecedented electricity demand.
  • NextEra wants Dominion’s strategic foothold in a hotbed for data centers, crucial for feeding "hyperscalers" (big tech AI operators).

• Notable Detail:

  • Despite the obvious AI/data center angle, official communications focus on "affordability" over "data centers".
  • "In the press release, I don't think they ever use the word data center ... they use 'affordability' a gazillion times." – James Fontanella-Khan (06:24)

3. Politics & Regulation: Power, AI, and Public Sensitivities (07:36–14:13)

• Regulatory Hurdles:

  • Utility mergers need state (not just federal) approval; public service commissions scrutinize impact on local electricity bills and voters.

• Election-Year Optics:

  • The merger’s presentation minimizes data center focus, emphasizing "affordability" to appease local consumers and politicians.
  • "You need to balance that geopolitical battle with the question of affordability... A lot of people, especially in Virginia, are not very happy about data centers." – James Fontanella-Khan (08:01)

• Public Perception of AI:

  • AI’s popularity is mixed—seen both as a job risk and a driver of higher energy costs.
  • "The pitch from the tech industry is, 'We're building these machines that are going to take away your job. And by the way, before they do that, they're going to drive up your electricity bill.'" – Rob Armstrong (08:36)
  • The deal is intertwined with national ambitions to beat China in the AI race, yet faces local opposition to large-scale data, energy projects.

• Sociopolitical Irony:

  • Many communities feeling the negative effects of AI/data center expansion are in Republican or rural areas, creating political tension for the Trump administration.
  • "There's a sense that people who have suffered the brunt of AI the most are not based in cities, they're in rural areas ... so Trump finds himself in a position where it's not an easy thing to manage." – James Fontanella-Khan (13:53)

4. Deal-Making in the Age of AI: New Strategies and Industry Shake-Ups (15:38–20:01)

• AI's Marketwide Impact:

  • Most large deals now revolve around AI—either to gain scale or serve new types of demand ("Everything that happens in markets is AI driven...").
  • Utilities, industrials, and other traditional sectors have become "sexy" as the physical side of AI infrastructure (data centers, grid expansion) takes center stage.

• Evolving Deal Structures:

  • Companies favor "acqui-hires" and new types of deals over traditional M&A to circumvent slow regulation.
  • "The nature of deals has also changed because of AI ... now they found ways of actually doing deals which are not traditional M&A." – James Fontanella-Khan (16:43)

• Physical Infrastructure Cascade:

  • The mounting demand for electricity ripples through energy, oil/gas, and industrial sectors—fanned by AI’s insatiable need for computing power.
  • "There's a huge physical infrastructure right in the background and in a way that I don't think we've ever really seen." – Oliver Barnes (18:12)

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Memorable Moments & Quotes

• On the Deal’s Core Logic:

  • "Company like NextEra sees this as a hell of an opportunity to supply that power ... Dominion ... that's where the data center are." – James Fontanella-Khan (06:05)

• On Politics and Regulatory Approval:

  • "When people go about doing big deals, the first thought ... is what is our Trump strategy? ... It's no coincidence that a company like NextEra was among the companies that donated to Trump's ballroom." – Oliver Barnes (15:09)

• On AI’s Unpopularity:

  • "It's one of those things that there's a lot of consensus both on the right and on the left that like, we don't like AI. We didn't vote for AI, we didn't ask for AI." – James Fontanella-Khan (12:33)

• On the Local Impact:

  • "There's this town in Northern Virginia called Ashburn where there's like 150 data centers ... there's only 50,000 residents. There's something so Martian and soulless about the idea." – Oliver Barnes (13:08)

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Timestamps of Key Sections

• Big Energy Deal Overview: [02:13–06:13]
• AI & Data Center Power Demand: [05:29–07:28]
• Regulation & Local Backlash: [07:36–14:13]
• Deal-Making in the AI Era: [15:38–20:01]

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Conclusion & Tone

The conversation is lively, irreverent, and deeply informed—peppered with both dry humor and analyst-level detail. The hosts thread the needle between high-level finance commentary and ground-level impacts, showing how giant utility deals now sit at the crossroads of energy, technology, and national politics.

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"Long and Short" Segment Highlights (21:01–21:58)

For a lighter, personable finish, the hosts share picks:

• James Fontanella-Khan: Long on Brazil to win the World Cup (“I need to pick a derivative [since Italy isn't playing]”).
• Oliver Barnes: Long on the upcoming New York summer (“After one of the most brutal winters ever ... with a potential Knicks victory on the horizon, it's gonna be special.”)
• Rob Armstrong: Long on gating private capital funds (“We're all grown ups here. If we're going to have private asset funds, we're going to have Gates and Gates are fine.”)

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Summary prepared for listeners seeking a complete, engaging wrap-up of the episode’s key arguments, debates, and takeaways.

Transcript

[A]

From globalization to innovation, sustainability to market volatility, there's always more than one side to a story. Explore different perspectives on today's most important business and economic issues with the Flipside podcast from Barclays Investment Bank. Hear two research analysts in a lively debate and get insights from every angle. To further inform your view, listen to the Flipside on your favorite platform,

[B]

Pushkin. The AI boom runs on two things, money and electricity. And as it turns out, electricity runs on money too. Today on the show, the huge Next era Dominion deal deal making and AI electricity and money and everything else. I'm Rob Armstrong and this is Unhedged, the Markets and finance podcast from the Financial Times and Pushkin. I am joined on the show today by two fan favorites and show regulars, James Fontanella Kahn and Oliver Bad News Barnes. Gentlemen, welcome back to the show. Now is the part of the show where I get your titles wrong.

[C]

Go for it.

[B]

So Oliver, you are the US Deals impresario, I believe is our correct term. Correct.

[C]

Okay.

[B]

And you are grand High priest JFK of deals of all finance, is that right?

[C]

Bianca?

[B]

Actually you should say your real titles.

[C]

You asked.

[D]

I got really serious. US Finance editor and I am the US Steel's correspondent. The atmosphere in here is electric.

[C]

Yeah,

[B]

let's start by just. There's been a big deal in utilities and it's always a bit of a big ask for a financial journalist to make the utility industry interesting.

[D]

How dare you say that.

[B]

Tell us about what this deal is and why it is interesting. I'll let you start, Oliver.

[D]

It's interesting. First, in its scale, it's the biggest deal of the year. It's an all stock acquisition, kind of framed as a, as a combination or merger, but really it's an acquisition. It's Nextera, the world's largest listed utility group by market cap buying Dominion. The deal is it values Dominion about $67 billion. Equity value around $120 billion enterprise value.

[B]

Okay, place these for me. Geographically, where are these monsters located?

[D]

Sure. So Nextera, their, their kind of home base is in Florida. They own a subsidiary called Florida Power and Light and that serves around 10 million customers in Florida.

[B]

And this is the grid, the power generation or both.

[D]

Both. Their home turf is Florida and Florida Power and Light. And then Dominion basically has a, a real foothold in the Virginia, in Virginia and the Carolinas.

[B]

But they don't touch. In other words, the footprints, the geographic footprints don't touch. But they're nearby but not overlapping.

[D]

But now they don't, they don't overlap. But they will now be contiguous. So like now, if this deal closes, you know, Nextera will control half of the eastern seaboard of the U.S. i mean, if to frame it in a proper empire building way. But in essence, right, like there are, there are two elements to these businesses right? In their core, their regulated utilities providing power to, you know, everyday Americans businesses up and down Florida, up and down the Carolinas, in Virginia. But then there's another part to the business which is the power generation element of it. So if you look what's, what's grown next era so much, it's not just this core regulated utility part, it's the fact that they operate in almost every US state as a power generator and they're a huge renewable energy generator. They benefited a lot from Biden's inflation reduction act agenda and green push. And now obviously that's fallen by the wayside somewhat. They have to pivot towards this other huge opportunity outside regulated utilities, which is data centers.

[B]

Of course we're going to focus a lot on the data centers here. I want to just make sure I have the kind of regulated unregulated distinction.

[C]

Correct.

[B]

My understanding is the government allows you to have a monopoly supplying power in a certain area and in return your profits are limited to a certain amount.

[D]

Correct?

[B]

Right. Broadly speaking. Whereas unregulated, you're just a company that makes energy and selling it to whoever's out there buying it.

[D]

And there's also rules, and don't get me too into specifics here, but there's also rules about how much of a company's revenue streams can come from regulated versus unregulated. So in a way it can't get too lopsided. So part of actually the logic of this deal for Nextera is also they kind of rewrite that maths of like the balance of regulated versus unregulated.

[B]

James, we have to do something now to make Oliver stop talking. So let me ask you a question.

[C]

I love hearing Oliver's voice.

[D]

It's like it's every day for him, every hour.

[B]

I think it's the whole office really. What's the logic of this deal?

[C]

It's scale. We're going through an AI revolution, particularly

[B]

in America and, and by the way, particularly in Virginia.

[C]

Absolutely right.

[B]

You know what I mean? That's where a lot of these sheds are with the big computers in them.

[C]

Absolutely. The kind of is a data center alley. What's it called?

[D]

Data center alley.

[B]

Yeah, I think that's right.

[C]

What is fascinating here is that they need a ton of power yes. And they'll do. The companies, the data centers, the hyperscalers will do whatever they can to get this power.

[B]

Yeah.

[C]

And so company like Nextera sees this as a hell of an opportunity to

[B]

supply that power and dominion who they're effectively buying. They're in data center ally. So they're, that's where the.

[C]

It's got the location.

[B]

Let's, let's go, let's go there. Right.

[C]

And obviously when they announced the deal, which was, I should say was we broke, Ollie and I broke before everybody else.

[B]

Tiny little victory lap.

[C]

Yeah. Thank you very much. In the press release, I don't think they ever use the word data center.

[B]

That's very interesting.

[C]

Which is very interesting. And they in fact use another word which is affordability a gazillion times, which is now one of Trump's favorite words as well.

[B]

Yeah. And this touches on the kind of political aspect of this deal, which is pretty significant. You know, how it's presented is extremely

[C]

important, 100% because I think the logic is quite clear. You need scale to kind of help feed all this demand for power.

[B]

So they're going to have to build a lot of stuff and if they're a bigger company they can build it for cheaper.

[C]

Capex is another kind of buzzword this year. So everybody needs to invest a ton of money and in some way it's great for Mac. It creates a lot of jobs in industries which were previously maybe less sexy. You know, we always love writing about tech. Now it's all about industrials, it's all

[B]

about power utilities, heavy asset, low obsolescence.

[C]

Exactly.

[B]

Halo companies they call them.

[C]

Yeah, but yeah, so I think the logic, basically it is quite obvious to everybody, but.

[B]

So why then do they say affordability? Affordability. Affordability. What does that mean?

[C]

Well, because in the past it's never been that straightforward to get two large utility companies, companies to combine just. That's simple. To the point that we were making earlier about the. They generally run essentially regulated monopolies and the way that you can increase usually prices on kind of on consumers is, has to be justified by that CAPEX expenditure.

[B]

Yes.

[C]

The world is very different now and so AI and we can go back to why is so important to deal making today. But like for the US winning the AI race versus China is of absolute importance from a geopolitical perspective. And you need to balance that interest, that geopolitical kind of battle with the question of affordability. In an election year we've got in November we'll have midterms and A lot of people, especially in parts of Virginia, are not very happy about data centers.

[B]

I want to focus on the controversial aspect of data center construction, which I kind of sympathize with. And maybe you could sum up like this. The pitch from the tech industry is we're building these machines that are going to take away your job. And by the way, before they do that, they're going to drive up your electricity bill.

[D]

I don't think that's quite how they'd want to frame it, but there's a truth to it. Right. And. And why I think this deal is so interesting is because in a way, it strikes at the heart of that kind of duality. Right. Nextera is both a regulated utility that has to serve its everyday customers. Right. But then at the same time, it's seeing this huge potential opportunity in, you know, related power. Exactly. Demand from data centers. Right. The combined company alone has the potential of adding, I think, 130 gigawatts, which is the equivalent of like 100 million homes worth of power.

[B]

Right.

[D]

So that's why you don't get the mention of data centers in the press release. And you do get a lot of talk of affordability. Right. Because in order to sell this, they have to do quite a delicate dance, which is basically say, on the one hand, yes, we're going to serve these data center providers, but then the scale and profits that we get from that we can give back to the consumer, at least in the short term. Right. So they are also offering bill credits, subsidizing the bills of some of the customers where Dominion operates. Right. And the really tricky thing about all of these utility deals, and there have been big ones in the past, but this is by quite a large measure the biggest, and Nextera knows this very well itself. Nextera has tried on several occasions to do larger deals, some of which came undone in the negotiations and some of which came undone when they went in front of regulators. And it's not so much the regulators, you know, in dc, it's not the FTC that they're necessarily worried about or the doj, it's the public services commissions in the states in which Dominion operates. Because their primary concern is always going to be, how does this affect my electorate?

[B]

Yes.

[D]

So they, they like that. It's like an audience of one, in a way. It's whoever, like local official is presiding over those committees. And particularly in Virginia, there's quite a thorny history of utilities deals and these kind of, you know, the financial engineering within this industry getting past the Virginia Public Services Commission. And that's really Dominion's heartland. Right. That's why they have to think so much about affordability. Then it plays into this much bigger debate that's unfolding in the US I

[B]

want to turn to JFK on that. Can you kind of put this in the context of the national picture? Where is the Trump administration on this? Where is national politics on this? How does that stuff fit in?

[C]

Well, there's two things going on. On the one hand, the US has been, and Trump has been very clear about wanting America to be dominant in the AI space. This is a matter of national security. It's also a matter of like in the succeeding economically.

[B]

Yeah, yeah, yeah.

[C]

And the rival very clearly is China. And so you see also kind of the kind of people in the administration are kind of doing everything to support that. And so in that sense, this deal is helpful for that. On the other hand, there's politics is a retail business as well.

[B]

Yes.

[C]

And we have an election where the pressure on inflation is rising despite Trump's promises of lowering it. And a lot of it is driven by electricity costs.

[B]

And there's another issue, which is that AI is not that popular. You know, you look how it's polling. Do you. Are you looking forward to the future of AI or, you know, when I talk to my kids, they don't, they, they're not excited about AI, they're terrified about their futures.

[C]

It's one of those things that there's a lot of consensus both on the right and on the left that like, we don't like AI. We didn't vote for AI, we didn't ask for AI.

[D]

Well, I think because it seems like a bit of a lose lose, right, doesn't it? It's like on the one hand, AI isn't what it stacks up to be and then we're in a huge bubble and the market comes crashing down. On the other hand, AI does stack up to what it's meant to be

[B]

and you're fired and you are gone.

[D]

Yeah, exactly. And none of us have a job left. And then meanwhile, like your beautiful pastoral view out your back window has turned into this like large whirring shed.

[C]

Absolutely.

[B]

Desktop computer.

[D]

And it's funny because before, before we broke this deal, like I didn' even know about data center rally. There's this town in Northern Virginia called Ashburn where there's like 150 data centers. Can you imagine there's only 50,000 residents. I mean, there's something so like kind of Martian and soulless about the Idea of living in a town full of. I mean, if you have to live

[B]

in that town, you should just get a dividend. It should be like living in Alaska and you just get a.

[D]

Well, that is kind of what the bill credit is, right? Yeah, yeah. You know what I mean?

[C]

It impacts, if I'm not mistaken, mostly Republican states. And that's again, it's kind of, it's

[B]

one of those situations where, well, Virginia's purple, famously. Right.

[C]

It is, but it's kind of. The Carolinas aren't. And like.

[B]

Sure.

[C]

And there's a sense of people that have suffered the brunt of AI the most are not based in cities, they're more in rural areas, which again, tend to be more Republican than Democrat. And so there's an irony there. And so Trump really finds himself in the position where it's not an easy thing to manage.

[B]

Do you think the deal's going through, Oliver?

[D]

Yeah, yeah.

[B]

You think it's gonna work?

[D]

Yeah, I just think it is kind of your baby.

[B]

You broke it. So basically it doesn't go through. It's a commentary on you.

[D]

We're completely objective on it. But I think that there is a degree of empire building here from John ketchum, who's the CEO of NextEra. And this is kind of quite an extraordinary pivot from a few years ago where the really they were just being subsidized so much by the Biden administration and now they're pushing in to a whole new territory. Right. The reason, I think, the reason I'm confident that it will, that will go through is that I think nowadays when people go about doing big deals, the first thought they have before they've even got together in the room and started negotiating is what is our Trump strategy? What is the strategy with the administration? Right. And it's no coincidence that a company like Nextera was among the companies that donated to Trump's ballroom. Beautiful ballroom.

[B]

Yeah.

[D]

So that's just one like little leg of, I'm sure, what is a much larger strategy to try and convince the Trump administration of the merits of that. And on this show before we've, we've discussed the railroad merger that happened and that now is beginning to go through its regulatory process and it's maybe not quite as smooth as everyone imagined it would be. Right. And I'm sure this won't be easy, but they will have a very detailed thought out strategy of how to convince the Trump administration and also how to convince the local regulators.

[B]

I want to widen the discussion now to AI and deal making. It seems like as a markets columnist, all I get to write about now is AI. Everything that happens in markets is AI driven, etc. Etc. Is that true in dealmaking world? JFK is every time anybody calls you, anytime you talk to a source. Is it AI all day long and twice on Sundays?

[C]

Maybe not every conversation, but certainly a lot of the deals that we look at are driven by AI in one way or the other. We mentioned scale earlier. That's. And again, you need to be bigger than ever to compete in this space. But it's also what is interesting. A lot of industries which were slightly sleepier or like little less sexy, frankly.

[B]

Yes.

[C]

Have suddenly become the center of the attention. They're being impacted by AI.

[B]

So give me some examples of that.

[C]

Well, I mean, in the power and utilities talked about in the energy sector, in kind of industrial. Industrial.

[B]

A lot of action.

[C]

Yeah, exactly. And the other thing is that the nature of deals has also changed because of AI. And that's, I think, the biggest change from my perspective. I've been doing this now for over a decade and it was just like kind of, it was journey pretty vanilla. A buys B and you know, you move on. Times you get boxed by a regulator, you got to make some concessions. Now we're seeing, for example, the tech companies were left out of the kind of the mega merger mania that we saw in the last 10 years. And now they found ways of actually doing deals which are not traditional M and A. So starting even with like Microsoft not really owning OpenAI but being in the foundation or instead of you have Facebook instead of acquiring a company, it now kind of buys out the 10 best employees for $15 billion.

[B]

Yes.

[C]

So that's. Is that M and A? I mean, it kind of is, but it isn't. It's. And that kind of. Why are they doing that in the case of Facebook or Meta, it's probably because it makes it easier not to go through the whole antitrust regulatory process. Right. It's an acqui hire.

[B]

Yeah.

[D]

Rather than an outright deal in the same way. We've been talking a lot about scale throughout this conversation in tech. In a way, the driving factor is speed, is that the technology is evolving at such a rapid pace. You know, we went from kind of GPT4 to GPT5 and like now people are like, we're going to get AGI at some point.

[B]

You know, Artificial general intelligence.

[D]

Exactly.

[B]

Our robot overlord.

[D]

Let's not get into whether or not that's going to happen or not. But, but, you know, so when, if You're a tech company, right? And if you're one of the, you know, the big players in AI, you have to think about, okay, if I'm buying something, if I had a regulatory process that takes 18 months, what I'm buying might be irrelevant by the time I actually get to buy it and own it, right? And that's what's driving a lot of these kind of aqua hires or new structures around deals. But the thing that's so striking, I think that this deal made us think about, I think for the first time is just how like AI to, to us as the average consumer, it's, it's a digital phenomenon, right? You go on your phone, you go into ChatGPT or into Claude or whatever, you know, and you ask it, whatever, whatever. Breakfast this morning. But there's a huge physical infrastructure right in the background and in a way that I don't think we've ever really seen because like you think about the Internet and telecommunications, like yes, we laid kind of subsea cables and the Internet also needed data centers too. But the level of demand for all this physical infrastructure is like, it's, it's reaching like constantly new heights. And it's kind of fascinating how it like cascades from one industry to the next to the next. It's like first you have the data centers themselves, then there's the power companies serving the data centers. So it has effects on the oil and gas companies, then it has effects on industrials companies because they're the ones doing the picks and shovels story for the energy companies. That is like working on their pipelines and little like generators. And so much of this, this frothiness we're seeing in deal making at the moment, when you, when you trace a lot of it back, it's kind of etymology. It starts with AI listeners.

[B]

If the three of us are not replaced by AI in the next few minutes, we will be right back with long and short.

[E]

Today's markets move fast. Get the insights you need in 10 minutes with the Barclays Brief, a new podcast from Barclays Investment Bank. Through sharp dialogue and scenario based analysis, our leading experts analyze key market themes each week. So whether you're managing a portfolio or leading a business, the Barclays Brief podcast can help you make smarter decisions today. Stay sharp, stay briefed. Find Barclays Brief wherever you get your podcasts

[B]

listeners. Welcome back. This is long and short, the part of the show where we go long things we like and short things we don't like. Jfk, what are you long or short Today?

[C]

I'm long on Brazil winning the World Cup.

[B]

Who you think it's going to be? Brazil? They've had a hard time the last couple of years.

[C]

Given that I'm Italian and there's no Italian team, I need to pick a derivative.

[B]

And not only do you think they're gonna win, that's the team you're rooting for.

[C]

Absolutely. And they're gonna win.

[B]

Okay, very good, Oliver.

[D]

I'm long the upcoming New York summer.

[B]

Yeah, it's gonna be a good one.

[D]

I think after one of the most brutal winters ever. Yeah. And with a potential Knicks victory on the horizon, it's gonna be special.

[B]

If Oliver has just jinxed the Knicks. I'm gonna be so happy. JFK is gonna be so mad. I am long. The Gating of Private Capital Funds Everybody, we have a headline here in the FT today. Blackstone Caps Withdrawals from Flagship Private Credit Fund. I think the gating structure is totally fine. You saw when you went in, you may not be able to take your money out at will. Sometimes you can't take out your money at will. No problem.

[D]

Prevents a bank run.

[B]

Yeah, yeah, it prevents a bank run. I don't think there's anything wrong with gating. I don't think it's a problem when funds have to gate. I think this is. We're all grown ups here. We can have. If we're going to have private asset funds, we're going to have Gates and Gates are fine. JFK wants to say something, but I'm not going to let him say anything about this. Listeners, we will be back in your feed next Tuesday and until then, stay cool out there. Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. We had additional help from Tony for Forhez. Special thanks to Laura Clark, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30 day free trial is available to everyone else. Just go to ft.com unhedged offer I'm Rob Armstrong. Thanks for listen, Sam.