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Narrator/Reporter
This is Wall Street Week.
David Westin
I'm David Westin bringing you stories of capitalism. The data center frenzy is in full bloom, but the neighbors are restless. Is there a way for the rest of us to get the benefits from AI without compromising the interests of those who will be living? Plus, earlier we brought you the story of the brain drain from New Zealand. People and talent are flowing the other way for Poland. It's one of the fastest growing economies around, driven in part by the best and brightest returning home, and we use it for everything from military equipment to packaged goods. Aluminum is ubiquitous, and now it's caught in between Trump tariffs and a war in Iran. But we start with the drama that is politics in the United Kingdom, as the fifth prime minister in eight years is fighting to avoid yet another turnover at number 10, and the markets are keeping score. How much say does the guilt market have in who gets to run the country? John Authors is Bloomberg's senior editor for markets. So John, there's a lot of political upheaval drama playing out in the United Kingdom right now, at the same time bonds are selling off gilts. Yes, the yields have gone up. Is there a connection between the two and if so, what?
John Authers
Yes, there's certainly a connection, which is that Britain has even more than where we are here in the us, the rest of the Western world. It has a fiscal problem. We don't have much headroom left to spend money in the uk. Any sign of concern about political instability will in its own right worry bond markets and specifically at the moment, because Keir Starmer is in a lot of political trouble. Any challenger, even those who you could argue are to his political right, will want to do something to show they've made a difference once they take over from him. And that's going to involve spending some more money on something that's going to involve being more lenient on fiscal policy than Labour has been so far. So plainly the, the risks are towards more fiscal spending. That's plainly something the gilts market dislikes. There's a long history of friction between a Labor government that has its origins in socialism and the unions and bond markets.
David Westin
Naturally there is also a more recent history between the Conservative government, the bond market. Yes, read Liz Truss. We remember that. But one of the things you pointed out on one of your columns is actually the yields on gilts right now are above where they got to under Liz Trust.
John Authers
Exactly. I mean there are. To be fair to the current Labour government, there are reasons for that in the interest rates have risen across the world since then and what really can endanger a financial accident is when yields rise very fast, which is absolutely what's happened under, under Liz Truss. She, she took the market by surprise and and thereby slipped on a banana skin. Whereas what we've got at the moment is more of a slow motion car wreck with Labor. But yes, the ultimate fact is true. The, the higher the yields go and they are now even higher than, than when they toppled Liz Truss. The, the less room for maneuver any government has and to some extent this is a systemic problem for the UK because as we've just said that Liz Truss was a was and is Conservative. This is universal across the parties, a certain lack of trust and the British two party system is breaking down at present and both Greens who are basically a British government of the aoc, Bernie Sanders left and the Reform Party under Nigel Farage who are obviously very similar to the Donald Trump Margaret right, both of those are on the face of it, more inclined to splash money around and do things that the bond market really dislikes than the incumbents. There's a very worrying dynamic about the entire British political situation. Or at least it's very worrying if you're, if you're a gilts investor.
David Westin
We know from your column that you are a student of popular music and I don't remember the Aretha Franklin song.
Brendan Moore
Who?
David Westin
Zoom in who?
John Authers
Yes, 1985. I remember that. That was actually my first time in America. But anyway, carry on.
David Westin
But if you take the bond market, the guilt market on one hand and the political system on the other, who's zoom and who? I mean you've explained how the political turmoil can affect the gilt market. Is the guilt market affecting what's going on in politics as well at the moment?
John Authers
I mean certainly in the Liz Truss incident, yes, that was very much the case that it was the bond market that basically said no you can't do this and forced the expulsion of first the Chancellor and then the Prime Minister itself. This time around that's less clear. You could certainly say that at this point the bond market has become a kind of a sheet anchor or a straight jacket for whoever is in charge. But it will be more uncomfortable for a party of the left that actually has fewer hang ups about spending taxpayers money. But the overall, the overall position is difficult either way. The other thing that's quite interesting compared to history is that it used to be the currency market. So Harold Wilson have being forced to devalue in the pound and then going on television to say that the, the pound in your pockets of course isn't worth any less, which absolutely wasn't true. And then Labour government of the 70s being forced by a run on the pound to, to, to go to borrow from the imf. And John Major's government basically never recovered from the Black Wednesday attack on sterling by George Soros and others. So it used to be the currency market that really inflicted pain. And now that currencies do tend to float more gradually, more, more, more easily. And now that we've had many years of being used to extremely low bond yields that, you know, cheap money is being treated as a fact of life or a birthright almost. It's the bond market that has now taken over as the anchor. The great limitation.
David Westin
The United Kingdom has a historically high ratio of debt to gdp. But they're not alone in that. They may be a little bit more than some of the rest of us, maybe a little less than some as well. Is what we're seeing in the UK simply what's going to happen in other parts of the world, including United States Just sooner.
John Authers
Yes. There's a reason that the UK has more of a problem or more of an instant problem, which you can explain easily enough from geography and history. The UK is an island which got rich by trading with other people. The US is basically a continent that got rich by trading with itself. So exports have always been a much more important part of the, the UK equation. When you have pressure on the currency, when you have inflation elsewhere, it will affect the UK much, much more swiftly, much more dramatically. It has, it is much more dependent on the generosity of others than, than the states. That said, America's share of GDP, the debt, public debt as a share of GDP, was in round numbers 20 years ago, before the global financial crisis. 60% cause, you know, occasioning great alarm. The Simpson Bowles, if you remember that attempts to cut the deficit. It's now 120. And whatever you think of the relative merits of Joe Biden and Donald Trump, both of them spent money, whether through tax cuts or fiscal largesse or both, in a way that suggested that this just wasn't an issue. It will become an issue at a time. The US is a, is a bigger, more closed economy than the uk. It can, and it has the exorbitant privilege of the dollar. It doesn't. It's not as it's not disciplined by, by potential runs on the currency like the UK is. But ultimately, if you're borrowing more than you have and can't generate the money to repay it, you're either going to get very bad inflation or you're going to go bust. You're not going to go bust, you're going to get very bad inflation. And that, that is ultimately the risk that afflicts this country too.
David Westin
You were a young lad, a young boy, during the Wilson time.
John Authers
Yes.
David Westin
And the crisis when there was really high inflation in the UK and as you say, the pound was devaluing and I think some would say that was a predicate for what happened with Margaret Thatcher and a fundamental revision of the economy. Is there any prospect that could happen again in the uk? Could we have a new Thatcher?
John Authers
We certainly can't see her yet. Although, that being said, if you think back to 75, 76, Margaret Thatcher wins the leadership of the Conservative party in 75, doesn't actually get the general election where she becomes prime minister until 79. She certainly didn't seem to be quite the radical departure that she would turn out to be in 75. So maybe there is somebody out there who is hiding in plain sight already. I think the points I would make about the Thatcher regime. I was 12 when she got in, 24 when she left. My generation of Brits still basically think she's running the world. And you could also argue there's an analog to that in the States, which didn't get into anything like as much trouble in the 70s as Britain did, but did get into a lot of trouble. Paul Volcker is the key figure who changes America around. He is appointed by Jimmy Carter, as was Alfred Kahn.
David Westin
Deregulation?
John Authers
Yes. And would American the American economy have boomed the way it did in the 80s if you hadn't then had Ronald Reagan, who really believed this stuff, who was a really enthusiastic advocate for it? Almost certainly not. But it was much easier for him to do what he did because he actually had the building blocks in place again. The the ancient regime had accepted that the game was up and shifted before you then had the really exciting free market politician, Thatcher or Reagan to take things forward. So I think the key moment is when is the game up? When does the market, does the economy force a change? It's conceivable it could happen here that Donald Trump grasps that you just need to actually start cutting entitlements and cutting back on defence budgets or whatever. But I think it's more likely that circumstances force a change from the ancient regime and that's the critical change, rather than that voters elect in the person who will make the change.
David Westin
Coming up, the money is pouring in. The construction is underway. Data centers are paving the way for our AI future. But some communities want to know why they have to be in their backyard.
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David Westin
This is a story about good fences making good neighbors. The promise of artificial intelligence has brought a wave of data center building across the country. And in success we hope that I will benefit the economy, investors and the vast majority of Americans.
Brendan Moore
$1 trillion is an enormous amount of infrastructure. You have to have complete confidence that the trillion dollars you're putting down would
Trond Olaf Christoffersen
be performant for as long as you could.
Mark Gansey
See if you're building a multibillion dollar data center in the US or around the world and you have a 15 plus year contract with with a company with a $3 trillion market cap, that feels pretty good.
David Westin
If we knew how to get a
John Authers
trillion dollars right now, which we don't, would we be able to deploy that profitably in the next few years? And I'm not sure about that, but
Mark Gansey
I feel confident we can make 500
Andrei Domanski
billion of value back.
David Westin
But while we all wait for the full benefits of AI to be realized, what does construction of these massive AI data centers mean for the people living around them? And how much of a say do residents have in the type of fences keeping things in or out?
Dana Nessel
Not now, not ever.
Christian Friedland
Push back today to a proposed AI data center. Amazon comes to town, starts emailing our town manager and wants to build an enormous data center. And the citizens did not know about this, even though it was going to be a $500 million dollar investment.
Narrator/Reporter
That sort of massive capital investment brings with it the prospect that the data centers being built today will be with us for a long time to come.
Mark Gansey
Ultimately to be paid for the risk that we're taking, we're looking to get a lease that's somewhere in the neighborhood. David between 13 years and 17 years.
Narrator/Reporter
Mark Gansey is the CEO of Digital Bridge, an alternative asset investment firm specializing in data infrastructure. He's among the major players making long term bets for AI. Massive bets that are being distributed across a wide array of investors.
Mark Gansey
So on the equity side, you're seeing the traditional players, the big infrastructure players. And so we're seeing today is, we're seeing the large mega funds. These big, big infrastructure players really lean into the AI thematic. And as a part of that thematic, when they think about infrastructure, they think about putting billions of dollars of equity to work behind these large datacenter platforms and projects. On the debt side, it's actually really interesting. Today of course, we see bank syndicates, we see construction financing club deals on the bank side. And now David, you're beginning to see the emergence of private debt capital. So private debt capital financing projects that are a little tougher, perhaps less investment grade exposure or perhaps even more risk.
Narrator/Reporter
On the power side, projected investments in data centers have climbed past $3 trillion. That's a $3 trillion long term bet on the future, which requires a business plan with some pretty attractive returns.
Mark Gansey
That is the long term nature of the cash flows. So that we go to build that facility, we're getting an imputed yield. And today most data center yields are somewhere between, David, on a cash on cash return basis, somewhere between 8 and 12%. It just depends on who the credit is. So if you're dealing with an investment grade tenant like Amazon, you're going to be at the low end of that guidance. If you're dealing with a brand new startup or perhaps you're dealing with a quantum compute player that's non investment grade, you're looking at something more like an 11 to 12 cap rate. But you do need to be paid for the risk that you're taking. And that risk is measured in long durated cash flows with some form of an escalator.
Narrator/Reporter
But while investors anticipate that Future payout over 15 or 20 years, in the communities where data centers are going up right now, now there are immediate potential effects on the people who live near them.
Dana Nessel
To say that I have significant concerns is sort of an understatement.
Narrator/Reporter
Dana Nestle is the Michigan Attorney General whose job includes looking out for the interests of Michigan taxpayers, ratepayers and citizens. She is appealing the state's expedited approval of a very large data center set to be built in Saline Township just south of Ann Arbor.
Dana Nessel
Well, it appears as though the project is underway. The first that I learned about it was really on Halloween of last year that this was going to be an enormous project, a project bigger than any of its kind we've seen.
Narrator/Reporter
It's not that Attorney General Nessel denies the potential upside of data centers in Michigan, but she wants to test the projections and promises weighing Both the benefits and the burdens of things like changing electricity rates, land values, and water needs that her citizens will face. The sorts of things that may require some pretty good fences.
Dana Nessel
If you talk to Michigan residents, they don't want these in their backyard. Nobody knows yet what it's going to mean for that community. They don't know what it's going to mean for their water. They don't know what it's going to mean in regard to noise pollution or other types of pollutants. Until we have some of those questions that can be more fully answered and better policies put in place at the state level, most people don't want to see these massive data centers continue to be erected.
Narrator/Reporter
Michigan residents aren't the only ones with concerns. Pew Research center found that an overwhelming share of Americans think data centers are mostly bad for the environment, home energy costs, and their overall quality of life. But Gansey says he's seen a version of this play before and that it can be handled in a way that satisfies the need for growth and the concerns of citizens.
David Westin
Do you need to take into account the reaction of the community?
Mark Gansey
100%. It's a factor. I've been doing this for 32 years building digital infrastructure, and where I got my sort of humble start was building cell towers. David, in 1994. And at that point in time, nobody wanted a cell tower in their backyard. And that was the rise of NIMBYism, not in my backyard. Well, the sector got organized. We navigated through it. We explained the benefits of mobile communications, emergency services, and ultimately the fact that most Americans wanted ubiquitous mobile coverage. And so that carried through the early 2000s into 2010, 2020, and today, you don't hear a lot of skirmishes around cell towers because largely the industry has made peace with the local community.
Narrator/Reporter
State leaders like Nestle don't deny that things might work out for all concerned. But for that to happen, she believes we all need to know in advance the scope of data center construction, the effects it's likely to have on the community, and what commitments the developers and owners are making to address the possible local downsides.
Dana Nessel
The request was made before our utility regulator, the Michigan Public Service Commission, for this contract. It was filed for an ex parte hearing, meaning a hearing that would take place behind closed doors that we wouldn't be allowed to be part of. So the contract that was posted publicly was heavily redacted, and that included redactions to some incredibly important information, you know, involving things like exit fees. What would happen upon the termination of the contract, even, you know, basic terms and definitions had been redacted. Customer credits, even the signatories to the contract had been redacted so that we can't even know who signed this contract or what company they're affiliated with, which is pretty insane when you think about it. How are we supposed to know whether or not ratepayers are getting a fair deal if we're not even allowed to see the contract itself?
Narrator/Reporter
All of this comes against the backdrop of a rapidly evolving technology that is growing at a rate we've never seen before, raising questions about what happens if things evolve in ways that fall short of the best case. As an infrastructure investor, Gansey says they're ready for that.
David Westin
How do you anticipate the further growth as well as the obsolescence of some of the technology you're putting in?
Mark Gansey
Well, I think the great part about being the owner of the railroad is you don't own the actual cars that run on the tracks. We own the land. We build the power plant. Sometimes actually we're building power adjacent to the data center. We build the physical real estate structure inside the four walls. We bring the fiber connectivity, we bring the cooling, we bring the backup power. We create the data hall conditions where the UPC units are in and the cooling is in and the cable trays. But eventually, David, our customers put in the technology. So what makes our business great is we are candidly, we're GPU and TPU agnostic. And what I mean by that is we're not involved in the active compute. That is a bet that we don't make at Digital Break. What we are in the business of doing is providing that mission critical real estate and infrastructure to the top technology providers in the world. And we let them make the decision what kind of server they're going to buy.
Narrator/Reporter
That may take care of the investor risk, but what about community risk? In Michigan, abandoned auto plants still dot the landscape, a constant reminder of an earlier era of technological promise. And the costs that followed. Who will bear the cost this time remains uncertain.
Dana Nessel
In the event that the bubble bursts and something happens and this hyperscale center in Saline Township is no longer needed, somebody is going to have to pay all of the extra costs of this new infrastructure. And who's going to pay it? Well, it's either going to be borne by the ratepayers in this state, and we already are subject to some of the highest rates and the worst reliability anywhere in the country, or it'll be the taxpayers. They'll have to bail out the Utility companies who are making these, in some instances, you know, terrible bets, that AI is going to be around for a long time. If you look at these contracts, it's clear that the cost is supposed to be borne out not over the course of a few years, but over the course of really a few decades. You know, up to something like 18 years. But we can't even see the exit fees in the next few years. Those that have encouraged these data centers to come here without any sort of guardrails at all, I think they've set us up for a very difficult future here.
Narrator/Reporter
Which brings us back to those fences neighbors need. Gansey sees a way to build what's
David Westin
needed in a way that accommodates everyone
Narrator/Reporter
and doesn't stand in the way of progress.
Mark Gansey
You're seeing red states and blue states both look at the data center opportunity and quandary in the same way, which is it can't hurt consumers. So the industry has to get organized and has to explain ultimately the benefits of why these data centers exist. Why are they creating jobs, not losing jobs? Why is it going to be good for them long term from a property value perspective and why it ultimately isn't going to rise their utility bill and take away all their water. We got a pretty big uphill challenge.
Narrator/Reporter
We need data centers to build the technology of tomorrow. The long term promises are big, but so are short term costs that may fall on the shoulders of local communities. That's why we need to construct some fences carefully to protect our neighbors. And to do that, we need to bring everyone to the table.
David Westin
Up next, Poland has gone from a laggard to a European economic leader in large part by attracting back all those talented Poles working abroad.
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John Authers
Why is it always chaos when we link up?
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David Westin
This is a Story about going home again the narrative of Europe in recent years has too often been about lack
Narrator/Reporter
of growth, but there are exceptions.
David Westin
It turns out that Poland is one of the world's fastest growing economies and although it's now attracting its best and brightest to come home to build their businesses, tough challenges still lie ahead.
Narrator/Reporter
Born and raised in Warsaw, Alexandra Podrushevska followed a well trodden path for young, ambitious Poles and went abroad.
Alexandra Podrushevska
I wanted to study abroad and I started looking around and my objective was getting the best education that I can get. So I left in in 2013 to study at Cambridge. I didn't really make a choice after studies about which country I want to live in. It was very much driven by the opportunities. What could I do in different countries and for me it was natural to stay in the uk,
Narrator/Reporter
but that was then. Now the well trodden path is heading into the other direction. Poland is booming. Its economy topped $1 trillion last year and this year it will be invited to the G20 summit and its count of citizens living abroad, a figure that was steadily climbing after it joined the EU in 2004, peaked in 2017 and has been dropping ever since. Although Poland's National Statistics Agency adjusted its methodology in 2022, among those returning is Pedroevska.
Alexandra Podrushevska
I think a lot has changed and especially for people like me with the backgrounds like I had. I wanted to work on the edge of new technologies. I really wanted to be exposed to the best R and D, the best teams that are building effectively the future of what the technology sector is. I don't think that these opportunities were as obvious 10 years ago and as available as they are now.
Andrei Domanski
Actually our performance started in 1989.
Narrator/Reporter
Andrei Domanski is Poland's Minister of Finance
Andrei Domanski
and economy and 1989 we had GDP of US$67 billion. Last year, GDP of Poland reached 1 trillion. There was only one country in that period that had higher pace of growth and it was China.
David Westin
What were the things that drove that performance over that long period of time?
Andrei Domanski
Well, first of all, the reforms of the early 90s, strong institutions that were established here at that time, of course the entrepreneurship spirit of Polish people who helped in this process. And of course with no doubt joining European Union in 2004. And frankly, we are often asked what is the most important sector or most important company of Polish economy? And it's very difficult to say. And I perceive it as a strength of Poland because we are really well diversified. Polish economy is well integrated with other European Union economies. We are well integrated with global value chains. At the same time, we are quite important market of 37 million people. So we have strong domestic markets. So there are many engines of Polish GDP growth.
Narrator/Reporter
Drivers of Poland's economic growth include a range of services as well as manufacturing. More recently, the Russian invasion of Ukraine has led to a sharp uptick in defense spending, projected to account for almost 5% of GDP in 2025, the highest in the EU. Its digital industry is also growing fast. McKinsey estimates the current $44 billion sector will grow to $123 billion in 2030, accounting for 9% of GDP. That's Petruzewska's domain. She co founded Vivid Q, a British company developing holographic display technology in 2017. But on her return to Poland, she started VastPoint, a venture capital firm focused on tech startups in Central and Eastern Europe.
Alexandra Podrushevska
The startup scene is very vibrant and I think about this word, I think it really represents what's currently going on. I think that this ambition and this certainty that whatever is being built from here or by Polish teams has this potential of becoming a global solution.
Narrator/Reporter
Yet for all the optimism around Poland, there are some warning signs ahead. Macie Albanowski is an economist at the Institute for Structural Research in Warsaw.
Macie Albanowski
The main short term challenge for Poland is to consolidate public finances. Although public debt is still at moderate level of around 60% of GDP and public debt is safe in Poland, we are running large deficits. Last year it was around 7% of GDP. So it is clearly not sustainable over the longer term. And we need to come up with a way to rationalize public spending, probably raise some taxes and probably we need to face the fact that elevated military spending requires some tax hikes. We don't want to start consolidating our public finances. When we are under external pressure, because then it's more painful.
Andrei Domanski
We spent close to 5% of our GDP on defence. This is close to 50 billion euro per year. So of course we run high deficit. We take some steps to lower it gradually. We believe that we are not in the position to cut spendings on defense.
Narrator/Reporter
Another challenge lies in demographics. For Poland, as in much of the
Macie Albanowski
the Western world, by 2050 our labor force will shrink by about 20%. So this is one large factor. Secondly, the average age of an employee is increasing and it also matters for the productivity. While older workers can certainly work with modern technologies, they may need some more support than younger workers. So we need to invest more in policies that allow upskilling, reskilling, adjusting skills to these new technologies. And currently we are not doing much in this direction.
David Westin
How do you address that economically?
Andrei Domanski
So we are running many programs that are supporting Polish families with some additional income. We have also started in vitro program. Already 13,000 children were born thanks to this program in Poland. And I want to say personally that we are really proud that after eight years of very right wing government that stopped this program. Our government reintroduced it and we already have, As I said, 13,000 young Polish people because of that. But it's not enough. We need to create new incentives for people to be more willing to work. And our government is doing that.
Narrator/Reporter
Foreign investment is both an opportunity and a challenge for Poland. Many foreign investors have become more confident in the sustainability of the Poland story. But Domanski says the war in Ukraine has has made some wary.
Andrei Domanski
We see that some investors, especially from non European investors, are a little more reluctant to invest in especially eastern parts of Poland recently. That being said, Poland will be the biggest of course, apart from Ukraine, beneficiary of peace in Ukraine. So we want just and lasting peace for Ukraine. First of all, of course to we need to end this brutal Russian aggression. It would be also very good for Polish economy. Foreign direct investments were absolutely crucial in building strength of Polish economy. And this is. No, it is a matter of fact, it's not an opinion because of the investments from other European countries, of course, US investors right now we see more and more interest from Asian investors investing in Poland.
Macie Albanowski
We certainly need to invest more in research and development. We need to invest in our academic sector. We also need to rethink our educational policies, both aimed at children and at adults. Because this is what more successful Western economies are doing. And in Poland so far we relied much on competitive labor supply, on cheap labor costs. But if you want to reach higher level of wages. If we want to converge to not to 50% of German wages, but to 80 or 90%, we certainly need to invest more in education, in research and development and in other pro growth policies. We are quite satisfied with our present growth trajectory. So we may not be well motivated to invest in research and development, to invest in in new educational policies because so far it's good, but in future current growth model of Polish economy may not be sufficient.
Narrator/Reporter
As they say, getting to the top is one thing, staying there is another. Poland's growth is a success story, but its next test will be sustaining it.
Alexandra Podrushevska
A lot of the success of Poland so far has been unfortunately playing catch up. I think Once you join 20 biggest economies in the world or 20 economies with the biggest GDP per capita, it really becomes about what is the limit of your growth and where do you need to seek it if playing catch up is not going to work out that well anymore.
Narrator/Reporter
But in the end for Poland and as it is for many countries, the key is making sure that the best of the brightest can go home again and stay there.
Alexandra Podrushevska
I could have stayed in London, raise a fund there. I could have thought about maybe moving to the US and effectively starting over. But I decided to take a step which I don't think is a step back, but step into something entirely new, but just in the place which I used to call home when I was a child. So it feels really special to me able to do that. It feels also really special because I don't feel like I have to give up on anything.
David Westin
Coming up, it's not just oil and fertilizer. Aluminum is another victim of the Iran war, which is making President Trump's plans to strengthen the U.S. industry that much harder.
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John Authers
Why is it always chaos when we link up?
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David Westin
This is a story about trying to have it both ways. Since he first became president, President Donald Trump has sought to protect the U.S. aluminum industry through tariffs. But the war in Iran may be taking us in a very different direction. Our colleague Christian Friedland tells us a story of a key metal that is caught in the middle.
Andrei Domanski
Aluminum foil keeps foods from drying out
John Authers
while sealing in all their natural flavor.
Christian Friedland
When you think about aluminum, the first thing that comes to mind might be tin foil or soda cans, but it's also an essential component of cars, planes and machinery. It's the world's most abundant metal. But even that hasn't kept aluminum safe from the fallout of war.
Jean Simard
The supply is now depleted by about half of the metal that used to be shipped from the Middle east because there's been some damage and there's been some curtailments to avoid further damage.
Christian Friedland
Jean Simard is the president and CEO of the Aluminum association of Canada.
Jean Simard
It's a very significant situation for the aluminum sector worldwide because the Middle east produces 20% of all the aluminium outside China and it ships to Asia, but mostly to the US and to Europe.
Christian Friedland
Of the top aluminum producing countries in the world, two are in the Middle east, and Simard says the impact of the war in Iran could be long
Jean Simard
lasting, starting at the beginning of the crisis. The first curtailment happened in Qatar because of an energy supply situation and then damage was done in Bahrain and then to the Alta Wheela smelters in the Emirates. This is very significant because it will take a long time to bring it back. Smelters are very highly impacted by energy and to restart a smelter you have to do like if there is a supply problem with electricity for your house, you have to unplug everything and then replug one at a Time so they can only start back two cells a day out of the hundreds and hundreds of cells.
Christian Friedland
Production is just one part of the aluminum supply chain. Facing disruption, distribution is another. Like so many of the world's exports, aluminum needs to be shipped often a long way. And shipments are snarled by the blockade of the Strait of Hormuz.
Jean Simard
The problem is what's in front of us. The last ship to leave the Middle east just before the beginning of the crisis has made it to the US. There's no other ship on its way. It took 60 days to get there, so the full shock is ahead of us. I'm not too sure that all downstream transformers, processors, mom and pop shops that use aluminum are fully aware of what's ahead of them.
Christian Friedland
In the first two weeks of the war, the price of aluminum on the London Metal Exchange saw double digit gains shooting to record record highs. But while the war added to rising prices around the world, some of the fallout in the US is self inflicted. Last year President Trump hiked tariffs on imports of aluminum to 50% with the intention of stimulating domestic production. As of 2025, the US was dependent on imports to meet some 60% of internal aluminum consumption. And that was something that the Trump administration didn't like.
Trond Olaf Christoffersen
The US is short market on primary aluminium, so the US need to import a lot of primary aluminum to fill demand. So to attract that metal then US consumers or manufacturing using aluminium, in effect how to pay the duty on aluminium into the US market.
Christian Friedland
Trond Olaf Christofferson is the CFO of Norse Hydro, a publicly traded aluminum producer based in Norway. The company is also in the unique position of having a production facility in Qatar.
Trond Olaf Christoffersen
Our joint venture in Qatar, Katalum, has been impacted by by the war and is currently operating around 60% production capacity. Because of the situation and we continue to operate around that level. It is a challenging situation with the raw material, material access and also to get metal out from the region but, but we are continuing to operate at that production level.
Christian Friedland
And so is the US now facing more of an aluminum crisis than other parts of the world?
Trond Olaf Christoffersen
Well, the supply situation I think is all the situation in mid last impacts the supply situation in all markets. Physically when it comes to supply, I think the Asian market is worse impacted because quite a lot of the metal from the Middle east is normally sold in Asia, around 2.5 million tonnes. But the price impact is global.
Christian Friedland
This isn't the first time the United States has imposed tariffs on Canadian aluminum. In 2018, when I was Foreign Minister, the trade spat between our two countries ended with the US Backing down. And although the US Is facing higher aluminum prices today, Simard says that's not a direct effect of the war in Iran. That's because the vast majority of aluminum the United States imports comes from Canada.
Jean Simard
When the tariffs, the 50% tariff, were implemented, it created a price shock in the market for exporters into the US As Canada is one of them. And basically the reaction was to divert shipments to another market, which covered the full logistical costs and the whole netback that would differentiate this destination from the U.S. one thing is sure, if you want to get all the available supply from Canada, you have as a policymaker in the US to do a carve out for Canada within the global tariff situation right now. If that doesn't happen, Canada will go where the market is.
Christian Friedland
Among the industries that are most affected by higher aluminum prices are packaging and transportation, from trains and trucks to mopeds and bikes. And that's where Brendan Moore comes in.
Brendan Moore
Fundamentally, aluminum is one of the primary materials used on a bicycle. The reason is it's very light, very strong, reasonably priced. You know, it's not a super exotic metal.
Christian Friedland
Moore's company, Wolf Tooth Components, makes premium bike parts that are shipped all over the world. His manufacturing plant in the suburbs of Minneapolis is about 7,000 miles from the Strait of Hormuz. But he's still feeling the consequences of the war in Iran.
Brendan Moore
We're a small company like us, we're not Boeing. So we don't get to say, Kaiser, send us 10 truckloads of aluminum. We buy our aluminum through suppliers locally, and those suppliers will source that from various suppliers around the world. We don't get a lot of choice in where our aluminum comes from. But I can tell you that it's shifted and we do have a preference for US Aluminum.
Christian Friedland
Eventually, the only solution for a manufacturer like Moore might be to raise prices. But he says it's not so simple in consumer goods.
Brendan Moore
I would say it's not. Not like when you go to the restaurant and there's like lobster pricing and it's like market rate. That's not how consumer goods work. And when prices of aluminum or raw material go in, we can't necessarily just like raise our prices right away. Raising prices, remember, does three really bad things. One, it upsets your customers. Two, it puts you at a disadvantage to your competition. And three, it's actually a lot of work. And so when aluminum goes up effectively, initially, we just eat. It just comes right out of our bottom line.
Christian Friedland
Moore has seen peaks and valleys in the price of aluminum before but he says this time is different.
Brendan Moore
If you look, there was Covid, which aluminum prices started going up, but then actually the biggest peak was right when the Russian war started, just went crazy high. And then tariffs came in, and then the Strait of Hormuz was closed. But the biggest thing people aren't talking about, and you're seeing this broadly across commodities, is the AI buildout is actually one of the big impacts for aluminum prices going up right now. Those data centers that we all hear so much about, they use a ton of raw material and a lot of it's aluminum. And so kind of we're seeing like a triple whammy now, if you will.
Christian Friedland
Smaller manufacturers like Wolf Tooth Components not only have to contend with higher prices for the metal they need, but also have to compete against bigger, more powerful players that also use aluminum. The squeeze could eventually raise prices across the board for consumers, triggering another bout of inflation.
Brendan Moore
There's really no viable alternative to aluminum in our case. And you'd hear the same thing if you asked Boeing, like, they're still going to use tons of aluminum in the airplanes, no matter what the price prices. And the price of those airplanes will just go up. Same with our bicycle parts.
Christian Friedland
As the war drags on. So did the timeline for prices to stabilize back in Norway. Christoffersen says the outlook is far from certain.
Trond Olaf Christoffersen
So in the aluminum market, I think we see a bit the same situation as you see in the energy markets, where you have quite high prices in the front end, meaning metals to be delivered in the coming month, but then you have a declining price, a backwardation situation in the market, with lower prices falling down to $3,000 per tonne a couple of years out in time.
Jean Simard
So it will take anywhere between 12 to 18 months for the Middle east supply that's been affected to come back into the market. And then you need 60 days to ship to North America that you add to this. So we're heading for a supply shock as we move through the summer period. And this will last most likely for about a year, a year and a half, until this supply starts to make its way back into the market.
Christian Friedland
For business owners like Brendan Moore, the effects of domestic and foreign policy have become an unavoidable hazard of the job.
Brendan Moore
We control, control the processing, we control our efficiency, we control our yields. So we have to just focus on those. I think near term we're going to be able to mitigate most of the aluminum prices longer term. If it stays this high, there has to be some sort of increase. But a consumer, if if aluminum goes up 20% again this year, our prices of our products aren't going to go 20%. They're going to go up like 3 or 5%. And I like Boeing. I mean, I'm trying to poop poo them at all, but like we don't have the negotiating power that say they have or automaker has. And when these prices change or tariffs change, I see that almost the same day. I mean, not joking sometimes. Well, I didn't start this small business because I wanted to learn about tariffs or deal with massive supply chain issues or deal with geopolitics. Those are in fact some of my least favorite things. Bicycles are way more fun than that stuff.
Christian Friedland
With all the back and forth of tariffs and wars, it's hard to see how U.S. policy at the moment is helping American manufacturers or American consumers. And this is one problem that the marketplace can't fix on its own.
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John Authers
chaos when we link up?
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Episode Theme:
Global capitalism at critical junctures: Britain’s debt and political drama, AI’s local impact, Poland’s economic boom, and the aluminum supply shock.
Host: David Westin (Bloomberg)
This episode investigates four interconnected stories reflecting capitalism’s pressures and promise across the globe:
[02:04–13:28]
Key Discussion Points:
Notable Quotes:
Memorable Moment:
A discussion of Aretha Franklin’s “Who’s Zoomin’ Who?” segues humorously into who really calls the shots: politicians or bond markets, with a nod to past crises.
[15:37–27:15]
Key Discussion Points:
Notable Quotes:
Memorable Moment:
The realization that after decades, Michigan residents still see abandoned factories—now wondering if data centers might be the next risky legacy.
[29:15–40:51]
Key Discussion Points:
Notable Quotes:
Memorable Moment:
Podrushevska’s personal journey from Cambridge back to Warsaw, emblematic of Poland’s reversal from emigration to thriving homecoming, reflects optimism about building a new future at home.
[42:53–54:18]
Key Discussion Points:
Notable Quotes:
Memorable Moment:
Moore’s blend of frustration and humor at small businesses being forced to navigate global geopolitics and raw material markets, when all they want to do is build better bikes.
| Segment | Main Topic | Start–End | Key Speakers/Guests | |------------------------------------------|-------------------------------------------------|---------------|------------------------------------------| | Britain’s Debt Problem | UK fiscal/political crisis, market pressure | 02:04–13:28 | David Westin, John Authers | | AI’s Local Burden | Data centers’ promise vs. local impact | 15:37–27:15 | David Westin, Mark Gansey, Dana Nessel | | Poland’s Economic Boom | ‘Brain gain,’ growth and new challenges | 29:15–40:51 | David Westin, Andrei Domanski, Podrushevska, Albanowski | | The Aluminum Shock | Tariffs and war disrupt global supply | 42:53–54:18 | Christian Friedland, Jean Simard, Trond Olaf Christoffersen, Brendan Moore |
Wall Street Week’s June 19, 2026 episode illustrates the ways in which economic, political, and technological shifts are converging globally. Britain’s debt dilemma becomes a cautionary tale for larger economies, AI’s rapid advance forces Americans to confront local fallout, Poland’s rise offers both hope and warning, and the aluminum supply shock shows just how tangled modern supply chains—and government policies—have become.
Final Notable Quote:
“We need data centers to build the technology of tomorrow. The long-term promises are big, but so are short-term costs that may fall on the shoulders of local communities. That’s why we need to construct some fences carefully to protect our neighbors. And to do that, we need to bring everyone to the table.” — Narrator [26:54]