Speaker 1
Welcome back to Market Movers the opening bell wall. New York Climate Week, concluding as Manhattan bids adieu to world leaders as well as chief executives and institutional allocators. As the UN General Assembly concludes. Now this year's discourse revealing a dramatic reframing sweeping net zero slogans have been replaced by cold, hard capital realities, energy security as well as grid reliability and the insatiable power demands of artificial intelligence.
And as Big Tech's data center build out collides with climate goals and geopolitical disruptions in the energy markets, investors are forced to reassess where value and material risks really lie. Well, joining us without further ado is Jeff Goodman, managing director for Goodman Asset Management.
Jeff, good morning. Thank you so much for joining us.
Speaker 2
Thanks for having me.
Speaker 1
Well, here we are coming out of a nor'easter here on the East Coast. But what a week it was last week with the U.N. General Assembly with all the leaders in town. But you were busy at Climate Week, so give us a sense of what's different in 2026.
Speaker 2
I mean, it's interesting because three years ago we did the AI climate at the New York Stock Exchange. Adaptation, innovation and resilience. And that really has become the bellwether for the conference this year. It was really all about adaptation and resilience, like you said. Net zero didn't hear it mentioned in any of the rooms that I was in.
And I was probably in 50 rooms this week. But really, what can we do about AI? Is AI and a help for adaptation? Is it help for resilience? What is the difference between adaptation and resilience, which was talked about in some rooms, and the big overhang I think over everything. Aside from AI insurance, the interesting stats coming out of places like Florida is that voters in Florida believe that their homeowner insurance increases are 60% of voters believe that it's directly tied to climate change.
And as you know, these are big Republican voters. So it's interesting to see that finally, insurance pricing and insurance risk is driving the climate change story better than any other dialog or anything that has been put out by the climate movement, if you want to call it that, up until this year.
Speaker 1
And Jeff, you moderated and spoke at so many events at Climate Week. So I'm sure you're talking to stakeholders not just from the US, but also around the world. And given the extreme weather that we're seeing around the globe, as you mentioned, insurance is a reality that all of us have to contend with, whether we're talking about homeowners, individuals, corporations or nation states and governments.
So what is actually being done?
Speaker 2
I mean, the interesting thing is we had people on the panels from Switzerland in London talking about insurance risk. They're places like Switzerland. The whole country actually pays into the risk pool. It's not separated by towns or cities or states like it is in the US. so they have a much bigger pool of which to deal with the increasing risk in the US.
The problem that we're having is that voters in one state don't want to subsidize the risk that voters in another state are taking. So. In Florida, you're seeing the insurance pool or the risk plan in Florida. The plan has 1.5 million households right now that are being covered by it. We're seeing the plan in California also greatly increasing where the state has to come in and pick up.
The big thing is a lot of conversations around the fact that you might have homeowner's insurance. That doesn't mean you have flood insurance. Flood insurance is really covered by Nfip. The national program. Most people aren't aware that if they're not in a FEMA designated flood zone, that they're not covered by nfip.
Most people don't realize that most flood insurance policies, even if you are covered, only cover rising waters from local rivers and streams. They don't cover what we dealt with this week, and they conducted storms dropping four inches of rain in a day. Those policies don't cover flood insurance on that.
So really, insurance is like this lever that everyone is kind of looking to. But what insurance companies are pushing back on is they need regulation to change in order for them to affect pricing. They want to reward customers and homeowners that are building resilience into their properties, that are doing clear cutting, that are putting on stronger roofs, reinforcing windows.
They want to be able to reward those people. But a lot of state regulation doesn't allow for reducing pricing on one home in a town. They have to cover that whole town equally. So a lot of challenges around insurance.
Speaker 1
Sure. And Jeff, I also do want to get your perspective on artificial intelligence, in particular what's happening here in the US. So given the fact that here on Wall Street, of course, we're paying attention to what it means for the AI trade, what the hyperscalers are doing, how they are building out. And of course, when it comes to energy demand.
That does involve what's happening on the ground here. So what are the conversations that are actually taking place and what actually do you think needs to be done?
Speaker 2
So the big story on AI this past week from AI companies specifically, but also from cities, was that there's enough AI intelligence impacting energy reduction, up to 30% energy reduction in some buildings that are happening now, not rebuilds, just actual meter measuring and going to the water pipes and making sure enough water is actually getting through the pipes or putting repairs in on the pipes.
The AI story is we can save more energy than we can cost. Now that's a big debate, and it's not getting out to communities where communities are pushing back on water and energy usage by data center build out. It's a message that needs to get out. If this story is going to keep growing, these data centers are going to keep getting built.
They have to put their money where their mouth is. They have to show that the energy reductions are more than enough to offset the energy increases and water demand.
Speaker 1
Yeah, and it's really interesting because the UN was warning last week at the meetings that the leaders are actually on thin ice when it comes to some of the electricity strain as well as rising power costs. So at what point do you think that the energy footprint actually becomes a material drag when it comes to valuations for tech?
Speaker 2
I think we're getting it now. I think there's enough pushback and enough energy costs coming into when you look at homeowners costs. It's not just insurance costs, it's their utility bill that's rising. We had habitat on one of the panels, which builds homes for people that don't meet specific bank requirements of building homes so that, you know, lower income families, their biggest effects right now are them defaulting on their mortgages is primarily insurance, but secondarily, their utility bills, their utility bills are climbing.
That's going to be the political story going into the midterms. And as we're seeing energy prices just keep going up, interest rates just keep coming up. That's going to impact energy demand and energy usage and energy projects getting built out. A lot of times rely on interest rates and can't get built at these higher interest rates.
So I think it's going to be a big midterm story.
Speaker 1
Yeah. And as we look ahead to the midterms, I do want to get your take on portfolio adjustments. So when it comes to climate adaptation as well as grid resilience, what do you think needs to be happening when it comes to portfolio management?
Speaker 2
I think people need to look at sustainable infrastructure. What I think is the most underinvested commodity that we have and where needs rushing towards gold and copper and silver. We can't live without water, not for more than a couple of days. So. And we're seeing water shortages in major cities around America, San Antonio, Houston and projecting over the next six years they run out of water, and water is priced unbelievably low compared to the rest of the markets right now.
It's to me, it's the single biggest underinvestment in people's portfolios.
Speaker 1
And finally, 60s, before we move on to the opening bell here at the New York Stock Exchange. So what was the most important takeaway for you from the Climate Week here in New York?
Speaker 2
My keynote at the end for Munich Re on Thursday, towards the end of the Climate Week, was choosing Hope. We have to be hopeful. We have to get on the ground and do the work that needs to get done. We can't just hang up our hands. It's over. So climate tourism is out choosing hope, is it? That's my positive message for climate change.
Speaker 1
Well, Jeff, always appreciate your time. Of course, hope is vital when it comes to looking ahead, so I appreciate your time as well as all of your perspective today.
Speaker 2
Thanks so.
Speaker 1
Much. Thank you so much, Jeff.
