WEBVTT - Bloomberg Businessweek Weekend - June 20th, 2025 0:00:00.880 --> 0:00:05.199 This is Bloomberg Business Week Daily, reporting from the magazine 0:00:05.240 --> 0:00:09.840 that helps global leaders stay ahead with insight on the people, companies, 0:00:09.880 --> 0:00:14.800 and trends shaping today's complex economy. Plus global business, finance 0:00:14.840 --> 0:00:18.400 and tech news as it happens. Bloomberg Business Week Daily 0:00:18.680 --> 0:00:23.160 with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:24.320 --> 0:00:27.440 Hi, everyone, welcome to the weekend edition of Bloomberg Business Week. Yeah, 0:00:27.560 --> 0:00:30.760 a lot coming out investors in a holiday shortened trading week, 0:00:31.160 --> 0:00:33.720 no trading, just a reminder in the US on Thursday 0:00:33.760 --> 0:00:35.559 because of the Juneteenth holiday. 0:00:35.840 --> 0:00:39.559 Still a log coming at US again, including the escalating 0:00:39.600 --> 0:00:43.479 conflict between Israel Andy Ron, the fourth FED decision of 0:00:43.520 --> 0:00:46.240 the year, and a G seven meeting of global leaders. 0:00:46.320 --> 0:00:48.800 Yeah, that is our macro. Our guest this week, the 0:00:48.840 --> 0:00:51.960 CEO of the publicly held connect One Bancorp, on the 0:00:52.000 --> 0:00:54.520 FED business environment and consumer credit. 0:00:54.640 --> 0:00:58.840 Speaking of consumers, Dana Telsey knows retail like no other, 0:00:59.440 --> 0:01:03.240 so we're concerned about this week's retail sales data that 0:01:03.360 --> 0:01:06.640 dropped for a second month and was the largest decline 0:01:06.680 --> 0:01:08.840 since the start of the year. It's a question we'll 0:01:08.840 --> 0:01:09.399 post to her. 0:01:09.560 --> 0:01:11.679 We do, indeed, and we've got a global view on 0:01:11.720 --> 0:01:14.520 tariffs and trade and President Trump with the head of 0:01:14.560 --> 0:01:18.360 Ireland's foreign Direct Investment Agency. That's one reaction. We get 0:01:18.360 --> 0:01:22.160 another reaction from the CEO of Synergy Maritime and United Maritime, 0:01:22.480 --> 0:01:24.679 and then in our next hour the CEO of Axiom 0:01:24.680 --> 0:01:29.280 Space on building Era defining space infrastructure and oh wine 0:01:29.280 --> 0:01:30.120 from Uruguay. 0:01:30.560 --> 0:01:31.640 It's really good. 0:01:31.440 --> 0:01:33.320 And Carol knows it's really good because she tried it. 0:01:33.400 --> 0:01:33.720 I did. 0:01:33.800 --> 0:01:36.160 Okay, all that to come, we begin with a read 0:01:36.240 --> 0:01:40.440 on the US economy banking, especially regional banking. Just before 0:01:40.440 --> 0:01:43.199 this week's FED decision, we caught up with Frank Sorrentino, 0:01:43.640 --> 0:01:46.400 chairman and CEO at the publicly held New Jersey based 0:01:46.400 --> 0:01:49.400 community bank Connect one Bank Corp. Which is the parent 0:01:49.440 --> 0:01:50.880 company of Connect One Bank. 0:01:50.960 --> 0:01:51.280 That's right. 0:01:51.360 --> 0:01:54.800 Connect One Bank counts small businesses and construction companies among 0:01:54.840 --> 0:01:57.800 its customers. The bank recently merged with First of Long 0:01:57.840 --> 0:02:01.160 Island Corp, which brings its total assets to about fourteen 0:02:01.200 --> 0:02:04.640 billion dollars. CEO Frank Sorenttino kicked off our conversation about 0:02:04.640 --> 0:02:08.400 why he's optimistic, still optimistic about this US economy. 0:02:08.840 --> 0:02:10.760 Yeah, it's interesting, you know, if you go back a 0:02:10.760 --> 0:02:13.080 couple of months the Liberation Day, and you took a 0:02:13.160 --> 0:02:15.640 nap on that day and woke up today, you'd say, well, 0:02:15.720 --> 0:02:17.639 I don't know, things don't look too bad. Other than 0:02:17.680 --> 0:02:21.519 what's going on overseas, the market is pretty much rebounded 0:02:21.720 --> 0:02:25.480 or recovered most of the ground. You know, people feel 0:02:25.520 --> 0:02:28.520 the economy is on more sturdy ground today than they 0:02:28.560 --> 0:02:34.120 thought in those weeks after that news. But the economy 0:02:34.240 --> 0:02:37.440 still is quite robust in the markets that we served, 0:02:37.560 --> 0:02:39.600 as you know, Connect one is in the New York 0:02:39.639 --> 0:02:42.280 metro market in New Jersey, New York now Long Island 0:02:42.919 --> 0:02:47.200 in a pretty big way, and the vast majority over 0:02:47.240 --> 0:02:50.720 the client base that we have is still seeing strong 0:02:50.760 --> 0:02:54.360 demand for products and services, a lot of service oriented businesses. 0:02:54.440 --> 0:02:58.560 There's still an enormous amount of demand for housing, for apartments, 0:02:58.680 --> 0:03:04.799 for all types of construction, warehousing, uh, even office, which has, 0:03:04.960 --> 0:03:08.400 as you know, been you know, the subject of you know, 0:03:08.480 --> 0:03:11.560 a lot of conversation over the last two two or 0:03:11.560 --> 0:03:16.040 three years or so, has is seeing a tremendous rebound 0:03:16.120 --> 0:03:18.760 As we're moving, you know, through this period of time. 0:03:18.840 --> 0:03:22.000 I'm getting to a few questions from loyal listener Ryan 0:03:22.040 --> 0:03:26.680 Horan reaching out over the instant Bloomberg. He's glad we're 0:03:26.720 --> 0:03:28.800 talking to you because a great check of small business 0:03:28.840 --> 0:03:32.440 and the consumer. He's curious about any worrying trends or 0:03:32.480 --> 0:03:35.760 any pullback in underwriting that you're seeing. Are you adding 0:03:35.800 --> 0:03:38.040 to reserves to shield any non performing loans? 0:03:39.440 --> 0:03:42.040 You know, most banks are reporting that they're seeing a 0:03:42.080 --> 0:03:45.760 fairly benign credit perspective out there. I know there was 0:03:45.840 --> 0:03:49.480 a lot of tariff talk UH sixty days or so ago, 0:03:49.640 --> 0:03:53.000 and a lot of investors were very concerned about how 0:03:53.080 --> 0:03:57.080 tariffs may impact bank earnings, you know, through the through 0:03:57.080 --> 0:03:59.920 the credit cycle, through any sort of credit cycle that's 0:04:00.120 --> 0:04:03.760 really quite diminished these you know, recently in the past 0:04:03.760 --> 0:04:07.640 few days or weeks UH, and banks are still reporting 0:04:07.680 --> 0:04:12.040 a fairly benign credit period. There are certainly one offs, 0:04:12.080 --> 0:04:14.600 as we would always expect there to be, and there's 0:04:14.640 --> 0:04:18.200 appropriate reserving going on at most banks, But there's nothing 0:04:18.440 --> 0:04:22.360 systematic that's out there that where banks are feeling that 0:04:22.400 --> 0:04:25.039 there are particular segments of the market that are showing 0:04:25.760 --> 0:04:28.040 more signs of weakness than than normal. 0:04:28.279 --> 0:04:28.760 Why is that? 0:04:32.920 --> 0:04:36.000 When we start I always start with we have a 0:04:36.160 --> 0:04:40.840 four percent unemployment rate. Everyone has a job, and anyone 0:04:40.839 --> 0:04:43.760 who's looking for a job can get a job, and 0:04:43.839 --> 0:04:48.680 so things are good. People are getting raised, There's, you know, 0:04:48.880 --> 0:04:53.680 plenty of opportunity in the market. There's been an enormous 0:04:53.720 --> 0:04:56.960 amount of liquidity put in the market over the last 0:04:57.040 --> 0:05:01.719 dozen years or so. That is just driving our economy 0:05:01.800 --> 0:05:04.600 to all time highs. The market is reacting to that. 0:05:05.240 --> 0:05:08.480 You can't buy a car, you people are waiting in 0:05:08.520 --> 0:05:12.560 line for homes and apartments. Luxury goods are on fire. 0:05:13.080 --> 0:05:16.360 You go to the airport, you can't get on a plane. 0:05:16.640 --> 0:05:20.160 It's the economy. I keep saying the economy is robust, 0:05:20.160 --> 0:05:23.440 and everyone keeps challenging me why I use that word. Well, 0:05:23.480 --> 0:05:27.240 it just is. And so all of these things are 0:05:27.320 --> 0:05:30.040 driving GDP is growing it over three three and a 0:05:30.080 --> 0:05:34.520 half percent. That's what's driving. What's going on, notwithstanding all 0:05:34.560 --> 0:05:36.440 the news that you're hearing about, you know a lot 0:05:36.480 --> 0:05:41.120 of global issues and other you know political you know 0:05:41.160 --> 0:05:43.000 craziness that's going on in the marketplace. 0:05:43.080 --> 0:05:44.400 Well, what do you make you know, we talked the 0:05:44.440 --> 0:05:48.400 retail sector earlier with Dana Telsey, and we talked about 0:05:48.800 --> 0:05:53.560 everyone trading down. So you're seeing discount retail doing better 0:05:53.600 --> 0:06:01.480 than most airlines pulling guidance. It feels like there's stuff brewing, 0:06:02.160 --> 0:06:05.480 and I think it's safe to say that employers are 0:06:05.680 --> 0:06:10.279 really gun shy about letting go of workers. There is 0:06:10.320 --> 0:06:13.880 some labor hoarding going on because they remember all too well, Frank, 0:06:14.120 --> 0:06:16.600 what happened after COVID and nobody could find workers, right. 0:06:17.000 --> 0:06:20.320 So I just you know, I just wonder if you've 0:06:20.320 --> 0:06:21.279 seen a lot of economies. 0:06:21.320 --> 0:06:23.240 I know I ask you this all the time, but 0:06:23.279 --> 0:06:27.159 I just do wonder, are you hearing anything autecnotally where 0:06:27.160 --> 0:06:30.040 people are like, we're a little nervous and you know, 0:06:30.160 --> 0:06:32.400 these tariffs are more onerous or yeah. 0:06:32.640 --> 0:06:36.760 Yeah, I think we are seeing consumers being a bit 0:06:36.880 --> 0:06:39.960 more price sensitive, and I think they are, you know, 0:06:40.000 --> 0:06:43.480 maybe not spending as lavishly as they might have in 0:06:43.520 --> 0:06:45.880 the past, and they got a little shook up with 0:06:45.960 --> 0:06:49.680 the tariffs, and they're looking at some specific products that 0:06:50.000 --> 0:06:52.720 you know, may have changed in price. There's been some 0:06:52.920 --> 0:06:56.359 hoarding going on that I do think impacted some of 0:06:56.400 --> 0:06:59.920 that consumer spending. I know for a fact that's impacted 0:07:00.200 --> 0:07:03.440 you know, building supplies and building goods. You know, people 0:07:03.600 --> 0:07:07.560 front loaded buying things and anticipation of the tariffs. So 0:07:07.600 --> 0:07:11.080 there's a lot of turbulence going on in the marketplace today. 0:07:11.720 --> 0:07:15.560 My read, however, is though if you strip out you know, 0:07:16.480 --> 0:07:21.800 some of the you know, gas and tariff related items 0:07:21.800 --> 0:07:25.440 out of the consumer spending, you'll actually see numbers were 0:07:25.440 --> 0:07:29.120 actually up a bit, not down. And even what they're 0:07:29.160 --> 0:07:31.800 reporting that that you know, the consumer spending was down 0:07:31.840 --> 0:07:34.680 a bit, it's down less than one percent or point 0:07:34.840 --> 0:07:38.360 something percent, So it's not a it's not a sea 0:07:38.480 --> 0:07:41.800 change that's going on. There is you know, some volatility here, 0:07:41.840 --> 0:07:45.600 but overall, I still see I don't I do not 0:07:45.760 --> 0:07:49.080 see a recession, and I still see a fairly robust 0:07:49.120 --> 0:07:51.240 economy ahead, you. 0:07:51.200 --> 0:07:56.160 Know, I I we're talking to you on Tuesday, June seventeenth, 0:07:56.200 --> 0:07:58.200 the day before we hear from Fed Shair J. 0:07:58.360 --> 0:07:58.800 Powell. 0:07:59.120 --> 0:08:00.640 We don't know what he's going to say say. I 0:08:00.680 --> 0:08:02.280 think I know what he's gonna say to some question 0:08:02.560 --> 0:08:05.080 when he answered some questions specifically about politics and his 0:08:05.120 --> 0:08:07.400 own future, because he said those same answers for months. 0:08:08.320 --> 0:08:10.760 But Frank, I'm curious what you see of the as 0:08:10.760 --> 0:08:13.600 the path of the Federal Reserve for the remainder of 0:08:13.640 --> 0:08:15.679 the year. Give us your dot plot. 0:08:16.440 --> 0:08:18.760 Well, based on what I just said to you if that, 0:08:19.000 --> 0:08:22.440 if that in fact is what's going on in the economy, 0:08:23.080 --> 0:08:25.680 then the expectation has to be that the FED does 0:08:25.760 --> 0:08:29.080 not lower rates because the economy is still quite strong, 0:08:29.680 --> 0:08:33.760 and so my belief would be that you'll see a 0:08:34.880 --> 0:08:38.840 You will definitely see some commentary about the uncertainty that 0:08:39.240 --> 0:08:41.719 lies in the marketplace as we move forward. There are 0:08:41.760 --> 0:08:44.600 lots of things to be uncertain about. You know, tariff's 0:08:44.640 --> 0:08:48.080 being won, the war in the Middle East, the war 0:08:48.120 --> 0:08:50.560 in Ukraine, and how those things are impacting you know, 0:08:50.679 --> 0:08:54.720 gasoline prices, which happened to be down, but you know, 0:08:54.840 --> 0:08:58.280 could rise dramatically depending on where things go. So there's 0:08:58.320 --> 0:09:00.680 going to be a lot of things that are inputs 0:09:00.720 --> 0:09:03.440 that the FED will be looking at that will determine 0:09:03.800 --> 0:09:05.960 what's going to happen in the future, and they may 0:09:06.000 --> 0:09:09.400 give some guidance about what they think those things would 0:09:09.400 --> 0:09:13.280 be going forward. The market expects the FED to cut 0:09:13.360 --> 0:09:17.120 at least one, if not two times this year. I 0:09:17.160 --> 0:09:20.240 believe it'll be closer to one, and be careful what 0:09:20.280 --> 0:09:24.400 you wish for. I do believe that again, this economy 0:09:24.440 --> 0:09:27.000 will continue to roll on and the FED is going 0:09:27.040 --> 0:09:29.600 to have a tough time to lower interest rates as 0:09:29.600 --> 0:09:31.160 we move through the cycle, Frank, I. 0:09:31.120 --> 0:09:31.760 Do wonder too. 0:09:31.880 --> 0:09:34.320 You know, this was an interesting past earning cycle where 0:09:34.360 --> 0:09:36.960 we actually did have folks give you two scenarios like, 0:09:37.160 --> 0:09:39.720 if everything's good, here's what our numbers will be. If 0:09:39.720 --> 0:09:42.679 they're not, here's you know where they will be, and 0:09:42.760 --> 0:09:44.560 quite arrange. And I'm not saying everybody did that, but 0:09:44.600 --> 0:09:46.640 it was just for those of us who have covered 0:09:47.360 --> 0:09:50.200 publicly held companies for a long time and earned the 0:09:50.240 --> 0:09:53.160 earning season. I don't remember people doing that. I've seen 0:09:53.160 --> 0:09:59.000 people pulling guidance a lot, but not giving scenarios. How 0:09:59.000 --> 0:10:01.640 many heurius about the conversation do you have with your team? 0:10:01.679 --> 0:10:04.280 Do you talk about a lot of different scenarios in 0:10:04.320 --> 0:10:07.040 this environment because it could go a lot of different ways, 0:10:07.360 --> 0:10:09.840 or no, you feel much more confident to say this 0:10:10.000 --> 0:10:11.880 is probably the course, and here's why we. 0:10:11.800 --> 0:10:13.520 Can make decisions based on this course. 0:10:14.440 --> 0:10:19.240 We definitely have those discussions. We're definitely keeping our ear 0:10:19.440 --> 0:10:23.599 close to what's happening. And the thing that I constantly 0:10:23.720 --> 0:10:26.880 bring back to the table is, let's listen to what 0:10:27.080 --> 0:10:30.679 our clients are telling us. And so you know, it's 0:10:30.679 --> 0:10:32.360 one thing for us to predict what we think is 0:10:32.440 --> 0:10:35.600 going to happen based on facts, figures, whatever. But earing 0:10:35.679 --> 0:10:39.400 in from our clients and what they're experiencing in each 0:10:39.440 --> 0:10:41.840 of the various segments that we do business with, to me, 0:10:42.480 --> 0:10:45.640 is much more important than any view we may have 0:10:46.600 --> 0:10:51.439 on our own. So we're still hearing that folks in 0:10:51.559 --> 0:10:56.280 general are in good shape. There's a fair amount of 0:10:56.280 --> 0:11:00.920 liquidity still in you know, folks checking accounts and their 0:11:00.960 --> 0:11:06.040 ability to borrow still remains strong. And so we continue 0:11:06.080 --> 0:11:10.120 to see a fairly robust economy going forward. And that's 0:11:10.120 --> 0:11:13.720 what we're modeling for and that's what we're predicting for 0:11:13.760 --> 0:11:14.240 the future. 0:11:14.320 --> 0:11:17.520 Some people say uncertainty. Frank's word is robust. That's the 0:11:17.559 --> 0:11:19.600 word he is. He's used over and over again. 0:11:19.880 --> 0:11:24.720 Co existent, You've been consistent, and uncertainty is is a 0:11:24.840 --> 0:11:29.160 challenge though, and it is impacting you know, people's decision 0:11:29.240 --> 0:11:32.680 making ability. And so, you know, one of the things 0:11:32.679 --> 0:11:35.240 that I always look at and always counsel people is, hey, 0:11:35.320 --> 0:11:37.959 look at what's really going on on the ground, and 0:11:38.120 --> 0:11:40.120 you know, try not to get caught up in all 0:11:40.160 --> 0:11:42.720 the headlines of you know, what may be going on 0:11:42.800 --> 0:11:45.719 around you that don't that doesn't necessarily impact you. I've 0:11:45.760 --> 0:11:48.360 had conversations with clients we're talking to me about tariffs, 0:11:48.360 --> 0:11:52.200 and tariffs don't actually impact their business, right, So I'm saying, well, okay, 0:11:52.240 --> 0:11:56.520 why are we focused on that? So uncertainty absolutely can 0:11:56.640 --> 0:11:58.880 change the direction of the economy. 0:11:59.480 --> 0:12:02.319 That was Frank Sorrantino, chairman and CEO at the publicly 0:12:02.360 --> 0:12:05.320 held New Jersey based community bank connect One Bank Corp. 0:12:05.440 --> 0:12:08.000 You're listening to Bloomberg Business Week coming up. Banking a 0:12:08.000 --> 0:12:09.520 great way to get a read on what's going on 0:12:09.600 --> 0:12:12.480 right now, So too is the good Old US consumer. 0:12:12.679 --> 0:12:15.080 Dana Telsey is up next on retail. 0:12:15.080 --> 0:12:18.600 Expectations are second half of July into back to school 0:12:18.880 --> 0:12:21.240 is when you'll see the price optics and when you 0:12:21.280 --> 0:12:24.080 speak to companies, it'll more be on some of the 0:12:24.080 --> 0:12:26.480 goods that are newer and have more product or make 0:12:26.559 --> 0:12:29.280 or embellishment in them. Essentials are going to be watched 0:12:29.360 --> 0:12:33.280 very carefully. The phrasing is surgical and select items where 0:12:33.280 --> 0:12:36.360 there are price increases. That's where it will happen. 0:12:36.640 --> 0:12:38.080 It won't be across everything. 0:12:38.679 --> 0:12:39.760 This is Bloomberg. 0:12:50.400 --> 0:12:54.600 This is Bloomberg Business Week Daily with Carol Masser and 0:12:54.679 --> 0:12:57.240 Tim Steneveek on Bloomberg Radio. 0:12:58.320 --> 0:13:02.560 US monetary policymakers voted unanimously to hold US interest rates 0:13:02.559 --> 0:13:06.040 study for a fourth straight meeting this past week on Wednesday, 0:13:06.080 --> 0:13:08.840 as they await clarity on whether tariffs will leave a 0:13:08.840 --> 0:13:12.400 one time or more lasting mark on inflation. FED Chair 0:13:12.480 --> 0:13:14.200 J Powell said is still unclear how much of the 0:13:14.200 --> 0:13:17.000 bill will fall on the shoulders of US consumers, but 0:13:17.200 --> 0:13:19.760 he expects to learn more about tariffs this summer. 0:13:19.920 --> 0:13:21.640 The amount of the tariff effects, the size of the 0:13:21.679 --> 0:13:24.040 tariff effects, their duration, and the time it will take 0:13:24.040 --> 0:13:27.640 her all highly uncertain. So that is why we think 0:13:28.040 --> 0:13:30.400 the appropriate thing to do is to hold where we 0:13:30.440 --> 0:13:33.240 are as we learn more, and we think our policy 0:13:33.280 --> 0:13:35.640 stances is in a good place where we're well positioned 0:13:35.679 --> 0:13:37.079 to react to incoming developments. 0:13:37.360 --> 0:13:40.319 After the Powell news conference, we caught up with Ross Mayfield, 0:13:40.440 --> 0:13:44.800 investment strategists at BAIRED Private Wealth Management in Bloomberg Intelligence, 0:13:44.880 --> 0:13:48.760 Chief US rate strategist Ira Jersey. Iira put the decision 0:13:48.960 --> 0:13:50.400 in some context for US. 0:13:50.920 --> 0:13:53.199 Yeah, I think there's some people who think that firstly, 0:13:53.280 --> 0:13:55.600 that the Federal Reserve does have to cut interest rates 0:13:55.600 --> 0:13:58.000 because they see cracks in certain parts of the economy 0:13:58.000 --> 0:14:01.000 and then there's other people who are fearful of tariffs 0:14:01.000 --> 0:14:04.880 and think that, you know, inflation might increase. And you know, 0:14:05.120 --> 0:14:08.560 I this was as I expected. And what's always interesting 0:14:08.559 --> 0:14:12.080 about this, you know, and we have to as market 0:14:12.080 --> 0:14:15.480 professionals kind of parse every single thing coming out of 0:14:15.480 --> 0:14:16.560 the FED Reserve. 0:14:17.720 --> 0:14:19.680 Is the reaction function? Right? 0:14:19.720 --> 0:14:22.240 What is the Fed's reaction function? So we heard a 0:14:22.360 --> 0:14:25.800 number of if van statements from Jare Powell, and you know, 0:14:25.840 --> 0:14:29.240 those fan statements could mean, you know, give us at 0:14:29.320 --> 0:14:32.040 least a little bit of an indication under what circumstances 0:14:32.040 --> 0:14:33.720 they'll make any kind of policy adjustments. 0:14:33.760 --> 0:14:35.480 Hey, Ross, come on in here and just give us 0:14:35.560 --> 0:14:39.240 your general overview of how the meeting went, your expectations, 0:14:39.280 --> 0:14:40.840 Where they met, where they not met. What was your 0:14:40.840 --> 0:14:41.520 big takeaway? 0:14:41.840 --> 0:14:42.040 Yeah? 0:14:42.040 --> 0:14:43.040 I think they were largely met. 0:14:43.080 --> 0:14:45.720 I mean, don't I don't know anyone who expected much 0:14:45.800 --> 0:14:48.360 action at this meeting or a resolution of all the 0:14:48.440 --> 0:14:51.480 uncertainty that they've been discussing at this meeting, given that 0:14:51.520 --> 0:14:54.320 we're still in this kind of tarff pause. You know, 0:14:54.360 --> 0:14:57.040 we have the potential for oil prices to swing and 0:14:57.080 --> 0:14:58.160 impact headline inflation. 0:14:58.320 --> 0:15:00.400 So I didn't expect much. 0:15:01.440 --> 0:15:03.560 I'm on the side of the camp that thinks the 0:15:03.600 --> 0:15:06.320 FED should be a little more aggressive and cutting. I 0:15:06.400 --> 0:15:09.760 think the cracks in the labor market are starting to 0:15:09.800 --> 0:15:12.280 really accumulate. And to hear FED sch our pals say 0:15:12.280 --> 0:15:14.440 that the labor market is I forget the exact language, 0:15:14.480 --> 0:15:15.640 but on solid footing. 0:15:15.440 --> 0:15:17.720 Yeah, he wouldn't agree with you. I think ross that 0:15:17.880 --> 0:15:20.520 the cracks are starting to appear. What data are you 0:15:20.680 --> 0:15:22.040 paying attention to that he's not. 0:15:22.400 --> 0:15:27.000 Yeah, certainly, the anecdotal evidence of layoffs is rising. But 0:15:27.040 --> 0:15:29.640 if you look at something like warn notices or initial 0:15:29.640 --> 0:15:32.840 claims and continued claims, I mean we're sitting at multi 0:15:32.920 --> 0:15:35.280 year highs for a lot of those levels. If you 0:15:35.320 --> 0:15:39.320 look at some of the employment statistics about people fresh 0:15:39.360 --> 0:15:41.280 into the job for us out of college, you know 0:15:41.280 --> 0:15:44.720 that the unemployment rate there is a not record highs 0:15:44.720 --> 0:15:47.440 by any means, but is significantly higher than the overall 0:15:47.440 --> 0:15:49.920 on employment rate. So I think it's a labor market 0:15:49.960 --> 0:15:53.360 where we have tight supply, and especially in this you know, 0:15:53.360 --> 0:15:56.120 given the immigration policy, but it is not a robust 0:15:56.160 --> 0:15:59.480 labor market and we are well north of a neutral policy. 0:15:59.520 --> 0:16:03.160 I think that getting to neutral should be more more 0:16:03.160 --> 0:16:05.240 of a goal for the Fed who doesn't seem to 0:16:05.280 --> 0:16:06.880 want to get there until the end of twenty twenty 0:16:06.920 --> 0:16:08.040 six if you look at the CCP. 0:16:08.280 --> 0:16:10.560 All right, come on in uh irah. 0:16:10.680 --> 0:16:10.880 Yeah. 0:16:11.000 --> 0:16:12.520 So I just want to want to say I think 0:16:12.560 --> 0:16:15.640 that's part of this debate, like where is neutral? And 0:16:15.960 --> 0:16:18.760 you know there's you know, the FED will say that 0:16:18.800 --> 0:16:22.800 they're still have restrictive policy, but a lot of the 0:16:22.840 --> 0:16:26.800 other information that some of us me included, have looked 0:16:26.800 --> 0:16:29.600 at suggests that actually they're probably pretty close to neutral. 0:16:29.960 --> 0:16:33.480 So unless there's a deceleration of the economy, the FED 0:16:33.560 --> 0:16:37.480 probably doesn't have to adjust interest rates. Now, the question is, 0:16:37.520 --> 0:16:41.520 and to Cross's point, like they can't wait until the 0:16:41.640 --> 0:16:45.160 economy is clearly really bad before they cut interest rates. 0:16:45.600 --> 0:16:48.960 But I do suspect that because of this overhang of 0:16:49.080 --> 0:16:53.120 inflation and the recent past episode that we just had, 0:16:53.520 --> 0:16:55.840 that the FED will try to wait until almost the 0:16:55.920 --> 0:16:58.560 last minute, and then once it cuts, it'll cut faster. 0:16:58.640 --> 0:16:59.600 And I go back to the. 0:16:59.520 --> 0:17:00.680 Statement that J. 0:17:00.880 --> 0:17:03.480 Powell made in May at his at the press conference 0:17:03.640 --> 0:17:05.440 where he said, like, look, we know how to deal 0:17:05.520 --> 0:17:08.640 with a weak economy. We could just cut more aggressively 0:17:09.040 --> 0:17:13.400 and get down below the neutral rate to stimulate the economy. 0:17:13.960 --> 0:17:15.480 We don't want to have to go the other way 0:17:15.520 --> 0:17:19.080 and have to hike interest rates rate if inflation were 0:17:19.119 --> 0:17:20.720 to remain relatively high. 0:17:21.080 --> 0:17:24.120 Hey, Ira, a couple more to you, and then we're 0:17:24.119 --> 0:17:27.240 going to bring ross back in here. But I'm wondering 0:17:27.480 --> 0:17:31.159 about a couple of things here. One specifically, is the 0:17:31.280 --> 0:17:34.680 question of AI and the labor force. The bed chair 0:17:34.840 --> 0:17:37.440 was asked about that. Carol, and I cannot stop talking 0:17:37.480 --> 0:17:40.320 about this. What did you make of the way that 0:17:40.600 --> 0:17:43.560 he answered this question about AI and the effect on 0:17:43.560 --> 0:17:44.120 the labor force? 0:17:44.119 --> 0:17:45.600 Feels like there's a pig pile of all of a sudden, 0:17:45.600 --> 0:17:47.760 people are waking up and saying, Okay, there's going to 0:17:47.760 --> 0:17:49.600 be a lot of jobs lost because of AI. 0:17:50.560 --> 0:17:53.600 Well, there's always disruptions. Whenever you have new technologies, there's 0:17:53.600 --> 0:17:56.639 always disruptions and you wind up having you know, layoffs 0:17:56.640 --> 0:17:59.880 in some sectors, and then the new economy creates other 0:18:00.160 --> 0:18:04.040 jobs and new jobs. We've done that over centuries since, 0:18:04.320 --> 0:18:08.119 you know, even before the Industrial Revolution, you've always seen 0:18:09.160 --> 0:18:11.200 you know, things replacing other things. I mean, we did 0:18:11.200 --> 0:18:13.240 it thirty years ago, right when you think about the Internet, 0:18:13.600 --> 0:18:16.679 and you know, in nineteen ninety five, very. 0:18:16.560 --> 0:18:17.800 Few firms had websites. 0:18:17.880 --> 0:18:20.760 Yet today everyone does, right and this is kind of 0:18:20.760 --> 0:18:24.160 an extension of that. So we created a whole new 0:18:24.160 --> 0:18:27.520 economy around the Internet that now is creating more jobs. 0:18:27.560 --> 0:18:31.399 Whereas robotics and other things like manufacturing, they're less people 0:18:31.400 --> 0:18:34.119 are needed to do the same amount of work in 0:18:34.200 --> 0:18:36.320 labor than was needed in nineteen seventies. 0:18:36.520 --> 0:18:40.000 That's Bloomberg Intelligence Chief US rate strategist Ira Jersey and 0:18:40.119 --> 0:18:41.440 Ross Mayfield of Bear. 0:18:41.720 --> 0:18:45.399 We also got some economic data this past week, specifically 0:18:45.520 --> 0:18:48.600 US retail sales falling nine tenths of a percentage point 0:18:48.640 --> 0:18:50.920 in the month of May. That is the largest decline 0:18:50.920 --> 0:18:54.000 since the start of the year, with seven of thirteen 0:18:54.000 --> 0:18:55.480 categories posting declines. 0:18:55.600 --> 0:18:57.920 We've got a trusted a voice on retail, somebody who's 0:18:57.920 --> 0:19:00.960 analyzed this area through multiple cycles and gets into the 0:19:01.040 --> 0:19:03.800 details like no one else. The founder, CEO and chief 0:19:03.800 --> 0:19:06.840 Research Officer of Telsey Advisory Group, Dana Telsea here in 0:19:06.880 --> 0:19:09.520 our Bloomberg BusinessWeek Studio. I want to start with the 0:19:09.520 --> 0:19:12.920 big picture data data, the data that we got earlier today, 0:19:12.960 --> 0:19:15.920 the largest decline since the start of the year. Obviously, 0:19:16.359 --> 0:19:18.400 people not buying cars has a lot to do with this, 0:19:18.960 --> 0:19:22.000 But is it proof that tariffs do affect the way 0:19:22.080 --> 0:19:23.760 that customers think about buying things? 0:19:24.119 --> 0:19:26.239 So a couple things you have, Yes, it was one 0:19:26.280 --> 0:19:28.360 of the weakest months. You look at cars, which were 0:19:28.440 --> 0:19:31.360 the real week link it's twenty percent of retail sales. 0:19:31.640 --> 0:19:33.520 You've seen some of the other data points where the 0:19:33.680 --> 0:19:37.560 sporting goods department stores frankly did a touch better. I 0:19:37.560 --> 0:19:40.400 think overall, the pull forward of sales, I think we're 0:19:40.400 --> 0:19:42.840 seeing some of that. We put out a tracker every 0:19:42.920 --> 0:19:45.879 Tuesday of eighty items and how the prices have changed. 0:19:46.040 --> 0:19:47.879 We've done this for nine weeks now, we're going to 0:19:47.880 --> 0:19:50.240 continue to do it. We haven't seen much change in 0:19:50.280 --> 0:19:54.320 prices yet. Expectations are second half of July into back 0:19:54.359 --> 0:19:57.280 to school is when you'll see the price upticks. And 0:19:57.320 --> 0:20:00.239 when you speak to companies, it'll more be on some 0:20:00.280 --> 0:20:02.440 of the goods that are newer and have more product 0:20:02.520 --> 0:20:05.240 or make or embellishment in them. Essentials are going to 0:20:05.240 --> 0:20:08.840 be watched very carefully. The phrasing is surgical and select 0:20:08.960 --> 0:20:12.720 items where there are price increases. That's where it will happen. 0:20:12.960 --> 0:20:15.679 It won't be across everything, but the mood and the 0:20:15.720 --> 0:20:19.080 sentiment look at the numbers you got from the sentiment index. 0:20:19.200 --> 0:20:22.439 Those are better than expected, a little surprising given the 0:20:22.480 --> 0:20:25.040 headwinds that you're seeing in some of the services. The 0:20:25.160 --> 0:20:28.040 restaurant numbers certainly continue to show a downturn. 0:20:28.160 --> 0:20:30.640 So yeah, so add it up for us, like you've 0:20:30.640 --> 0:20:33.200 seen cycles, you've seen stress points that we have gone through, 0:20:33.200 --> 0:20:35.840 whether you know great financial crisis code, like, there's a 0:20:35.880 --> 0:20:36.560 lot of things. 0:20:37.280 --> 0:20:37.720 How would you. 0:20:37.720 --> 0:20:38.920 Describe the retail environment? 0:20:38.920 --> 0:20:40.479 And I know it's hard to throw everything in one 0:20:40.520 --> 0:20:42.159 bucket because there's so many different verticals. 0:20:42.200 --> 0:20:44.840 I think right now it's more uncertain the change that's 0:20:44.880 --> 0:20:48.359 different this retail environment than others. Even luxury has come down, 0:20:48.720 --> 0:20:52.160 even your luck, so your high income spender isn't spending 0:20:52.200 --> 0:20:54.439 in the same magnitude and you don't have the flood 0:20:54.480 --> 0:20:56.760 of taurusts that have come to the United States like 0:20:56.800 --> 0:20:59.600 you had in the past to buy those discretionary items. 0:21:00.000 --> 0:21:03.840 We still seeing essentials, grocery, that's where the consumer is spending. 0:21:04.040 --> 0:21:07.119 They'll spend selectively on some services, but take a look. 0:21:07.280 --> 0:21:10.960 We've seen airfares well Cojet Blue today talk about reduced demand. 0:21:11.240 --> 0:21:13.640 So how I added up is it feels a little 0:21:13.680 --> 0:21:16.919 bit more uncertain because of the volatility, and it's not 0:21:17.359 --> 0:21:21.680 complete down trends across the board. It's very selective and 0:21:21.800 --> 0:21:24.480 I think could it come yes. I think it's more 0:21:24.640 --> 0:21:26.720 let's go into the summer through the second half of 0:21:26.720 --> 0:21:29.719 the summer and see what these price increases are. But 0:21:29.760 --> 0:21:32.640 there's more concern over slowing than growing. 0:21:33.000 --> 0:21:35.600 It's interesting that you brought in tourism here, especially when 0:21:35.600 --> 0:21:38.360 it comes to retail. I'm wondering on the other side 0:21:38.359 --> 0:21:41.520 of things, We've heard from executives and companies, including Coca Cola, 0:21:41.640 --> 0:21:45.400 that the crackdown on immigration is actually affecting their sales. 0:21:45.680 --> 0:21:48.840 I'm wondering from a retail environment, is the ice crackdown 0:21:48.920 --> 0:21:52.360 on undocumented immigrants weighing on sales for any retailers out 0:21:52.359 --> 0:21:55.000 there at this point? People being afraid to shop, people 0:21:55.040 --> 0:21:56.399 afraid to go out, that sort of thing. 0:21:56.400 --> 0:21:58.320 And you think about it for restaurants in terms of 0:21:58.320 --> 0:22:01.239 the workers working in restaurants. You've certainly seen it some 0:22:01.280 --> 0:22:04.080 of the low end points and the retailers. It's interesting 0:22:04.119 --> 0:22:07.480 that the dollar stores performed okay, so that's where you 0:22:07.520 --> 0:22:10.800 would think you would, yeah, show up, but it hasn't 0:22:10.800 --> 0:22:13.760 shown up there as much. And also you look at Walmart. 0:22:13.920 --> 0:22:16.639 Walmart's sales were better than expected. 0:22:16.480 --> 0:22:18.480 So we are seeing I hate to say trading down. 0:22:18.560 --> 0:22:20.840 I feel so like not nice, but I just feel 0:22:20.840 --> 0:22:23.120 like maybe just people are being smart right I'm looking 0:22:23.160 --> 0:22:23.680 for the best bar. 0:22:23.840 --> 0:22:26.560 They are trading down. Look where Walmart has talked about 0:22:26.560 --> 0:22:29.720 the biggest growth coming from is their highest income consumer. 0:22:30.080 --> 0:22:32.280 You've seen it from others. Look at TJ Max on 0:22:32.320 --> 0:22:34.919 the off price side. You've seen what they have and 0:22:34.960 --> 0:22:38.080 they're an umbrella for pricing, so they'll always be lower 0:22:38.160 --> 0:22:39.720 than everyone else. And I think they're going to be 0:22:39.720 --> 0:22:42.040 a beneficiary as we go through the back half of 0:22:42.080 --> 0:22:42.360 the year. 0:22:42.640 --> 0:22:45.679 When you and I spoke earlier this spring, you mentioned 0:22:45.680 --> 0:22:48.320 that we could be seeing some empty shelves later this year. 0:22:48.920 --> 0:22:51.639 Has that materialized in anything that you cover and is 0:22:52.119 --> 0:22:53.360 that still a possibility. 0:22:53.600 --> 0:22:56.959 It's a possibility. It hasn't materialized yet because the goods 0:22:56.960 --> 0:22:59.600 that are on the shelves right now, there's still some 0:22:59.640 --> 0:23:03.600 of the low cost goods. Ordering for holiday is happening 0:23:03.640 --> 0:23:06.919 right now, and it would show up frankly first when 0:23:06.960 --> 0:23:09.160 you get to the holiday season. But you know what 0:23:09.280 --> 0:23:13.399 you have TJX buyers overseas in China right now looking 0:23:13.440 --> 0:23:16.440 to take over and take control of and acquire those 0:23:16.520 --> 0:23:18.840 canceled items, So go to the off pricers. 0:23:19.080 --> 0:23:21.959 Yeah, kind of fascinating. Well, you know, and I just wonder, 0:23:22.480 --> 0:23:25.119 you know, ultimately in terms of supply chains, right, we 0:23:25.160 --> 0:23:28.120 talked about so much of that because of the tariffs, Dana. 0:23:28.160 --> 0:23:31.320 When you think about you know, clothes and things like that, 0:23:31.520 --> 0:23:34.320 I mean, it's already been moving away from China, correct, Like, 0:23:34.359 --> 0:23:37.520 give me some perspective on where all of the stuff 0:23:37.560 --> 0:23:40.000 that we are wearing, where it really is manufacting. 0:23:39.520 --> 0:23:41.919 Where things are coming from. Yes, they've all looked to 0:23:42.000 --> 0:23:47.520 reduce their exposure to China. Vietnam has been very popular, Mexico, Cambodia, 0:23:47.760 --> 0:23:50.760 Brazil hard to come back into North America and the 0:23:50.920 --> 0:23:54.480 US given the high labor costs. But it's been Mexico, 0:23:54.560 --> 0:23:58.040 it's been Vietnam, it's been Brazil and Cambodia that we 0:23:58.119 --> 0:23:59.639 hear goods are going towards. 0:24:00.000 --> 0:24:01.360 How much is still made in China. 0:24:01.720 --> 0:24:05.359 Depends on which type of retail retailer. Everyone is trying 0:24:05.359 --> 0:24:08.399 to get to single digits. No one wants to stick 0:24:08.600 --> 0:24:09.920 stick there at double digits. 0:24:10.119 --> 0:24:12.960 Connect was that happening ahead of it's. 0:24:12.840 --> 0:24:15.960 Been happening since the last time we had tariffs. Everyone 0:24:16.000 --> 0:24:18.479 had accelerated it. But keep in mind one of the 0:24:18.480 --> 0:24:22.600 beneficiies of China labor costs are compelling, and the make 0:24:22.680 --> 0:24:25.399 that they put into the product and the expertise is 0:24:25.560 --> 0:24:29.440 faster and better than others. As a long time sourcing 0:24:29.480 --> 0:24:32.359 executive always tells me, there's no China like China. 0:24:32.600 --> 0:24:33.679 Wow, Okay, but it. 0:24:33.680 --> 0:24:36.040 Seems like Dana, at least for President Trump. It doesn't 0:24:36.080 --> 0:24:38.600 matter if it's made in China or it's made in Vietnam. 0:24:39.000 --> 0:24:40.960 It's not made in the US. It's going to be 0:24:41.040 --> 0:24:43.440 hit with a tariff. Yes, So how are retailers dealing 0:24:43.440 --> 0:24:43.679 with that? 0:24:43.920 --> 0:24:46.399 They'll raise prices on some selective goods, and it's a 0:24:46.400 --> 0:24:49.440 third to third, A third, a third they'll diversify their sourcing, 0:24:49.680 --> 0:24:52.560 a third they'll share the cost of the manufacture, and 0:24:52.640 --> 0:24:55.320 a third they'll raise prices on select goods to the 0:24:55.400 --> 0:24:55.920 end consumer. 0:24:56.040 --> 0:24:58.920 When you say select goods, do you mean obviously it's 0:24:59.480 --> 0:25:01.240 we can't put them all in the same bucket. 0:25:01.400 --> 0:25:02.400 Higher price goods. 0:25:02.600 --> 0:25:05.480 Higher price goods because the consumer has a higher willingness 0:25:05.520 --> 0:25:06.720 to pay because. 0:25:06.440 --> 0:25:09.399 It's new and different, it's something that isn't a basic okay, 0:25:09.600 --> 0:25:10.280 which makes. 0:25:10.119 --> 0:25:12.399 Me wonder like which companies are going to see it 0:25:12.480 --> 0:25:15.760 hurt in terms of their balance sheets on that you know, 0:25:15.920 --> 0:25:18.760 first quarter retail sales. Right, We've seen all these numbers. 0:25:19.000 --> 0:25:20.680 So which names do you think stand out? Really is 0:25:20.680 --> 0:25:22.240 the biggest winners? Which are the biggest loser? 0:25:22.359 --> 0:25:26.080 You look at Birkenstock with their closed toad shoes, very popular, 0:25:26.280 --> 0:25:28.840 still doing really well. I think that there's. 0:25:28.720 --> 0:25:31.680 Definitely some moment in there that was Dana Telsey, founder 0:25:31.720 --> 0:25:34.040 and CEO of the Telsea Advisory Group. 0:25:33.960 --> 0:25:37.520 Still ahead on Bloomberg Business Week Global Shipping and global 0:25:37.600 --> 0:25:40.320 leaders on edge in today's uncertain environment? 0:25:40.640 --> 0:25:44.240 Or are they the CEO of Synergy Maritime and the 0:25:44.280 --> 0:25:47.520 head of Ireland's Foreign direct Investment Are They're up next? 0:25:47.960 --> 0:25:49.040 This is Bloomberg. 0:25:52.640 --> 0:25:56.840 This is Bloomberg Business Week Daily with Carol Masser and 0:25:56.920 --> 0:25:59.479 Tim Stenovek on Bloomberg Radio. 0:26:00.640 --> 0:26:03.800 This past week, two giant ocean going tankers collided and 0:26:03.840 --> 0:26:06.440 caught fire off the coast of the United Arab Emirates 0:26:06.560 --> 0:26:08.840 near the Strait of Harmmu's energy choke point. 0:26:09.080 --> 0:26:12.240 Separately, two vessels were approached by Iranian boats near the 0:26:12.280 --> 0:26:15.920 Strait of horn Mouz, which is noteworthy during regional tensions. 0:26:16.200 --> 0:26:19.680 The incidents rattled global oil and shipping markets, with forward 0:26:19.680 --> 0:26:23.360 freight agreements rallying an oil tanker rate surging more than 0:26:23.359 --> 0:26:26.120 fifty percent at one point due to the increased tensions. 0:26:26.240 --> 0:26:28.879 The Israel Iran conflict was definitely on the radar of 0:26:28.880 --> 0:26:31.480 the global shipping industry, was really on the mind of 0:26:31.480 --> 0:26:35.399 all of us. Just ask Stamatus Santanus, which we did. 0:26:35.720 --> 0:26:38.360 He is chairman and chief executive officer of the publicly 0:26:38.359 --> 0:26:41.000 held global shipping company Synergy Maritime. 0:26:41.480 --> 0:26:45.160 He's also CEO of United Maritime. United was spun off 0:26:45.160 --> 0:26:48.200 from Synergy back in twenty twenty two. We talked with 0:26:48.280 --> 0:26:50.720 him early in the week and he explained how geopolitical 0:26:50.800 --> 0:26:53.560 uncertainty is forcing him to adjust shipping routes. 0:26:53.680 --> 0:26:55.520 I mean, we were going through the Red Sea all 0:26:55.560 --> 0:26:59.000 the time, connecting let's say Australia to Europe and all that. 0:26:59.440 --> 0:27:01.359 Now we have around the Cape of Good Hope. So 0:27:01.480 --> 0:27:03.760 that has added a lot to the tone mild effect, 0:27:04.040 --> 0:27:06.320 and of course the pollution. Because you do more miles, 0:27:06.320 --> 0:27:09.960 you emit more co twos, it's more expensive for the consumers. 0:27:10.040 --> 0:27:12.879 You go longer distance. So the answer is yes, I mean, 0:27:12.920 --> 0:27:16.040 every little thing that happens or bigger thing, it's good 0:27:16.040 --> 0:27:18.200 for ratees, but but for the Earth, I guess. 0:27:18.000 --> 0:27:20.399 Do you see it getting worse in the strait of 0:27:20.400 --> 0:27:22.960 horm moves anytime in the near future. I know you 0:27:22.960 --> 0:27:25.800 said you're optimistic, and you're optimistic by nature, but that's 0:27:25.880 --> 0:27:28.200 a real energy choke point. As Carol mentioned, I. 0:27:28.119 --> 0:27:30.760 Want to believe that there's nothing serious is going to happen, 0:27:30.840 --> 0:27:33.760 and the collision you had today is not actually a 0:27:33.800 --> 0:27:36.840 product of wars. The shadow fleet. You know, the shadow 0:27:36.880 --> 0:27:39.520 fleet has been going around since the Russian invasion, and 0:27:39.560 --> 0:27:43.119 you have all these undocumented and shadow ships going around, 0:27:43.359 --> 0:27:45.960 and there's like a danger and it's only a miracle 0:27:46.000 --> 0:27:48.840 that we haven't seen more of these things happening because 0:27:48.880 --> 0:27:53.080 of the shadow fleet. It's yeah, that's a product of 0:27:53.119 --> 0:27:54.760 the previous war, not like this war. 0:27:54.920 --> 0:27:56.840 Now, how are you, as someone right who's got to 0:27:56.880 --> 0:27:59.960 watch these things so closely determine like or think about, Okay, 0:28:00.160 --> 0:28:02.240 this is not such a big issue, this could be 0:28:02.280 --> 0:28:03.400 something more substantial. 0:28:03.680 --> 0:28:06.479 Well, we try to be prepared, I mean, except for 0:28:06.520 --> 0:28:09.720 the insurance and stuff we whenever we see like any 0:28:09.760 --> 0:28:12.720 conflict arising, we don't want to put the risk health, 0:28:12.800 --> 0:28:15.560 risk of our crews, of our people, so we just 0:28:15.880 --> 0:28:18.639 stay out of that. And we are lucky to have 0:28:18.800 --> 0:28:21.960 partnered with some of the world's biggest chatters, and whenever 0:28:22.040 --> 0:28:24.520 we tell them that we want to avoid what there is, 0:28:24.840 --> 0:28:26.400 they listen to us, so they're not going to push 0:28:26.480 --> 0:28:27.679 us to go through the war areas. 0:28:27.680 --> 0:28:30.560 What tools do you have on ships to prevent from 0:28:30.600 --> 0:28:33.520 pirate attacks or defend from pirate attacks. 0:28:33.119 --> 0:28:36.520 We I mean, if anyone says that they have sophisticated 0:28:36.520 --> 0:28:40.120 tools avoiding that they're lying because you know, we just 0:28:40.160 --> 0:28:43.000 avoid these areas and whenever we have to cross pirate 0:28:43.040 --> 0:28:46.160 there is, we always have armed guards on board of ships. 0:28:46.920 --> 0:28:48.640 Otherwise there's no other way to do it, no other 0:28:48.640 --> 0:28:49.080 way to do it. 0:28:49.120 --> 0:28:52.400 I mean, whoever says that, yeah, these are commercial ships, 0:28:52.640 --> 0:28:54.600 slow going commercial. 0:28:54.200 --> 0:28:56.200 Ships, targets targets. 0:28:56.280 --> 0:28:57.920 Yeah, so you just avoid it all together. 0:28:58.200 --> 0:29:00.600 It's very big, but yeah, right, super big. 0:29:00.600 --> 0:29:00.880 Okay. 0:29:00.920 --> 0:29:02.360 One thing I want to ask you what's great is 0:29:02.400 --> 0:29:04.360 tim and I love to watch money flows, right, money 0:29:04.360 --> 0:29:06.280 tells you so much, but I also love to watch 0:29:06.360 --> 0:29:08.840 when it comes to transportation. Transportation flows tells us a 0:29:08.880 --> 0:29:11.320 lot about what's going on in the world. The US 0:29:11.320 --> 0:29:16.320 more protectionist policies. How has that impacted global drive? Back 0:29:16.360 --> 0:29:18.520 to Mead, what are you seeing in that regard. 0:29:18.320 --> 0:29:21.560 Well, I'm sureful it is what the right resion eventually, 0:29:22.040 --> 0:29:24.480 but so far it has created a lot of uncertainty. 0:29:24.800 --> 0:29:27.400 A lot of people are just don't know what to do. 0:29:27.520 --> 0:29:31.040 I mean, imports in the United States have really dropped 0:29:31.040 --> 0:29:33.880 significant in the last few months because of the potential 0:29:33.960 --> 0:29:36.040 tartifs that I don't even know if they have kicked 0:29:36.080 --> 0:29:39.160 in or not kicked in already. So we need certainty 0:29:39.200 --> 0:29:41.200 and we need to make sure that people will be 0:29:41.240 --> 0:29:44.360 able to trade always for the benefit of the US 0:29:44.440 --> 0:29:47.080 consumer and always for the benefit of everybody. But it 0:29:47.280 --> 0:29:51.040 really has to be like a dependable and you know, 0:29:51.120 --> 0:29:52.720 to know what you expect. That's the thing. 0:29:52.840 --> 0:29:56.680 Certain things already changing in terms of you like flows 0:29:56.680 --> 0:29:59.560 back to the United States. We have seen changes right already. 0:29:59.640 --> 0:30:02.160 Indeed, yes, I mean what we do which is at 0:30:02.240 --> 0:30:04.960 On or Cole and Box site doesn't really change. It's 0:30:04.960 --> 0:30:08.880 still super strong the demand for these raw materials because 0:30:08.880 --> 0:30:11.840 you needed for infrastructure. As you know, a lot of 0:30:11.920 --> 0:30:15.600 investors in including a lot of people here in the 0:30:15.600 --> 0:30:19.200 government have invested significantly in infrastructure in the Middle East. 0:30:19.360 --> 0:30:21.800 We have one point six three million dollars of investments 0:30:21.840 --> 0:30:25.360 happening there, new nice buildings and all that. So this 0:30:25.400 --> 0:30:27.280 is going to happen. They're all fully funded and it's 0:30:27.400 --> 0:30:28.240 good for our business. 0:30:28.320 --> 0:30:31.000 I guess on the protectionist policies, I'm wondering what you're 0:30:31.000 --> 0:30:33.960 seeing in terms of goods flowing to and from China, 0:30:34.000 --> 0:30:37.880 and specifically of China is looking elsewhere for commodities that 0:30:37.880 --> 0:30:39.520 are typically sourced from the US. I mean, we could 0:30:39.520 --> 0:30:42.080 talk grains, we could talk corns, so I being wheat 0:30:42.120 --> 0:30:43.920 and the like, or we could talk other commodities too. 0:30:43.920 --> 0:30:46.560 What are you seeing, Well, suddenly the last few weeks 0:30:46.600 --> 0:30:50.320 we saw a surge in exports from the US golf, 0:30:50.840 --> 0:30:54.080 the American golf. So we see a surge in Yeah, 0:30:54.120 --> 0:30:57.880 we see a surge of America. Yes, okay, exactly exactly. Well, 0:30:57.880 --> 0:30:59.280 I just want to hear what you So we see 0:30:59.360 --> 0:31:02.880 surge in you know, coin products, maze, you know, grains 0:31:02.920 --> 0:31:05.080 and all that. So that has been good. Actually we're 0:31:05.080 --> 0:31:09.560 not expecting that, and we came into it coming from Yes, 0:31:09.720 --> 0:31:11.400 and we do a lot of coal, lot of going 0:31:11.440 --> 0:31:15.440 where to India and in China as well. We see 0:31:15.480 --> 0:31:16.920 that picking up slowly, slowly. 0:31:17.240 --> 0:31:19.160 That's but it was. It did slow down, It did 0:31:19.200 --> 0:31:19.880 slow down a lot. 0:31:19.960 --> 0:31:21.640 Yeah, but now it's picking up again. I don't know 0:31:21.680 --> 0:31:23.840 if it's going to be there to stay, but for 0:31:23.920 --> 0:31:26.680 the time being, it's going quite well the last few weeks. 0:31:26.880 --> 0:31:29.280 Let's hope it's going to remain. And we do a 0:31:29.280 --> 0:31:34.080 lot of coal trades out of India to sorry, Baltimore 0:31:34.120 --> 0:31:36.600 to India. So we've done a couple of trades recently 0:31:36.640 --> 0:31:37.840 which we hadn't done for a while. 0:31:37.920 --> 0:31:40.280 So in terms of any of the flows that have shifted, 0:31:40.520 --> 0:31:44.520 is it just, in your view, kind of defensive maneuvers 0:31:44.680 --> 0:31:47.280 and just a result of maybe short term blips and 0:31:47.320 --> 0:31:48.840 you think things are going to go back to the 0:31:48.880 --> 0:31:51.240 way it is, or do you see some new long 0:31:51.320 --> 0:31:54.400 term trade flows based on the shipping demand. 0:31:54.760 --> 0:31:58.560 Well, China's reliance to the used grains has dropped a lot. 0:31:58.640 --> 0:32:02.760 I mean they learned their in the previous administration, not 0:32:02.800 --> 0:32:05.600 the immediate previous, but the previous before that. Yeah, and 0:32:05.960 --> 0:32:09.240 they have now dependent they're more dependent now in South 0:32:09.280 --> 0:32:12.840 American corps, you know. So that's that's the corpse, you know, 0:32:12.920 --> 0:32:16.520 So that's the thing. If it ever gets back to 0:32:17.200 --> 0:32:20.440 you know, importing more and more grain products from the US, 0:32:20.880 --> 0:32:23.000 I hope it does, but it doesn't really seem like 0:32:23.040 --> 0:32:24.000 that in the near future. 0:32:24.280 --> 0:32:26.160 Before we let you go just thirty seconds, I think 0:32:26.480 --> 0:32:28.480 right now there's a focus on where ships are built 0:32:28.520 --> 0:32:31.959 that hasn't been yes, in focus really ever in my career, 0:32:32.280 --> 0:32:35.840 specifically Chinese built ships. Are there any Chinese built ships 0:32:35.880 --> 0:32:36.440 in your fleet? 0:32:36.680 --> 0:32:39.200 In our fluidat of the twenty nine we only have one, 0:32:39.280 --> 0:32:42.360 which is basically a Japanese yard based in China, So 0:32:42.400 --> 0:32:45.040 I don't know if that qualifies for Chinese altogether. But 0:32:45.200 --> 0:32:48.080 the vast, vast majority is made in China. Yes, made 0:32:48.080 --> 0:32:52.240 in China, but not really by Chinese yard. So Chinese interesting. 0:32:52.240 --> 0:32:56.640 So I'm not concerned about us. The only good thing 0:32:56.680 --> 0:32:58.840 I need to say is we've been in discussions with 0:32:58.880 --> 0:33:02.840 the US administration about that issue, and they're listening. They're positive, 0:33:02.840 --> 0:33:04.840 and they're listening. They want to find a solution, so 0:33:04.880 --> 0:33:07.440 they're not like totally black or white. 0:33:07.680 --> 0:33:10.560 That was the modest Santanas, chairman and CEO of the 0:33:10.600 --> 0:33:12.400 global shipping company Synergy. 0:33:12.880 --> 0:33:16.040 Geopolitics a major theme of this past week with G 0:33:16.200 --> 0:33:21.000 seven global leaders gathering in Canada to talk wars, conflicts, trade, tariffs, 0:33:21.080 --> 0:33:21.680 and a lot more. 0:33:21.920 --> 0:33:24.840 Another global voice to put it all in context for US, 0:33:25.080 --> 0:33:29.120 Michael Loewen, CEO of IDA Ireland. It's the Foreign Direct 0:33:29.120 --> 0:33:31.120 Investment Agency of the Irish government. 0:33:31.400 --> 0:33:34.560 When we last met actually just in March of this year, 0:33:34.840 --> 0:33:38.440 I think we've gone through a loss in those intervening weeks. 0:33:38.440 --> 0:33:41.320 To be honest, probably as much as I've seen in 0:33:41.360 --> 0:33:44.160 my career in foreign direct investment. A lot has happened 0:33:44.200 --> 0:33:46.720 in a very short space of time. And when you 0:33:46.760 --> 0:33:50.240 think about from the tariffs in terms of what tariffs means, 0:33:50.240 --> 0:33:53.240 where they're going to be composed, at what level and 0:33:53.320 --> 0:33:57.120 what timeframe, A lot of those questions still remain unanswered 0:33:57.160 --> 0:33:59.520 as we sit today, and I think from a European 0:33:59.560 --> 0:34:03.120 perspective of we are very clear that, you know, bringing negotiation, 0:34:03.240 --> 0:34:06.720 trying to get to a point of as opposed consensus 0:34:06.920 --> 0:34:09.880 around what this looks like. It's so critically important for 0:34:10.040 --> 0:34:13.959 investment flows and indeed for the economic prosperity of the world. 0:34:14.040 --> 0:34:15.920 You know, whether it's the US or whether it's the Europe, 0:34:16.160 --> 0:34:18.279 or indeed whether it's the Asia, So that's a that's 0:34:18.320 --> 0:34:21.920 a real area of focus from a European perspective and 0:34:21.960 --> 0:34:24.720 indeed the Irish government perspective. And of course you're correct, 0:34:24.880 --> 0:34:27.439 this is all against the backdrop then of some other 0:34:27.520 --> 0:34:30.440 conflicts across the world, and you know, we see that increasing, 0:34:30.560 --> 0:34:32.800 so you know, it's we're very mindful of that in 0:34:33.080 --> 0:34:36.200 the context of trade flows and trade investments as well, 0:34:36.239 --> 0:34:40.400 because that brings another level of uncertainty into the equation. 0:34:40.600 --> 0:34:43.160 Yeah, it's been pretty much exactly three months since we 0:34:43.239 --> 0:34:46.040 last saw you. You were here in New York right 0:34:46.080 --> 0:34:49.520 before you went to Washington with the Prime Minister to 0:34:49.760 --> 0:34:52.560 visit the White House, that you met with the President, 0:34:52.680 --> 0:34:54.799 you met with his team. How did the meeting go? 0:34:55.600 --> 0:34:58.200 So you're correct, the last time was here, I left them. 0:34:58.280 --> 0:35:00.000 I went to d C with On T. Shuck or 0:35:00.040 --> 0:35:02.680 our Prime minister. The medium went very well, actually, and 0:35:03.400 --> 0:35:06.480 I think actually it was was in reflecting on it, 0:35:06.520 --> 0:35:09.560 you'd say that, you know, the President was actually very 0:35:09.600 --> 0:35:12.319 gracious in terms of his engagement. Yes, there was fourth 0:35:12.400 --> 0:35:15.280 Right discussions and you know he talked about the challenges 0:35:15.280 --> 0:35:18.320 in terms of trade, trade deficits in particular. 0:35:18.160 --> 0:35:20.160 And this was before all the teriffs were announced. 0:35:20.239 --> 0:35:22.520 Yeah, this is before but remember this was all very 0:35:22.640 --> 0:35:24.560 you know, it was all very live and active at 0:35:24.560 --> 0:35:26.560 that point because you were this we were talking about 0:35:26.640 --> 0:35:29.560 this is the fifteenth, sixteenth of March, so it was 0:35:29.600 --> 0:35:33.200 all becoming very transparent or apparent as to what was 0:35:33.800 --> 0:35:35.759 always going to come down the tracks. So I would 0:35:35.760 --> 0:35:38.560 say that that that that meeting and engagement very much 0:35:38.600 --> 0:35:41.879 reflect this the relationship which is one hundred years between 0:35:41.920 --> 0:35:44.759 Ireland and the US, and I think in any relationship 0:35:44.880 --> 0:35:47.759 there can be pints of let's call it discussion, and 0:35:47.880 --> 0:35:49.560 that was the discussion that we had, but would think 0:35:49.600 --> 0:35:51.879 it was very respectful on both on both sides. 0:35:51.920 --> 0:35:54.680 Michael, what changes have you guys seen in investment flowers? 0:35:54.719 --> 0:35:56.239 What are you seeing from your vantage point? 0:35:56.400 --> 0:35:58.920 Yeah, so what we're seeing today, actually, Carrol, it is interesting. 0:35:59.640 --> 0:36:01.719 So I can sit here today and actually in two 0:36:01.760 --> 0:36:04.919 weeks time I'll be sharing with her Minister Peter Burke 0:36:05.000 --> 0:36:07.319 are results for the first half of the year. And 0:36:07.400 --> 0:36:11.080 what I can't disclose them to you on what I could, yeah, 0:36:11.360 --> 0:36:13.879 but I won't. But what I can say is this 0:36:14.000 --> 0:36:16.600 is that we continue to see investment flows. In fact, 0:36:16.840 --> 0:36:19.160 it is a power with last year in terms of 0:36:19.160 --> 0:36:22.160 the first half of last year, which is maybe somewhat 0:36:22.239 --> 0:36:25.279 maybe surprising giving the level of uncertainty that you see 0:36:25.320 --> 0:36:27.960 across the globe. But the reasons where we see that 0:36:28.160 --> 0:36:30.160 is and we're seeing across a number of different areas. 0:36:30.280 --> 0:36:34.640 We're seeing reinvestment in research and innovation continuing and companies 0:36:34.680 --> 0:36:37.480 looking to double down on their investments in Ireland in innovation. 0:36:38.000 --> 0:36:40.080 We're also seeing a lot of investment as well in 0:36:40.120 --> 0:36:42.800 terms of new entrants into the Irish economy, which is 0:36:42.840 --> 0:36:46.040 really important, and that's because they're looking for global marketplace, 0:36:46.320 --> 0:36:50.200 stable locations where they who's just trusted and proven, I believe, 0:36:50.239 --> 0:36:52.160 and that's what they're seeing in Ireland in terms of 0:36:52.160 --> 0:36:52.759 the future world. 0:36:52.800 --> 0:36:54.880 I know you can't reveal all, but I am curious 0:36:54.920 --> 0:36:57.640 so on that where there's new investments coming in. Are 0:36:57.640 --> 0:37:02.120 there conversations you're having with entities, global companies, US companies 0:37:02.160 --> 0:37:05.520 who say we want to do more stuff with you 0:37:05.600 --> 0:37:09.239 guys because we don't necessarily want to be in the US. 0:37:09.040 --> 0:37:10.359 Or other like give me an idea. 0:37:10.400 --> 0:37:14.600 There's anything that's a repercussion or you know the result 0:37:14.680 --> 0:37:16.440 of an action by the White House. 0:37:16.520 --> 0:37:19.920 Yeah, So I don't think it's it's it's a scenario 0:37:20.040 --> 0:37:21.560 of we don't want to do it in location A, 0:37:21.640 --> 0:37:24.080 so we're doing location B. I actually think companies are 0:37:24.080 --> 0:37:26.879 looking to actually, how can we grow our business, Where 0:37:26.960 --> 0:37:29.399 can we grow that from? What markets do we want 0:37:29.400 --> 0:37:32.680 to serve and where can we get the skills or 0:37:32.800 --> 0:37:35.600 are the policies that support that. That's really what we're 0:37:35.640 --> 0:37:38.120 seeing and what we do in Ireland is that, you know, 0:37:38.280 --> 0:37:40.719 we make sure we bring is stability and certainty to 0:37:40.800 --> 0:37:44.440 those areas of policy. In terms of talent and talent availability, 0:37:44.600 --> 0:37:47.279 not just Irish talent, but international talent. These are the 0:37:47.320 --> 0:37:50.799 pieces that are setting I believe investors apart when they're 0:37:50.800 --> 0:37:53.759 looking at locations around the globe, because I said previously 0:37:54.200 --> 0:37:57.600 at the very core of FDI and of multinational companies, 0:37:57.840 --> 0:38:00.720 they look to international markets. They needing to national markets, 0:38:00.840 --> 0:38:04.719 need international supply chains, they need international talent. That's what 0:38:04.800 --> 0:38:07.360 the need in order to be successful. And that success 0:38:07.560 --> 0:38:10.080 isn't just success in the country they're located in. It 0:38:10.120 --> 0:38:11.920 actually comes back to their entire supply chain. 0:38:12.400 --> 0:38:15.560 That was Michael Loewen, CEO of IDA Ireland. It's the 0:38:15.600 --> 0:38:18.600 Foreign Direct Investment Agency of the Irish government and. 0:38:18.480 --> 0:38:20.200 That wraps up the first hour of the weekend edition 0:38:20.280 --> 0:38:22.920 of Bloomberg Business Week from Bloomberg Radio Ahead. In our 0:38:22.960 --> 0:38:27.120 next hour, sending everyone Someday into Space with the CEO 0:38:27.200 --> 0:38:28.600 of Axiom Space. 0:38:28.560 --> 0:38:33.880 Plus Meta, paying billions to tap into scale AIS intelligence. 0:38:33.320 --> 0:38:37.560 And experiencing wine in Uruguay. This is Bloomberg Business Week. 0:38:37.680 --> 0:38:38.879 I'm Carol Masser. 0:38:38.680 --> 0:38:41.400 And I'm Tim Steneveeck. Stay with us today's top stories 0:38:41.400 --> 0:38:45.760 and global business headlines. They are coming up right now. 0:38:48.640 --> 0:38:53.000 This is Bloomberg Business Weekdaily, reporting from the magazine that 0:38:53.120 --> 0:38:56.680 helps global leaders stay ahead with insight on the people, 0:38:56.920 --> 0:39:02.000 companies and trends shaping today's complex ECONO plus global business, 0:39:02.120 --> 0:39:06.000 finance and tech news as it happens. Bloomberg Business Week 0:39:06.080 --> 0:39:11.000 Daily with Carol Maser and Tim Steneveek on Bloomberg Radio. 0:39:11.880 --> 0:39:13.879 Plenty Ahead in our second hour of the weekend edition 0:39:13.920 --> 0:39:17.480 of Bloomberg Business Week, including AI for commerce and retail 0:39:18.000 --> 0:39:20.959 and building the next generation space Economy. We'll talk about 0:39:21.000 --> 0:39:23.200 that with the CEO of Axiom Space. 0:39:23.160 --> 0:39:25.880 Plus Meta gets out its checkbook to catch up in 0:39:25.920 --> 0:39:30.080 the AI race, and the Little Tuscany in Uruguay with 0:39:30.239 --> 0:39:32.920 Christian Wiley of Bodega Garzon. 0:39:32.960 --> 0:39:35.120 First up this hour, a little bit of AI news. 0:39:35.120 --> 0:39:39.000 This past week, Elon Musk's AI startup, Xai is burning 0:39:39.040 --> 0:39:42.200 through one billion dollars a month, with expected losses of 0:39:42.239 --> 0:39:44.959 thirteen billion dollars this year due to the high cost 0:39:45.000 --> 0:39:48.160 of building advanced AI models. Now to cover the gap, 0:39:48.360 --> 0:39:50.880 Xai is trying to raise nine point three billion dollars 0:39:50.920 --> 0:39:53.520 in debt and equity, with plans to spend over half 0:39:53.560 --> 0:39:55.560 of it in the next three months, and expects to 0:39:55.600 --> 0:39:57.880 be profitable by twenty twenty seven. 0:39:58.000 --> 0:40:00.879 That is a lot of cash burning. Certainly, the big 0:40:00.920 --> 0:40:03.960 spend is on and we recently caught up with one 0:40:04.000 --> 0:40:07.600 part on the AI spectrum, and that is the AI 0:40:07.719 --> 0:40:10.440 that customers deal with. That's where Daniel Wagner comes in. 0:40:10.880 --> 0:40:14.759 He's chairman and CEO of Resolve AI. Resolve is a 0:40:14.760 --> 0:40:17.680 suite of AI powered products. It's meant to help companies 0:40:17.719 --> 0:40:21.000 with customer attention, engagement, loyalty and support. 0:40:21.360 --> 0:40:23.040 It is nice to have you here with us. 0:40:23.400 --> 0:40:25.560 Tell us a little bit more about your company and 0:40:25.600 --> 0:40:26.880 the environment right now. 0:40:27.320 --> 0:40:31.960 Sure, so you know, I'm a multi decade entrepreneur in 0:40:31.960 --> 0:40:35.239 the tech business and Resolve AI is the culbination of 0:40:35.239 --> 0:40:38.000 my career in many respects, having built market leaders in 0:40:38.040 --> 0:40:42.080 e commerce and search. The development of Genai as a 0:40:42.200 --> 0:40:46.920 technology is an enabler and we use it to really 0:40:47.000 --> 0:40:50.600 enhance the digital experience for consumers. Right now, when you 0:40:50.640 --> 0:40:54.120 go onto an e commerce site, it's a very perfunctory experience, 0:40:54.160 --> 0:40:57.560 and it's actually very ineffectual because seven out of ten 0:40:57.600 --> 0:41:00.000 people who go into a physical store end up buying 0:41:00.080 --> 0:41:02.040 a product, and seven out of ten people to go 0:41:02.080 --> 0:41:04.120 into a digital store end up not buying a product. 0:41:04.360 --> 0:41:06.680 And the reason for that is because I believe they 0:41:06.680 --> 0:41:08.759 don't get the answers to their questions that they need. 0:41:08.800 --> 0:41:10.200 You know, if my wife wanted to go and buy 0:41:10.200 --> 0:41:12.960 me a mobile phone, she couldn't do it online because 0:41:12.960 --> 0:41:15.000 she couldn't get She doesn't know what iOS is or Android. 0:41:15.280 --> 0:41:17.640 She doesn't know what a megabyte is or a megapixel. 0:41:18.000 --> 0:41:19.959 But if she went into the AT and T store 0:41:20.000 --> 0:41:23.280 on Lexington Avenue, the salesman would help her through that process. 0:41:23.600 --> 0:41:26.120 So what we're doing with Jenai is we're changing, you know, 0:41:26.160 --> 0:41:29.800 e commerce into a conversational commerce. We've created a language 0:41:29.800 --> 0:41:32.680 model that is the best salesman on the planet with 0:41:32.880 --> 0:41:35.280 deep product knowledge empathy. 0:41:35.480 --> 0:41:39.319 So with your wife, what might it do with her? 0:41:39.560 --> 0:41:40.960 Who where you say? She doesn't have that? 0:41:41.080 --> 0:41:42.759 So she would go I'm in that camp too, which 0:41:42.800 --> 0:41:44.480 is why my husband buys all of our phones. 0:41:44.640 --> 0:41:46.440 But I'm just saying, like, how would that help her? 0:41:46.520 --> 0:41:48.160 So she would be able to go to a website 0:41:48.239 --> 0:41:50.720 now and say, hey, I need to buy my husband 0:41:50.880 --> 0:41:51.720 a mobile phone. 0:41:52.680 --> 0:41:54.440 What you know, what would you recommend? 0:41:54.760 --> 0:41:58.120 And the answer would be verbally or typed up on 0:41:58.160 --> 0:42:00.600 the screen. Well, tell me a little bit more about Osmond. 0:42:00.960 --> 0:42:03.600 Does he use a PC or a Mac? Is he 0:42:03.640 --> 0:42:05.920 a business person or a creative? Does he use his 0:42:05.960 --> 0:42:06.600 phone all day? 0:42:06.719 --> 0:42:07.480 Or you know? 0:42:07.960 --> 0:42:11.040 And the answers to those questions will will guide her 0:42:11.600 --> 0:42:14.120 to a phone with a long lasting battery or a 0:42:14.160 --> 0:42:16.799 phone with you know, an Android or an iOS and 0:42:16.880 --> 0:42:19.520 she would result probably with buying a phone from that 0:42:19.600 --> 0:42:20.360 digital site. 0:42:20.400 --> 0:42:23.040 Do you use your own LM that you've trained yourself 0:42:23.239 --> 0:42:25.959 or are you using a clod. 0:42:25.840 --> 0:42:29.799 Or We started developing this in twenty sixteen, so a 0:42:29.800 --> 0:42:33.359 lot before it became fashionable. I come from as an 0:42:33.400 --> 0:42:36.240 information services and as I mentioned before, commerce and retail, 0:42:37.000 --> 0:42:40.640 so we understood about data structure, We understood the implications 0:42:40.640 --> 0:42:44.440 of the algorithms that the foundational algorithms for Genai. So 0:42:44.480 --> 0:42:47.720 we started building a language model initially that could replicate 0:42:47.760 --> 0:42:49.759 the best salesman on the planet, and then we built 0:42:49.760 --> 0:42:51.960 products that sit on top of it that allow our 0:42:52.000 --> 0:42:53.880 customers to deploy it really as a plug into their 0:42:53.920 --> 0:42:56.560 existing sites. So it's a very easy deployment from it. 0:42:56.560 --> 0:42:58.319 But if it's if it's a plug, and then how 0:42:58.320 --> 0:43:00.560 does it know if you're shopping? How is an expert 0:43:00.600 --> 0:43:04.480 in shoes and running shoes, for example, versus an expert 0:43:04.520 --> 0:43:05.040 in phone. 0:43:05.160 --> 0:43:07.480 So think about our LLLM as a sort of blank 0:43:07.480 --> 0:43:11.160 sheet of paper when we approach a customer. 0:43:11.200 --> 0:43:12.520 It doesn't have the world's knowledge. 0:43:12.800 --> 0:43:15.480 It just has conversational skills. And then what we do 0:43:15.560 --> 0:43:18.680 is we import the product catalog of that retailer, so 0:43:18.760 --> 0:43:20.799 it could be shoes or whatever. Then there would be 0:43:20.840 --> 0:43:21.920 context around that. 0:43:22.040 --> 0:43:24.680 So you still have to train after a company side. 0:43:24.560 --> 0:43:28.120 Really it's already training you in jest, We've already trained 0:43:28.160 --> 0:43:31.360 the model to be a salesman. The training quote unquote 0:43:31.560 --> 0:43:35.360 of its product catalog is literally a matter of minutes, 0:43:35.400 --> 0:43:39.240 probably hours at most. And then the everything else about 0:43:39.280 --> 0:43:42.960 the language model and the technology is that it is 0:43:42.960 --> 0:43:44.319 a very proficient salesperson. 0:43:44.520 --> 0:43:48.600 So if you take a digital information, let's just take. 0:43:48.440 --> 0:43:50.960 A physical analogy. 0:43:51.080 --> 0:43:53.760 Okay, if I've running If I'm running a camera camera 0:43:53.800 --> 0:43:55.600 store and I need a new sales guy, and new 0:43:55.600 --> 0:43:59.120 sales guy or girl joins my retail. 0:43:58.760 --> 0:44:01.719 Store, the first thing I do say, hey, here's our products. 0:44:02.040 --> 0:44:03.640 You better learn about the products. Do you know anything 0:44:03.640 --> 0:44:06.600 about photography? You know, so that the next time somebody 0:44:06.600 --> 0:44:09.160 walks in, they can sell a camera. Now we're able 0:44:09.200 --> 0:44:11.880 to do that piece in a matter of minutes. And 0:44:11.920 --> 0:44:15.240 then from that point forward, all of the best sales 0:44:15.280 --> 0:44:17.480 capabilities are inherently built into our model. 0:44:18.320 --> 0:44:19.160 Where did you train it? 0:44:20.160 --> 0:44:20.920 Where did we train it? 0:44:21.239 --> 0:44:22.560 What information do you we use? 0:44:22.680 --> 0:44:25.040 We used the Canadian Book Repositor, which is two hundred 0:44:25.040 --> 0:44:29.120 million books, open source books, Wikipedia for language and context, 0:44:29.480 --> 0:44:32.879 and then so it has three hundred billion token data 0:44:32.920 --> 0:44:36.560 sets as the foundational model to it. We did this 0:44:36.600 --> 0:44:38.840 over a period of years, so unlike many others, we 0:44:38.880 --> 0:44:41.880 didn't throw bucket loads of cash, you know, into a 0:44:41.880 --> 0:44:44.480 big black hole. We trained it over period using a 0:44:44.560 --> 0:44:46.880 much more efficient model, and so it took us, you know, 0:44:46.920 --> 0:44:49.319 six or seven years. But then we ended up with 0:44:49.360 --> 0:44:52.520 the foundational model that has been recognized by Microsoft and Google, 0:44:52.560 --> 0:44:54.800 who are partnered with US as one of the leaders 0:44:54.800 --> 0:44:55.239 in the field. 0:44:55.440 --> 0:44:58.880 One of the examples you use on your website is saying, 0:44:58.880 --> 0:45:01.600 you have any dinner party, you want it vegetarian? You 0:45:01.640 --> 0:45:05.200 have six people coming, Yeah, more or less? Give me 0:45:05.239 --> 0:45:07.640 some recipes or what should I make? I could use 0:45:07.719 --> 0:45:11.239 chatch ept for that, yes, now, but why you. 0:45:11.160 --> 0:45:13.880 Couldn't do it on Degasino's website or on you know, 0:45:14.480 --> 0:45:17.160 a target. So we're sending to retailers. We're not selling, 0:45:17.360 --> 0:45:21.720 We're not providing you know, Google, we're providing best Bard. 0:45:21.640 --> 0:45:24.160 But is it a huge good? Sorry? Go ahead. 0:45:23.560 --> 0:45:26.040 So if your wife was looking for a phone, she 0:45:26.080 --> 0:45:30.320 would go to let's say Apple, well go to she'd. 0:45:30.200 --> 0:45:33.480 Go to Google and end up probably on AT and 0:45:33.520 --> 0:45:35.480 T side or Charison or something that. 0:45:35.560 --> 0:45:37.840 But with yours, she's going to either start with Verizon 0:45:37.960 --> 0:45:39.760 or start with Apple or Samsung or something. 0:45:39.840 --> 0:45:42.640 Right, No, not necessarily, I mean, because how do you compare? 0:45:42.920 --> 0:45:43.480 How do you get that? 0:45:43.560 --> 0:45:45.279 Like you've got to You've got to remember, right, there 0:45:45.320 --> 0:45:48.120 are millions of retailers out there. You're driving traffic to 0:45:48.160 --> 0:45:50.240 their sites all the time. When you get to that site, 0:45:50.320 --> 0:45:52.560 seven out of ten people drop out. So what we're 0:45:52.560 --> 0:45:54.600 doing is that when you arrive at that site, you're welcomed, 0:45:54.960 --> 0:45:58.320 you get answers to your questions, you get detailed information 0:45:58.360 --> 0:46:01.240 about the products you're looking at you and you're guided 0:46:01.280 --> 0:46:03.920 through the sales process. So if I went to Mace's 0:46:03.920 --> 0:46:06.080 today and I said, hey, I got to buy gift 0:46:06.120 --> 0:46:10.480 for my niece for her twenty first birthday, It's not 0:46:10.480 --> 0:46:11.759 gonna give me an answer. I'm going to have to 0:46:11.840 --> 0:46:13.880 navigate through lots of categorism try and figure out do 0:46:13.920 --> 0:46:14.800 I want to get her a candle? 0:46:14.840 --> 0:46:16.160 Do I want to get it? You know, I don't know. 0:46:16.280 --> 0:46:17.840 But if I was to ask that question of a 0:46:17.880 --> 0:46:19.879 salesperson in Maces, they say, hey, we've got. 0:46:19.840 --> 0:46:20.640 Lots of ideas for you. 0:46:21.160 --> 0:46:24.120 So they put how we're. 0:46:23.760 --> 0:46:26.920 Leveling up commerce from what was a poor experience to 0:46:27.040 --> 0:46:30.160 a very rich, engaging experience, which we believe and have 0:46:30.239 --> 0:46:33.799 shown results in better conversion, which has a material impact. 0:46:33.920 --> 0:46:34.960 Change in the conversion. 0:46:35.000 --> 0:46:37.600 Well, it's only been going, you know, a short period 0:46:37.640 --> 0:46:40.080 of time, but we announced only a few weeks ago 0:46:40.360 --> 0:46:42.799 that we've seen twenty five percent uplift in conversion, which 0:46:42.840 --> 0:46:44.480 is massive massive. 0:46:44.680 --> 0:46:47.520 What's to stop a company like chat GPT from just 0:46:47.600 --> 0:46:50.640 selling directly to Target or Deagostino and saying, Hey, this 0:46:50.719 --> 0:46:52.960 is the this is the this is what's going to 0:46:53.040 --> 0:46:55.520 power it. Yeah, come to us because we have this 0:46:55.600 --> 0:46:56.120 data set. 0:46:56.480 --> 0:46:58.160 So they're a generalist, right. 0:46:58.239 --> 0:47:01.160 So the issue with that is that they already think 0:47:01.200 --> 0:47:05.120 they know everything, and that contaminates the model. Okay, so 0:47:05.239 --> 0:47:08.759 if you ingest a whole load of cosmetics and fragrances, 0:47:08.800 --> 0:47:11.440 they're going to have names like savage and beast, and 0:47:11.480 --> 0:47:14.400 their descriptions are going to be things like BlackBerry notes 0:47:14.440 --> 0:47:16.520 with sandalwood and barbecue. 0:47:16.600 --> 0:47:17.120 Right now. 0:47:17.320 --> 0:47:20.799 A GENAI model like open ai doesn't understand that well 0:47:20.920 --> 0:47:22.600 and will hallucinate thinking you're talking. 0:47:22.440 --> 0:47:24.560 About a beast in the world. We don't. 0:47:24.600 --> 0:47:28.000 We have a clean slate. We're ingesting fragrances. We tell 0:47:28.000 --> 0:47:30.920 the model it's just fragrances you're ingesting, and then it 0:47:31.000 --> 0:47:31.520 knows how. 0:47:31.360 --> 0:47:31.839 To sell that. 0:47:31.920 --> 0:47:34.719 So it's a it's a different approach, and it's why 0:47:34.800 --> 0:47:37.399 Microsoft and Google partner with us because they recognize, both 0:47:37.440 --> 0:47:40.120 of them with significant investments in AI, recognize that we 0:47:40.200 --> 0:47:44.000 have really, you know, focused on this vertical to make 0:47:44.040 --> 0:47:45.760 this the most appropriate solution. 0:47:45.800 --> 0:47:47.640 Well, it sounds like each one because you're dealing with 0:47:47.680 --> 0:47:48.880 a particular retailer. 0:47:48.920 --> 0:47:51.400 It's their kind of closed data. 0:47:51.160 --> 0:47:53.120 Sets in some respect, it is, right, Yeah. 0:47:52.920 --> 0:47:54.759 And so you just kind of whittle it down. All right, 0:47:55.080 --> 0:47:56.840 I pull up the FA function. I know you're a 0:47:56.920 --> 0:48:00.239 young company, you just started, So what are your expectations 0:48:00.360 --> 0:48:02.960 in terms of revenue growth? 0:48:03.000 --> 0:48:04.280 Like, where do you see this company? 0:48:04.320 --> 0:48:06.080 We're getting it out of the park straight away. 0:48:06.280 --> 0:48:07.120 Of growth are you seeing? 0:48:07.160 --> 0:48:09.240 Well, you started at the beginning last. 0:48:09.000 --> 0:48:10.520 I mean it's easy to ramp last year. 0:48:10.520 --> 0:48:12.640 We had nothing beginning of this year. You know, we 0:48:12.680 --> 0:48:15.120 announced a couple of weeks ago forty one million consumers 0:48:15.200 --> 0:48:17.040 have our technology on their phones. I mean it's like 0:48:17.440 --> 0:48:19.239 almost instant. We're going to exit this year with one 0:48:19.280 --> 0:48:23.680 hundred million dollars of arr and we are. And we 0:48:23.719 --> 0:48:25.799 signed a deal only two or three weeks ago in 0:48:25.840 --> 0:48:28.520 partnership with Google, which was a ten million dollar annual 0:48:28.520 --> 0:48:30.680 deal with Liverpool in Mexico, a very large department. 0:48:30.680 --> 0:48:33.319 When is that partnership with Google? Because that's fascinating, Right, 0:48:33.360 --> 0:48:36.200 they're doing their own thing. They're worried about potentially being 0:48:36.239 --> 0:48:38.640 replaced in terms of a search engine, which is why 0:48:38.640 --> 0:48:41.200 they're doing Gemini. But they're watching very carefully right in 0:48:41.239 --> 0:48:44.440 terms of how people are now communicating online. 0:48:44.800 --> 0:48:47.240 Find Yourself and Google both wanted to do an exclusive 0:48:47.239 --> 0:48:50.200 deal with me. I rejected both of those advances and 0:48:50.239 --> 0:48:52.280 we ended up doing a non exclusive deal with both. 0:48:52.920 --> 0:48:56.400 It demonstrates our position in the market and the valuable 0:48:56.440 --> 0:48:58.320 asset that we have in this vertical. 0:48:58.520 --> 0:49:00.560 Google, So what's the deal with them? Tell me how that? 0:49:00.760 --> 0:49:05.200 So Google are introducing our technology to their retail customers 0:49:05.560 --> 0:49:09.520 as a solution which ties in those customers to Google 0:49:09.560 --> 0:49:11.920 Cloud and to us, so they see us as a 0:49:12.040 --> 0:49:15.799 sticky enhancement to Google Cloud. Microsoft are doing exactly the 0:49:15.840 --> 0:49:18.400 same thing and see us as a sticky enhancement to AZOR. 0:49:18.719 --> 0:49:22.719 Both Azore and Google Cloud are competitive cloud services that 0:49:22.800 --> 0:49:24.960 are really it's a you know, you can move from 0:49:25.000 --> 0:49:27.560 onto the other very easily. But with our technology sort 0:49:27.560 --> 0:49:30.960 of embedded in those customer accounts, they see. 0:49:30.840 --> 0:49:33.040 Us as you know, retaining those. 0:49:32.920 --> 0:49:35.200 Customers when they come up for renewal, and as a result, 0:49:35.239 --> 0:49:37.360 they're pushing us out to ninety percent of the retailers 0:49:37.360 --> 0:49:39.759 on the planet. Because those two companies basically deal with 0:49:39.800 --> 0:49:41.279 pretty much everybody. 0:49:40.840 --> 0:49:43.560 You've got a few different products in the suite of 0:49:44.440 --> 0:49:46.920 software as a service products. How do you know that 0:49:47.000 --> 0:49:48.920 consumers are okay with this at this point? 0:49:49.440 --> 0:49:51.960 Well, I think it's Look, I'm an innovator. All the 0:49:51.960 --> 0:49:54.680 products and services I've created in my career, which have 0:49:54.760 --> 0:49:57.719 all gone on to become market leaders, have always been very, 0:49:57.800 --> 0:49:59.680 very innovative. The first company I set up in ninety 0:49:59.719 --> 0:50:02.359 eighty four was a pioneer and online information. In fact, 0:50:02.480 --> 0:50:06.000 Mike Bloomberg licensed my content newspapers for the terminals back 0:50:06.040 --> 0:50:08.719 in eighty six, So we were pioneering stuff back then. 0:50:08.760 --> 0:50:11.480 We're pioneering stuff in the late nineties, and we're doing 0:50:11.480 --> 0:50:13.919 it again now. I started this in twenty sixteen, we're 0:50:14.040 --> 0:50:16.680 nine years in and now we're productizing it and going 0:50:16.719 --> 0:50:19.240 to market. We're way ahead of anybody else in the space, 0:50:19.800 --> 0:50:21.840 I believe, and I think it's being shown by the 0:50:21.880 --> 0:50:23.280 takeup we're seeing in the last few. 0:50:23.160 --> 0:50:24.480 Months that we're on to a winner. 0:50:24.640 --> 0:50:27.720 This is a this is a step up for commerce, 0:50:28.040 --> 0:50:31.920 and right now I believe the environments and the interfaces 0:50:31.920 --> 0:50:34.480 that we're using in commerce are so out of date 0:50:34.480 --> 0:50:38.080 they're forty years old, that they're due a complete refresh. 0:50:37.880 --> 0:50:40.359 Just really quickly thirty seconds. I haven't heard Amazon. Are 0:50:40.400 --> 0:50:41.200 you talking with Amazon? 0:50:41.360 --> 0:50:41.400 No? 0:50:41.560 --> 0:50:43.920 Obviously Amazon is the big competitor to every retailer on 0:50:43.960 --> 0:50:44.440 the planet. 0:50:44.560 --> 0:50:45.520 They do a great job. 0:50:45.719 --> 0:50:47.360 We're not going to try and sell to them, and 0:50:47.400 --> 0:50:49.759 we're certainly not going to be partnering with them. You know, 0:50:49.840 --> 0:50:51.200 our customers are everybody else. 0:50:51.480 --> 0:50:54.640 That was Daniel Wagner, chairman and CEO of Resolve AI. 0:50:54.960 --> 0:50:57.520 The AI race is on. Yes, indeed, so too is 0:50:57.560 --> 0:50:59.719 the next generation space race. 0:51:00.040 --> 0:51:02.760 Where we go with the CEO of Axiom Space. 0:51:03.080 --> 0:51:06.000 No single country, no single company, can get off the 0:51:06.040 --> 0:51:11.040 planet alone. And if you believe we are destined to 0:51:11.120 --> 0:51:16.200 be off planet, to be multiplanetary, which I do, we 0:51:16.400 --> 0:51:19.080 have to do it together. So that's what you're seeing. 0:51:19.200 --> 0:51:20.560 It can't be done alone. 0:51:20.800 --> 0:51:23.800 That story is next. You're listening to Bloomberg Business Week. 0:51:24.080 --> 0:51:25.200 This is Bloomberg. 0:51:38.520 --> 0:51:42.680 This is Bloomberg Business Week Daily with Carol Masser and 0:51:42.760 --> 0:51:45.320 Tim Steneveek on Bloomberg Radio. 0:51:46.280 --> 0:51:49.120 Some recent news from the world of space. NASA and 0:51:49.320 --> 0:51:52.759 Axiom Space postpone the launch of the Axiom mission for 0:51:52.960 --> 0:51:54.480 to the International Space Station. 0:51:54.840 --> 0:51:58.360 Everyone's familiar with NASA, of course, but axiom Space perhaps 0:51:58.600 --> 0:52:02.720 not so much. XIM is focused on developing private space stations, 0:52:02.840 --> 0:52:08.000 human spaceflight, space suits and more. Yeah, it's kind of rocket. 0:52:07.680 --> 0:52:11.080 Science, it is indeed. Tej Paul Batya is CEO of 0:52:11.080 --> 0:52:14.160 axiom Space. He stopp by our Bloomberg studio recently. 0:52:14.560 --> 0:52:18.799 You know, at axiom Space, we're developing the products and 0:52:18.840 --> 0:52:22.719 platforms for humanity to thrive off Earth. And you said, 0:52:22.719 --> 0:52:26.640 you want to talk about the macro and how the 0:52:26.719 --> 0:52:30.279 geopolitical situation right now impacts us. If we were to 0:52:30.280 --> 0:52:32.279 go a little more macro than of that, you know, 0:52:32.400 --> 0:52:36.239 up to the level of space looking down space has 0:52:36.320 --> 0:52:43.160 proven to be the ultimate experiment for international diplomacy through crisis. 0:52:43.880 --> 0:52:48.040 You know, the International Space Station is a collaboration of 0:52:48.200 --> 0:52:51.640 fifteen nations over the last couple of decades and over 0:52:51.680 --> 0:52:54.920 the last few years access to many more nations thanks 0:52:54.960 --> 0:52:58.880 to companies like Axiom Space and our public private partnership 0:52:58.880 --> 0:53:02.680 with NASA and other companies companies. What you really see 0:53:02.800 --> 0:53:06.239 is through the crisis times, what's happening down here is 0:53:06.280 --> 0:53:09.480 not really what's reflected up there. They're working together to 0:53:09.560 --> 0:53:13.120 develop this platform in this lab for the future of humanity, 0:53:13.640 --> 0:53:18.239 and what we see is what's happening down here does 0:53:18.480 --> 0:53:21.919 impact a lot of decision making, but ultimately up there 0:53:22.000 --> 0:53:24.839 it is the ultimate collaboration. And if you think about 0:53:24.840 --> 0:53:29.320 the International Space Station, it's the largest object ever created 0:53:29.320 --> 0:53:33.200 by humans. It is the most expensive product created by 0:53:33.239 --> 0:53:36.960 humanity in a time where it wasn't as connected in 0:53:36.960 --> 0:53:39.239 real time as this. You know, think about thirty years 0:53:39.280 --> 0:53:43.960 ago they were doing this across languages, across borders on phones, 0:53:44.480 --> 0:53:48.000 you know, in the Soviet Union and the US, in Europe, 0:53:48.040 --> 0:53:51.160 in Japan and Canada, and they got that thing built. 0:53:51.360 --> 0:53:54.759 You know, speaking of collaboration, I'm curious about the recent 0:53:54.760 --> 0:53:58.120 announcements that ACXIOM has made with foreign governments. I mean, 0:53:58.160 --> 0:54:03.600 we're talking Egypt, Check Public Portugal, among others. Perhaps there 0:54:03.600 --> 0:54:06.640 are some out there who might say that it looks 0:54:06.680 --> 0:54:11.239 like there could be AXIOM being a private sector arm 0:54:11.280 --> 0:54:13.920 of the State Department, essentially in the sense of boosting 0:54:14.000 --> 0:54:17.160 soft power globally, sort of as the US has used 0:54:17.160 --> 0:54:20.720 in the past space to diplomacy to compete against China. 0:54:21.360 --> 0:54:23.520 I'm curious about your take on this, and you know, 0:54:23.560 --> 0:54:26.360 if you have any coordination with the State Department or 0:54:26.440 --> 0:54:28.000 NASA when it comes to these deals. 0:54:28.160 --> 0:54:31.560 You know, it's spot on. I wouldn't necessarily say it 0:54:32.480 --> 0:54:35.960 as a space diplomacy arm of the State Department. What 0:54:36.000 --> 0:54:39.080 I'd say is what Axiom has proven is commercial companies 0:54:39.560 --> 0:54:44.240 can drive US diplomatic interests overseas. So we're a private company, 0:54:44.280 --> 0:54:45.280 We're an American company. 0:54:45.440 --> 0:54:46.640 Is this the new soft power? 0:54:46.960 --> 0:54:47.319 It is? 0:54:47.960 --> 0:54:50.480 And go ahead, And it's exactly what I mean. I 0:54:50.480 --> 0:54:53.239 would expand that a little bit also given the light 0:54:53.280 --> 0:54:57.799 of the news today. It's power, it's hard power, it's 0:54:57.840 --> 0:55:02.000 soft power, and its economic power. And what you see 0:55:02.400 --> 0:55:06.000 is a eight year old startup and you were saying 0:55:06.000 --> 0:55:09.000 that it's rocket space, rocket science. I joined the company 0:55:09.680 --> 0:55:11.680 a little under four years ago. I invested it, just 0:55:12.560 --> 0:55:15.759 became CEO. I invested in the company about five years ago. 0:55:15.960 --> 0:55:18.719 I don't have a space background besides being fascinated since 0:55:18.719 --> 0:55:20.960 I was three years old. Right, I'm not a rocket scientist, 0:55:20.960 --> 0:55:23.880 I'm not a billionaire. But here this outsider from the 0:55:23.880 --> 0:55:27.680 startup world, the tech world, the Google world, comes into 0:55:27.719 --> 0:55:30.680 space and in a very short period of time can 0:55:30.680 --> 0:55:33.440 have this outsized impact. And what we saw in this 0:55:33.560 --> 0:55:36.120 last week. I just arrived from Florida. We were down 0:55:36.160 --> 0:55:36.960 there for our launch. 0:55:37.080 --> 0:55:38.440 We're gonna talk about that in a minute. 0:55:38.480 --> 0:55:44.200 We were at tables and conversations with NASA, SpaceX, the Russians, 0:55:44.640 --> 0:55:48.839 the Indian Space Agency, the European Space Agency, the Hungarians. 0:55:48.239 --> 0:55:49.040 And the Polish. 0:55:49.360 --> 0:55:54.840 This is the future of international collaboration. And right in 0:55:54.880 --> 0:55:57.960 the center, in the front was a startup, an American startup, 0:55:58.320 --> 0:56:02.080 so being able to drive US diplomatic interests but also 0:56:03.800 --> 0:56:07.239 overall diplomatic interests. You mentioned the Chinese, they've had a 0:56:07.280 --> 0:56:10.080 space station since twenty twenty two, fully manned. 0:56:10.200 --> 0:56:11.200 Yeah, we remember the. 0:56:11.160 --> 0:56:14.560 First space race, which was the US versus the Soviet Union. 0:56:15.160 --> 0:56:19.359 The second space race is China versus the West and 0:56:19.400 --> 0:56:23.040 its industry. And the third space race is the first 0:56:23.080 --> 0:56:26.360 to create the next applications that are going to change humanity. 0:56:26.440 --> 0:56:29.879 So we see this rapidly scaling from sixty years down 0:56:29.880 --> 0:56:32.600 to six years to the next six months. I think 0:56:32.600 --> 0:56:35.560 you're going to see rapid development in space commercials. 0:56:35.680 --> 0:56:37.720 I have to ask you, my father was a rocket 0:56:37.760 --> 0:56:40.239 scientist and involved in the first space race, so I 0:56:40.520 --> 0:56:42.240 kind of liked tim, like, we just look. 0:56:42.120 --> 0:56:42.840 Love this world. 0:56:43.000 --> 0:56:45.919 But what I'm curious about is it was a race, yes, 0:56:46.000 --> 0:56:49.000 for the United States to succeed before others, and it 0:56:49.160 --> 0:56:51.560 just what you are laying out for me is a 0:56:51.600 --> 0:56:55.920 lot more collaboration between nations and regions of the world, 0:56:56.200 --> 0:56:59.239 where I feel like our headlines are often showing all 0:56:59.280 --> 0:57:02.759 of those that you were talking about, kind of with 0:57:02.840 --> 0:57:06.080 stress points and tensions. So tell me, I mean, does 0:57:06.120 --> 0:57:09.920 that really show a much more true picture of what 0:57:10.080 --> 0:57:13.600 is going on globally in terms of relationships. Help me 0:57:13.640 --> 0:57:14.279 make sense out of it? 0:57:14.280 --> 0:57:15.680 I think it does. And this comes back to your 0:57:15.719 --> 0:57:18.720 first macro question, and I will start macro and then 0:57:18.720 --> 0:57:21.000 I'll bring it very micro back to the first space race, 0:57:21.080 --> 0:57:22.640 the second space race, and what I think is a 0:57:22.720 --> 0:57:27.800 third space race. The macro point here is a little 0:57:27.840 --> 0:57:31.120 more philosophical, but it is actually a collaboration question. Is 0:57:31.480 --> 0:57:34.440 no single country, no single company can get off the 0:57:34.440 --> 0:57:39.480 planet alone. And if you believe we are destined to 0:57:39.520 --> 0:57:44.600 be off planet, to be multiplanetaryary, which I do, we 0:57:44.800 --> 0:57:47.480 have to do it together. So that's what you're seeing. 0:57:47.640 --> 0:57:50.520 It can't be done alone, despite what you're hearing down 0:57:50.560 --> 0:57:52.880 here and what you see on Twitter, and these problems 0:57:52.880 --> 0:57:54.400 are very very It's not a. 0:57:54.440 --> 0:57:56.680 Race though, to be the first nation to. 0:57:56.600 --> 0:57:59.040 Do It's a different race. So the first space race 0:57:59.040 --> 0:58:02.520 getting back to time was actually a race two countries. 0:58:03.040 --> 0:58:06.439 It was so hard and expensive and impossible that two 0:58:06.480 --> 0:58:09.760 countries were racing to get the first human, the first 0:58:09.880 --> 0:58:14.480 astronaut off planet. In those sixty years following that, there 0:58:14.520 --> 0:58:17.720 was an average of about eight humans per year that 0:58:17.920 --> 0:58:21.440 went off planet. In the last six years that average 0:58:21.480 --> 0:58:24.480 has jumped to twenty two people per year. So in 0:58:24.560 --> 0:58:26.880 just the last six years we've almost tripled the number 0:58:26.880 --> 0:58:29.720 of people that go up. Sixteen of those were with AXIOM, 0:58:30.080 --> 0:58:31.600 which is just in the last three years. 0:58:31.640 --> 0:58:36.960 Can you explain TAJ exactly where you work within the 0:58:36.960 --> 0:58:39.400 context of SpaceX for example, I think a lot of 0:58:39.400 --> 0:58:42.400 people are familiar with SpaceX. The launches get so much attention, 0:58:42.880 --> 0:58:46.040 the Dragon capsule and what it does with the ISS. 0:58:46.120 --> 0:58:48.880 Just explain where you sit in the ecosystem. 0:58:48.920 --> 0:58:49.440 Absolutely. 0:58:49.480 --> 0:58:51.720 So when we pull these missions together, like the AX 0:58:51.720 --> 0:58:55.400 four mission India, Hungary, Poland pulling through the European Space 0:58:55.400 --> 0:58:59.040 A and C, AXIOM is pulling that mission together. So 0:58:59.160 --> 0:59:01.760 we are going out getting the customers, creating the crew, 0:59:01.920 --> 0:59:05.920 procuring the vehicle, SpaceX being the launch provider, getting the 0:59:05.920 --> 0:59:08.960 permit from the ISS, primarily Nasai. 0:59:08.760 --> 0:59:10.040 Guys are essentially the producer. 0:59:10.520 --> 0:59:12.560 That's a great way of putting it. Actually, I don't 0:59:12.600 --> 0:59:16.640 think that language would necessarily translate to the space industry. 0:59:17.000 --> 0:59:21.560 Hollywood and Houston speak very different languages. It's both English, 0:59:21.960 --> 0:59:23.720 but it's very different languages Hollywood. 0:59:24.040 --> 0:59:26.240 But that sounds like what you're describing to make it happen. 0:59:26.360 --> 0:59:32.560 Yeah, and think about when a producer puts together a package, right, 0:59:32.600 --> 0:59:35.480 that's also an order that probably wouldn't resonate in the 0:59:35.480 --> 0:59:38.960 space industry. That packaging has a ton of value. Yes, 0:59:39.040 --> 0:59:43.120 the physical film or theater or studio or camera groups, 0:59:43.160 --> 0:59:46.560 but think about the intellectual property. Think about the products 0:59:46.600 --> 0:59:50.560 that created, get are created, and the derivatives that create value. 0:59:50.760 --> 0:59:54.480 So when we pull together these missions, there isn't a bit. 0:59:54.600 --> 0:59:57.360 There is a very large element of mission integration training, 0:59:57.600 --> 1:00:01.720 kayload integration, but the key is locking in the demand. 1:00:02.200 --> 1:00:06.080 Those countries are trusting us, and these decisions aren't made 1:00:06.200 --> 1:00:08.920 at a space agency level. These are done at the 1:00:08.920 --> 1:00:12.200 prime minister president level. You're not sending up a Humanto 1:00:12.200 --> 1:00:16.200 space with a startup with an American launch company without 1:00:16.240 --> 1:00:18.040 significant consideration and trust. 1:00:18.400 --> 1:00:20.920 You mentioned you were just back from Florida, where you 1:00:20.920 --> 1:00:24.400 were for the X four mission launch. It was ultimately scrubbed. 1:00:25.960 --> 1:00:27.640 When are we going to see a new date and 1:00:27.840 --> 1:00:31.240 what exactly have you been told about leakage on the ISS? 1:00:31.320 --> 1:00:35.160 Sure, So the mission was scheduled to launch earlier this week. 1:00:35.200 --> 1:00:38.400 We had some weather delays, which is normal for a 1:00:38.400 --> 1:00:41.280 lot of our guests who have gone down to Florida 1:00:41.280 --> 1:00:43.880 and wanted to see an anticipated a launch. While it's 1:00:43.920 --> 1:00:46.200 normal for the space business, it's not really normal for 1:00:46.240 --> 1:00:48.920 someone who flew down to Florida to see it, but 1:00:49.000 --> 1:00:52.320 it happens. I've been through four launches myself with Axiom 1:00:52.360 --> 1:00:55.880 now and the delays usually go you know, sometimes months 1:00:55.920 --> 1:00:59.040 and weeks, then day by day based on minor things. 1:00:59.240 --> 1:01:02.840 So we had a weather delay, totally normal. There was 1:01:02.920 --> 1:01:05.120 some data that came back from the launch vehicle which 1:01:05.200 --> 1:01:09.960 was resolved, also completely normal. Sometimes that happens during a 1:01:10.040 --> 1:01:13.040 test or readiness review. Sometimes it happens on the launch pad. 1:01:13.560 --> 1:01:15.880 Better to happen before than on the launch pad. But 1:01:15.920 --> 1:01:19.600 these are all measures for safety. Then this issue on 1:01:19.640 --> 1:01:22.480 the ISS, the leaks have been happening for a while. 1:01:23.400 --> 1:01:28.440 There is an effort to improve it, to fix it. 1:01:28.480 --> 1:01:31.320 The ISS is old, you know, it's a thing. You 1:01:31.320 --> 1:01:33.040 can think of it as a piece of equipment, not. 1:01:33.040 --> 1:01:33.960 Really like a building. 1:01:34.280 --> 1:01:37.160 It has a lifespan, which is it's coming to its end. 1:01:37.440 --> 1:01:41.240 The whole reason Axiom exists is we won an award. 1:01:42.200 --> 1:01:45.120 We are the exclusive company, the only company that can 1:01:45.160 --> 1:01:49.520 connect its modules commercial private modules to the ISS. The 1:01:49.640 --> 1:01:52.680 reason for that is to prevent a gap in human 1:01:52.720 --> 1:01:56.480 presence in lower thorbit. So Axiom connects what I'd say 1:01:56.520 --> 1:01:58.840 is a bridge, but it's actually physically a tunnel onto 1:01:58.880 --> 1:02:02.360 the ISS. We make sure we preserve whatever assets and 1:02:02.480 --> 1:02:05.760 value we have on the ISS. We connect our second module, 1:02:05.800 --> 1:02:08.400 and then we can separate and be a free flying 1:02:08.720 --> 1:02:13.520 commercial platform. So with the ISS itself, that's where we 1:02:13.640 --> 1:02:16.720 go right now. So in this production, imagine this as 1:02:17.120 --> 1:02:21.920 the studio or where we're going for So their risk 1:02:22.080 --> 1:02:28.040 profile and their safety profile is what we follow. But 1:02:28.120 --> 1:02:30.680 remember our risk profile is a little different. When NASA 1:02:30.880 --> 1:02:34.640 sends up astronauts with SpaceX, they're sending us astronauts. We 1:02:34.680 --> 1:02:37.480 are sending other countries astronauts. So we don't take any risks. 1:02:37.240 --> 1:02:41.480 Here since you rely on SpaceX for launching. What happens 1:02:41.480 --> 1:02:44.240 if Elon Musk has a fallout with President Trump and 1:02:44.320 --> 1:02:46.960 the US decides to move away from SpaceX, what happens 1:02:47.000 --> 1:02:47.280 to you. 1:02:48.200 --> 1:02:50.360 So what we have right now is what i'd call 1:02:50.400 --> 1:02:53.640 a supplier constrained market, and that's okay. There's only one 1:02:53.640 --> 1:02:55.320 way to go up and down. And what SpaceX has 1:02:55.320 --> 1:02:59.360 done is phenomenal, and I really hope it doesn't go away. 1:02:59.720 --> 1:03:03.480 Right It's important, it's important. It's very important. What I 1:03:03.560 --> 1:03:10.360 see from SpaceX's point of view and their mission. I understand, 1:03:10.960 --> 1:03:13.360 not the feud that's going on, not the rhetoric, not 1:03:13.440 --> 1:03:14.440 what's on Twitter. 1:03:14.200 --> 1:03:15.800 None of us understand it to be there. 1:03:16.480 --> 1:03:20.280 But I can understand the magnitude of what it takes 1:03:20.800 --> 1:03:23.800 to get off planet. Now, what they've created from a 1:03:23.880 --> 1:03:27.080 launch standpoint, it is phenomenal. It's elite, it is, you know, 1:03:28.000 --> 1:03:30.960 really a wonderful thing for humanity, and I'd hate to 1:03:31.000 --> 1:03:34.040 see it go away. With that said, in a supplier 1:03:34.080 --> 1:03:38.680 constrained market, certain dynamics are created so to be the 1:03:38.920 --> 1:03:43.680 other power player. If supply is locked in, you want 1:03:43.680 --> 1:03:45.920 to lock in demand because that gives you leverage. And 1:03:45.960 --> 1:03:48.560 we've seen this model. You brought up the producer angle. 1:03:48.720 --> 1:03:51.480 I got my start at ESPN in media, and we 1:03:51.520 --> 1:03:54.480 can go back to the seventies and eighties of cable 1:03:54.520 --> 1:03:58.480 and satellite how content companies how Bloomberg TV probably got 1:03:58.520 --> 1:04:03.320 its opportunity how ESPN, MTV, CNA and MTV when there 1:04:03.400 --> 1:04:07.880 was the cable satellite wars. Who benefited the content companies 1:04:08.240 --> 1:04:10.880 and the consumers. So I believe we're in that kind 1:04:10.920 --> 1:04:14.080 of market dynamic right now. So our hypothesis really been 1:04:14.360 --> 1:04:15.760 about the customer demand. 1:04:16.080 --> 1:04:16.560 That was tees. 1:04:16.640 --> 1:04:19.520 Paul Batya, CEO of Axiom Space. 1:04:19.320 --> 1:04:23.040 Still ahead on Bloomberg BusinessWeek, Meta spending megabucks on Scale 1:04:23.040 --> 1:04:27.400 AI and tapping into a mega wine experience in Uruguay. 1:04:27.920 --> 1:04:30.520 Those stories. Next, This is Bloomberg. 1:04:34.360 --> 1:04:38.480 This is Bloomberg Business Week Daily with Carol Masser and 1:04:38.520 --> 1:04:40.840 Tim Steneveek on Bloomberg Radio. 1:04:41.640 --> 1:04:46.680 Meta Platforms taking a forty nine percent steak in Scale 1:04:46.720 --> 1:04:50.320 AI with Alexander Wang, who's twenty eight years old, joining 1:04:50.360 --> 1:04:54.160 Meta as a top executive to build AI super intelligence. Steak, Right, 1:04:54.480 --> 1:04:55.000 it's a steak. 1:04:55.120 --> 1:04:58.760 It's sgak, yeah, not something you a steak and steak 1:04:58.960 --> 1:04:59.520 put in the ground. 1:04:59.720 --> 1:04:59.760 CA. 1:05:00.480 --> 1:05:02.800 It's not an acquisition, yeah, Okay. 1:05:02.920 --> 1:05:04.840 If it works like an acquisition, Davie. 1:05:04.600 --> 1:05:06.520 Says, do not call it an acquisition for a host 1:05:06.520 --> 1:05:10.200 of reasons, okay deeply. As US technology columnists for Bloomberg Opinion, 1:05:10.240 --> 1:05:12.400 he spent about fifteen years reporting on tech at the 1:05:12.440 --> 1:05:14.960 FT and BBC before joining Bloomberg. He joins us here 1:05:15.120 --> 1:05:18.440 in the Bloomberg Interactive brokers at studio, do we just 1:05:18.480 --> 1:05:20.920 not call this an acquisition? Why are we not acquired? 1:05:20.920 --> 1:05:22.640 Why are companies not acquiring things right now? 1:05:22.680 --> 1:05:25.200 Because they're afraid to They're afraid that the courts are 1:05:25.200 --> 1:05:28.240 going to undo their old acquisition. So at this time 1:05:28.280 --> 1:05:32.440 they're thinking probably too risky, too complicated. If the stake 1:05:32.680 --> 1:05:35.000 was fifty percent as opposed to forty nine percent, that 1:05:35.000 --> 1:05:37.480 would of course be a takeover rather than an investment, 1:05:37.920 --> 1:05:41.120 and immediately that would trigger all kinds of reviews. They'd 1:05:41.160 --> 1:05:43.400 have to wait, they'd have to get clearances, not only 1:05:43.400 --> 1:05:45.960 in the US but also around the world different regulators. 1:05:46.320 --> 1:05:48.360 There's no time for that in the AI era. They've 1:05:48.400 --> 1:05:50.560 got they've got to get to work straight away. And 1:05:50.600 --> 1:05:52.800 so we're seeing this sort of new approach which I 1:05:53.320 --> 1:05:55.640 sort of likened in a column I wrote to sort 1:05:55.680 --> 1:05:58.560 where a football team buys a great young prospect, you know, 1:05:58.840 --> 1:06:01.760 they pay a transfer for to compensate wherever he's leaving. 1:06:01.800 --> 1:06:04.600 In this case, for Wang, it's about you know, making 1:06:04.600 --> 1:06:07.360 investors hole at the Scale AI, the company he founded, 1:06:07.680 --> 1:06:09.720 and they bring on this young talent with the view 1:06:09.720 --> 1:06:11.640 that he's going to be, you know, the what. He's 1:06:11.640 --> 1:06:14.880 going to run a super intelligence team at Meta and 1:06:14.920 --> 1:06:17.120 this is obviously what Mark Zuckerbo thinks is needed to 1:06:17.480 --> 1:06:20.400 bring his team up to up to speed to compete 1:06:20.400 --> 1:06:21.720 against the other big teams. 1:06:22.560 --> 1:06:25.680 He's going to be sitting by. Mark Zuckerberg reportedly what 1:06:25.800 --> 1:06:26.920 is superintelligence? 1:06:26.920 --> 1:06:27.280 What is? 1:06:27.640 --> 1:06:32.440 And also scally Eyes not building its own super intelligence either, 1:06:32.600 --> 1:06:35.040 that's what That's what's confusing to me. 1:06:35.320 --> 1:06:37.680 So Scale Eye is an interesting company. It's kind of 1:06:37.720 --> 1:06:40.800 right at the very early stages of AI development. It's 1:06:40.840 --> 1:06:43.800 about hiring humans to dough data labeling and say that's 1:06:43.840 --> 1:06:45.680 a tree, that's a bus, and so forth. 1:06:45.760 --> 1:06:47.520 It doesn't sound like super intelligence to me. 1:06:48.240 --> 1:06:50.760 The crucial thing and a colleague, one of my colleagues, 1:06:50.760 --> 1:06:53.800 Ellen who Hewittt, wrote this fantastic piece about Alexander Wang 1:06:53.840 --> 1:06:58.160 today sort of talking about how this guy knows everybody 1:06:58.160 --> 1:07:01.040 in AI and he knows everything that's going on. And 1:07:01.040 --> 1:07:02.920 one of the things about Scale AI that makes it 1:07:02.960 --> 1:07:06.360 particularly useful for Meta is that it's a company that 1:07:06.440 --> 1:07:08.680 other companies would go to when they needed data. So 1:07:08.680 --> 1:07:11.040 they were working with open Ai, they were working with Google, 1:07:11.080 --> 1:07:13.600 They're working with several other companies, and so they have 1:07:13.640 --> 1:07:16.000 a bit of an insight into what those companies are 1:07:16.000 --> 1:07:18.000 working on and what sort of data they were needing 1:07:18.040 --> 1:07:21.480 to have. So now Mark Zuckerberg gets a bit of 1:07:21.520 --> 1:07:22.240 that intelligence. 1:07:23.160 --> 1:07:25.360 We want what you have, we want we wan't what 1:07:25.480 --> 1:07:28.960 you know about what kind of the whole landscape is 1:07:28.960 --> 1:07:30.040 doing when it comes to AI. 1:07:30.160 --> 1:07:31.560 What have these companies come to you for? 1:07:31.840 --> 1:07:35.240 Yeah, exactly. And also Alexander Wung is just known as 1:07:35.560 --> 1:07:38.360 a great networker, and so when so much of this 1:07:38.520 --> 1:07:41.640 AI race is about talent and bringing people on, we're 1:07:41.680 --> 1:07:45.840 hearing bug Zuckerberg is emailing people personally and saying, come 1:07:45.880 --> 1:07:48.040 and join us. I'll give you ten million bucks if 1:07:48.040 --> 1:07:51.320 you do it. This is this is just a signal 1:07:51.360 --> 1:07:53.760 of how fierce the AI rate is. 1:07:53.720 --> 1:07:55.840 A different type of signing bonus. 1:07:55.600 --> 1:08:01.360 Right like a smart star, but considerably bigger in terms 1:08:01.360 --> 1:08:02.240 of the numbers of. 1:08:02.480 --> 1:08:06.320 What's the promise though, I mean, what is this superintelligence 1:08:06.360 --> 1:08:09.280 that they're working toward? What is the world dev that 1:08:09.520 --> 1:08:13.040 meta Platforms wants to build and be ready for. 1:08:13.480 --> 1:08:15.280 I'm not sure I want to imagine it, frankly, but 1:08:15.480 --> 1:08:18.760 it's you and me both. There's various names for it now. 1:08:18.800 --> 1:08:21.440 Superintelligence or artificial general. 1:08:21.120 --> 1:08:24.519 Intelligence is a very EGI and super intelligence are the 1:08:24.560 --> 1:08:24.880 same thing. 1:08:24.920 --> 1:08:26.880 It's all basically the same goal, This idea that you 1:08:26.920 --> 1:08:30.200 can create this essentially one machine or you know, one 1:08:30.240 --> 1:08:33.880 technology that people can use for whatever sort of varied 1:08:33.920 --> 1:08:36.200 juices they want an AI to do. And there is 1:08:36.240 --> 1:08:39.719 this feeling that somebody will get there first. Right now, 1:08:40.200 --> 1:08:43.400 I'm of the view personally that there'll be several players 1:08:43.439 --> 1:08:45.320 doing this and that's how it's going to the land's 1:08:45.360 --> 1:08:48.120 going to turn out. However, I think there is a 1:08:48.160 --> 1:08:49.720 sort of panic to make sure that we've got to 1:08:49.720 --> 1:08:52.680 be you know, first, or very very close behind. 1:08:52.439 --> 1:08:53.160 To be fair, right. 1:08:53.439 --> 1:08:55.760 I mean Microsoft has done some similar moves right to 1:08:55.840 --> 1:08:59.120 try and position themselves by acquiring you know, either different 1:08:59.120 --> 1:09:02.960 people that seem to have certainly some AI insight or 1:09:03.040 --> 1:09:05.519 know how. I think alphabet has done the same thing, right, 1:09:05.560 --> 1:09:07.120 So they're all kind of jocking for position. 1:09:07.240 --> 1:09:09.720 They're all joking position, and they're also taking the same 1:09:09.760 --> 1:09:12.720 approach of we can't be seen to be acquiring companies, 1:09:13.040 --> 1:09:14.960 so but we can try and acquire people. 1:09:15.120 --> 1:09:15.280 Now. 1:09:15.320 --> 1:09:17.760 I think they're not as clever as they think in 1:09:17.800 --> 1:09:20.599 this regard. I think the Federal Trade Commission, the Department 1:09:20.600 --> 1:09:23.960 of Justice, they know what's happening here. They know this 1:09:24.000 --> 1:09:26.519 is competition, just in a different form. Because if you've 1:09:26.520 --> 1:09:30.639 got companies that are spending crazy money on wages, does 1:09:30.680 --> 1:09:32.920 that mean a smaller company just can't compete for talent? 1:09:33.479 --> 1:09:36.680 I guess not right, So there's going to be and 1:09:36.880 --> 1:09:38.720 we already know the FEC is looking into some of 1:09:38.760 --> 1:09:39.160 these deals. 1:09:39.320 --> 1:09:40.880 They are I'm looking what they're going to do. Yeah, 1:09:40.920 --> 1:09:42.880 what's going on when it comes to innovation at these 1:09:43.120 --> 1:09:45.439 huge companies. I mean, I read your column and I 1:09:45.439 --> 1:09:48.519 think to myself, this is turning into like a PEPSI 1:09:49.040 --> 1:09:51.759 buys Poppy for two billion dollars type of thing, because 1:09:51.760 --> 1:09:54.320 we want to let the startups duke it out for 1:09:54.760 --> 1:09:57.240 shelf space. When it comes to probiotic soda, we're not 1:09:57.240 --> 1:09:58.600 going to develop it ourselves. 1:09:59.400 --> 1:09:59.920 Is that happen? 1:10:00.560 --> 1:10:03.880 I thought I thought the startup ecosystem, I thought there 1:10:03.960 --> 1:10:07.800 was you know, a decade ago, I thought Facebook killed 1:10:07.840 --> 1:10:08.880 the startup ecosystem. 1:10:09.360 --> 1:10:11.439 Well, I mean, look, I guess it's a question of 1:10:11.560 --> 1:10:14.640 the shifting purpose of the ecosystem to those big companies, right. 1:10:14.640 --> 1:10:16.439 I mean, it used to be if you started a startup, 1:10:16.479 --> 1:10:20.759 you had several exit opportunities U IPO, you get acquired. 1:10:21.080 --> 1:10:24.479 You know, both of those channels have almost been closed off. 1:10:24.479 --> 1:10:26.760 We're not seeing so many tech companies IPO anymore. That's 1:10:26.760 --> 1:10:29.599 really dried up, and it's becoming much harder for tech 1:10:29.600 --> 1:10:33.760 companies to acquire companies at all. But at the same time, 1:10:33.800 --> 1:10:38.040 the startup ecosystem still has this fantastic ability to work 1:10:38.120 --> 1:10:41.120 quickly and bring out new ideas. And I wrote that 1:10:41.200 --> 1:10:43.360 in that Columny reference that you know, I'm not sure 1:10:43.400 --> 1:10:47.200 if Alexander Wang joins Meta as like a junior engineer, 1:10:47.560 --> 1:10:49.560 I'm not sure he rises through the ranks. 1:10:49.240 --> 1:10:50.040 That becomes this guy. 1:10:50.120 --> 1:10:52.040 I think that's only something you could do outside of 1:10:52.080 --> 1:10:54.640 the company, And that's just the nature of startups. 1:10:55.000 --> 1:10:57.879 That's Dave Lee, technology columnist for Bloomberg Opinion. 1:10:58.040 --> 1:11:00.240 Before we go, how about a journey to a family 1:11:00.280 --> 1:11:04.560 owned winery in Uruguay. Since nineteen ninety nine, Bodega Garzone 1:11:04.640 --> 1:11:08.160 have been making wine and developing a mega wine experience. 1:11:08.640 --> 1:11:12.479 Christian Wiley is Bodega Garzon's managing director. He stopped by 1:11:12.560 --> 1:11:14.680 to tell us all about it. It is. 1:11:14.800 --> 1:11:19.880 It is a time uncertain times. The tariffs, of course, 1:11:20.240 --> 1:11:24.000 came on top of a lot of complications into the 1:11:24.120 --> 1:11:29.439 alcohol wine industry, and you just basically need to keep going. 1:11:29.479 --> 1:11:32.160 You have a long term strategy and the most beautiful 1:11:32.160 --> 1:11:34.920 thing is that wines just get better with age, so 1:11:35.000 --> 1:11:38.000 we have to be patient. But it is, it is 1:11:38.040 --> 1:11:38.840 a challenge right now. 1:11:38.840 --> 1:11:41.000 It's tough. You know, when we think about so called 1:11:41.000 --> 1:11:42.840 New World wines. I think a lot of people often 1:11:42.880 --> 1:11:47.919 think of in South America, maybe Argentina or Chile, Uruguay 1:11:48.000 --> 1:11:50.800 not really on the map as a wine destination as 1:11:50.880 --> 1:11:52.080 much as other areas. 1:11:52.160 --> 1:11:54.439 Why well, I mean it's not on the map because 1:11:54.439 --> 1:11:56.400 they've been drinking all their wine they've been making for 1:11:56.479 --> 1:12:00.599 the last threes three centuries. But then got Song comes 1:12:00.640 --> 1:12:04.400 into play. And this is an incredible investment of Don 1:12:04.439 --> 1:12:08.400 Alejandro Uldoni. It's two hundred and fifty million dollars capex. 1:12:08.840 --> 1:12:13.000 It is the largest investor invest investment ever in the 1:12:13.040 --> 1:12:15.559 industry of wine. And this is right now in the 1:12:15.600 --> 1:12:17.320 region in the world, in the world world. 1:12:17.880 --> 1:12:18.879 So this is right. 1:12:18.720 --> 1:12:20.879 Next to the beach to the Uruguayan Riviera. 1:12:21.439 --> 1:12:22.080 So you have. 1:12:22.000 --> 1:12:24.840 Jossei Nacio, which is like the San Trope. So it's 1:12:24.960 --> 1:12:27.519 and it's it's done in a in a very if 1:12:27.560 --> 1:12:32.760 you like, forward thinking way of the most committed to sustainability. 1:12:33.200 --> 1:12:35.200 We were the first winery in the world to be 1:12:35.240 --> 1:12:38.599 one hundred percent LEAD certified and we work, you know, 1:12:38.760 --> 1:12:42.200 to express the place. It's a new troire that is, 1:12:42.840 --> 1:12:45.320 you know, the vision is for Albert Antonini, who's like 1:12:45.360 --> 1:12:48.960 the top wine maker from from Tuscany. And then we 1:12:49.439 --> 1:12:51.800 one of our pillars is the experiences, so we have 1:12:52.320 --> 1:12:56.080 Francis malmon Is our chef, so you experience these beautiful 1:12:56.080 --> 1:12:59.040 wines with an incredible view right next to the ocean 1:12:59.520 --> 1:13:02.040 in a place is that it's like the Senterpeo South America. 1:13:02.240 --> 1:13:02.920 You don't spend tw. 1:13:02.840 --> 1:13:05.439 Hundred and fifty million dollars on capex unless there's growth 1:13:05.479 --> 1:13:09.200 going on. Tell us about the business and in terms 1:13:09.240 --> 1:13:12.960 of top line growth, but it also sounds like it's 1:13:13.000 --> 1:13:17.200 also experiential that you guys have incorporated, so give us you. 1:13:17.200 --> 1:13:17.960 Know, we're Bloomberg. 1:13:18.000 --> 1:13:19.639 We love all the numbers so give us an idea 1:13:19.640 --> 1:13:21.120 in terms of the growth that you guys have seen. 1:13:21.400 --> 1:13:24.439 Well, we've basically gone from a place that didn't grow 1:13:24.520 --> 1:13:28.120 vines to a vineyard that has more than a thousand 1:13:28.200 --> 1:13:32.479 little parcels, little blocks. We've gone from zero to sixty markets. 1:13:32.520 --> 1:13:35.240 We're selling all over the world. It's become the main 1:13:35.280 --> 1:13:37.960 brand in Uruguay, but it's also the leader in the 1:13:38.000 --> 1:13:42.960 States and to Brazil, to Japan, China, UK and it's 1:13:43.080 --> 1:13:45.479 it's growing very fast normally. 1:13:45.600 --> 1:13:49.360 And what's fast is it high teens? Is it above that? 1:13:51.760 --> 1:13:56.520 Many years doubling the business, many years in a row, 1:13:56.640 --> 1:13:59.439 including COVID, and as you said, all the different cycles. 1:14:00.080 --> 1:14:02.680 Toasted to our first year with our new partners in 1:14:02.720 --> 1:14:05.800 the US with a wine bow. And again we did 1:14:05.840 --> 1:14:07.439 really well in a very tough year. 1:14:09.040 --> 1:14:09.320 But you. 1:14:10.920 --> 1:14:15.280 Have a level of investment that it's really projected very 1:14:15.360 --> 1:14:19.000 very long term. We have projects for hotels, we have 1:14:19.040 --> 1:14:22.640 a real estate on the beach. Mister Volgeroni has an 1:14:22.680 --> 1:14:27.400 incredible a golf course designed by Phil Michelson and Acha 1:14:27.520 --> 1:14:31.280 Caria that it's a PGA Tour preferred golf course. We 1:14:31.320 --> 1:14:33.479 make our own extra virgin olive oil so that we 1:14:33.520 --> 1:14:34.479 talked about there are. 1:14:34.280 --> 1:14:37.800 Some universe What is the biggest revenue driver? Is it 1:14:37.800 --> 1:14:40.439 the winer, is it the real estate? Where I ask 1:14:40.520 --> 1:14:41.599 if it's even the olive oil. 1:14:42.080 --> 1:14:44.679 Yeah, the first one was the olive oil, the extra 1:14:44.760 --> 1:14:47.280 virgin olive oil, and it's one like the best extra 1:14:47.360 --> 1:14:49.320 virgin olive oil in the world. A couple of times. 1:14:49.840 --> 1:14:53.120 The winery is the wines. It was driving the revenue. 1:14:53.479 --> 1:14:56.680 And it's not just setting wine as a product, it's 1:14:56.720 --> 1:15:01.040 also the experiences. So we have fifty thous visitors a 1:15:01.120 --> 1:15:03.320 year and this is in the middle of nowhere, as 1:15:03.360 --> 1:15:06.800 you just mentioned ou Wai. Yeah, and it's all very 1:15:06.880 --> 1:15:12.320 high income and networth people. It goes from twenty thousand 1:15:12.320 --> 1:15:15.000 people living there in Punta de Les de Anderson to 1:15:15.120 --> 1:15:17.880 two million tourists around New Years. It's a lot and 1:15:17.960 --> 1:15:21.240 a lot of them are celebrities like Clooney or Winneth 1:15:21.240 --> 1:15:23.639 Paltrow or Messi or it's ours. 1:15:25.120 --> 1:15:26.880 That's kind of our crew. Care well, I'm here to 1:15:27.000 --> 1:15:27.599 invite you. 1:15:27.600 --> 1:15:29.599 You have to corroborate this story, right. 1:15:29.560 --> 1:15:31.519 We only have Unfortunately about a minute and a half 1:15:31.600 --> 1:15:33.960 or so left. You did bring in some bottles of 1:15:34.000 --> 1:15:37.320 wine and tell us about what you brought. I don't 1:15:37.320 --> 1:15:40.280 want to mispronounced Blasto, tanate. 1:15:41.160 --> 1:15:42.320 Alberino, Alvardino. 1:15:42.360 --> 1:15:45.360 It will start with the white wine. Yeah, it's this 1:15:45.479 --> 1:15:48.720 is Albardino. We are the main grower of Alberdino in 1:15:49.000 --> 1:15:52.400 the Americas. It's the white great variety that like the 1:15:52.479 --> 1:15:55.839 Queen of Spain. We have the same kind of granite 1:15:55.880 --> 1:15:59.320 and Atlantic Ocean influence, similar to Galicia. And this is 1:15:59.320 --> 1:16:03.280 our actually our setting line in the US, perfect for 1:16:03.400 --> 1:16:06.400 summer or the end of the of the spring, if 1:16:06.439 --> 1:16:08.680 you like Top one hundred white spectator. 1:16:09.360 --> 1:16:11.599 So an awesome valley. This is like a twenty two 1:16:11.680 --> 1:16:12.519 dollars retail. 1:16:12.640 --> 1:16:13.120 That's great. 1:16:13.160 --> 1:16:15.439 So there's a beautiful opportunity there. 1:16:15.640 --> 1:16:18.919 That was Christian Wiley Bodega. Garzon's a managing director. 1:16:19.040 --> 1:16:21.080 And that wraps up the weekend edition at Bloomberg Business 1:16:21.120 --> 1:16:23.599 Week from Bloomberg Radio. Thank you so much for joining us. 1:16:23.720 --> 1:16:26.479 Be sure to tune into Bloomberg Business Week daily Monday 1:16:26.479 --> 1:16:28.600 through Friday starting at two pm Wall Street Time, on 1:16:28.640 --> 1:16:32.479 Bloomberg TV, Bloomberg Radio, and on Serious XM Channel one 1:16:32.520 --> 1:16:35.240 twenty one. You can also listen to us on Applecarplay 1:16:35.240 --> 1:16:37.479 and Android Auto Free in the Apple App Store. 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