Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. Yesterday, you might recall we
Speaker 1: talked with Peace Lamp He's the chief strategy officer at
Speaker 1: work Day. We talked about digital transformation, the changing world
Speaker 1: of how we work well embracing digital strategies. They are
Speaker 1: definitely everywhere, including a massive company best known for its
Speaker 1: industrial construction and mining machines. Tim, we are talking, of
Speaker 1: course about Caterpillar. Yeah, I'm familiar with it. It's my
Speaker 1: three and a half year old's favorite company that exists.
Speaker 1: I mean, we're talking about the world's leading manufacturer construction
Speaker 1: and mining equipment, Caterpillar. UM tractor. Well you are now
Speaker 1: Arlow's best friend a grand It's pretty cool. Let's get
Speaker 1: to Aggie red Zick, chief digital officer for Caterpillar, who
Speaker 1: joins this vias here from Scottsdale, Arizona. Really great to
Speaker 1: have you with us this afternoon. Thanks so much for
Speaker 1: taking the time. When we think Caterpillar, I mean we
Speaker 1: are talking heavy equipment, We're talking construction, we're talking mining equipment.
Speaker 1: I mean, in a sense, this is stuff that's powered
Speaker 1: by diesel, and it's the it's quite kind of the
Speaker 1: antithesis of digital. But talk to me about how you
Speaker 1: guys harness digital. Now, first of all, good afternoon, Carroll,
Speaker 1: Good afternoon, Tim. Um. I hope you're three year old
Speaker 1: would like a little moti greater than I have my kids.
Speaker 1: My kids love it, Um. Digital. Digital really enables Caterpillar.
Speaker 1: I mean, you know cateripilars history, you know, been around
Speaker 1: hundred years, kind of invented the track tip tractor and
Speaker 1: figure out how to put gasoline versus a steam engine,
Speaker 1: and and really kind of changed so many industries since that.
Speaker 1: We view digital as a big enabler for our dealers
Speaker 1: and customers to continue innovating in the new world if
Speaker 1: you're building all around us, so you know what we're doing,
Speaker 1: namely just my team. We have a team about four engineers.
Speaker 1: We collect data from more than one point two million
Speaker 1: assets that Caterpillar has out in the field. We like
Speaker 1: that data. We actually put the data in a useful
Speaker 1: information We create services on top of the data and
Speaker 1: every past uh information back to our customers so that
Speaker 1: they can operate their fleet letters. They can know where
Speaker 1: their equipment is, how hard it's working. And we have
Speaker 1: many interesting applications we give to our customers and our
Speaker 1: dealers so they can improve the operation of the fleet. Well,
Speaker 1: you know what's interesting too, And I want to just
Speaker 1: if I can just step away from some of the
Speaker 1: digital work you guys are doing, specifically because you touched
Speaker 1: about data and how that UM. You know, data is
Speaker 1: such an important part of what you do. And one
Speaker 1: of the things that we love about UM Caterpillar is
Speaker 1: that you guys are so into collecting lots of data points.
Speaker 1: And if I can just for a moment, though, tap
Speaker 1: into what the data points tell you about kind of
Speaker 1: our broader world, our macro world, which has been a
Speaker 1: theme that we have been hammering in particular over the
Speaker 1: last week or so, because we look at inflation concerns
Speaker 1: about growth, we're looking at the continued digital transformation of
Speaker 1: the world and how that can be uncomfortable as we
Speaker 1: move towards it when you look at that, and you
Speaker 1: guys are known for your data collection and what it
Speaker 1: tells us about the global economy. So if I can
Speaker 1: just step back for a moment, what does that tell
Speaker 1: us about our world right now? Well, obviously we don't
Speaker 1: really talk much about data that we dislob collect from
Speaker 1: our customers. We primarily use the data to help our
Speaker 1: customers with applications that they use day in and day out.
Speaker 1: But certainly, um, you know, we have increased number of
Speaker 1: assets out there that keep collecting the data and uh
Speaker 1: and and leveraging that or benefit to the customers. And
Speaker 1: I can tell you that, you know, the world is
Speaker 1: continuing to come along our customers. We have growing number
Speaker 1: of customers using our platforms every day, so they extract
Speaker 1: more information from mouths. They use our autonomy solution, for example,
Speaker 1: more than ever before. So there's definitely a desire and
Speaker 1: an appetite for data to be shared back with our
Speaker 1: customers in a meaningful way where they can actually leverage
Speaker 1: the applications that we built. Well, that's what I was
Speaker 1: going to ask you. You know, in terms of what's
Speaker 1: top of mind you know for your customers. You know,
Speaker 1: whether it's energy, transportation, construction, forming, which is you guys
Speaker 1: play into so much of what is our global economy?
Speaker 1: What is top of mind for them? Well, look, I
Speaker 1: mean the key for them is to be able to
Speaker 1: operate their fleet as effectively as they can. It's important
Speaker 1: for them to be able to get parts from us,
Speaker 1: from our dealers, It's important for them to transact with
Speaker 1: us in a seamless way. So when we look at
Speaker 1: the investment that we're making a digital for example, we
Speaker 1: make investment to help our customers with condition launching. So
Speaker 1: we have a team on people that build very advanced
Speaker 1: machine learning tools that it can actually take information from
Speaker 1: let's say mining truck and a mind figured out two
Speaker 1: best amounts of data that we collect from it that
Speaker 1: there's potential issue that may merge over the next week
Speaker 1: or so. And if you can get in front of
Speaker 1: that problem with our customers, save and hundreds of thousands
Speaker 1: of dollars of one plan downtime and actually get the
Speaker 1: right part, in the right service eegnuation in front of
Speaker 1: the customer and in that mind that it will be
Speaker 1: tremendously valuable to the customer. So they're looking at these
Speaker 1: digital technologies that we that we helped deploy to them,
Speaker 1: is a way for them to save on the operational
Speaker 1: costs we use the downtime. It's really important for our customers.
Speaker 1: You can imagine that each one of these mining trucks,
Speaker 1: it's tens of thousands of dollars per hour if it's
Speaker 1: not operational, uh, for for the mining operator. But also
Speaker 1: we make it very easy for them to get parts,
Speaker 1: to get service, to book service to other parts online.
Speaker 1: We we've just recently share the breed through our dealers
Speaker 1: and the network do more than ten billions of parts
Speaker 1: sales every day on our online e commerce channels and
Speaker 1: we except expect that to continue growing. So we can
Speaker 1: imagine making it very easy for our customers to get
Speaker 1: their spare spare parts, to get the spare parts in
Speaker 1: the right moment, in the right time they need them,
Speaker 1: and our dealers are there to help help customers with
Speaker 1: that transisi. Hey, is this also playing into what's going
Speaker 1: on with climate change? And I'm just curious in terms
Speaker 1: of the data points and is how is that maybe
Speaker 1: translating into helping out your customers digitally, uh and ultimately
Speaker 1: leading to more growth for them. Sure, I mean a
Speaker 1: very simple way. We have a tool we called vision Link.
Speaker 1: It's one of the fleet management tools that kind of
Speaker 1: the factor standard in the industry UM and this tool
Speaker 1: will tell fleet operators, for example, how much CEO two
Speaker 1: they're emitting. So it's very simple. If you obviously drill
Speaker 1: a little deeper, you can see how is your fleet
Speaker 1: doing when it comes to idling versus operating the engine
Speaker 1: for and clearly if you have an idle time, you
Speaker 1: want to try to reduce it because of ambitions that
Speaker 1: you're going to get with it. And also you know,
Speaker 1: you want to just make sure that you extend useful
Speaker 1: life of the asset that you have to the maximum.
Speaker 1: So there are tools that we developed in digital that
Speaker 1: actually help our customers operate those fleets more effectively. Hey,
Speaker 1: what does this do for stickiness when it comes to
Speaker 1: customers and Caterpillar machinery when they're ready to go and
Speaker 1: actually buy a new piece of equipment for mining or
Speaker 1: for construction. Does having this digital offering having the data
Speaker 1: about what they're working on. Uh, does that make them
Speaker 1: more likely to continue to buy a piece from Caterpillar
Speaker 1: rather than from a competitor? And what is the data
Speaker 1: show us about that? But absolutely total operating costs of
Speaker 1: what really matters to our customers. It is critical for
Speaker 1: us to make sure and demonstrate to our customers that
Speaker 1: operating costs of owning pieces of machinery from Caterpillar is
Speaker 1: better than from our competitors. If you look for example,
Speaker 1: I mean, I'll give you some some data. Um customers
Speaker 1: that come to us and start using our digital to
Speaker 1: digital tools to to buy parts to transact with us
Speaker 1: actually end up buying and those that just do it
Speaker 1: over the counter, and not only do they buy more
Speaker 1: of what they previously bought, but they also have an
Speaker 1: opportunity to explore more of what we offer and therefore
Speaker 1: they buy more scutes things that they have bout for
Speaker 1: and they also have much broader spectrum of solution that
Speaker 1: we can offer them when they see them in nice,
Speaker 1: nice and order digital catalog for example. So I give
Speaker 1: you some idea of how valuable we think these tools are.
Speaker 1: Well and talk to us about you know, we we've
Speaker 1: been getting into how what you guys are doing can
Speaker 1: help customers write clients in terms of their digital transformation.
Speaker 1: How does this though, the digital transformation that's happening with
Speaker 1: you guys and focusing on this, how is that translating
Speaker 1: into growth and how will it in the years to
Speaker 1: come on Caterpillar in terms of impacting top and bottom lines. Yeah,
Speaker 1: absolutely so. I gave you a data point of ten
Speaker 1: million dollars in deal with part sales per business day
Speaker 1: today and we expected that will grow fifty in the
Speaker 1: next three years. That's one data point. Another interesting data
Speaker 1: point is we've put a lot of effort and energy
Speaker 1: in our machine learning capability to give better leads to
Speaker 1: our dealers. So we use twenty different data sources. Obviously
Speaker 1: data for machine we look at engineering information and look
Speaker 1: at thematics, UH information, data from from service, and we
Speaker 1: collect all of that. We come up with a very
Speaker 1: precise recommendation to our dealers to go and visit a
Speaker 1: customer because we know that there is a particular need
Speaker 1: of going to materialize in a moment. We just started
Speaker 1: that effort three years ago. Really in two thousand and
Speaker 1: twenty one, we did about a billion dollars of closed one,
Speaker 1: so deal that actually resulted in sale and we expected
Speaker 1: already will be doing about two millions sale. But during
Speaker 1: the excuse me sorry, as as we've been seeing supply
Speaker 1: chains just you know, reach havoc upon during the pandemic,
Speaker 1: did that type of data even matter, like did you
Speaker 1: have the equipment to send those dealers? We did. We
Speaker 1: actually had the best parts availability in one. So obviously
Speaker 1: there's been a lot of hard work from many people.
Speaker 1: I know my team is you know, went all over
Speaker 1: the world to find the chips that we needed and
Speaker 1: often had to replace them with different chips. And then
Speaker 1: the engineering work to ensure that these new chips will
Speaker 1: work is effectively as the pre those chips. So there's
Speaker 1: a lot of effort that goes into it. But clearly, um,
Speaker 1: you know, when it comes to for example, parts availability,
Speaker 1: which is what matters. One was actually pretty goodyear. Now
Speaker 1: we continue to have challenges and supply changes like everybody
Speaker 1: else in the in the industry. I'm not at liberty
Speaker 1: to to predict when those will get better. But again
Speaker 1: we're doing everything that weekend and I think, uh uh
Speaker 1: are doing a reason need good job, well you know what,
Speaker 1: and just building on that you know in terms of
Speaker 1: digital transformation, you hear digital, you do think about sony
Speaker 1: conductors and chips specifically. And we've all had some really
Speaker 1: smart conversations and thoughtful conversations about where we need to
Speaker 1: be manufacturing, where we need to get our supplies, and
Speaker 1: we are increasingly hearing, certainly from a US story, that
Speaker 1: it needs to be closer to home. And you guys sell, um,
Speaker 1: I think it was it roughly about twenty two billion
Speaker 1: in North America and then I think more than that
Speaker 1: outside of North America. So when you think about where
Speaker 1: those supply chains need to be, does it make sense?
Speaker 1: We talked with the mayor of Columbus, Ohio UH into
Speaker 1: making a big investment in that city specifically to build
Speaker 1: out a semiconductor presence. Is it really smart? Do you
Speaker 1: agree that we need to be building this closer to
Speaker 1: where we're selling uh and for the United States to
Speaker 1: kind of step up and bring production home. Well, ultimately,
Speaker 1: you know, I'm probably not the expert to tell you
Speaker 1: where the factories should be, but I can tell you
Speaker 1: that would you buy, you need and you need to
Speaker 1: have access, right, It's critical, critical for us to have
Speaker 1: access to chips, absolutely and if that means if we
Speaker 1: need to do more in the United States, absolutely we'll'll
Speaker 1: be fully supportive of that. But right now, I mean
Speaker 1: we're still years away from anything in Ohio coming online.
Speaker 1: We still have, you know, short term issues if you
Speaker 1: need to resolve and those chips need to come from
Speaker 1: somewhere else. Well, I have to say it's great to
Speaker 1: check in with you. A few years ago I did
Speaker 1: a deep dive on the company, spent some time in
Speaker 1: the proving ground out in Illinois, got to drive um
Speaker 1: some vehicle attractor. But it's interesting in terms of how
Speaker 1: this company, you know, continues to brace technology, including the
Speaker 1: digital world, the digital transformation. It makes sense whether they're
Speaker 1: doing it internally or for their for their customers. Why
Speaker 1: don't we do a remote where we do this from
Speaker 1: the tractor. I loved it. Man, were a hard cool,
Speaker 1: self driving tractors so that we can go to tough
Speaker 1: mining areas so you don't put people at risk. It's
Speaker 1: pretty amazing. Aggie Redzick. He is Chief Digital Officer over Caterpillar,
Speaker 1: joining us via Zoom from Scottsdale, Arizona. Coming up, we're
Speaker 1: checking in with Steve Kase talking more transformation This is
Speaker 1: Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg Radio. Well, the World Health Organization
Speaker 1: out with some new research what they call invisible numbers
Speaker 1: about the impact of noncommunicable diseases what to do about
Speaker 1: them n C D s to him. You're talking about
Speaker 1: cardiovascular diseases, cancer, diabetes, chronic respiratory diseases, along with mental health.
Speaker 1: They all together under that n C d umbrella caused
Speaker 1: nearly three quarters of deaths in the world. The impact
Speaker 1: and quality of life, the global economy and global productivity,
Speaker 1: it's really massive. So we're going to take kind of
Speaker 1: a look at healthcare space, the cost, especially when you
Speaker 1: think about things like higher inflation factoring that in. Yeah,
Speaker 1: I'm really glad you brought up that inflation element because
Speaker 1: we know that health care is a significant portion of
Speaker 1: duding here in the US. About, um, what does it
Speaker 1: mean when everyone's paying higher prices for things? For that,
Speaker 1: we turned to Eileen Flick. She's senior vice president director
Speaker 1: of Health Technology Technological Technical Services. Excuse me at seageal Uh,
Speaker 1: it's a benefits an HR consulting firm. Eileen great to
Speaker 1: have you with us this afternoon. How are you good?
Speaker 1: Thank you for having me. We'll talk to us a
Speaker 1: little bit about some of the data that Carol just
Speaker 1: shared and the idea of Um. Obviously, these are preventable
Speaker 1: diseases in many cases. Uh, the question is there's the
Speaker 1: benefit the cost benefit analysis that happens here right. Costs
Speaker 1: so much to actually treat these things when people they
Speaker 1: do affect people and they end up being hospitalized and
Speaker 1: long term care facilities. How do we start to treat
Speaker 1: them earlier so it doesn't end up costing as much
Speaker 1: and so people are healthier. Um, Well, that that is
Speaker 1: the key. UM. So I mean I just want to
Speaker 1: address before I even get to that, I just want
Speaker 1: to just mentioned that that you know, healthcare is expected
Speaker 1: to increase next year and inflation is at a forty
Speaker 1: year high, so I do expect, you know, it to
Speaker 1: drive up medical costs over the next year. But there
Speaker 1: there is a lot that can be done to reduce
Speaker 1: the costs and to to treat people earlier. So, I mean,
Speaker 1: benefit plants can do a lot that. I mean, what
Speaker 1: you could do is really promote using lower cost settings. Um.
Speaker 1: You could do things like promote use of walking clinics
Speaker 1: and urgent care centers for non life threatening acute care needs.
Speaker 1: Anytime patient is using hospital owned facility for care, they
Speaker 1: generally pay warfare services. So there's you know, there's very
Speaker 1: many times maybe the only and best option, but there's
Speaker 1: capabilities and access for alternative care centers, and they've grown
Speaker 1: tremendously in the past decade. And I think with UM,
Speaker 1: with with the pandemic, there's been a lot more promotion.
Speaker 1: You know, there's been a lot more access to just
Speaker 1: UM care outside of the hospital. So the ad patient
Speaker 1: care in general has just been her tremendous lines and
Speaker 1: those poor I say, these poor urgent care centers you
Speaker 1: know who you know, over the last year have just
Speaker 1: been flooded with patients for COVID tests. I mean, we
Speaker 1: certainly have to to figure something out so they're not
Speaker 1: bursting at the seams. Hey, Elean, Um, you mentioned that
Speaker 1: inflation is take is the causing the price of healthcare
Speaker 1: to go up. We're gonna see open enrollment, I think
Speaker 1: for a lot of companies in the near future. Um,
Speaker 1: are we going to see sticker shock as employees at
Speaker 1: many of these companies when we start to see how
Speaker 1: much more our premiums are going to go up? Well,
Speaker 1: it depends on the plan sponsor. I mean, I think
Speaker 1: in plants, plants should expect on on average, and we've
Speaker 1: seen this in our healthcare costumes. Are we So the
Speaker 1: survey basically showing that medical plan costs are expected to
Speaker 1: increase at an annual rate of seven to eight percent
Speaker 1: in three Now, you know, we've seen that trends were
Speaker 1: actually they had gone down significantly because people were not
Speaker 1: were differing care. And now we're seeing between the inflationary
Speaker 1: environment and people actually using services, and now there's been
Speaker 1: enough to conservices. I think, um that you know, we're
Speaker 1: seeing that they're going up a lot. That that said,
Speaker 1: it's not at the same level as what we're seeing
Speaker 1: for inflation UM inflation, I would think the medical care
Speaker 1: is price price inflation has actually gone up just in
Speaker 1: general UM for overall overall consumer of goods, and medical
Speaker 1: price is probably a little bit behind, and it's behind
Speaker 1: because of timing and provider contracting and commercial plans. So
Speaker 1: I think that it's it's embedded in those rates to
Speaker 1: some extent, but it's probably going to increase over the
Speaker 1: next couple of years. You know, I wonder what the
Speaker 1: the right conversation is to be having at this point
Speaker 1: healthcare and the costs to society, to um individuals, to companies,
Speaker 1: just to the economy. We've been talking about this for years.
Speaker 1: II lean and I do wonder, you know, you guys
Speaker 1: are looking at how inflation is impacting healthcare costs? I mean,
Speaker 1: should we be looking at something like and I talked
Speaker 1: about n c d s at the top. I mean
Speaker 1: n c d S, which touched so many of our
Speaker 1: lives either directly or through people we know? Is there
Speaker 1: something that we can think about in terms of lifestyle
Speaker 1: preventive care. So maybe the question to be asked is,
Speaker 1: you know, how can preventive care impact healthcare costs? There's
Speaker 1: smarter conversation. We were have to turn things upside down
Speaker 1: and how we approach healthcare where we would get a
Speaker 1: better outcome in terms of quality of life as well
Speaker 1: as when it comes to the cost equation. I mean,
Speaker 1: definitely and prevented. There's definitely opportunity with preventive care. And
Speaker 1: I think we've seen even with the pandemic that there
Speaker 1: are a lot of people who didn't like to, you know,
Speaker 1: take their preventive care screenings and and there are people
Speaker 1: that are now getting you know, diagnosed with lead stage cancers.
Speaker 1: So preventive careacters is always a smart thing to do
Speaker 1: in general. And um, under you know, there's any opportunity
Speaker 1: you can you have to to get to care sooner.
Speaker 1: It is always going to catch things earlier and avoid
Speaker 1: uh you know, high cost m claim outcomes. So that's
Speaker 1: definitely a smart thing to do, alright, And so doing
Speaker 1: a matter well, you know, everyone just prevent a high
Speaker 1: cost claim and improved outcomes early on. How sticky are
Speaker 1: we only have twenty seconds left only? But how stickier
Speaker 1: healthcare costs? Like do they come down or do they
Speaker 1: just stay high? If they go higher? Um, there's there's
Speaker 1: a sticky as a plan sponsor is in terms of
Speaker 1: managing their costs, and there's lots that can be done
Speaker 1: to do that. And so I think, um, you know,
Speaker 1: plant sponsor really needs to look at their data to
Speaker 1: understand what is driving their costs and using their data
Speaker 1: they can come to affective strategies you know, to mitigate increases. Well,
Speaker 1: great to check in with you. I Lean Flex, Senior VP,
Speaker 1: Director of Health Technical Services at Seagull. There and employee
Speaker 1: benefits and HR consulting firms. She joins us via zoom
Speaker 1: from basch Or in New York. You're listening to Bloomberg
Speaker 1: Business Week with Carol Masser and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. Well, folks, we know getting back
Speaker 1: to work for the most part, DC back in swing,
Speaker 1: and that leads us to a Bloomberg Business Week story
Speaker 1: about the massively popular video app owned by a Chinese company.
Speaker 1: We are talking about TikTok and it's charm offensive around
Speaker 1: its lottice critics you could just call it's kind of addicting,
Speaker 1: like cigarettes. It is. What's that? TikTok? Tiktoky? What's Up?
Speaker 1: Was the last segment exactly. I mean, in a sense,
Speaker 1: Facebook wishes it would have you been able to snag
Speaker 1: TikTok instead of What's Up, But that's an entirely different story.
Speaker 1: Joining us, we got Josh Brustein, Technology editor for Bloomberg
Speaker 1: Business so he joins us on the phone from New
Speaker 1: York City. Joshua, good to have you with us this afternoon.
Speaker 1: We're also gonna be hearing from Joel Webber, the editor
Speaker 1: of Bloomberg Business Week from our Bloomberg Interactive broker studio Joshua,
Speaker 1: I want to start with you as you edited this
Speaker 1: piece by Alex Branka and Emily burn Bomb. If people
Speaker 1: haven't been following the TikTok saga, just explain what has uh,
Speaker 1: you know, Republicans, Democrats and then tech critics so concerned
Speaker 1: about the ownership of the app. Sure, so, as you said,
Speaker 1: TikTok is a really popular social video app, competitor to
Speaker 1: a out of the US based social media apps, um,
Speaker 1: you know, Instagram, Facebook and so on. And in addition
Speaker 1: to kind of the general distrust of all tech products
Speaker 1: that work like this and questions about, um, you know,
Speaker 1: how people are using them, whether the algorithm is manipulative,
Speaker 1: there's the added twist that TikTok is owned by a
Speaker 1: Chinese company and thus raises a lot of questions suspicions
Speaker 1: about its connection to the Chinese government. Um, and so
Speaker 1: lawmakers and others have questions about, you know, what kind
Speaker 1: of data on US users is ending up on servers
Speaker 1: in Beijing, Um, you know what, what sort of how
Speaker 1: these algorithms might be furthering Chinese government political priorities and
Speaker 1: just generally kind of tapping into that increased hostility between
Speaker 1: the US and China. Alright, so Joshua breaking down some
Speaker 1: of the concerns there, Jill Weber, you know, I feel
Speaker 1: like we've seen this playbook before. Company gets in trouble,
Speaker 1: sends crew down, a d C, spends money, talks to
Speaker 1: lawmakers to try and fix things. Uh. Sounds familiar, right,
Speaker 1: tech company? Um, most of those are our US based Uh.
Speaker 1: You know, so this one's a little different, Um, And
Speaker 1: that that is I think part of the TikTok challenge
Speaker 1: here is like how do you how do you actually
Speaker 1: thread this needle and and you know, go on this
Speaker 1: charm offensive. But then, as the story UM explores, the
Speaker 1: charm offensive is only directed at certain people. There's other
Speaker 1: people that the charms definitely just not going to work on,
Speaker 1: and so they're just like steering entirely around them. But
Speaker 1: josh the other thing to kind of mention here is
Speaker 1: actually just the scale of the lobbying ambitions, because I
Speaker 1: think that's the other war partner, because it's like there's
Speaker 1: like an r o I here where I think Kiktok
Speaker 1: looked at it was like, you know, we kind of
Speaker 1: need to show up. But maybe not show up for
Speaker 1: like a decade, like you know, Facebook is just like
Speaker 1: in football game. So Josh talk to us about that strategy,
Speaker 1: because it does look like it's been very u tactful. Perhaps. Yeah, absolutely,
Speaker 1: I think that tik cook is it's a much younger
Speaker 1: company than Meta, UM and some of the other Silicon
Speaker 1: Valley companies that are getting into trouble. So it's been
Speaker 1: scaling up UM since scaling up pretty pretty rapidly. Uh.
Speaker 1: They spent UM about two point one million dollars on
Speaker 1: lobbying in the last period, which UM was that's I
Speaker 1: think a year to date or I'm sorry, that's a
Speaker 1: second quarter, and UM, you know that's not Meta scale,
Speaker 1: but that's pretty significant. UM. And I do think that
Speaker 1: the interesting thing is, while they didn't say, UM, the
Speaker 1: company doesn't say this on the record, UM. Part of
Speaker 1: the reporting in this story, UH is that the company
Speaker 1: kind of realizes there are certain people that it just
Speaker 1: has no chance of convincing, and it's saying, UM, you know,
Speaker 1: we just don't want to just meeting with Josh Holly
Speaker 1: or meeting with some of the other kind of especially
Speaker 1: strident critics. There's just no margin for us there and
Speaker 1: so we're going to focus on trying to get someone
Speaker 1: to listen to our story, and maybe there's just gonna
Speaker 1: be people who won't do it at all. So what's
Speaker 1: this potentially look like, Josh in d C Like, I mean,
Speaker 1: it could have one outcome if Democrats UH stay in power.
Speaker 1: It could be another if they lose seats uh and
Speaker 1: things go to the GOP. What what kind of do
Speaker 1: the little game three for us? What does it look like? Yeah,
Speaker 1: I think there's a couple of things to watch here.
Speaker 1: Number one is to watch UM Scipious, which is the
Speaker 1: inter agency panel that looks at foreign investments that might
Speaker 1: have national security implications. You all might remember that there
Speaker 1: was a Cipious review started in the Trump administration looking
Speaker 1: at TikTok's connection to the Chinese government and whether or
Speaker 1: not UM Bite Dance, their parent company based in China,
Speaker 1: should have to divest TikTok entirely. UM. We do have
Speaker 1: some reporting that the company is nearing a deal with
Speaker 1: Siphius that would allow it to not have to completely divest.
Speaker 1: It's not completely separate from Bite Dance, so that would
Speaker 1: be a good UM, that would be a good outcome
Speaker 1: for them. It's a little bit less tied to partisan
Speaker 1: um to partisan concerns, And in terms of what happens
Speaker 1: in November, if you see Republicans take over, they just
Speaker 1: the most harsh critics are coming from the GOP side.
Speaker 1: So I do think that for TikTok, just in terms
Speaker 1: of the public drubbing, a Republican victory might mean more
Speaker 1: of that. What's the worst case scenario, Joshua here, I mean,
Speaker 1: you can't really ban it, could you. Well, if if
Speaker 1: if the Cifius decision goes in a way that isn't
Speaker 1: kind of as as indicated it seems to be going,
Speaker 1: and they did have to play divest um, I mean
Speaker 1: that is that could be pretty disastrous. Um. There's also
Speaker 1: some there's also some discussion the Biden administration looking at
Speaker 1: UH an executive order, which could, depending on its wording,
Speaker 1: severely restrict the amount of data on US citizens that
Speaker 1: a Chinese owned company could collect. Um, a social media company,
Speaker 1: they all collect a lot of data. UM. We don't
Speaker 1: know what that executive order would look like, but that
Speaker 1: could also be a pretty serious threat. UM. So I
Speaker 1: think those are two things in the near future to
Speaker 1: watch out for. UH. And you know, I think that
Speaker 1: the cifiest thing is totally the elephant the room, because
Speaker 1: if they had to divest this or or you know,
Speaker 1: end up to another ownerships or something, you know like
Speaker 1: that would just be you go from being number one
Speaker 1: to something else. I know a company that would really
Speaker 1: like that if that happened. Rhymes with Facebook platforms, I believe, Yeah,
Speaker 1: thank you, sorry, And I guess what would happen is
Speaker 1: what has happened now for a lot of geriatric millennials
Speaker 1: like myself, which is all the tiktoks you end up
Speaker 1: seeing are the ones that are on Instagram that people
Speaker 1: repost there. Oh my god, we're living in odd times.
Speaker 1: All right, we gotta run. Josha Brewstain, technology editor at
Speaker 1: Bloomberg business Week. I just love going to the Congressional
Speaker 1: football game, though. Man, this is how it works. Indeed,
Speaker 1: and that, of course, was the editor of Bloomberg Business Week.
Speaker 1: Jill Webber. You are listening and watching Bloomberg Radio. I'm
Speaker 1: roam mac a journal. Yeah, but you let me drive?
Speaker 1: Oh no, no, no, who's right? Please, I'll do the dravel.
Speaker 1: I want to drive. It's good question drive. This is
Speaker 1: the drive to the clothes on Bloomberg radio. All right,
Speaker 1: everybody just got about ten minutes left to in today's
Speaker 1: trading session. Did you just say Disney shut Yeah, Disney,
Speaker 1: We're just getting used. Disney is shutting its Florida theme
Speaker 1: parks tomorrow and Thursday. This is Hurricane Ian Bears down
Speaker 1: on the stage. Yeah, certainly makes sense to be careful
Speaker 1: and obviously mid what is expected to be a pretty
Speaker 1: pretty rough storm. All right, let's get to it. Uh,
Speaker 1: certainly been a rough year when it comes to the market,
Speaker 1: certainly if you're trying to be bullish, because it's certainly
Speaker 1: been one for the bears. Jimmy Lee is founder and
Speaker 1: chief executive officer at Wealth Consulting Group. Two point nine
Speaker 1: billion in asset's roughly under management, once again, joining us
Speaker 1: on the phone from Las Vegas. Jimmy Lee, how are
Speaker 1: you great? How are you You're great? Jimmy? Do you
Speaker 1: still have two point nine billion dollars in US that's
Speaker 1: under management? Are you growing those? Au? M? Well, we're
Speaker 1: sorrying our best. Let's joking about this market environment. You know,
Speaker 1: it's a very tough time right now, as we all know. Um,
Speaker 1: there's a lot of confusion out there amongst investors and
Speaker 1: with I think it's really about yields and how I
Speaker 1: interest rate your going up and as we know, everybody's
Speaker 1: trying to predict, Um, you know what the Fed's gonna do.
Speaker 1: Are they really going to do what they say? And
Speaker 1: are we going to have the FED funds rate go
Speaker 1: up another point point in the quarter and and and
Speaker 1: if that were to happen, is it going to be
Speaker 1: too late in terms of a potential for any kind
Speaker 1: of a soft type landing and what we cause a
Speaker 1: really bad economic downturn? So I think that's what the
Speaker 1: debate is right now. Obviously, the market teetering on the
Speaker 1: June lows and the next few days I think will
Speaker 1: be important not just for equities but also for fixed income. So, Jimmy,
Speaker 1: what we love talking to you for a lot of reasons, um,
Speaker 1: but one of them is because you're talking to clients
Speaker 1: all the time, and I'm I'm wondering what your email
Speaker 1: inbox looks like right now? You know what what's happening
Speaker 1: is the phone ringing off the hook? Are people concerned?
Speaker 1: What are your clients saying? I've got some great stories
Speaker 1: for you. So, um, you know I've been in the
Speaker 1: business since so for over twenty seven years. I have
Speaker 1: some clients that I still work with day that we're
Speaker 1: invested with me to the dot com bubble back in
Speaker 1: you know, two thousand to two thousand and two, a
Speaker 1: lot of clients that were invested through the financial crisis
Speaker 1: awight O nine. And then I will say that there
Speaker 1: are a few few clients that I have personally that
Speaker 1: I worked with, um that I've only been working with
Speaker 1: for the last few years, that are expressing a lot
Speaker 1: of nervousness and literally over the last day or two,
Speaker 1: and so, you know, I think they're you know, that
Speaker 1: type of anecdotal evidence. And I'm sure I'm not the
Speaker 1: only advisor that is having that type of experience. And
Speaker 1: so what I'm trying to point out is that the
Speaker 1: investors that have experienced declines much bigger than what we're
Speaker 1: going through today, because right now on SMP, it's not
Speaker 1: even a typical bear market yet, right, but I think
Speaker 1: that some people that don't have as much experience are
Speaker 1: starting to capitulate a little bit. So I think we're
Speaker 1: somewhere between even not panic quite yet, but we're getting
Speaker 1: close to that emotional, you know, behavior curve where people
Speaker 1: start to wanting to sell, and so I think it's
Speaker 1: it's really important and we've been telling all of our
Speaker 1: advisers recently that to double up on all the communication
Speaker 1: with existing clients and and for our business, it's also
Speaker 1: a great time to go out and find new people
Speaker 1: that need to guidance. Um, when you say it's a
Speaker 1: typical bear market, what because of all the bouncing around
Speaker 1: or or what, Well, when you get a typical bear market,
Speaker 1: I mean the SUPs down the third or more. So
Speaker 1: we're not even close to that yet and I'm not
Speaker 1: saying that this can't turn into that. And I think
Speaker 1: that's what the debate has been, whether we go into
Speaker 1: a recession that bear market is going to look more
Speaker 1: like a third or more, right, And so is that
Speaker 1: what's going to happen? And I've I've been on the
Speaker 1: side of I'm hoping it doesn't happen. I think that
Speaker 1: the consumer is still strong, but you know, the Feds
Speaker 1: trying to regain some credibility for not increasing interest rates
Speaker 1: sooner and if they're going to be bullheaded and just
Speaker 1: kind of destroy the economy at it at the same time,
Speaker 1: and we're starting to see some ripple effects, right, We're
Speaker 1: wide with interest rates in different places. I think in
Speaker 1: places like you know, um, Italy. In the UK, it's
Speaker 1: more about sovereign issues versus what's going on here with
Speaker 1: the FED. But you know, we're seeing yields pop in
Speaker 1: the UK at levels that we haven't seen before in
Speaker 1: a very long time. Here in the US, I can't
Speaker 1: remember when we had a four percent, you know, fort
Speaker 1: term interest rate for cash and um. And also I
Speaker 1: can't remember when I really believe that buying bonds were
Speaker 1: a good opportunity. So we've actually added to our Jeffery
Speaker 1: dunlack Is is finding some interesting that. Yeah, well we
Speaker 1: added to duration on our bond portfolios too recently by
Speaker 1: adding some treasuries in the seven to ten year maturity range. Interesting. Um,
Speaker 1: if you said it's a good opportunity right now at
Speaker 1: actually provide guidance to newer, newer clients, newer customers. Are
Speaker 1: you getting new money in this environment? Absolutely? Um. I
Speaker 1: mean for us as advisors, money is always in motion
Speaker 1: during times like this, So how are you pandemic? Well,
Speaker 1: we're dollar cost averaging. So in my notes, that's one
Speaker 1: of the things that we're still going back to the
Speaker 1: old fundamentals, right some some things that have always worked.
Speaker 1: So if you got dry powder, I wouldn't try to
Speaker 1: predict today to be the market low. But adding in
Speaker 1: today's levels, if you're long term investors, you have a
Speaker 1: three year time arising or longer is a very smart
Speaker 1: thing to do. If you're a retiree and you're being
Speaker 1: forced to sell your investments at a loss because you
Speaker 1: need to spend on I think you should go interview
Speaker 1: a new advisor because you should have a strategy in
Speaker 1: place that that doesn't, you know, force you to do
Speaker 1: something like that. So most a lot of advisors have,
Speaker 1: you know, reserve accounts set up for for spending for
Speaker 1: retire reasons. So I think it depends on the type
Speaker 1: of investor you are, but certainly for people that are
Speaker 1: trying to accumulate, well, these are good times. You in
Speaker 1: your notes that you shared with our producers and our team,
Speaker 1: you said you reminded us that on September twenty second,
Speaker 1: we've got a market signal where over six of American
Speaker 1: Association of Individual Investors survey were bearish in previous readings.
Speaker 1: When this happened, the average return till months later was
Speaker 1: thirty for the U S in p five. Okay, Yeah,
Speaker 1: that's a pretty significant UM metric. How should we be
Speaker 1: reading it at this point where we're still waiting for
Speaker 1: full market capitulation just quickly again, I mean that's another
Speaker 1: that's another sign. So when when everybody's barish, it makes
Speaker 1: me feel like it's not that easy to make money
Speaker 1: in the market, whether you want to short it or
Speaker 1: go along. So that's assistic. I think supports the view
Speaker 1: that you know, we could get a pretty decent rally
Speaker 1: now again, if we get some inflation reports that are
Speaker 1: less than expected before the year end, and somehow Sherman
Speaker 1: Powell starts to change his language a little bit to
Speaker 1: make people think that they're going to pause sooner than
Speaker 1: we think today. Yeah, we could have a huge rallies
Speaker 1: at the midterm election. So that's what I would say,
Speaker 1: So it would be optimistic and think about the long sort.
Speaker 1: Which makes me wonder whether Charlie Evans, who talked to
Speaker 1: CNBC like opened the door a little bit to that. Um,
Speaker 1: I don't know whether we should read too much into it.
Speaker 1: I think there's a lot of debate. Hey Jimmy Lee, um,
Speaker 1: I always good to talk with you, Founder and CEO
Speaker 1: of Wealth consultant group roughly two point nine billion, and
Speaker 1: now so it's under management. Thanks for listening to Bloomberg
Speaker 1: Business Week, download the podcast on iTunes, SoundCloud, or Bloomberg
Speaker 1: dot com, and you can also listen to our radio
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