Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: listen to our radio show weekdays at two pm Eastern
Speaker 1: only on Bloomberg Radio. Mentally, he's the CEO at city
Speaker 1: Link dot AI. He's here with me here at the
Speaker 1: Bloomberg Government next event in Washington. This concept of a
Speaker 1: smart city, you know, that's that's very much top of mind.
Speaker 1: It's easy to say, but what is it? Tell us
Speaker 1: what it is? You know, our version is a digital city,
Speaker 1: and it's all about the citizen, you know, creating a
Speaker 1: frictionalists commerce and improving the quality of life. So everything
Speaker 1: in the future is going to be digital, everything from
Speaker 1: your calendars to your activities, to actually having artificial intelligence
Speaker 1: to predict and support your intent and more importantly, you
Speaker 1: start to get a network of machine learning artificial intelligence bots,
Speaker 1: if you will, to optimize the supply chain to support
Speaker 1: those intents within a digital city. So city link ai
Speaker 1: is a technology company that linked the data around people, places, activities,
Speaker 1: and things, and it's an operating system to make that
Speaker 1: data more accessible and more useful using our we call
Speaker 1: our EVE your Virtual Enterprise Artificial Intelligence platform. So it's
Speaker 1: all about the citizen engagement. And you kind of stick
Speaker 1: a step back and think about Disney. Everything about Disney
Speaker 1: is about the guests experience. So what we're doing is
Speaker 1: taking that approach and bringing it to many cities, many
Speaker 1: university towns and create that environ seven to create. Basically,
Speaker 1: we call it simple, convenient, and fun. All right, So
Speaker 1: convenience comes at a cost to some extent, both in
Speaker 1: actual costs and also you talk about transparency. We've talked
Speaker 1: a lot at this conference about access, access to information,
Speaker 1: and access to data. How do you ensure that it's safe, secure,
Speaker 1: and that everyone's privacy is taken into account. Yeah, that's
Speaker 1: a very very big topic. You can imagine all the
Speaker 1: large company like Amazon that you mentioned in Google and
Speaker 1: all tackling this the same issue. We are actually building
Speaker 1: a privacy model first, So the idea of having the
Speaker 1: ability to opt in once will happen and own your
Speaker 1: own data, have your own private personal assistant, your private
Speaker 1: clouds that follow you using our platform EVE, your virtual enterprise,
Speaker 1: and the ability to actually archive and delete the data
Speaker 1: and manage your own data is where we're moving towards.
Speaker 1: So the idea that is, how do we level the
Speaker 1: playing field and push the information, the ownership and responsibility
Speaker 1: back to the citizens, back to the local environment versus
Speaker 1: a one place where everybody is going to know one
Speaker 1: or two very large corporation. So we call that hyperlocalization.
Speaker 1: I mean, I want to ask you too though about development, uh,
Speaker 1: in terms of building these cities much easier to kind
Speaker 1: of build a connected city from the ground up, And
Speaker 1: I'm just curious about the obstacles that need to be
Speaker 1: overcome to kind of take our old cities and bring
Speaker 1: them and make them new and make them much more
Speaker 1: connected than they have been. That's a great question. In fact,
Speaker 1: we we face that every day, and I think you
Speaker 1: have to take a step back and take a holistic
Speaker 1: approach to this. So think about it from a consortium
Speaker 1: and a partnership perspective. Who's going to pay for all
Speaker 1: of this. So that's how we think about it. So
Speaker 1: when we come in, we bring the capital. We have
Speaker 1: a practical, who market driven environment that has a real
Speaker 1: return on impact investing. At the same time, because we
Speaker 1: are also a commercial real estate investor and developer, we
Speaker 1: understand the hurdle to build, finance, operate an environment. In fact,
Speaker 1: we're building a smart district out in Grammacy District outside
Speaker 1: of the Washington d C. Coincidentally only eleven miles from
Speaker 1: where National Landing will be right on the silver line
Speaker 1: out in Loudon County. But more importantly, you actually have
Speaker 1: to bring in everybody. In this case, we bring the
Speaker 1: tool set, we bring the capital, we bring all partners.
Speaker 1: Wave Capital Partners is one of our capital providers. So
Speaker 1: that holistic approach is the only way you can actually
Speaker 1: move the ball because you have to optimize the resources
Speaker 1: available in the local environment. We can call it for
Speaker 1: a second, I just a quick question. I'm just curious
Speaker 1: geographically global ating. Is there someone, some country, some area
Speaker 1: that's going to lead in the development of these types
Speaker 1: of city you know, in the United States. I think
Speaker 1: it has to be capital driven, in commercial driven, with
Speaker 1: a partnership with university and governments. So unlike you know
Speaker 1: other countries, we actually have to have return on investments
Speaker 1: and we have to think about an economically viable solution.
Speaker 1: It is great to think you can go green, but
Speaker 1: you cannot underwrite it and finance it and attract the
Speaker 1: impact investors to dry feasible and sustainable business model. It
Speaker 1: just doesn't go. So we're focusing on the US. There's
Speaker 1: three point five trillion dollars in commercial real estate market
Speaker 1: in the US. All model is simple. We're actually zero
Speaker 1: and asset. But we want to digitize the people, the places,
Speaker 1: the things and activities in a hyper localized environment. UM
Speaker 1: and will actually give the power back to the citizen.
Speaker 1: That's that's only available now because the ubiquity of technology.
Speaker 1: You know, ten years ago you wouldn't be able to
Speaker 1: do this because it cost you tens of millions up
Speaker 1: dollars to achieve what we're able to do today in
Speaker 1: a small UM seven investment. Yeah, that's great, Manly CEO
Speaker 1: at City Link AI here with me in Washington at
Speaker 1: the Bloomberg Government next eighteen event. Because when you where
Speaker 1: your fist will from, that will bring everybody down all right, Carol,
Speaker 1: So I know you're not worried about anything. You're always happy.
Speaker 1: You always got a lot of sleep. On the way
Speaker 1: back from London, I'm joined now by someone who is
Speaker 1: helping us put AI into perspective. He's got a new
Speaker 1: book out. He's Daniel Wagner, founder and chief executive officer
Speaker 1: of Country Risk Solutions. Here with me at the Bloomberg
Speaker 1: Government next. Some of the book is called AI Supremacy,
Speaker 1: Winning in the Era of Machine Learning. It's got a
Speaker 1: very cool uh cover care. I'm going to bring it
Speaker 1: back to you people racing. They've got flags made, They've
Speaker 1: got heads made of flags. It's so cool. Uh, Daniel,
Speaker 1: thank you so much for joining us. Good to be
Speaker 1: with you so help us feel good about AI and
Speaker 1: how it's gonna make our lives better and we shouldn't
Speaker 1: be scared of all the robots. Well, I think what
Speaker 1: AI is really going to do is help the human
Speaker 1: race be all that it can be. There are pluses
Speaker 1: and minuses associated with this, of course, but when you
Speaker 1: think about unleashing human potential, this, in my mind is
Speaker 1: what AI is really about. You know, you have such
Speaker 1: a fascinating background. We were talking a little bit about
Speaker 1: it before we came on. Are you worked at GE,
Speaker 1: you worked at a I G. You worked for the
Speaker 1: Asian Development Bank. I believe you've worked all over the world,
Speaker 1: so you understand that this is not a US phenomenon.
Speaker 1: Far from it, and the Chinese especially have essentially said
Speaker 1: we're coming for you when it comes to AI. To
Speaker 1: to the US, how is it playing out globally and
Speaker 1: and who's got the edge at this point. First of all,
Speaker 1: I should say that the Chinese get it. They see
Speaker 1: this as the future. They're devoting up to a hundred
Speaker 1: fifty billion dollars over the next decade to make this
Speaker 1: a reality for them and to make them the premier
Speaker 1: power in the AI arena. If you look on the
Speaker 1: book cover, you see that there are five countries in
Speaker 1: the mix, including China, the US, Japan, Germany, Russia, and
Speaker 1: the US is currently kind of in the lead and
Speaker 1: China's nipping at its heels. There is no doubt in
Speaker 1: my mind, based on the amount of resources being devoted
Speaker 1: by China, that this is China's race to lose and
Speaker 1: that it will very quickly, uh you know, succeed the
Speaker 1: US as the leader. And I think it's going to
Speaker 1: stay there in big part because we're not devoting the
Speaker 1: resources and spending the money to make sure that we
Speaker 1: stay on top. So it's a great point, and I
Speaker 1: think everybody should, you know, kind of sit down and
Speaker 1: listen to this because we don't, I think, fully acknowledge
Speaker 1: the amount of money and effort and time that China
Speaker 1: is putting on a What will be the result if
Speaker 1: China is the leader when it comes to artificial intelligence? Um,
Speaker 1: I just think about you know, one HND one, one
Speaker 1: country dominating this world. Right, There's already been a global
Speaker 1: grad for AI engineers big time, and China's aggressively pursuing them.
Speaker 1: You know, Dan Daniel, what does this mean potentially on
Speaker 1: a geopolitical level. That's a great question, and it does
Speaker 1: have geopolitical implications because the country or set of countries
Speaker 1: that rules the AI arena is going to rule the
Speaker 1: future of the global economy. And my concern is that
Speaker 1: not only for the US, but the other countries that
Speaker 1: are not sprinting ahead fall further and further behind. So
Speaker 1: the question becomes, if China takes the lead and they
Speaker 1: stay in the lead, will they ever be caught up?
Speaker 1: I think there's a pretty good chance they will not.
Speaker 1: They understand the stakes that are involved, and they're putting
Speaker 1: their money where their mouth is. They're not just talking
Speaker 1: about it, They're doing it and are doing it very aggressively,
Speaker 1: through m and A, through the acquisition of talent, through
Speaker 1: making sure that their graduates understand what AI is all about, etcetera.
Speaker 1: What does that mean for us? That's a very good question.
Speaker 1: We're getting all excited about DARPA getting a couple of
Speaker 1: billion dollars, Meanwhile tens of billions are being spent by
Speaker 1: other countries in a single year. Well, and I do
Speaker 1: think about Hank Paulson has warned about this former U. S.
Speaker 1: Treasury secretary about an economic iron curtain, right if if
Speaker 1: he talks about if the U. S. And China can't
Speaker 1: get along. But I mean there's a there's a lot
Speaker 1: of ways of um the world kind of being divided
Speaker 1: up as a result of being kind of first mover
Speaker 1: advantage when it comes to technology. So my perspective is
Speaker 1: that this really is the Chinese century. I think people
Speaker 1: who don't acknowledge that, or maybe a little bit delusional
Speaker 1: or maybe having a hard time falling off of our
Speaker 1: own precipice and that's okay. We have distinct comparative advantages,
Speaker 1: and so do they. It's very easy for them to
Speaker 1: do what they're doing. They simply wave a magic wand,
Speaker 1: and being an authoritarian government, they make it happen. They
Speaker 1: don't have to have a lot of discussion, they don't
Speaker 1: have to talk about allocation of resources. It just happens.
Speaker 1: In this country, it's a much more different process. It's
Speaker 1: much more complicated, it's much more um convoluted, and that
Speaker 1: that's to our own disadvantage. It would be really nice
Speaker 1: if we had successive governments which acknowledged what it is
Speaker 1: that is at stake and we're simply proceeding apace so
Speaker 1: that we have a strategy and that strategy is going
Speaker 1: to be implemented on an ongoing basis. But that's not
Speaker 1: what we have. So let's go back to where you
Speaker 1: started this conversation, which was a pretty optimistic view of
Speaker 1: you know, how AI ultimately can make us better humans.
Speaker 1: One thing that we've covered in Bloomberg Business Week and
Speaker 1: a number of times, and relatively provocatively, and I think importantly,
Speaker 1: is understanding bias in machines and machine learning and trying
Speaker 1: to prevent that. I know it's something you deal with
Speaker 1: in your book. Are we worried enough about that? And
Speaker 1: are the right things being done to combat that? So
Speaker 1: we aren't concerned enough about it? People should understand that
Speaker 1: there's bias introduced in everything that we teach a robot
Speaker 1: or a machine to do. They inherit our biases. That
Speaker 1: includes racial bias, by the way, which has all sorts
Speaker 1: of unfortunate undertones when AI is put into practice. Uh,
Speaker 1: there's not much that we can do about that. The
Speaker 1: only way we lose bias, I think is when the
Speaker 1: computers don't need us anymore and they can teach themselves.
Speaker 1: But of course then they've already integrated the biases that
Speaker 1: we have into the process. That's part of human nature,
Speaker 1: that's part of who we are. It will be really
Speaker 1: interesting to watch the evolution about how bias either becomes
Speaker 1: enhanced or slowly disappears as AI develops in the future.
Speaker 1: Fascinating such big questions. Congratulations on this book. The book
Speaker 1: is called AI Supremacy, Winning in the Era of Machine Learning.
Speaker 1: Co author Daniel Wagner also the CEO of Country Risk
Speaker 1: Solutions based in Connecticut, but here with me at the
Speaker 1: Bloomberg Government Next Event and watched to Thank you so much,
Speaker 1: come back and join us. I know you're working on
Speaker 1: a new book. I won't spoil it, but it's going
Speaker 1: to be a good one as well. Back to you, Carol. Yeah,
Speaker 1: it's certainly gonna be a focus in twenty nineteen. Speaking
Speaker 1: more about artis intelligence. You are listening to Bloomberg Business Week,
Speaker 1: Carol Master Jason Kelly right here on Bloomberg Radio. You
Speaker 1: say you want a rebel little show. No, all right,
Speaker 1: So this is a very very cool topic we're about
Speaker 1: to get into, Carol. I'm very fortunate to be joined
Speaker 1: by Diana Cooper. She's the senior VP of Policy and
Speaker 1: Strategy at Precision Hawk. She's joining me here at the
Speaker 1: Bloomberg Government Next event in Washington. So Precision Hawk, Carol,
Speaker 1: it's about drone. It's about drones. We've been sitting here
Speaker 1: talking about drones, talking about a sort of rogue drone
Speaker 1: operation I was involved in a couple of years ago.
Speaker 1: I don't think you were there, Carol, out in San Francisco. Um, Diana,
Speaker 1: great to be with you. So tell us how drones
Speaker 1: are kind of coming into the mainstream because you're talking
Speaker 1: about using them for kind of business intelligence at this point. Yeah. Absolutely.
Speaker 1: So drones have been around on the commercial side for
Speaker 1: about four or five years now. Really started to take
Speaker 1: off about two years ago when d f A put
Speaker 1: out the first rule for commercial operations known as Part
Speaker 1: one oh seven, which kind of made it more accessible
Speaker 1: than through a very um expensive and lengthy waiverard process.
Speaker 1: And so the first applications were we we actually saw
Speaker 1: where India agriculture space, so a lot of farmers are
Speaker 1: using it to monitor their crop yield, look for UM
Speaker 1: bug infed stations, water damage and things like that, and
Speaker 1: really understand where to do precision UH interventions like nitrogen
Speaker 1: application and things like that. UM. More recently, we've seen
Speaker 1: energy companies as well as insurance companies doing things like
Speaker 1: roof inspections and all kinds of new applications coming out
Speaker 1: as well. I gotta jump in because so I know
Speaker 1: I keep taking it back to London and our blood
Speaker 1: breakaway of it. Well no, well I am. But what
Speaker 1: was interesting is UM. One of the sponsors was Dell,
Speaker 1: and they talked UM a lot about They actually showed
Speaker 1: a video clip of two people getting in a car
Speaker 1: accident and how in a connected world versus the traditional world.
Speaker 1: That kind of showed the two drivers and when you know,
Speaker 1: I had to call their insurance agent was on the
Speaker 1: phone waiting the other one the smart car said Hey,
Speaker 1: you're in an accident. Let me call your insured. The
Speaker 1: insure gets on Da da Da da, and then all
Speaker 1: of a sudden said hey, we're gonna send out a drone.
Speaker 1: They're gonna look at the damage. And the drone comes
Speaker 1: and checks it out. Now, it was a little bit extreme,
Speaker 1: but as they said, this will happen and you will
Speaker 1: like instantaneously be able to kind of get it all done,
Speaker 1: get an insurance adjustment or or assessment. Um, you know,
Speaker 1: like I said, courtesy of a drone coming out to
Speaker 1: check out the situation, look at the damage. Like we're
Speaker 1: we're getting ready for a very different type of world,
Speaker 1: are we not? Absolutely? And that's that application is already
Speaker 1: starting to happen today, not just for accidents. But you know,
Speaker 1: for example, our company did a lot of work after
Speaker 1: Hurricane Florence in North Carolina and a lot to the
Speaker 1: areas we're just devastated and fully flooded. You couldn't access
Speaker 1: them by foot, So traditional adjusters couldn't actually walk up
Speaker 1: to those neighborhoods and see what the damage was. There
Speaker 1: were t frs in place, it was difficult for manned
Speaker 1: aircraft to access and gather that data. So we're able
Speaker 1: to fly in very quickly with drones, gather really good data,
Speaker 1: help people's claims get processed faster and get back into
Speaker 1: their homes or get some sort of a remedy. So
Speaker 1: I gotta ask you because you arguably have, like the
Speaker 1: engineers have a tough job, but you arguably have an
Speaker 1: even tougher job, which is to ensure that sort of
Speaker 1: the regulatory piece keeps up with where technology is going.
Speaker 1: So tell us about the latest there and what you're
Speaker 1: hearing from, especially from the federal level you're based here
Speaker 1: in Washington, About how much that the government is or
Speaker 1: isn't sort of embracing where you're going. Yeah, absolutely, We're
Speaker 1: We're lucky to have a very forward leaning regulator, the
Speaker 1: f A that you know, had the foresight not only
Speaker 1: to create the first commercial rule for drones a couple
Speaker 1: of years ago, which is fair fairly forward meaning for
Speaker 1: given that time frame, but they also had the foresight
Speaker 1: to actually enter into partnerships with commercial companies like ours
Speaker 1: to have us test things like beyondline of site operations,
Speaker 1: to actually create the data so that they can have
Speaker 1: data driven rulemaking for expanded operations. Uh so we're pretty
Speaker 1: lucky in that respect. We want things to stay with
Speaker 1: the f A. Uh. What we want to do is
Speaker 1: try to keep the cities and the states from actively
Speaker 1: also piling on regulations on the drone industry. And so
Speaker 1: how do you do that? I mean that that would
Speaker 1: seem like a very real danger at this point. Yeah, absolutely. Uh.
Speaker 1: Fine Stein and Lewis each had bills on the hill
Speaker 1: over the last year trying to um get the ability
Speaker 1: to regulate up to two feet, which we think is
Speaker 1: damaging from an innovation perspective, you can't build your business
Speaker 1: across city or state lines if you have to deal
Speaker 1: with thirty six thousand counties regulating your operations. And also
Speaker 1: from a safety perspective, you know, we have a highly
Speaker 1: sophisticated regulator with a great aviation safety track record. Counties
Speaker 1: and states do not have that track record and would
Speaker 1: be you know, we would be seeing all of accidents
Speaker 1: take place. What are the tricky things that still have
Speaker 1: to Diana kind of be worked out as we move
Speaker 1: into a more drone prone world. Yeah. Absolutely, Um, you
Speaker 1: know the first is really remote identification and tracking. So
Speaker 1: there's been an informal hold over rulemaking for a flight
Speaker 1: over people or expanded operations because the security agencies have
Speaker 1: concerns today. If they see a drone flying over a
Speaker 1: crowd of people, they know that operation is likely illegal,
Speaker 1: and so that's a threat they need to mitigate. If
Speaker 1: everyone is allowed to do it under the rules, how
Speaker 1: will they know what's a good drone versus a roade drone.
Speaker 1: And so really getting the rule making out for remote
Speaker 1: identification and tracking is the next big thing that we're
Speaker 1: waiting for, and it's supposed to drop imminently. Great. Diana Cooper,
Speaker 1: Senior vice president of Policy and Strategy at Precision Hawk.
Speaker 1: Fun fact, Carol, original name wine Hawk because they used
Speaker 1: to look over vineyards. I knew you would like that,
Speaker 1: all right, Little Bruce Springsteen fourth a bit of New
Speaker 1: Jersey here in Washington, d C. We are Carol at
Speaker 1: the Bloomberg Government next event and as we've been talking
Speaker 1: about artificial intelligence, so top of mind here, but I
Speaker 1: feel like the conversations are getting in a good way,
Speaker 1: much more complex and a very special guest joining us Saska.
Speaker 1: Moissy Levich is head of AI Foundations at IBM, and
Speaker 1: I have to say, Carrol, if you didn't see this
Speaker 1: in our notes, has a really cool Twitter handled data Priestess.
Speaker 1: That is amazing. How did you come up at best?
Speaker 1: That is I thought about the data Jong keep Yeah,
Speaker 1: I like data preestiss. It feels a little more. It's
Speaker 1: a female power right there. You go, So tell us
Speaker 1: about this intersection of basically the human and the machine.
Speaker 1: You do so much work in this area. Help us
Speaker 1: understand kind of where we are and where we're going. Okay,
Speaker 1: so um, I'm going to start where we used to be,
Speaker 1: which was like in nineties fifties when the whole field started.
Speaker 1: There was like this whole big fascination with creating machines
Speaker 1: then that can think and on that journey, we've tried
Speaker 1: so many different things, and I think we're still very
Speaker 1: very early on that journey. But right now, we we
Speaker 1: came to a point where we suddenly had this huge
Speaker 1: access to massive amounts of data. We know how to
Speaker 1: analyze it, how to parts it, how to tease insights
Speaker 1: out of it, and we're actually beginning to think about
Speaker 1: how can this take us to be hopefully maybe better
Speaker 1: or maybe more efficient, And we are beginning to to
Speaker 1: kind of put it into some sort of decision making.
Speaker 1: Uh where we're going? I think there's an enormous evolution
Speaker 1: ahead of us, and I think I would like to
Speaker 1: think that we we should be the ones driving it.
Speaker 1: We should be the ones responsible for saying, hey, this
Speaker 1: is where I want to take AI next. These are
Speaker 1: the kinds of things that we want to create. So,
Speaker 1: for example, rather than maybe doing movie recommendations and taking
Speaker 1: us to the best restaurant, can we put into some
Speaker 1: really good use to humanity, you know, helping solve issues
Speaker 1: I love? Well, like what I love that idea? Uh? Yeah,
Speaker 1: So so I can give you plenty of examples, because
Speaker 1: um um, I run a program at IBM called Science
Speaker 1: for Social Goods. So I'll just pull a couple of examples.
Speaker 1: So one, for example, is how can we maybe mine
Speaker 1: massive amounts of prescription data or or healthcare data to
Speaker 1: understand how people get addicted to opioids because different doctors
Speaker 1: prescribed differently, different people behave differently, and if we can
Speaker 1: tease out these patterns, we can actually come up with
Speaker 1: the shot at creating more more responsible UH prescription guidelines
Speaker 1: and and curb the epidemic. Um. Another example is, okay,
Speaker 1: how about teaching computers to design new drugs that can
Speaker 1: um maybe help us deal with the antimicro build resistance. Like,
Speaker 1: designing new drugs is enormously expensive and it takes, like
Speaker 1: you know, decades and an enormous investment, and imagine being
Speaker 1: able to do that faster and cheaper and with a
Speaker 1: little bit more of help of kind of different type
Speaker 1: of creativity. They will take us to a really new direction.
Speaker 1: And So what's your biggest worry as you design these systems?
Speaker 1: As you think about this interaction between humans and machines,
Speaker 1: where are we most likely to kind of get it wrong?
Speaker 1: So so I think, um, my biggest worial something that
Speaker 1: we always think about as we design them is what
Speaker 1: are the kinds of things they can be used for?
Speaker 1: They can they be misused their abuse? So you always
Speaker 1: want to think about, hey, what are the the bad
Speaker 1: things that can happen? Even if you design for a
Speaker 1: good outcome, some bad things can happen. Um. And quite frankly,
Speaker 1: another type of word that I always have is is
Speaker 1: this notion of of security and safety and cyber security,
Speaker 1: and this this idea that these systems can be hacked
Speaker 1: and manipulated just like other software systems, and that is
Speaker 1: these day pretty big worry right. Well, and it's interesting,
Speaker 1: you know, we were talking earlier about artificial intelligence and
Speaker 1: UM China really leading the way right deep pockets, a
Speaker 1: lot of energy and effort and the government behind it
Speaker 1: in terms of really advancing on something like AI. And
Speaker 1: we talked about some of the geopolitical concerns potentially of
Speaker 1: you know, maybe one country in particular leading the way
Speaker 1: on something. How does that factor into some of your thoughts?
Speaker 1: Just got about forty seconds left. I think it factors
Speaker 1: in the sense that we have to be ahead and
Speaker 1: that it's something that there's no boundaries anymore for scientific research,
Speaker 1: so just by saying okay, we are not going to
Speaker 1: do something, and that there is no edge completely democratized
Speaker 1: in ways that anyone can can develop new algorithms, and
Speaker 1: we need to keep up with that and think about that, right.
Speaker 1: Fascinating fascinating stuff. Saska mois Levich is had ahead of
Speaker 1: a foundations at IBM, you know, and as you mentioned
Speaker 1: also the co director of IBM Science for Social Good
Speaker 1: and IBM Fellow just fascinating and really important research. Joining
Speaker 1: us here at the Bloomberg Government next event. And Carol,
Speaker 1: I do feel like this echoes back to a lot
Speaker 1: of what we've been talking about in the pages of
Speaker 1: the magazine, especially around things like unintended consequences, things like
Speaker 1: bias and whatnot. These conversations getting much more sophisticated in
Speaker 1: a good way about how this technology is going to
Speaker 1: be used and how it's not a binary system between
Speaker 1: humans and machines. Listen, it's a powerful system and you
Speaker 1: can think about all the good can be done, but
Speaker 1: we still have to kind of really understand because it
Speaker 1: can go straight, just like things like social media. Right,
Speaker 1: it's good, but there are some concerns about it. Yeah,
Speaker 1: but you let me drive. Oh no, no, no, please,
Speaker 1: I want to try the questioning the Drive to the
Speaker 1: Globe than on Bloomberg Radio. It is time for the
Speaker 1: Drive to the Clothes On this Wednesday, I'm called Master
Speaker 1: along with Jason Kelly. Let's bring in our guest Andrews.
Speaker 1: Simon uh Is, Managing Director, Senior portfolio manager at Morgan
Speaker 1: Stanley Investment Management. Excuse me on the phone from Chicago,
Speaker 1: Andrew is it's Did I say it right? Slimon? That's right? Okay,
Speaker 1: forget right, forgive me. I knew as soon as I
Speaker 1: say I said, I thought it was not coming out
Speaker 1: right anyway. Tell me about this market environment. We have
Speaker 1: talked about there being more volatility in the marketplace. We
Speaker 1: certainly have seen it this year. We've seen stocks under
Speaker 1: pressure once again. Um, how do you explain the trade
Speaker 1: right now? Yeah? I mean, well, look in terms of
Speaker 1: I think it's a class the reversion to meet, which
Speaker 1: is last year we didn't have any volatility, so we
Speaker 1: said we just do for more volatility. Uh. This year
Speaker 1: number two is you know, we've had pretty good returns
Speaker 1: for U S stocks off those two thousand sixteen lows.
Speaker 1: So I don't think it should come as a surprise
Speaker 1: that this is kind of more of a mediocre, flattish year.
Speaker 1: Is a pause, uh not the end of the world.
Speaker 1: The problem is is if you have a pause in
Speaker 1: a more volatile year where the markets open, you know
Speaker 1: somewhere around two hundred and fifty days a year, you
Speaker 1: know that creates a lot of a lot of movement.
Speaker 1: And yet when we get to the end of the year,
Speaker 1: probably not much headway. And that's that's that's the scary
Speaker 1: thing for investors because I'm worried that a lot of
Speaker 1: bad decisions are made, our knee jerk reactions are made
Speaker 1: at the wrong time. And I think, again, we'll get
Speaker 1: to the end of the year. Won't be that bad
Speaker 1: a year. It just won't be a great year. So Andrew,
Speaker 1: I know that Europe is something that you have been
Speaker 1: avoiding a bit because it has, shall we say, underperformed,
Speaker 1: and yet it's very front of mine for a lot
Speaker 1: of us even today. You know, we heard from Prime
Speaker 1: Minister May a little bit earlier. She's got to deal
Speaker 1: with her cabinet. At least she's going to talk to
Speaker 1: Parliament tomorrow. Is Brexit the thing that could, once it's resolved,
Speaker 1: make Europe a little more for lack of better term,
Speaker 1: investible without a doubt, absolutely, I think you it's a
Speaker 1: very good question. You nailed it. And the way we
Speaker 1: see it when we look at stocks, there's just an
Speaker 1: extraordinary number of stocks in Europe that are telling it,
Speaker 1: you know, very very low valuation, not distressed companies, just
Speaker 1: companies that you know and followed out of bed because
Speaker 1: of brexits. So I think that that's the type of
Speaker 1: thing that you know, that that needs to occur to
Speaker 1: have some rotation or people get a little bit more
Speaker 1: optimistic on these days. And I look the return differential
Speaker 1: between the US market and really the rest of the
Speaker 1: world this year is so extreme that these are the
Speaker 1: types of thing that caused some kind of reversal still occur.
Speaker 1: But is it just a case of volatility, some extremes,
Speaker 1: but the world isn't falling apart. We talked to Peter
Speaker 1: Peter Koir Economics edited or Bloomberg Business Week. He's got
Speaker 1: a story in the magazine looking at the year ahead
Speaker 1: and saying, you know, folks, it's not so globally when
Speaker 1: you look at growth, um So is it a case
Speaker 1: of it isn't so bad. We just needed to maybe
Speaker 1: have more interesting and better valuations, cheaper valuations to kind
Speaker 1: of get investors back into the market, Or do you
Speaker 1: see some problems on the horizon. Maybe it's politics has
Speaker 1: played more heavily on other equity markets in the US. Right.
Speaker 1: We've certainly seen Asia in China all the all the
Speaker 1: worries about teriffs have much more negarly impacted China Chinese
Speaker 1: stocks than the US. Europe has been has had this
Speaker 1: cloud of Brexit over its head. So I think it's
Speaker 1: more politics than anything that has weighed on really rest
Speaker 1: of the world more than the US. So talk a
Speaker 1: little bit more about China and how you figure out
Speaker 1: valuations there, and especially when we think about the internet stocks,
Speaker 1: the tech stocks. You know, we had Singles Day from
Speaker 1: Ali Baba earlier in the week that gives us a
Speaker 1: sort of amazing window just by by virtue of the
Speaker 1: scope of how much that they sell on a relative basis.
Speaker 1: Is there a play there? Should investors be thinking about
Speaker 1: that as an opportunity or is it waiting seeing sure?
Speaker 1: Just broadly speaking, without getting into individual stocks, this group
Speaker 1: of stocks, Chinese interset stocks are down significantly. In fact,
Speaker 1: at the lows, they had underperformed the US Internet Index
Speaker 1: by fifty percent year to date five hero. The result
Speaker 1: is that the ps and many of these Chinese internet
Speaker 1: stocks are half the counterparts in the US and um,
Speaker 1: there's no doubt that there is slowing there's there's been
Speaker 1: a slowdown in growth in China this year. But what
Speaker 1: I find fascinating is some of these companies have just
Speaker 1: recently reported numbers, they were rather lackluster, and the stocks
Speaker 1: stopped going down. And so I think what's happening is,
Speaker 1: if you think about it, the slowdown has occurred this year,
Speaker 1: so the year of your comparisons are going to start
Speaker 1: to get easy next year, and the stock market is
Speaker 1: going to pick up on that. And so in many
Speaker 1: ways they have easier comparisons in China than they you
Speaker 1: than the US. The US counterparts Great stef Andrew Slimmon,
Speaker 1: Managing Director, senior portfolio manager from Marigan Stanley Investment Management,
Speaker 1: joining us on the phone from Chicago. So, Carol, so
Speaker 1: many inputs. It feels like right now in this as
Speaker 1: you said at the top, much more volatile market. Yeah. Absolutely,
Speaker 1: And can I just say that one of the stories
Speaker 1: that has caught my attention I ran into Simone Fox
Speaker 1: when I mentioned it earlier, is this Sam's l who
Speaker 1: is apparently increasingly looking for exits outside of his real
Speaker 1: estate empire. And so he's sold or plans to sell
Speaker 1: stakes and at least four companies since October. This is
Speaker 1: according to our own Bloomberg data. And in the same
Speaker 1: period his company has announced one new investment. So I
Speaker 1: just think I go back to the top of the
Speaker 1: real estate market, and Sam's l selling his read uh
Speaker 1: and just getting out before everything started to come undone.
Speaker 1: And I just think, you know, we've got to watch
Speaker 1: these big investors for signs of what they're doing, because
Speaker 1: I think comming indication and maybe what they're thinking is
Speaker 1: to come and well. And to that point, Stevie Cohen
Speaker 1: just a few stories down from that, saying bear market
Speaker 1: coming in two years, another investor that people certainly tune into.
Speaker 1: You are listening to a Wednesday edition Bloomberg Business Week.
Speaker 1: I'm Jason Kelly, Carol Masters in New York, and this
Speaker 1: is Bloomberg Radio. Thanks for listening to Bloomberg Business Week.
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