WEBVTT - China’s Shock-and-Awe Plan Left a Piece Missing 0:00:02.920 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.520 --> 0:00:12.920 This is Bloomberg Business Week Inside from the reporters and 0:00:13.080 --> 0:00:16.640 editors who bring you America's most trusted business magazine, plus 0:00:16.720 --> 0:00:20.840 global business, finance and tech news. The Bloomberg Business Week 0:00:20.880 --> 0:00:25.759 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:26.840 --> 0:00:27.760 We are once. 0:00:27.600 --> 0:00:30.080 Again starting with China today because for a third day 0:00:30.120 --> 0:00:33.479 we're looking at headlines over stimulus, got those overnight. It is, 0:00:33.520 --> 0:00:35.839 of course, the world's second largest economy. What happens in 0:00:35.920 --> 0:00:38.440 China tells us so much about what's going on in 0:00:38.479 --> 0:00:42.400 the global economy. China's gross trajectory being closely watched around 0:00:42.440 --> 0:00:45.200 the world. This is something Nobelle laureate and economist Joseph 0:00:45.200 --> 0:00:48.440 Stieglitz singled out earlier today at the Bloomberg New Economy Forum. 0:00:49.720 --> 0:00:55.400 Unfortunately, we're a real challenge for the emerging markets and 0:00:55.440 --> 0:01:03.640 developing countries is going to be China because we, you know, 0:01:03.800 --> 0:01:11.720 and bypartisan view is that China represents a risk or 0:01:11.760 --> 0:01:15.119 a threat, a threat and you know, I think at 0:01:15.160 --> 0:01:19.240 this point there's very little evidence of that. 0:01:19.240 --> 0:01:22.080 That of course, was Nobel Laurie Joseph Stieglitz at the 0:01:22.120 --> 0:01:25.839 Bloomberg New Economy Forum happening today. So talking about China. 0:01:25.880 --> 0:01:27.880 He often talks about what's going on around the world, 0:01:27.880 --> 0:01:29.640 but certainly emphasizing what's going on there. 0:01:29.720 --> 0:01:30.360 Yeah, and I look, the. 0:01:30.360 --> 0:01:32.080 Question of a risk or a threat is an interesting 0:01:32.160 --> 0:01:34.240 dilemma to look at in terms of the announcements that 0:01:34.240 --> 0:01:36.399 we had today from the Chinese Center Bank cutting interest 0:01:36.480 --> 0:01:39.080 rates at one year policy loans by thirty basis points. 0:01:39.120 --> 0:01:41.120 That's by the most on record in terms of a 0:01:41.200 --> 0:01:43.920 scale of a cut. This follows that package of teramulus 0:01:43.920 --> 0:01:46.800 that we had announced by the PBOC governor yesterday as well. 0:01:47.000 --> 0:01:49.640 This all with a backdrop of the questions continuing to 0:01:49.640 --> 0:01:51.240 be asked about whether or not China is going to 0:01:51.240 --> 0:01:54.360 meet that growth target of around five percent this year. 0:01:54.440 --> 0:01:56.720 Let's get into that. We've got Bloomberg New Senior Editor 0:01:56.760 --> 0:01:58.960 Chris Ansy with us from our Boston bureau. Chris, great 0:01:58.960 --> 0:02:01.680 to have you on. Just talk us through the announcements 0:02:01.680 --> 0:02:04.520 that we had today and how that fits into what 0:02:04.560 --> 0:02:07.040 we learned yesterday from the PBOC governor. 0:02:08.280 --> 0:02:12.160 Well, the one year loan rate was widely expected. This 0:02:12.320 --> 0:02:15.959 was a follow through from the shock and awe as 0:02:15.960 --> 0:02:20.720 it were on Tuesday of announcements of a host of 0:02:20.800 --> 0:02:28.200 different interest rate cuts, a reduction in the banks required 0:02:28.240 --> 0:02:33.679 reserve ratio, and other monetary policy initiatives. As you say, 0:02:33.800 --> 0:02:37.919 this was the biggest on record reduction of this one 0:02:37.960 --> 0:02:42.000 year policy rate. But I would also just focus on 0:02:42.520 --> 0:02:46.760 the magnitude there that was thirty basis points, and the 0:02:46.760 --> 0:02:52.320 benchmark seven day rate that was announced on Tuesday that 0:02:52.360 --> 0:02:54.520 was cut by just twenty basis points. You know, for 0:02:54.600 --> 0:02:57.639 those of us who are used to monitoring the Federal 0:02:57.639 --> 0:03:01.440 Reserve or ECB, and we talked about fifty or seventy 0:03:01.520 --> 0:03:07.320 five being magnitudes of scale, twenty and thirty really doesn't 0:03:07.320 --> 0:03:08.560 sound like a whole lot. 0:03:08.840 --> 0:03:11.520 Is that why I was looking at the NAZEC Golden 0:03:11.560 --> 0:03:14.200 Dragon China Index, those Chinese names that trade in the 0:03:14.280 --> 0:03:17.240 United States yesterday at more than nine percent today giving 0:03:17.280 --> 0:03:19.640 back about two percent in a market that's got a 0:03:19.639 --> 0:03:22.840 fair amount of no direction, if you will, but nonetheless 0:03:22.840 --> 0:03:26.760 giving back. So not as impressive as what we've seen 0:03:26.840 --> 0:03:29.720 Chris as of late in terms of doing something to 0:03:29.880 --> 0:03:31.200 change the narrative in China. 0:03:32.440 --> 0:03:37.040 Well, I think our colleagues at Bloomberg Economics had a 0:03:37.080 --> 0:03:40.560 great way of framing it. They talked about this as 0:03:40.600 --> 0:03:45.320 a growth bump, but not an economy fix. So it's 0:03:45.440 --> 0:03:47.760 enough to move the needle maybe a little bit on 0:03:47.880 --> 0:03:52.840 GDP growth, but the bigger problems that China has the 0:03:52.880 --> 0:03:58.240 property sector, very low consumer confidence levels that never recovered 0:03:58.600 --> 0:04:05.160 since the pandemic hit, and consumer spending that remains, you 0:04:05.160 --> 0:04:09.440 know very much, you know, on a weak trend. You've 0:04:09.440 --> 0:04:12.480 got demographics, all of these kinds of things. This is 0:04:12.520 --> 0:04:14.880 not going to be addressed by a twenty or thirty 0:04:14.920 --> 0:04:16.000 basis point rate cut. 0:04:16.440 --> 0:04:18.680 And yet though Chris, as you well know, it's not 0:04:18.800 --> 0:04:21.400 the only thing that's happened over a series of time, 0:04:21.520 --> 0:04:24.200 not just this past week, but over months, and some 0:04:24.240 --> 0:04:27.320 would say over the last year or so. So what 0:04:27.480 --> 0:04:29.839 is the fix for China? Is there one? Is it 0:04:29.960 --> 0:04:32.280 just going to be a series of many, many moves 0:04:32.720 --> 0:04:36.240 already done to come before we see China maybe the 0:04:36.240 --> 0:04:38.720 growth story change, or is it a case that China 0:04:39.279 --> 0:04:41.760 is a very large economy and moving the nut and 0:04:41.760 --> 0:04:45.520 fixing the real estate thing is something that may take 0:04:45.800 --> 0:04:48.520 much much longer to change, or maybe maybe not at all. 0:04:49.400 --> 0:04:54.560 Yeah, all good questions and questions that China watchers are 0:04:54.600 --> 0:04:58.919 all asking. There does seem to be a kind of 0:04:58.920 --> 0:05:04.200 a universality of expect expectation that there will be some 0:05:04.320 --> 0:05:08.919 sort of next step on the fiscal front, something to 0:05:09.040 --> 0:05:14.960 try to jolt consumer confidence, something more concerted, perhaps to 0:05:15.160 --> 0:05:20.280 fix the property market. And you know, we'll see if 0:05:20.279 --> 0:05:25.760 that eventuates. But you know, you've got the economists saying 0:05:25.800 --> 0:05:30.880 that the scale of response really needs to be very large, 0:05:31.200 --> 0:05:35.279 I mean potentially in the trillions of dollars to really 0:05:35.320 --> 0:05:39.800 address the property market. And we've had no real sign 0:05:39.920 --> 0:05:44.279 yet that Chi Jinping and his lieutenants are prepared to 0:05:44.680 --> 0:05:48.760 endorse you know, that big a fiscal stimulus. 0:05:48.880 --> 0:05:50.760 Yeah, well, that's one of the really interesting questions, isn't it. 0:05:50.880 --> 0:05:53.040 But you know, every time that we talk about stimulus 0:05:53.040 --> 0:05:56.240 in China, it's that question of essentially, has there been 0:05:56.279 --> 0:05:58.440 a shift in position from cheating Ping into what he's 0:05:58.480 --> 0:06:00.599 willing to do to stimulate the economy. I'm looking at 0:06:00.760 --> 0:06:03.559 a story here about one off cash handouts being given 0:06:03.560 --> 0:06:06.640 to people in extreme poverty. That's a direct date measure. 0:06:06.640 --> 0:06:09.040 It's not going to do anything to boost consumer spending 0:06:09.080 --> 0:06:11.919 on a macro level. But is that perhaps an indication 0:06:12.160 --> 0:06:15.479 of the reticence that now exists in China to try 0:06:15.480 --> 0:06:17.359 and put more money from the fiscal side in. 0:06:18.320 --> 0:06:21.640 I think that's exactly right. And you know, some important 0:06:21.640 --> 0:06:25.360 context to keep in mind here is that the parts 0:06:25.400 --> 0:06:30.240 of the economy that Chi Jinping particularly cares about new 0:06:30.360 --> 0:06:37.240 energy vehicles, renewables, you know, solar, wind, nuclear power generations, 0:06:37.360 --> 0:06:41.479 the defense industry, all of those are going gangbusters. In fact, 0:06:41.760 --> 0:06:46.640 the latest monthly data showed double digit increases in areas 0:06:46.680 --> 0:06:50.280 of the economy. The new productive forces that Chigent Ping 0:06:51.000 --> 0:06:54.039 has said are the priority for his government, all of 0:06:54.080 --> 0:06:58.719 those are doing very well. Indeed, so it's not entirely 0:06:58.839 --> 0:07:03.360 clear that he particularly concerned that retail sales are only 0:07:03.360 --> 0:07:07.039 growing at a two percent plus year on your pace, 0:07:07.160 --> 0:07:10.360 rather than the nine percent we saw a pre pandemic. 0:07:10.800 --> 0:07:13.720 I do also wonder a very different China going forward. 0:07:14.080 --> 0:07:16.720 When I see that they're going to do different initiatives 0:07:16.800 --> 0:07:20.760 or the rules seem to change. Foreign investors have to 0:07:20.760 --> 0:07:24.080 be looking perhaps at China very differently going forward. And 0:07:24.160 --> 0:07:27.600 yet I don't know that we've seen dramatic outflows from 0:07:27.640 --> 0:07:32.360 global companies or moving their operations elsewhere, or their involvement elsewhere. 0:07:32.360 --> 0:07:35.120 But I do wonder what are we seeing in terms 0:07:35.160 --> 0:07:38.480 of investment flows that we really think about China's role, 0:07:38.560 --> 0:07:41.400 at least in the global marketplace as being something very 0:07:41.480 --> 0:07:42.080 very different. 0:07:43.200 --> 0:07:46.920 Well, direct investment into China has turned out to a 0:07:47.000 --> 0:07:51.200 net outflow in recent quarters. As you say, it's not 0:07:51.320 --> 0:07:55.480 a huge outflow. Some of this might be simply reflecting 0:07:56.320 --> 0:08:02.160 less in terms of retained profits being patriated abroad. So 0:08:02.200 --> 0:08:05.760 it's not a wholesale kind of shunning of China. But 0:08:05.800 --> 0:08:08.920 at the same time, it is a shift in direction. 0:08:09.600 --> 0:08:13.560 And if you look at the recent announcements of troubles 0:08:13.640 --> 0:08:17.520 with China sales on the part of BMW, on the 0:08:17.560 --> 0:08:22.320 part of Mercedes, you look at the Calvin Klein Maker 0:08:22.440 --> 0:08:26.320 running into problems with the Chinese authorities with regard to 0:08:26.440 --> 0:08:31.600 sourcing cotton from Shinjiang, China is a much less attractive 0:08:31.640 --> 0:08:34.600 place for a whole host of reasons than it was 0:08:34.920 --> 0:08:37.200 you say, you know, even as much as few as 0:08:37.240 --> 0:08:38.080 five years ago. 0:08:38.360 --> 0:08:41.439 As we say often, we're living in interesting times and 0:08:41.520 --> 0:08:44.120 changing times. Chris Antsy, Thank you so much, so appreciated, 0:08:44.160 --> 0:08:47.040 Bloomberg News Senior Editor, Chris Antsy. There, all right, now, 0:08:47.040 --> 0:08:48.600 we want to get to a story that is getting 0:08:48.840 --> 0:08:51.120 a lot of attention on the Bloomberg today. 0:08:51.280 --> 0:08:54.960 Yeah, look, this is a question about trust. Once upon 0:08:55.000 --> 0:08:58.080 a time, the story was a growing economy lifted everyone, 0:08:58.120 --> 0:09:01.240 the whole rising tide, lifting all boats things. These days, though, 0:09:01.400 --> 0:09:04.080 the rich only seem to be rising, and the presentage 0:09:04.080 --> 0:09:06.400 of Americans are told gallup that they have a great dealer. 0:09:06.480 --> 0:09:09.079 Quite a lot of confidence in major companies has dropped 0:09:09.120 --> 0:09:12.520 from thirty percent in nineteen ninety nine to sixteen percent 0:09:12.880 --> 0:09:16.440 this year. Writing about their republic of distrust is Bloomberg Opinion. 0:09:16.440 --> 0:09:18.640 Senior conlist Beth Coot is here with us in studio. Beth, 0:09:18.640 --> 0:09:21.160 great to see you, Thanks very much for joining us. 0:09:21.160 --> 0:09:21.880 It's depressing. 0:09:22.040 --> 0:09:24.080 This is depressing. But like, lay it out first, why 0:09:24.120 --> 0:09:25.360 do we need to trust companies? 0:09:25.559 --> 0:09:27.320 I mean, I think that this is a huge problem, right, 0:09:27.360 --> 0:09:31.160 This is what if you don't If people don't trust business, 0:09:31.160 --> 0:09:34.120 if they don't trust companies, our economy basically can't run. 0:09:34.160 --> 0:09:37.839 It can't function. People need to believe that big institutions 0:09:37.840 --> 0:09:42.040 in general have their best interested heart, and I think 0:09:42.040 --> 0:09:44.080 that we're seeing that's just not the case in business 0:09:44.120 --> 0:09:46.000 and a lot of other institutions as well. 0:09:46.360 --> 0:09:48.559 Well, let's talk about this because I do think that 0:09:48.760 --> 0:09:50.719 you know you and I feel like Stephen. Over the 0:09:50.800 --> 0:09:52.200 last couple of days, I've been talking about this, but 0:09:52.240 --> 0:09:54.400 I do think about we understand the push back in 0:09:54.440 --> 0:09:58.400 politics where people feel like government doesn't represent them anymore, 0:09:58.840 --> 0:10:00.719 and that goes hand in hand. They feel like there 0:10:00.760 --> 0:10:06.160 is an economy and marketplace that doesn't include them anymore. 0:10:06.200 --> 0:10:08.920 And I feel like the idea of companies taking care 0:10:09.000 --> 0:10:11.760 of employees, is it maybe there anymore? 0:10:12.240 --> 0:10:12.600 Us? 0:10:12.800 --> 0:10:14.520 You know, we work for a really great company. I'm 0:10:14.520 --> 0:10:16.079 going to lay it out fully transparent. We say it 0:10:16.080 --> 0:10:18.840 all the time, but that doesn't many people don't feel 0:10:18.840 --> 0:10:19.120 that way. 0:10:19.280 --> 0:10:21.160 I think that's true, and you know, one of the 0:10:21.240 --> 0:10:23.640 questions I tried to answer is why do people believe that? 0:10:23.720 --> 0:10:26.760 Why do they think that that business has their best 0:10:26.760 --> 0:10:28.600 interest at heart? And I think, if you what we 0:10:28.640 --> 0:10:30.680 really looked at was this sort of twenty five year 0:10:30.760 --> 0:10:34.280 period after World War Two when you know, rising tides 0:10:34.360 --> 0:10:38.480 really did seem to lift all boats right. Everybody prospered, 0:10:38.520 --> 0:10:40.920 you know, obviously some more than others. It wasn't a 0:10:40.920 --> 0:10:45.480 perfect era, but the gap between the wealthiest Americans and 0:10:45.520 --> 0:10:49.359 the poorest actually closed. And for a number of factors 0:10:49.520 --> 0:10:51.559 at play there. But I think a lot of people 0:10:51.600 --> 0:10:54.440 look back to this period and want to return to it, 0:10:54.480 --> 0:10:56.600 and there's some question is that even possible. 0:10:56.960 --> 0:11:00.520 Yeah. I mean, look, there's even the prominent examples of 0:11:00.200 --> 0:11:02.560 of scandals at companies. You able to think about everything 0:11:02.600 --> 0:11:05.160 that happened to Boeing this year, for example, that shifts 0:11:05.440 --> 0:11:08.200 how people think about a company. I mean, how important 0:11:08.280 --> 0:11:10.080 is this for companies to get the handle on as well? 0:11:10.160 --> 0:11:12.400 I think it's huge. I really think it's huge. I mean, yeah, 0:11:12.559 --> 0:11:14.079 I point to some of those in the piece right 0:11:14.160 --> 0:11:18.200 and ron financial crisis. There's just one after another where 0:11:18.200 --> 0:11:21.120 people not only feel like it means that they can't 0:11:21.120 --> 0:11:23.880 trust business, but that the rules don't apply fairly to everybody, 0:11:23.920 --> 0:11:29.480 that somehow the wealthiest leave unscathed. Well, it's sort of 0:11:29.480 --> 0:11:31.840 those at the bottom that bear the front of it. 0:11:32.040 --> 0:11:35.520 What about things like productivity gains technology helping us out 0:11:35.640 --> 0:11:39.160 unions where workers maybe had more of a voice at 0:11:39.200 --> 0:11:42.679 the negotiating table, that we used to be an economy 0:11:42.679 --> 0:11:45.240 that actually made a lot of stuff here before we 0:11:45.280 --> 0:11:48.000 started outsourcing it. We've talked with the folks who talk 0:11:48.040 --> 0:11:50.760 about all the consulting companies, said hey, here's a better idea. 0:11:50.840 --> 0:11:54.760 Outsource it safe costs, but workers have been penalized I 0:11:54.760 --> 0:11:55.920 think as a result here. 0:11:55.880 --> 0:11:58.200 Absolutely, And I think again that sort of golden era, 0:11:58.320 --> 0:12:00.760 that twenty five year period, unions were in their heyday. 0:12:01.600 --> 0:12:01.800 You know. 0:12:01.840 --> 0:12:04.720 I think we people coming back from the front. We 0:12:04.760 --> 0:12:07.199 had a you know, an influx of workers. There was 0:12:07.240 --> 0:12:09.560 a lot of demand for goods. We were making things 0:12:09.600 --> 0:12:12.040 here in this country, as you mentioned, and I think 0:12:12.080 --> 0:12:14.640 that really, you know, there was a very progressive tax code. 0:12:14.679 --> 0:12:16.760 So I think that there were all these factors at play. 0:12:17.040 --> 0:12:19.640 And you know, one one historian I was talking to said, 0:12:19.880 --> 0:12:20.720 you can't ring that belt. 0:12:20.800 --> 0:12:21.200 Whats right? 0:12:21.240 --> 0:12:23.080 Like it was just sort of this confluence of events 0:12:23.120 --> 0:12:27.040 that led to this era. And even people who didn't 0:12:27.120 --> 0:12:30.120 weren't even alive during that time, I think do idolize 0:12:30.120 --> 0:12:32.960 that period, and it's affected the way we do think 0:12:33.000 --> 0:12:35.360 about how business and the economy should work. 0:12:36.120 --> 0:12:38.640 It's interesting to think about the timeline over this as well, 0:12:38.679 --> 0:12:41.640 because when we look at the polling from Gallop on 0:12:41.679 --> 0:12:44.319 where trusting companies is through good times and in bad, 0:12:44.760 --> 0:12:47.680 it's still been pretty weak. Every recently is like this. 0:12:47.800 --> 0:12:50.400 It's not a question of when the economy is doing badly. Yeah, 0:12:50.440 --> 0:12:52.640 that that's the moment when just trust spikes, there seems 0:12:52.679 --> 0:12:54.839 to be something that's lasting kind of as I say it, 0:12:54.880 --> 0:12:56.439 you're good times in bad yeah, And. 0:12:56.559 --> 0:13:00.440 I think part of this is people feel like there 0:13:00.480 --> 0:13:02.480 there is this promise, right, I'm going to work hard 0:13:03.480 --> 0:13:06.360 and that should mean that I can, you know, buy 0:13:06.360 --> 0:13:08.680 a house, May we send my kids to college, that 0:13:08.800 --> 0:13:12.120 the next generation should prosper more than minded And I 0:13:12.200 --> 0:13:13.360 think we're not seeing that. 0:13:13.600 --> 0:13:13.719 You know. 0:13:13.760 --> 0:13:15.080 One of the things I looked at as well is 0:13:15.120 --> 0:13:19.360 CEO pay and the ratio of CEO to work our 0:13:19.440 --> 0:13:23.640 compensation has only that gap has just increased exponentially. So 0:13:23.679 --> 0:13:26.160 there's also this sense of you know, why am I 0:13:26.200 --> 0:13:29.360 struggling so much when those at the very top just 0:13:29.400 --> 0:13:30.560 seem to be getting paid more. 0:13:30.679 --> 0:13:32.800 It's really wild. And you put this in the story. 0:13:32.800 --> 0:13:34.720 And we used to cover the business Roundtable. We would 0:13:34.720 --> 0:13:37.800 do broadcasts from there. But this whole idea of laying 0:13:37.840 --> 0:13:40.040 out a few years ago, we talked about it all 0:13:40.120 --> 0:13:44.760 stakeholders matter, yes, investors, yes. 0:13:44.600 --> 0:13:47.120 Custom stakeholder capitalism that. 0:13:47.320 --> 0:13:49.880 Right, Like, where is that? And I feel like we 0:13:49.920 --> 0:13:53.120 have constant conversations with executives that companies say like our 0:13:53.120 --> 0:13:55.319 employees matter. I mean they can't do it without them. 0:13:55.320 --> 0:13:57.360 Right right, And I think this is a little bit. 0:13:59.120 --> 0:14:01.440 I think there is this of hypocrisy where we have 0:14:01.640 --> 0:14:04.120 seen a lot of companies retreat on some of these 0:14:04.160 --> 0:14:08.680 promises very quickly when under pressure from you know, certain 0:14:08.679 --> 0:14:12.520 conservative groups, right DEI ESG. We've seen a real role 0:14:12.600 --> 0:14:14.600 back there. And it makes people wonder, did you actually 0:14:14.679 --> 0:14:17.439 ever care about this or was this you know, simply 0:14:17.520 --> 0:14:18.040 good marketing. 0:14:18.280 --> 0:14:21.160 But that that's also, I think such an interesting point 0:14:21.280 --> 0:14:24.760 because companies moved into this space and started taking positions 0:14:24.800 --> 0:14:26.360 on it as they failed to importance and they thought 0:14:26.400 --> 0:14:28.600 would drive customer loyalty. 0:14:28.360 --> 0:14:30.920 Did a lot of the pandemic and the murder of 0:14:30.960 --> 0:14:31.640 George Floyd. 0:14:31.800 --> 0:14:32.440 But is that is that? 0:14:32.680 --> 0:14:34.240 I mean, is that gone now? Is that just not 0:14:34.400 --> 0:14:35.240 possible anymore? 0:14:35.400 --> 0:14:39.640 I do think that companies are saying, Okay, maybe maybe 0:14:39.680 --> 0:14:41.120 we went a little too far on this. Maybe we 0:14:41.160 --> 0:14:42.880 don't want to take that, Maybe we don't want to 0:14:42.880 --> 0:14:45.120 take a position, you know. I think the hard thing 0:14:45.240 --> 0:14:47.320 is in this era we are so polarized, there is 0:14:47.400 --> 0:14:49.400 no such thing as a neutral position. Right. If you 0:14:49.480 --> 0:14:54.160 take a position, you're gonna someone's gonna feel like, you know, 0:14:54.560 --> 0:14:56.560 this is against my beliefs. But if you don't, you're 0:14:56.560 --> 0:14:59.080 also sort of taking a position. So that's a tricky line. 0:14:59.360 --> 0:15:01.560 Beth, gotta ask, because we've got we've got We're going 0:15:01.640 --> 0:15:03.960 to talk with a very senior exec at Cisco Systems 0:15:03.960 --> 0:15:05.320 coming up. What do you think we should be asking 0:15:05.400 --> 0:15:06.120 companies about this? 0:15:06.400 --> 0:15:08.440 Yeah, if they are retreating, why you know, why are 0:15:08.480 --> 0:15:10.400 why are we rolling back on some of these positions? 0:15:10.440 --> 0:15:12.640 But also, you know, what do they hear from their workers? 0:15:12.720 --> 0:15:14.840 Do are they feeling some of this erosion? 0:15:15.280 --> 0:15:17.160 And the war for talent right is going to be 0:15:17.200 --> 0:15:18.320 a key factor for that as well. 0:15:18.440 --> 0:15:19.920 Absolutely, all right, good stuff. 0:15:19.920 --> 0:15:21.400 As we said, it's among the most read stories of 0:15:21.400 --> 0:15:24.400 the Bloomberok Beth, thank you as always, Bethcohit She's Bloomberg 0:15:24.440 --> 0:15:28.280 Opinion senior columnist talking is about the Republic of Distress. 0:15:28.480 --> 0:15:29.840 Yeah, you can find it on Bloomberg dot com for 0:15:29.880 --> 0:15:31.240 it Slash Opinion as well if you want to read 0:15:31.240 --> 0:15:33.080 the piece in full. Bath great to have you with 0:15:33.240 --> 0:15:34.760 us in studio. Look, this is a question that I 0:15:34.800 --> 0:15:37.160 think comes through so many of the conversations were at 0:15:37.160 --> 0:15:40.360 a plaza yesterday talking to senior exacts as well. It 0:15:40.480 --> 0:15:42.840 feeds into how people are perceiving companies too. I'm not 0:15:42.880 --> 0:15:44.200 something that's you know, it means you're going to got 0:15:44.280 --> 0:15:45.120 questions ast on that as well. 0:15:45.280 --> 0:15:47.800 Yeah, and you know, important issues, but you know, employees 0:15:47.840 --> 0:15:51.080 feeling taken care of. We talk increasingly too about pensions 0:15:51.120 --> 0:15:53.320 going away. Right, People used to retire and they didn't 0:15:53.320 --> 0:15:55.720 have to worry about things, but that's not necessarily given 0:15:55.760 --> 0:15:57.000 anymore by a lot of companies. 0:15:58.680 --> 0:16:02.160 You're listening to the bloom Business Week podcast. Catch us 0:16:02.280 --> 0:16:05.480 live weekday afternoons from two to five pm Eastern Listen 0:16:05.560 --> 0:16:07.680 on Apple car Play and then brought auto with a 0:16:07.720 --> 0:16:10.720 Bloomberg Business app, or watch us live on YouTube. 0:16:11.760 --> 0:16:13.920 We mcro call. It was just a couple of weeks ago, 0:16:14.120 --> 0:16:17.000 Tim and I actually caught up with Accenture's global talently. 0:16:17.120 --> 0:16:19.720 We talked about ais impact on work workers and the 0:16:19.800 --> 0:16:23.600 workforce on that Accenture is part of a consortium along 0:16:23.640 --> 0:16:26.120 with Cisco Systems on a build out of the AI 0:16:26.440 --> 0:16:29.640 enabled workforce and the information and communication technology or I 0:16:29.760 --> 0:16:32.240 see T space and our next guests definitely had some 0:16:32.280 --> 0:16:34.040 thoughts on that. We're so delighted at back with us 0:16:34.120 --> 0:16:37.400 in studio friend Casudas, she's executive vice president Chief People, 0:16:37.480 --> 0:16:40.800 Policy and Purpose Officer over at Cisco Systems. As I 0:16:40.840 --> 0:16:43.200 said here in studio, how are you good. 0:16:43.280 --> 0:16:44.320 It's wonderful to be back. 0:16:44.520 --> 0:16:46.480 It's great to have you here. A lot of things 0:16:46.520 --> 0:16:48.200 we want to get to. First up, I want to 0:16:48.240 --> 0:16:51.160 ask you, just as I often do the macro business environment, 0:16:51.240 --> 0:16:52.600 how do you see things going right now? 0:16:53.320 --> 0:16:55.560 So it's funny because I think there's so much going 0:16:55.600 --> 0:16:57.720 on in the world at the moment, but when we 0:16:57.840 --> 0:17:01.720 look at the macro business environment, what we see is 0:17:01.800 --> 0:17:05.760 a tremendous amount of focus still on technology. I think 0:17:05.800 --> 0:17:09.560 today the realization that we're hearing from our customers is 0:17:09.640 --> 0:17:13.800 that cybersecurity AI can't wait, and so I think there's 0:17:14.240 --> 0:17:16.880 a lot of learning. I think there's growth. I think 0:17:17.280 --> 0:17:20.639 anytime you go into an election season there's some hesitancy. 0:17:20.680 --> 0:17:22.840 And I will tell you around the world this year 0:17:23.000 --> 0:17:27.280 sixty elections, and there are countries where we see projects 0:17:27.400 --> 0:17:30.320 being held as people wait to see what happens in 0:17:30.359 --> 0:17:30.960 those countries. 0:17:31.040 --> 0:17:34.359 But just as in terms off of the US elections, you. 0:17:34.400 --> 0:17:36.960 Know what, it's interesting from a US perspective, I don't 0:17:37.000 --> 0:17:39.000 see this much. But I think part of that is 0:17:39.040 --> 0:17:42.480 because when you're talking about cybersecurity. When you're talking about 0:17:42.520 --> 0:17:46.359 the build out of infrastructure, it is pretty critical. I 0:17:46.440 --> 0:17:48.560 think some of the bigger projects that we're looking at 0:17:48.640 --> 0:17:51.359 around the world, you need to have a head of 0:17:51.400 --> 0:17:54.960 state and government that really believes and commits to the change. 0:17:54.960 --> 0:17:57.040 And so I think in those places you are going 0:17:57.080 --> 0:17:58.360 to see a little bit of a pause as well. 0:17:58.640 --> 0:18:00.960 Are those clients the willing to put money into this 0:18:01.000 --> 0:18:03.119 as well? Are they kind of up for spending to 0:18:03.200 --> 0:18:04.720 try and catch that innovation? 0:18:05.520 --> 0:18:05.680 Yeah? 0:18:05.720 --> 0:18:07.480 You know, it's funny. I see two things at the moment. 0:18:07.560 --> 0:18:10.760 So the first is I see around the world this 0:18:11.040 --> 0:18:15.920 belief that AI creates amazing opportunity, and so you have 0:18:16.080 --> 0:18:18.320 countries now around the world that are even creating AI 0:18:18.480 --> 0:18:22.520 ministers that are thinking about how do we capture the opportunity, 0:18:22.720 --> 0:18:25.120 and fortunately, I think a lot of them are also 0:18:25.240 --> 0:18:27.480 thinking about how do we ensure that we don't leave 0:18:27.920 --> 0:18:30.400 a subset of the community behind, and so I think 0:18:30.480 --> 0:18:33.200 that's a big part of the focus. I think many 0:18:33.520 --> 0:18:37.080 governments and companies are still sorting what does that build 0:18:37.119 --> 0:18:39.240 out need to look like? What are the use cases 0:18:39.359 --> 0:18:41.880 really that we'll be using over the next twelve months. 0:18:41.960 --> 0:18:44.040 You know, you mentioned communities feeling left behind. And we 0:18:44.160 --> 0:18:48.400 just talked about a Bloomberg story about how Americans trust 0:18:48.440 --> 0:18:50.040 in big business went from bad to worse, and a 0:18:50.080 --> 0:18:54.040 lot of it has to do with workers feeling left behind. 0:18:54.720 --> 0:18:56.960 What are you hearing about that on your front? We've 0:18:57.000 --> 0:19:00.280 talked with you a lot about people who issues employees shoes. 0:19:00.359 --> 0:19:03.200 This is your world. What do you hear back in 0:19:03.960 --> 0:19:06.920 terms of feedback from your workforce about what's important and 0:19:07.119 --> 0:19:09.720 maybe why they maybe feel behind. Not yours particular, but 0:19:09.880 --> 0:19:10.280 in general. 0:19:11.000 --> 0:19:13.040 You know what, I think it's real. I think that 0:19:13.280 --> 0:19:18.680 anytime you see such significant changes in technology that will 0:19:18.720 --> 0:19:22.359 truly impact roles, I think it's natural for people to say, 0:19:22.560 --> 0:19:24.960 will I be relevant? What is changing? 0:19:25.720 --> 0:19:26.439 But it's funny. 0:19:26.480 --> 0:19:29.159 I think I would say around eighteen months ago it 0:19:29.280 --> 0:19:32.320 was a bit more negative. I think the delta is 0:19:32.400 --> 0:19:37.640 that today our employees are playing with the technology, they're experimenting, 0:19:37.760 --> 0:19:41.920 they're learning that in many cases the technology will make 0:19:42.000 --> 0:19:44.080 them better. I do think we have to admit that 0:19:44.119 --> 0:19:46.520 there's areas where jobs are going to go away. 0:19:46.760 --> 0:19:49.760 But letting go a bunch of workers you talked about 0:19:49.800 --> 0:19:51.400 in your earnings report, and a lot of it said 0:19:51.440 --> 0:19:54.359 it wasn't financially related, right or profitability related, but it 0:19:54.480 --> 0:19:56.960 was that you guys were having a strategy shift. 0:19:57.560 --> 0:19:58.400 It was a mix of both. 0:19:58.760 --> 0:19:59.560 It was a mix of both. 0:20:00.000 --> 0:20:03.800 And I think that it's important for us to always 0:20:03.920 --> 0:20:08.199