Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm
Speaker 1: Jason Kelly and I'm Carol Master. Welcome to the weekend
Speaker 1: edition of Bloomberg Business Week. Jason, what a week, uh?
Speaker 1: And it really contains so much volatility on so many
Speaker 1: different fronts, whether you looked at politics, whether you look
Speaker 1: at the financial markets, and whether you looked at the
Speaker 1: global economy. And we're going to get into all of that.
Speaker 1: We're going to talk about the coronavirus continuing to spread
Speaker 1: and investors trying to size up government efforts and corporate
Speaker 1: efforts honestly to contain the outbreak. And it's economic and
Speaker 1: business impact. Right, So we tap some of our top
Speaker 1: editors of the magazine to look at the markets, look
Speaker 1: at the economy to see their assessment at this point.
Speaker 1: Also on the corporate front, Barnes and noble Man. The
Speaker 1: next chapter, the new Hero of the Chains Rags to
Speaker 1: riches tail It is a hedge fund. Didn't see that coming.
Speaker 1: Plus this week's cover story, what a timely one. It's
Speaker 1: a sit down with an EC director at Larry Cutlo.
Speaker 1: Maybe you know him from television. He's become the optimist
Speaker 1: in chief in this administration, and there's a big question
Speaker 1: about whether an optimist will make the right call when
Speaker 1: it comes to economic policies. Al Right, first, we begin
Speaker 1: with the roller coaster that was those global markets this
Speaker 1: past week and former Vice President Joe Biden's campaign continuing
Speaker 1: to rise as Super Tuesday reignited his race for the
Speaker 1: White House. That's a story in the magazine this week
Speaker 1: by Josh Green, Business Week national correspondent joining us right
Speaker 1: now from d C and Josh, what a week. Super
Speaker 1: Tuesday a bit of a surprise, and then we had
Speaker 1: several candidates dropping out. Obviously, the big news this week
Speaker 1: was that the front runner of the Democratic race went
Speaker 1: from Bernie Sanders, who looked like he might be prepared
Speaker 1: to run away with it, to Joe Biden, who looks
Speaker 1: like he might have been decisively edging out Bernie Sanders. So, uh,
Speaker 1: quite a week everything turned upside down. I think the
Speaker 1: real story is that, uh, non Sanders, moderate voters finally
Speaker 1: at the very last minute coalesced around a candidate that
Speaker 1: was Joe Biden. I think that makes him the front runner.
Speaker 1: But as I right in Business Week this week, he
Speaker 1: now faces a new and familiar problem. A lot of
Speaker 1: Democratic strategists are worried about, and that is that he's
Speaker 1: back in the role Hillary Clinton was four years ago,
Speaker 1: where you have an establishment favorite, you have Bernie Sanders
Speaker 1: as an insurgent, and it's hard to see how Democrats
Speaker 1: managed to unify the party. All right, And we also
Speaker 1: saw Elizabeth Warren and Mike Bloomberg dropping out. Mike Bloomberg,
Speaker 1: of course the founder and majority owner of Bloomberg LP.
Speaker 1: He endorsed Joe Biden. Let's look ahead to these next
Speaker 1: contests here, Josh, because there's still a lot of delegates
Speaker 1: out there and some pretty important states just over the
Speaker 1: next couple of weeks. Yeah, that's right, And I think
Speaker 1: I think the importance of Bloomberg and Warren dropping out
Speaker 1: is that we now have effectively a two man race.
Speaker 1: And as you look ahead, uh, it looks to me
Speaker 1: like the states we have coming up tend to favor
Speaker 1: Joe Biden. The one I'm going to be looking at
Speaker 1: is Michigan. Uh. Michigan was the scene of a surprise
Speaker 1: upset four years ago when Bernie Sanders came in beat
Speaker 1: Hillary Clinton. Caused a lot of excitement and belief among
Speaker 1: Sandor folks that maybe they actually could knock her off.
Speaker 1: That didn't end up happening. Since Super Tuesday, the polls
Speaker 1: that I've seen from Michigan show Biden the head. So
Speaker 1: we're really rerunning a test case that we saw four
Speaker 1: years ago. It turns out that Biden wins in Michigan,
Speaker 1: especially if he wins big, I think that might be
Speaker 1: the last blow for Bernie Sanders. Josh Green, thank you
Speaker 1: so much. Well. Super Tuesday's results and the coronavirus dominated
Speaker 1: conversations this week about financial markets and the economy. US
Speaker 1: Congress agreeing to an emergency spending bill after the FED
Speaker 1: jumped in with an emergency half a percentage point rate
Speaker 1: cut that was meant to calm investors and ease financial
Speaker 1: market conditions. Well, let's see how that went. It was
Speaker 1: a volatile week, to say the least. Let's bring in
Speaker 1: Markets editor Mike Reagan and economics enter Peter Coy to
Speaker 1: make sense of it all. So let's start with that
Speaker 1: rate cut. You know, Peter, it reminded me, you know,
Speaker 1: all the way back to the financial crisis. We haven't
Speaker 1: had an emergency rate cut by the FED since then. Right,
Speaker 1: the Fed attempted to calm the market. I mean, the
Speaker 1: problem is that the FED can do only so much.
Speaker 1: When you have something like this, it's not primarily a
Speaker 1: financial market issue. It's the issue with real bodies and
Speaker 1: real viruses, and it affects the real economy, so production,
Speaker 1: It affects the supply side of the economy, not just
Speaker 1: the demand side of the economy. When it's the demand side,
Speaker 1: you can sort of goose up people's spending by making
Speaker 1: money cheaper. But when it supplies, ie, when goods aren't
Speaker 1: being produced because people can't get to work, that's something
Speaker 1: that monetary policy is not as good at solving. And
Speaker 1: so is that why the market just sort of wasn't
Speaker 1: buying it like well? I think the one thing you
Speaker 1: have to realize when you look at a week like
Speaker 1: this in markets is that once you introduce that sort
Speaker 1: of volatility end of the market, when you have that
Speaker 1: steep of a drop over such a short time, it
Speaker 1: tends to create both up and downward volatility. In other words,
Speaker 1: a big move down one day and then a big
Speaker 1: move back up the next day, and then back down
Speaker 1: and uh. The example I I've been using a lot
Speaker 1: is the two thousand and eleven episode when the US
Speaker 1: lost its triple A credit rating. You saw these massive
Speaker 1: three four moves up one day, back down, the next day,
Speaker 1: back up, you know, and it's it goes to you know, uh,
Speaker 1: talk about how computerized the equity market has become and
Speaker 1: how traders in those sort of algorithmic programs are really
Speaker 1: reacting to signals in the market, and they're very good
Speaker 1: at pattern recognition. They know when you see a big
Speaker 1: drop like this that there's bound to be a bounce.
Speaker 1: It's not gonna last. So it all sort of creates
Speaker 1: this situation where a lot of moneys on one side
Speaker 1: of the boat one day, the other side of the
Speaker 1: boat the next day, and back and forth. And I
Speaker 1: think that given all the other news flow sort of
Speaker 1: causing uh, you know, it's to go one way or
Speaker 1: the other, that issue that really explains that the suddenness
Speaker 1: and the massiveness of the back and forth movements. Well,
Speaker 1: I think it's fair to say that folks were saying
Speaker 1: the market was overvalue the equity market. They were looking
Speaker 1: for excuse to sell. Having said that, I feel, like
Speaker 1: Peter Coyd, there were two different stories being told. The
Speaker 1: bond market was telling one story prior to like, even
Speaker 1: the concerns about the virus equity markets as they kept
Speaker 1: going higher and higher, we're telling another one. And then
Speaker 1: this week we had what the ten year go blow
Speaker 1: one percent. I mean, that's a significant move, the ten
Speaker 1: year yield going below one. We're starting to feel like
Speaker 1: Europe here. Now Europe has had negative rates nominal rates,
Speaker 1: and now the US is coming down towards the zero
Speaker 1: lower round even out to ten years. And what this
Speaker 1: means is that there's not much room left for the
Speaker 1: Fed to act. It's already spent a lot of ammunition
Speaker 1: because the Fed, unlike the ECB and the Bank of Japan,
Speaker 1: has kind of been pretty clear that it doesn't intend
Speaker 1: ever to let phenomenal rates at either the short end
Speaker 1: of the long and go below zero. That means we're
Speaker 1: close close to doing about as much as they can
Speaker 1: do on the rate itself. So that's Economics editor Peter
Speaker 1: Coy along with our Markets editor Mike Reagan, all, So,
Speaker 1: this is one of those conversations I love talking to
Speaker 1: all our guests, but this is one where you and
Speaker 1: look at the rundown. We're like, well, I can't wait
Speaker 1: for this. Chris lou Back with US senior fellow at
Speaker 1: the University of Virginia Miller Center, also former Deputy Secretary
Speaker 1: of Labor under President Obama, joins us on the phone
Speaker 1: from Ceville, Charlottesville, Virginia. Let's start with you've been through
Speaker 1: a few of these. What did you see it was
Speaker 1: new and different on Super Tuesday? Well, I will tell
Speaker 1: you that was a surprise to me as well. Um,
Speaker 1: you would have said, look, and the conventional wisdom was
Speaker 1: Bernie Sanders was, you know, clearly the front runner and
Speaker 1: the only question was is how much of a delegate
Speaker 1: lead he was able to rack up on Super Tuesday.
Speaker 1: So I think this is a pretty for those was
Speaker 1: that spent our time in politics. Um, this, this Biden
Speaker 1: comeback is just stunning, right, but it ain't over yet,
Speaker 1: right because we still have absolutely not. Yeah, so walk
Speaker 1: us through that, Like, you know, what's great about you
Speaker 1: is we were kidding you know earlier that you're someone
Speaker 1: who's been in the room when a lot of things happen,
Speaker 1: Like what are the conversations that's going on you know
Speaker 1: at these parties behind the scenes, and also what kind
Speaker 1: of pressure is coming from the Democratic Party overall because
Speaker 1: their endgame is beating President Trump. And I don't think
Speaker 1: at this point with any anyone who's still left from
Speaker 1: the race up that anyone's any party leader can tell
Speaker 1: them that they should stay in or go out. I mean,
Speaker 1: when people like to criticize the party establishment, there really
Speaker 1: is no party establishment anymore, particularly in a day and
Speaker 1: age where people can raise their own money online and
Speaker 1: raise large chunks of money. So, um, you know, this
Speaker 1: is going to go on for a while. You know. Um,
Speaker 1: obviously a lot of delegates were selected, but I always
Speaker 1: remind people, Um, April, May June, more delegates are awarded
Speaker 1: those three months, and even just in the next couple
Speaker 1: of weeks, We've got you know, Michigan, Missouri, Washington State.
Speaker 1: Next Tuesday on the seventeenth, We've got Arizona, Florida, Illinois, Ohio.
Speaker 1: So this is going to go on. We literally have
Speaker 1: a Super Tuesday, like almost every Tuesday for the next month.
Speaker 1: So I think, you know, and again with the two
Speaker 1: front runners, Biden and Sanders, I think they're just going
Speaker 1: to continue to slog it out, you know, the way
Speaker 1: that my former boss Barack Obama did with Hillary Clinton
Speaker 1: right through a good chunk of two thousand and eight.
Speaker 1: So let's talk about some some compare and contrast here, Chris,
Speaker 1: because you know, you look at that race, and obviously
Speaker 1: there were some some differences between Obama and Clinton. There
Speaker 1: were clearly some differences between Clinton and Sanders, and there
Speaker 1: are echoes of that right now in terms of establishment
Speaker 1: versus insurgent. How as someone who knows the Democratic Party
Speaker 1: as well as you do, how do you assess that
Speaker 1: you know, sort of together with the rest of the party.
Speaker 1: You know, on one hand, you know, when everyone tells me,
Speaker 1: you know, boy, this has been such an ugly race. Hey,
Speaker 1: go back and look at two thousand and eight. I mean,
Speaker 1: you know, the Obama people called Clinton a racist, She
Speaker 1: called us a sexist, she said, you know, you'll remember
Speaker 1: she said her big theme was Obama was not qualified
Speaker 1: and ran this kind of three am ad You know,
Speaker 1: who would you want to answering the phone and three
Speaker 1: am So it got really nasty. The difference, though, was
Speaker 1: that ideologically the two of them were not that far apart.
Speaker 1: You know, While you know, one was probably slightly more establishment,
Speaker 1: they were both fairly establishment people. I think here you
Speaker 1: have a greater ideological difference between Sanders and Biden. Um.
Speaker 1: But the truth of the matter is you know, even
Speaker 1: on something like healthcare, I think even Bernie Sanders would
Speaker 1: probably conceive that Medicare for all isn't happening, you know,
Speaker 1: in the next four to eight years. Uh, and that
Speaker 1: you know, we as a country have to sort of
Speaker 1: move incrementally in that direction, the public option being you know,
Speaker 1: kind of a first important first step on that. So
Speaker 1: I think you can even find ways to bridge some
Speaker 1: of these differences, but they are certainly more significant than
Speaker 1: in previous years. Chris lew Is with US, his former
Speaker 1: Deputy Secretary of Labor under the Obama administration, Senior Fellow
Speaker 1: today at the University of Virginia Miller Center, on the
Speaker 1: phone from Charlottesville, Virginia. So, Chris, um, you're probably hearing
Speaker 1: about it. I mean, lots of headlines continuing to pour
Speaker 1: out from the corporate community about how the virus is
Speaker 1: impacting them. You wrote about it, you said, the coronavirus
Speaker 1: is bad. Trump could make it worse. Crisis management does
Speaker 1: not seem to have been at its best in terms
Speaker 1: of the US and how they're handling this. Yeah, I
Speaker 1: think that's that's a fair statement. You know, for the
Speaker 1: president to get his arms around this, he's going to
Speaker 1: have to manage in a much different way than he
Speaker 1: has over this three years. He's gonna have to rely
Speaker 1: on government experts. He's gonna have to make decisions based
Speaker 1: on science and facts, and he's gonna have to be
Speaker 1: willing to hear hard news and then delivered to the
Speaker 1: American people. And unfortunately, you know, you kind of see
Speaker 1: he likes, he likes to kind of use happy talk
Speaker 1: to talk about where we are. And they're certainly aren't
Speaker 1: good things or it's not as I don't want to say,
Speaker 1: is that because I'm not sure we really know what
Speaker 1: it is. But even on a simple statement of when
Speaker 1: we're gonna have a vaccine um, he's contradicting his own
Speaker 1: um government experts on that topic. And that's just not
Speaker 1: helpful at this time. Yeah, and so well, let's dig
Speaker 1: into that a little bit because that does seem to
Speaker 1: to be part of the problem here is everybody not
Speaker 1: being on the same page. You've been in a lot
Speaker 1: of these rooms. Who does that fall to? I mean,
Speaker 1: is is that ultimately falling to the president, or is
Speaker 1: there some part of the administration sort of bureaucracy, be
Speaker 1: at the chief of staff or someone else who essentially says, look, folks,
Speaker 1: here's the script. Essentially, here are talking points. I mean,
Speaker 1: this is this is not that complicated. No, And you know,
Speaker 1: the first term of the Obama administration, I managed his
Speaker 1: cabinet and we had to deal with a bunch of
Speaker 1: these crises. We had H one and one in two
Speaker 1: thousand nine, we had obviously the Gulf Coast oil spill,
Speaker 1: in two thousand ten, Hurricane Sandy. So we had an
Speaker 1: experienced team of people with its stability, and we had
Speaker 1: practiced on this means. Unfortunately, we went through many of
Speaker 1: these incidents. And yes, obviously you want to coordinate the message.
Speaker 1: So I get that, But some of the news accounts
Speaker 1: that are coming out are troubling that military officials as
Speaker 1: well as health officials are afraid of telling the president
Speaker 1: the truth because he doesn't want to hear it um
Speaker 1: and and it's that's unfortunate, and so, you know, the
Speaker 1: president needs to hear bad news. And I think frankly,
Speaker 1: he's a little too concerned about what this might do
Speaker 1: for not even the economy, but really what it does
Speaker 1: for the stock market, which he then takes as a
Speaker 1: proxy for the economy, and then he views that as
Speaker 1: a proxy for his reelection, and if he just simply
Speaker 1: buckle down and focused on public health, ultimately that does
Speaker 1: the most to help his re election prospect. There are
Speaker 1: certain things you can plan for and then there are
Speaker 1: things you cannot, So give us kind of a smart
Speaker 1: understanding of that. The thing that's going to hit you
Speaker 1: is the unexpected thing. I don't think in April we
Speaker 1: could have anticipated there'd be an oil spill in the
Speaker 1: middle of the Gulf of Mexico. But what you have
Speaker 1: to understand is that the White House can't actually do anything.
Speaker 1: It's only agencies that can do things. Agencies have money,
Speaker 1: they have programs, they have authorities, and you first of
Speaker 1: all have to have a competent, stable group of leadership
Speaker 1: running your agencies who understand all the levers that you
Speaker 1: can push and pull. And unfortunately, this has been a
Speaker 1: cabinet that's had a huge amount of turnover, So then
Speaker 1: you need those people who know how to run the agencies.
Speaker 1: That's Chris Leu, former Deputy Secretary of Labor under the
Speaker 1: Obama administration. He's now a senior fellow at the University
Speaker 1: of Virginia Miller Center. And Jason, you and I love
Speaker 1: talking with him because, as you said earlier, he has
Speaker 1: been in the room and so much has happened, and
Speaker 1: understands the workings of insign and administration well. And as
Speaker 1: we heard from him, he was involved in crisis response
Speaker 1: in the administration. He's worked across all three branches of
Speaker 1: government and let's not forget also a super delegate, so
Speaker 1: he knows his politics as well. Activists out in full
Speaker 1: force this year, especially the hedge fund Elliott Management, which
Speaker 1: is involved in two well known companies. What are the
Speaker 1: companies making news this week? Another A Jason, of course,
Speaker 1: is a feature story in the magazine this week. Well,
Speaker 1: and the news this week scooped by Bloomberg, a scoop
Speaker 1: by the guy who's sitting with us here in New
Speaker 1: York City. Part of the team, got the stock moving,
Speaker 1: got a lot of people talking, uh, including probably I
Speaker 1: think it's safe to say Jack Dorsey Scott to vote
Speaker 1: here with us in New York. What's going on in Twitter? Well,
Speaker 1: Elliot has taken a steak obviously, and um, we broke
Speaker 1: the story on Friday night essentially that they've taken a stake,
Speaker 1: nominated for directors and now want to push Jack Dorsey
Speaker 1: out of the CEO role. Okay, so wow, Yeah, I
Speaker 1: mean that's a that's a big headline and certainly stopped
Speaker 1: a lot of people in their tracks. What's the case, Well,
Speaker 1: the case is pretty simple, and I think it's something
Speaker 1: that's been made a few times, is that Jack has
Speaker 1: he's one of the only people in the world to
Speaker 1: run two publicly traded, gigantic publicly traded companies. UH. He
Speaker 1: runs Square, he also runs Twitter UM and you know,
Speaker 1: late last year said that he also wanted to spend
Speaker 1: up to six months a year working in Africa UM and.
Speaker 1: So I think the argument is clear in that, you know,
Speaker 1: he has a lot of things going on and obviously
Speaker 1: has some divided loyalties between the two companies UM, and
Speaker 1: that Twitter is something that needs a full time CEO,
Speaker 1: particularly now we're going to major events like the U
Speaker 1: S Election, Summer Olympics, We've got the coronavirus going on.
Speaker 1: And while those are really great for you know, tweet activity,
Speaker 1: what they do also is create Twitter users and advertisers.
Speaker 1: So what does Elliott want. I mean, they've amassed what
Speaker 1: about a billion dollar position in shares of Twitter. It's
Speaker 1: a little bit more than more, yeah, than a billion years.
Speaker 1: So what do they want specifically, do they want tor
Speaker 1: see out no doubt about it? Yeah, I mean that's
Speaker 1: the that's the supplicity of this argument is that And
Speaker 1: and that's why I think it resonated with you know,
Speaker 1: so many people around it is that it's a singular argument.
Speaker 1: You need a CEO that will run this company and
Speaker 1: you know, well they think that, you know, the shares
Speaker 1: of underperformed you know, relative to Facebook and what have you. Um,
Speaker 1: they do pag a lot of that on the act
Speaker 1: that Dorsey is is, you know, divide a loyalty. But
Speaker 1: also you know, there is a Ruling Stone magazine article,
Speaker 1: you know, last year sometime where he said that he
Speaker 1: was getting eight and a half hour sleep at night,
Speaker 1: so running running to you know, one thirty five billion
Speaker 1: dollar company, one billion dollar company, uh, and getting more
Speaker 1: sleep than I do in a night right now. So
Speaker 1: I think that's the argument. But I think that's a
Speaker 1: really interesting point too, because so often an activist comes
Speaker 1: in and says, you know, the company needs to explore
Speaker 1: strategic options because costs, they need to do this, They
Speaker 1: need to explore all these different things they need to
Speaker 1: undertake this review. This is like boom, we need to
Speaker 1: bounce this guy. Yeah, and I think part of the
Speaker 1: argument is also that you know, UM, Twitter hasn't UM
Speaker 1: innovated in a way that a lot of its competitors have,
Speaker 1: so it's always stuck to its kind of core UM
Speaker 1: model and core platform UM, whereas you know, Snap or
Speaker 1: Instagram UM even to talks, seem to be more innovative
Speaker 1: and creating more consumer friendly UM products. All right, So, meanwhile,
Speaker 1: down in Union Square, not far from where we are,
Speaker 1: kind of ground zero to some extent of what's going
Speaker 1: on with Barnes and Noble also involving Elliot Man goodness gracious. Yeah. So, uh,
Speaker 1: you'll recall last year Elliott UM, through its private equity arm,
Speaker 1: acquired Barnes and Noble UM, and you know, they've they
Speaker 1: didn't do a whole bunch of change in the lead
Speaker 1: up to the holidays because they didn't want to mess
Speaker 1: with sales at all. But now that we're in the
Speaker 1: new year, are starting to implement all these changes into
Speaker 1: the Bardens and Noble chains. So that's what we're hooking
Speaker 1: this story on that's in Business Week this week. Well,
Speaker 1: you know, and let's just take a step back because
Speaker 1: before we get into kind of where Barnes and Noble
Speaker 1: maybe going in the future and who may be instrumental
Speaker 1: and determining where it goes. Tell it remind us. I mean,
Speaker 1: Barnes and Noble was the behemoth when it came to
Speaker 1: selling books before Amazon. Yeah, you've got mail, right, like
Speaker 1: that was that was the you know, that went as
Speaker 1: soon as you become famous and they make like a
Speaker 1: fictionalized version of your business like books, that's right, And
Speaker 1: so that was you know, at the peak of what
Speaker 1: Barnes and Noble was. It was you know, we say
Speaker 1: it in the story, it was like the socialization of
Speaker 1: a Starbucks with the sales tactics of a you know,
Speaker 1: a dealership of bargain basement dealership. And so when Barnes
Speaker 1: and Noble was like coming up in the nineties early
Speaker 1: two thousands, they you know, they were the big kid
Speaker 1: on the street, right, and they had you know, they
Speaker 1: were pushing all these independent stores and all of these
Speaker 1: smaller chains out of the way. And then of course
Speaker 1: we know what happened then, Uh, Amazon started selling books,
Speaker 1: right and uh and the e reader started to come
Speaker 1: and all these all these challenges um ended up beating
Speaker 1: up Barnes and Noble in the same way Barnes and
Speaker 1: Noble was beating up on everybody else. And that's Scott
Speaker 1: devote all over the activism beat here at Bloomberg, and
Speaker 1: that's really taken him into some of the biggest and
Speaker 1: best known companies, be a Twitter or in this case,
Speaker 1: in the and that's taken him inside some of the
Speaker 1: world's best known companies. Twitter obviously in the news this week,
Speaker 1: but Barnes and Noble, that's a story I didn't fully
Speaker 1: understand until I read this piece. When I think Scott
Speaker 1: makes a really good point when we sat down and
Speaker 1: talked with him, and he says, you know, Elliott has
Speaker 1: about forty billion dollars to deploy, so when they're going
Speaker 1: to do it, it's not going to be small, unknown companies.
Speaker 1: It's going to be those household names, those company names
Speaker 1: that we know. And that's exactly what they're doing. And
Speaker 1: another company very much in the news that Elliott has
Speaker 1: its eye on is soft Thing. It has been a
Speaker 1: week where once again, the coronavirus dominated conversations about financial
Speaker 1: markets and the economy. It's also been a week, Jason
Speaker 1: where the FED jumped in with an emergency half a
Speaker 1: percentage point rate cut to comm investors and financial market
Speaker 1: conditions through it all, President Trump's chief economic voice, Well,
Speaker 1: he was pretty optimistic. I thought you were just going
Speaker 1: to stop with It's been a week. We can say
Speaker 1: that to about every week, but this one was a doozy.
Speaker 1: Sean Donnan joins us from Washington. He was in the
Speaker 1: room where a key moment, the room where it happened,
Speaker 1: as they say, with the aforementioned economic advisor, that of
Speaker 1: course is Larry Cudlow. Take us there Tuesday morning. It's
Speaker 1: all happening, Sean. Yeah. So Tuesday morning, at at ten o'clock,
Speaker 1: the Federal Reserve announces that it's going to cut rates.
Speaker 1: It's the first emergency rate cut since the global financial
Speaker 1: crisis in two thousand and eight. And I happened to
Speaker 1: have an appointment at the White House for ten thirties.
Speaker 1: So I'm waiting in line to get into the White
Speaker 1: House and and see Larry Cudlow, who we've been talking
Speaker 1: about sitting down for for a couple of weeks, and
Speaker 1: things have moved around a bit, and and there it was.
Speaker 1: So by ten thirty, uh, a little shortly afterwards, I'm
Speaker 1: I'm sitting down with Larry in in his office and
Speaker 1: and uh, and that's just as J. Powell is getting
Speaker 1: ready to step up and and and do his press conference.
Speaker 1: And what you really get from that moment is a
Speaker 1: sense of how this White House is trying to write
Speaker 1: out this storm. And you know, Larry Cutlow is this
Speaker 1: relentlessly optimistic figure. He is. We all know him from CNBC,
Speaker 1: from his TV shows. We all know him from uh
Speaker 1: the way he trots out at the White House, uh
Speaker 1: pretty much daily to try and talk up the economy,
Speaker 1: talk up markets, uh and so on. And he has
Speaker 1: this this office uh in the West Wing, which feels
Speaker 1: like you're stepping into an old school gentleman's club. He
Speaker 1: sits at the end of a dining table. Uh. There
Speaker 1: there's no computer or or or TV in his office.
Speaker 1: It's an old fashioned pile of papers, printed out emails
Speaker 1: on the desk in front of him. Uh. And he's
Speaker 1: there looking out at the at the world's largest economy
Speaker 1: and what's happening in in markets? And uh they may
Speaker 1: be crashing and they did on on that Tuesday, But
Speaker 1: Larry was there, the relentless optimists seeing me through all
Speaker 1: of this and that tells you a lot about this
Speaker 1: White House and and whether they're in denial or whether
Speaker 1: they simply are refused to be swayed in their optimism,
Speaker 1: whether that's President Trump's message that he's taking into the
Speaker 1: into the election or whatever. But boy, there they're sticking
Speaker 1: to it. Well. So I love your story because you
Speaker 1: also get into the background of Cudlo, and we can
Speaker 1: go there in a moment. But what I do wonder is,
Speaker 1: you know, you have a head. You know, this is
Speaker 1: the president's chief economic guy, right, and so you have
Speaker 1: an individual who runs something but often has support staff
Speaker 1: and he's taking cues from different things. But it was
Speaker 1: interesting to hear no computer, just emails, Like I do
Speaker 1: wonder where Cudlo takes his cues from. Is it? I
Speaker 1: don't know where is it? Is it the president? Where
Speaker 1: does he get kind of the information to kind of
Speaker 1: help make his decisions or guide the president to make
Speaker 1: economic decisions. So Cudlo has a staff. He's at the
Speaker 1: head of the National Economic Council, which is a staff
Speaker 1: of policy wants, and they certainly give him advice. He's
Speaker 1: also talking to people in the markets and and and
Speaker 1: in business a lot and he's spending a lot of
Speaker 1: time with the president. One thinks Larry cudlo has been
Speaker 1: very good at doing is figuring out where the president
Speaker 1: is on the economy and where he might be going
Speaker 1: off the rails potentially on the economy, and trying to
Speaker 1: talk him away from that. But he spends a lot
Speaker 1: of time with the president, and so when you're hearing
Speaker 1: that optimism in that view that he's trying to project,
Speaker 1: it's it's a lot what President Trump wants to project
Speaker 1: as well. And that gets into you know, this is
Speaker 1: an existential moment for this administration right now. Uh. They
Speaker 1: are running on the back of what has been a
Speaker 1: pretty robust economy that is facing the first real crisis
Speaker 1: on the economic side of his presidency. Well, and Shawn,
Speaker 1: you know history both immediately and longer term. We'll talk
Speaker 1: a lot about this president's advisors and specifically the advisors
Speaker 1: in that role. Uh, let's get into some of the
Speaker 1: policies where Larry Cudlow has disagreed with the president, has
Speaker 1: tried to sway the president, maybe to a more successful
Speaker 1: extent than his predecessor, or certainly it feels like he
Speaker 1: has navigated the president maybe a little bit very better
Speaker 1: than Gary Khone did. I think that's right. I think
Speaker 1: it's it's worth remembering that Larry Cudlow, and he said
Speaker 1: this to me the other day, remains a free trader.
Speaker 1: He does not like tariffs. But then he got this
Speaker 1: job on the back of Gary Khne resigning over tariffs,
Speaker 1: over the steel tariffs that the President introduced in March eighteen,
Speaker 1: when Garry Cone lost an enormous policy battle inside the
Speaker 1: White House, got out maneuvered by Wilbur Rosson and Peter Navarro,
Speaker 1: and Larry Cublo came in knowing that the President had
Speaker 1: this this trade policy that was at odds with his
Speaker 1: own worldview. And he's tried very hard over the two
Speaker 1: years since, and it's been almost exactly two years that
Speaker 1: he's been in the job h to to try and
Speaker 1: press the president in a different way, UH and in
Speaker 1: a quieter way. I think the view inside the White
Speaker 1: House was that Gary Cohn was a real uh in fighter.
Speaker 1: No one sees Larry Cudlow as as a guy who's
Speaker 1: very political in terms of or aggressively political in debates.
Speaker 1: He makes his view UH known, but he's much more
Speaker 1: nuanced in how he gets it across and I think
Speaker 1: that is a view that has that has worked with
Speaker 1: with Trump much better. There's two key moments really that
Speaker 1: Larry Cudlow has wanted a debate on, and the first
Speaker 1: of them is with China in the trade wars. Larry
Speaker 1: was pretty instrumental in convincing Trump to embrace the idea
Speaker 1: of a smaller deal, of a phase one deal, to
Speaker 1: try and get to a truce in the trade wars
Speaker 1: and and and reduce attentions. And that started really back
Speaker 1: last summer when things were really melting down uh in
Speaker 1: the markets again, and when President Trump was minded to escalate,
Speaker 1: Larry kind of talked him off the ledge there. The
Speaker 1: second thing, and it also came last summer, was when
Speaker 1: the President around the same time, was getting increasingly concerned
Speaker 1: about the strong dollar, and it was a serious conversation
Speaker 1: going on inside the White House about possibly intervening and
Speaker 1: currency markets to try and weaken the dollar. Now, Larry
Speaker 1: Cudlow for decades now has advocated his view of king
Speaker 1: dollar that a strong dollar is actually a sign of
Speaker 1: strength for the US economy and and and should be
Speaker 1: embraced h and that is at odds completely with President
Speaker 1: Trump's view Uh. And he's expressed that again this week,
Speaker 1: that that a week dollar is what he needs to
Speaker 1: help experts and Larry managed to talk Trump out of
Speaker 1: out of intervening in the market. There. Those are two
Speaker 1: big moments, and we're seeing it a little bit this year.
Speaker 1: And how Trump is dealing with Europe. Larry has been
Speaker 1: instrumental as well and in talking the President out of
Speaker 1: slapping auto tariffs on European imports. So it's a big deal.
Speaker 1: So what I do wonder And you make a great
Speaker 1: point of saying, you know, he's a friendly kind of guy.
Speaker 1: For those of us who've had converse stations with him,
Speaker 1: he's pretty friendly, you know when you're talking to him
Speaker 1: and he calls people friend and pal. He's an optimist.
Speaker 1: But I do wonder in this time where we're trying
Speaker 1: to figure out what the coronavirus means for the US economy,
Speaker 1: there's criticism of the administration and in handling it. Maybe
Speaker 1: we don't know the extent of the virus yet in
Speaker 1: the United States. Uh, you have the FED to the
Speaker 1: emergency rate cut. It felt like we're in a pretty
Speaker 1: tough situation in terms of the US economy. You know,
Speaker 1: what's his track record, you know, on catching economic cycles,
Speaker 1: and will his optimism potentially make a misguided step when
Speaker 1: it comes to guiding US policy economic policy? Look, and
Speaker 1: and that is absolutely the fundamental question here is is
Speaker 1: whether Larry Cudlow's optimism it is actually gonna cloud his
Speaker 1: judgment in some way. We are at a key moment.
Speaker 1: You got to get the calls right here, and Larry
Speaker 1: in the past hasn't gotten all the calls right. And
Speaker 1: back in December two thousand and seven he was poo
Speaker 1: pooing any talk of a recession. We know now that
Speaker 1: that is exactly when the recession that turned into the
Speaker 1: Great Recession as a result of the global financial crisis
Speaker 1: was getting under way. Uh, he acknowledges that. But he
Speaker 1: has this this this this relentless optimism. Part of it
Speaker 1: is is political messaging. There's no doubt that the President
Speaker 1: wants to be in a place where he's talking up
Speaker 1: the economy, not talking down the economy. But you can't
Speaker 1: escape the fact that this week the Federal Reserve, for
Speaker 1: the first time since two thousand and eight, went with
Speaker 1: an emergency rate cut. This was not a scheduled meeting
Speaker 1: that they were moving at this was a response to
Speaker 1: a crisis that they saw in the economy, and the
Speaker 1: White House was refusing to embrace the idea of a
Speaker 1: fiscal plan at the same time, and Larry saying all
Speaker 1: through this, even as this is happening, literally in that hour,
Speaker 1: that this is happening with the Federal Reserve, that he
Speaker 1: thinks everything's fine in the U s economy. That Shohn Donnan,
Speaker 1: who covers all things trade and globalization for US here
Speaker 1: at Bloomberg News, Jason, I love about this story, and
Speaker 1: it's kind of what I love about journalism. You're working
Speaker 1: out a story, which is what Sean was doing trying
Speaker 1: to get an interview with Larry Cudlow, and it finally
Speaker 1: came to fruition this week and on a day when
Speaker 1: we had that emergency rate cut by the Federal Reserve,
Speaker 1: a press conference by j Powell, and so this was
Speaker 1: the guy you want to talk to about where we're
Speaker 1: going in the US Economy's we got to get back
Speaker 1: to the financial markets. We sat down with Suzanne Woolley
Speaker 1: from our Bloomberg Wealth team as markets faced a wild week.
Speaker 1: She discussed why now is not the time to buy
Speaker 1: the dip in the midst of such volatility is not
Speaker 1: a great time to rethink your asset allocation. It's really
Speaker 1: hard at point at a time like now to sort
Speaker 1: of sit on your hands and stick with a well
Speaker 1: thought asset allocation that you have or if you're four
Speaker 1: owe k is well spread out between stocks and bonds.
Speaker 1: Um being impulsive now it can be dangerous. And buying
Speaker 1: on the dip sounds good because we've had eleven years
Speaker 1: of a bull market and we've been a lot of
Speaker 1: people have cash on the sidelines. They've kind of been
Speaker 1: waiting to jump in. So it's now all the time.
Speaker 1: But so funny when you say that, because there was
Speaker 1: a fun story last week was a Mike Regan about
Speaker 1: all the metaphors, you know, climbing a wall of worry.
Speaker 1: But it is like, we're, yeah, exactly, like we're at
Speaker 1: that point where there's so much volatility. It's like, okay,
Speaker 1: so what does this mean? And we're all using these
Speaker 1: metaphors right right, and we have no clarity, you know,
Speaker 1: I mean, there's just no visibility into into much. So
Speaker 1: buying the dip now seems a little more like market timing,
Speaker 1: and as we all know, you know, bad idea, Yeah,
Speaker 1: bad idea of fools. Errand that's what they always call it,
Speaker 1: because partially, when you get out, that's one decision, Okay,
Speaker 1: The harder decision often is to get back in, right,
Speaker 1: And a lot of people who sort of got out
Speaker 1: in the last downturn didn't get back in soon enough. Well,
Speaker 1: and you make such a great point. I mean, this
Speaker 1: was a number that really stopped me cold. When you
Speaker 1: go back to March nine nine through February one, the
Speaker 1: SMB had a price game of three hundred and nine
Speaker 1: percent three nine three, And so when you think about
Speaker 1: a ten percent or even more sort of dip in
Speaker 1: that context, suddenly the math is a lot different. It's
Speaker 1: almost like you have to put up sticky notes, you know,
Speaker 1: that will keep it in context, have some perspective with
Speaker 1: you know, because ten percent in this context, you know,
Speaker 1: I don't want to talk like a market timer, but
Speaker 1: it's not very much well, you know, it's funny though, Susan.
Speaker 1: I've been thinking a lot about this though, because I
Speaker 1: often with a lot of our guests on air, talk
Speaker 1: about you know, also capital preservation, right, and there is
Speaker 1: a point where I do wonder have we made you know,
Speaker 1: whether it was last year and you know, when we
Speaker 1: have a strong market, do you kind of pull back
Speaker 1: a little bit and just say I'm good with this,
Speaker 1: you know, And then do you wait for when money
Speaker 1: off the table, right, and or be a little bit
Speaker 1: more conservative and wait for valuations to come back down.
Speaker 1: Because I think about I hear what you say from
Speaker 1: the financial crisis, but people saw their investments, you know,
Speaker 1: cut in half because of the financial crisis, So like
Speaker 1: you have to kind of balance that out right, Yes, definitely,
Speaker 1: I mean it all depends on your time horizon, right,
Speaker 1: and if you have you know how much cash you
Speaker 1: have saved. But because if you're planning to retire in
Speaker 1: a couple of years and you really haven't put enough away,
Speaker 1: you don't want to be having to sell stocks into
Speaker 1: a downturn. So in that situation you may want to
Speaker 1: pull back a bit. And maybe in your foe owing
Speaker 1: k there's stable value funds that you know are reasonable, right,
Speaker 1: not anything like equity long term returns, but safer right. Well,
Speaker 1: And that leads to I think one of the most
Speaker 1: important points of your story, which is it is a
Speaker 1: good time, in a very real time to understand your
Speaker 1: appetite for risk totally tell us about that. Well, you know,
Speaker 1: we don't really know our appetite for risk until we're
Speaker 1: in it. And after eleven years of a bowl market,
Speaker 1: there are a lot of people, especially younger investors, who
Speaker 1: don't know what it feels like. See such a swift decline,
Speaker 1: you know, and sort of most of us actually think
Speaker 1: we have more of risk tolerance than we do. We
Speaker 1: overestimate it. So now is a good time to sit
Speaker 1: back and think, like, how did that make me feel?
Speaker 1: Did it make me feel panicky? Couldn't I could I
Speaker 1: not sleep? Was I worried? Okay, so maybe you want
Speaker 1: to adjust your portfolio a little bit right now, you know,
Speaker 1: tweak it UM so that you can sleep better. So
Speaker 1: that is a and that's sort of this amorphous thing,
Speaker 1: but it's very valuable. But yeah, absolutely, and it's real.
Speaker 1: Let's let's not forget it. What about UM going to
Speaker 1: some of those safe safe havens. And I think about
Speaker 1: the bond market, which had a good run last year,
Speaker 1: right but you know, the bottom market raises its own
Speaker 1: risks UM, you know, and it's a little bit of
Speaker 1: a it's hard to find a haven right now. You
Speaker 1: know a lot of people have run into gold um
Speaker 1: that is a tactical move, um, that a lot of
Speaker 1: people have made that maybe they've had their move already. Yeah, yeah, maybe,
Speaker 1: And it's hard. I sort of think you just have
Speaker 1: to think of your basic asset allocation and pretty much
Speaker 1: stick to it and maybe tweak a bit. But there's
Speaker 1: not a lot of places to hide now, right. It's
Speaker 1: funny too. I mean on our daily radio show, we
Speaker 1: have a lot of money managers on and they talk
Speaker 1: about their clients. You talked to a lot on an
Speaker 1: ongoing basis, but specifically for this story. What are they
Speaker 1: saying about what they're hearing and how it may be
Speaker 1: different or what's the general times. Yeah, from clients, they're, um,
Speaker 1: they're getting some worried calls, um. But they are also
Speaker 1: getting some calls about like should I buy now? Um?
Speaker 1: So they're definitely you know, at about like ten percent
Speaker 1: down on SMP, they started getting calls about is it
Speaker 1: time to buy now? And you know, some advisors are like, well, okay,
Speaker 1: you know, if you have if you're still working and
Speaker 1: you have like one to two years of cash saved,
Speaker 1: or if you're retired and you have three to four
Speaker 1: years of cash saves, so that you can ride through
Speaker 1: any market downturn and not have to sell into weakness. Maybe,
Speaker 1: but um, because is it a time to put some
Speaker 1: new money? Like this is that valuation question right? It's
Speaker 1: a lot better than it was a couple of weeks
Speaker 1: ago in terms of valuations, and so many market watchers
Speaker 1: were calling for some kind of correction even without the
Speaker 1: virus concerns. And so if you do have some new
Speaker 1: money and you have a safety net put aside, is
Speaker 1: it an opportunity to kind of get to put some
Speaker 1: new money to work? I mean something to think. One
Speaker 1: thing to think about is that if you have a
Speaker 1: four one ken, you're already sort of averaging into the
Speaker 1: market every month or so and it goes into the
Speaker 1: four O one K. So if you you know, you
Speaker 1: could be doubling down on the market if you decide
Speaker 1: to take money outside that accountant. And that's Suzanne Willey
Speaker 1: a smart story, a timely when obviously, given everything that's
Speaker 1: been going on in the market. So I know, those
Speaker 1: of us who have dared to look at our four
Speaker 1: oh one case, it's a chilling moment, but got to
Speaker 1: be smart in this sort of environment. And she reminds
Speaker 1: us if you're already in a furrow one k you're
Speaker 1: already buying into the markets ups and down. So that's
Speaker 1: something to remember as we face those volatile financial markets.
Speaker 1: Jack Welch so much talked about former chairman and CEO
Speaker 1: of General Electric. He passed away one week ago at
Speaker 1: the age of eighty four. Someone who knew him beyond
Speaker 1: the headlines that most of us read is John Byrne.
Speaker 1: He wrote the book with Jack Welch. It's his autobiography.
Speaker 1: It was entitled Jack Straight from the Guy. He's spent
Speaker 1: a lot of time with him, more than a thousand
Speaker 1: hours a full year, a level of intimacy that really
Speaker 1: no journalist gets with a source, and a friendship that
Speaker 1: certainly continued. John joins us from San Francisco. So I
Speaker 1: have to say John, first, condolences. I know that he
Speaker 1: was a close friend and mentor, uh and someone who
Speaker 1: gave you a lot of advice over the years, unvarnished.
Speaker 1: What was your first thought when you heard that he
Speaker 1: had passed, Well, there was a sense of sadness. Um,
Speaker 1: he was really a larger than life figure. And I
Speaker 1: know that's almost a cliche, but in his case it
Speaker 1: really fits. He squeezed every precious moment out of every
Speaker 1: minute in his life, Uh to get the most out
Speaker 1: of it. He was fun to be with. Uh. He
Speaker 1: could be a very um scary character when he got mad. Uh,
Speaker 1: he was remarkably intense. He Uh, he was wickedly smart. UM.
Speaker 1: And when you were in his orbit, you somehow spelt
Speaker 1: felt special. Um, you didn't feel ordinary anymore. And that
Speaker 1: was the kind of magic that he had with a
Speaker 1: lot of people. And he was very much a people person,
Speaker 1: I mean he um. And he would go right to it. Well,
Speaker 1: so what what whatever, Wherever there was some something that
Speaker 1: he could provoke, he would provoke it. Before you wrote
Speaker 1: the book with him, UM. And I think two thousand one,
Speaker 1: you actually first got to know him back in and
Speaker 1: you wrote a story for Bloomberg or what was Business
Speaker 1: Week at that time. It became the longest UM cover
Speaker 1: story in the magazine's history. Take us back, that was
Speaker 1: what was your first impression of him? What was the
Speaker 1: first time you met him and sat with him? Um?
Speaker 1: Do you remember that? Sure? Well, contrary to what people think,
Speaker 1: he never sought the limelight. The limelight sought him. And
Speaker 1: it was difficult for him to actually sit down with
Speaker 1: a journalist. UM, it took me a year to gain
Speaker 1: access to do that cover story. So but once he
Speaker 1: opened the door, he completely opened the door. I spent
Speaker 1: four months. I interviewed well over fifty executives in the company.
Speaker 1: I traveled all over the country to different divisions, and
Speaker 1: I interviewed him multiple times. And the story really told,
Speaker 1: UH the sort of narrative of how did this one
Speaker 1: guy have so much influence over this massive global corporation
Speaker 1: with three hundred and fifty thousand employees and a range
Speaker 1: of business that was truly mind boggling, from appliances and
Speaker 1: light bulbs to aircraft engines and um, the aircraft engines
Speaker 1: and power generation equipment. UM, how does everyone know him
Speaker 1: as Jack? And how does he wield this influence? And
Speaker 1: it really got inside the motivational techniques that he used
Speaker 1: to get performance out of the company. He would do
Speaker 1: these handwritten notes that became prized within uh G E
Speaker 1: two people who really made a difference and UH and
Speaker 1: those things hung in their offices and they were just
Speaker 1: like the amazing most the best honor you could ever get. UH.
Speaker 1: So I got to know whom there and then as
Speaker 1: he approached his retirement two and a half years later,
Speaker 1: he came to me and asked if I would help
Speaker 1: him write his memoir. Of course, there was no hesitation.
Speaker 1: I agreed to me that experience was like having a
Speaker 1: PhD in management or leadership. I did, in fact, spend
Speaker 1: well over a thousand hours face to face one on
Speaker 1: one with Jack. Uh. It was the most grueling experience
Speaker 1: of my life. Uh. We fought a lot over what
Speaker 1: should be included, what shouldn't be included. Uh. He was
Speaker 1: very demanding. We went through many, many, many drafts. I
Speaker 1: can tell you some of the chapters went through something
Speaker 1: like eighteen twenty drafts. We'd sit side by side after
Speaker 1: I would write, Uh, and to make the manuscript his own,
Speaker 1: he would go over every paragraph, every sentence, every word.
Speaker 1: We'd fight over commas and dashes. Uh. Sometimes the changes
Speaker 1: in the manuscript would be so extensive. So one time,
Speaker 1: after scribbling all these notes all over the pages, UM,
Speaker 1: he turned to me, grabbed my arm, looked me in
Speaker 1: the eye, and said, you're gonna mess this up, aren't you.
Speaker 1: He used a more colorful than mess it up? Okay,
Speaker 1: but that was Jack. Yeah. And so what did you
Speaker 1: learn about him in that process? About him? As a
Speaker 1: human because again the intimacy that you gain over that
Speaker 1: many hours and over telling someone's life story in that
Speaker 1: level of detail. What did you learn about him? Well,
Speaker 1: I learned that one of the remarkable characteristics that he
Speaker 1: had was his love for people. And while he could
Speaker 1: be incredibly tough on people, um, literally beat them up,
Speaker 1: he also just as easily could come over to them,
Speaker 1: wrap his arms around them and tell them in the
Speaker 1: most genuine way possible, I love you, um. And that
Speaker 1: meant a lot to people. And he rewarded people incredibly generously.
Speaker 1: You know, we often think, uh in Silicon Valley and
Speaker 1: I'm here in the Bay Area that, um, these companies
Speaker 1: are very generous and buy a lot of talent with
Speaker 1: stock options. Well, you know, Jack us stock options very
Speaker 1: effectively in a big conglomerate, made tens of thousand people
Speaker 1: uh millionaires as a result. So if you performed and
Speaker 1: really did well by the company, you did well by
Speaker 1: yourself because he made sure that you were generously awarded
Speaker 1: for your work. That's John Byrne, who wrote with Jack
Speaker 1: Welch his autobiography. It was entitled Jack Straight from the Gut.
Speaker 1: That book selling more than ten million copies worldwide. But
Speaker 1: it's great to sit down and spend time with someone
Speaker 1: who spent so much time with Jack Welch and got
Speaker 1: to talk with him and see him not only as
Speaker 1: a CEO, but just as an individual, Yeah, as a
Speaker 1: human being. And he tells some great stories about everything
Speaker 1: that Jack was a complicated guy, obviously a legacy that
Speaker 1: will continue to be picked apart, but a very human
Speaker 1: look for sure. Let's not forget Jason. That's our Bloomberg
Speaker 1: Business Week Extra podcast. We talked with John Byrne for
Speaker 1: a long time, so be sure to check that out.
Speaker 1: Speed Racer. So the Bloomberg audience love sorrying about aving
Speaker 1: to do with the auto industry, from evies and stuff
Speaker 1: driving cars to really cool things like supercars, collectibles, innovation, competition,
Speaker 1: racing and more fast cars. All right, so today we're
Speaker 1: talking about the business of racing of the perfect duo
Speaker 1: to do that, with IndyCar champion Joseph new Garden joining
Speaker 1: us in our interactive Broker Students, so welcome to you. Also,
Speaker 1: of course, with us is our auto calumniess for Bloomberg Pursuits,
Speaker 1: Hannah Elliot, who actually brought us Joseph. I tried to
Speaker 1: in you the best. Yeah. Anyway, alright, so first of all, congratulations, welcome,
Speaker 1: thank you. Um. So, what's the state of racing right now? Well,
Speaker 1: we're here to just just distract everybody, you know, with
Speaker 1: all the chaos that's going on right now, we want
Speaker 1: you to just think about racing and good things. Um.
Speaker 1: But the Yeah, the state of racing is good, you know.
Speaker 1: We um, we're still going forward. I think Indie Car
Speaker 1: is an exciting time for us. We're kind of growing. Um.
Speaker 1: You know, we've gone through some swings over the last
Speaker 1: twenty thirty years with just the series, the identity of it,
Speaker 1: the popularity and uh, ever since I joined back in
Speaker 1: two thousand and twelve, we've just had this nice steady
Speaker 1: uptick and growth and I feel like we have a
Speaker 1: lot more momentum on our side now with Roger Pensky
Speaker 1: acquiring the Indianapolis Motor Speedway in the Indie Car series,
Speaker 1: so we feel like the direction of where the the
Speaker 1: series can go and really the growth potential is is
Speaker 1: pretty enormous right now. All right. I don't know why
Speaker 1: he's been so serious. What's it like to race? It's awesome? Alright,
Speaker 1: that's what I want to know. Yeah, no, I I
Speaker 1: love it. I grew up I'm for Nashville, Tennessee, and
Speaker 1: I played stick and ball sports like most you know,
Speaker 1: suburban American kids. Baseball was kind of my sport as
Speaker 1: as as a young guy. And uh, I always loved racing.
Speaker 1: I love cars that went fast. The first thing you raced,
Speaker 1: So I raced just go carts, traditional like hundred c
Speaker 1: C carts and um, you know, they go like sixty
Speaker 1: miles per hour, superload to the ground, and there was
Speaker 1: nothing like that around Nashville, Tennessee. So my dad actually
Speaker 1: had to take me. Uh. We we did this round
Speaker 1: trip three and miles up, three and miles back to Indianapolis.
Speaker 1: It was the closest carting track to to Nashville, and
Speaker 1: we did that. We went up there and figured out
Speaker 1: how carting worked, and then tried to get into cars.
Speaker 1: And then you kind of just learned how the you know,
Speaker 1: the series form up and then how to maybe one
Speaker 1: day try and pursue a career in motorsports. And what
Speaker 1: I'm so curious what separates a champion from someone who's
Speaker 1: really good. And I mean when you were driving these carts,
Speaker 1: did you know from an early age, I'm really good.
Speaker 1: Did that come later? It came later. You know. When
Speaker 1: I was a kid and i'd watch indie cards on TV,
Speaker 1: especially around street circuits, which is a track type that
Speaker 1: we run on, I'd watch these guys, you know, handle
Speaker 1: these seven hundred fifty horsepower super fast cars in between
Speaker 1: you know, twenty foot of walls, like that's that's you know,
Speaker 1: the track was the walls basically lining the track super tight.
Speaker 1: And I had no idea how they'd be driving these
Speaker 1: things at two or miles miles per hour in the
Speaker 1: street courses. I was like, man, there's there's just no way.
Speaker 1: It looks so dangerous, it's crazy. I mean they are
Speaker 1: like it's like riding a raging bull. And then there's
Speaker 1: they're so masterful. When I was a kid watching the
Speaker 1: drivers do it, and I never thought it was possible,
Speaker 1: to answer your question, for me to be able to
Speaker 1: be capable of that, And so I just got into
Speaker 1: it for the love of cars, the love of racing,
Speaker 1: the competition, and then quickly you learn like I'm pretty
Speaker 1: good at this, like maybe maybe I'll be able to
Speaker 1: drive cars one day. And then you get into cars
Speaker 1: finally and you're like, yeah, I think I could possibly
Speaker 1: get good at this. Was there a discussion you had
Speaker 1: with your parents about this? Um, Yes and no. I
Speaker 1: begged to start racing go cards since I was like
Speaker 1: three years old, and it was always a no until
Speaker 1: I was thirteen. So it took. It took a lot
Speaker 1: of convincing to hey, let's actually go try and do this.
Speaker 1: And so, to go back to what Hannah said, I mean,
Speaker 1: you understand you're pretty good at it, but then there
Speaker 1: is that, you know, a matter of seconds or middleiseconds
Speaker 1: in some cases inches feet that separate you know, a
Speaker 1: true champion, a winner, from someone who's like, yeah, this
Speaker 1: is pretty good. But what's the difference. Yeah, it's honestly,
Speaker 1: so like once you get to the top level and
Speaker 1: you're like, hey, you know, I'm I'm I'm pretty good
Speaker 1: at the sport. I'm lucky that I have some talent.
Speaker 1: It's so much more than just being fast or being
Speaker 1: inherently talented at something. You have to have such a
Speaker 1: complete package at the top level of it. Um, you
Speaker 1: really have to be diverse in your skill sets and
Speaker 1: and that a lot of what the driver does is
Speaker 1: he's like the quarterback of a football team. You know
Speaker 1: he's leading the pack, he's kind of directing on everything
Speaker 1: that we need to do, not only just on a
Speaker 1: race weekend and what decisions we make, but also globally,
Speaker 1: like how are we developing the race car, what's gonna
Speaker 1: make the race car fast? And all those decisions really
Speaker 1: derived from the driver. So the driver has to have
Speaker 1: a really good skill set to lead the team and
Speaker 1: lead the engineers and mechanics found the right path. That's
Speaker 1: that's what makes you good at the top of Is
Speaker 1: it a case though, like with any I don't know sport,
Speaker 1: if you will that the more you do it, the
Speaker 1: better you get, like practice, practice, practice, or that's not
Speaker 1: necessarily the case in racing. No, No, it's very true,
Speaker 1: very true. I think with anything, particularly indie car racing.
Speaker 1: IndyCar racing, amongst all of motor sports, is probably the
Speaker 1: most diverse. So with NASCAR, they're so predominantly oval racing.
Speaker 1: You know, probably the tracks they visit are all ovals.
Speaker 1: For IndyCar, it's split across four different track types, so
Speaker 1: we RaSE street circuits like I was talking about earlier.
Speaker 1: They are all so completely different that if you're not
Speaker 1: good at all of them, you're never gonna win a championship.
Speaker 1: So the diversity that it that it requires to be
Speaker 1: good in Indy cars is pretty cool. That's INDO Card
Speaker 1: Champion Joseph Newgarden and Blueberg's Hannah Elliott and I have
Speaker 1: to say the only challenge of listening to this on
Speaker 1: the radio or podcast, Carol, you don't see exactly how
Speaker 1: handsome Joseph Newgarden is. He really is, but so articulate
Speaker 1: as well. We had a fun com versation. It was
Speaker 1: not just about what it's like to get into a
Speaker 1: race car, although he did talk about that, but also
Speaker 1: talking about the broader industry, what's going on, it's self
Speaker 1: driving cars and e vs. It was a great fun conversation. Yeah,
Speaker 1: definitely keep an eye on him about fayv incredible stories
Speaker 1: about the lovely Cake Crater from the Year of the
Speaker 1: Noodle to opening a restaurant too simply winging it and
Speaker 1: by winging it we mean chicken wings. I think you
Speaker 1: just gave her a new nickname. It's called Hot Sauce,
Speaker 1: which I love. We call her Kate Crater Katie Kay.
Speaker 1: I'm not saying anything, but he did not call her back.
Speaker 1: I'm just saying, all right, Kate Craters here with us
Speaker 1: in New York City. Great to see you, so good
Speaker 1: to see all right. I said to Chris Rouser, who
Speaker 1: edits pursuits. I ran into him in the building this
Speaker 1: week and I said, you're the noodle I percent. And
Speaker 1: he told me a little bit of the back story.
Speaker 1: And you talk about this in the story. Every year
Speaker 1: could be the year of the noodle? Really is? Tell
Speaker 1: us why really is the year of the noodle? And
Speaker 1: I do think like every year people find a dish
Speaker 1: to fall in love with. You know, for those who
Speaker 1: got to Reya, there was that crazy octopus and bone
Speaker 1: marrow few silly several years ago. Mom Fuku Ramen has
Speaker 1: a lot of followers. But this year chefs are Chefs
Speaker 1: are taking the noodle. The ones who are already experts
Speaker 1: are going in new directions. And then some who have
Speaker 1: like not been crafting noodles have found or have you know,
Speaker 1: taken gotten religion or like now we're going to start
Speaker 1: making some noodles. So what are the new directions? Is
Speaker 1: it just a different shape or is it a lot
Speaker 1: of different things. It's a lot of different things. Actually,
Speaker 1: like one thing another thing that's fantastic about it is
Speaker 1: that I think traditionally, or at least I do in
Speaker 1: New York, think about UM. I mostly think of noodles
Speaker 1: as Italian. But it's awesome. I mean, not that I
Speaker 1: don't love Ramen, but now it's going in so many
Speaker 1: different directions. For instance, there's this really popular restaurant called Coat,
Speaker 1: which is a Korean steakhouse, and they, after Parasite won
Speaker 1: an Academy Award, they introduced the dish, a dish that
Speaker 1: um I don't want to know spoiler alerts, but Chapagari
Speaker 1: plays Um plays a role in this movie, and so
Speaker 1: they started doing a late night special and it's made
Speaker 1: with really good instant noodles, like better than Ramen noodles
Speaker 1: for sure, and they put their fantastic steak in it
Speaker 1: and they sell it every night. I have to say,
Speaker 1: when I saw a Parasite, I will not give anything
Speaker 1: away about the movie either, but when I saw that
Speaker 1: in the movie, I thought you would call ahead to
Speaker 1: get sout to get that. Let's take a step back,
Speaker 1: because you know so much about food and restaurants and
Speaker 1: culture and the intersection of all those things. Why do
Speaker 1: we love noodles so much? Well, you know what there's
Speaker 1: something satisfying. It's not something they are satisfaction, you know.
Speaker 1: I think like they come in bowls, you slurp them
Speaker 1: their comfort. You probably have a childhood memory of them.
Speaker 1: Wherever in the world you come from, a bath of them.
Speaker 1: They're so simple. They can be doused with butter, or
Speaker 1: they can get really elaborate, and they really they scratch
Speaker 1: the itch. Whether you know you have it or not,
Speaker 1: it will always be like someone you know putting their
Speaker 1: arm around you. For years, for my baby brother for lunch,
Speaker 1: I would make like you know, I boil some noodles
Speaker 1: and then with butter. That was our garland delicious. When
Speaker 1: feel like there's something comforting elemental, I mean, I think
Speaker 1: there's something about the elemental quality of it, and you know,
Speaker 1: you can certainly find it in a burger or something
Speaker 1: like that. But there's something about noodles that come too warm,
Speaker 1: the texture of them you bite into them, that you
Speaker 1: and the simplicity of it, ultimately, I mean sort of
Speaker 1: what you're getting toward and you are as well, Kate,
Speaker 1: this notion that you know, even when you're just starting out,
Speaker 1: either as a teenager or certainly when you're in college,
Speaker 1: like there's that notion of like, all right, well you
Speaker 1: can at least make you can do this right? No
Speaker 1: exactly how many how many noodles like noodles have stage
Speaker 1: college students? Yeah, we aids centuries what happened though too.
Speaker 1: I feel like, you know, the pushback against carbs like um,
Speaker 1: but yet there's like all these noodles. I think that's
Speaker 1: something that's actually fantastic about this. You know that they're
Speaker 1: so I mean, we can talk about chickpee pasta and
Speaker 1: that's of course having a moment too, but it hasn't
Speaker 1: like pushed conventional pasta off the stage, like conventional pasta
Speaker 1: is like we are here and so many different guys
Speaker 1: is as we were saying, Um, this guy, I don't
Speaker 1: know if you guys know pudo ramen, but it's like legendary.
Speaker 1: It's where people wait hours to have a bowl of ramen.
Speaker 1: And the guy, the chef um has opened his own
Speaker 1: place in Brooklyn now on Smith Street. Um it's called
Speaker 1: something I can't pronounce the first word of it, but
Speaker 1: it's like boton, Kazaki, boat and um. And he's doing
Speaker 1: these like he's inspired by New York culture. So he's
Speaker 1: making some broths with um steakbones with like major steakbones
Speaker 1: because he loves the steakhouse culture. And he's making another one.
Speaker 1: He's using the espresso machine to blend the broth because
Speaker 1: he likes um. He likes our coffee. Has culture here
Speaker 1: so smart. So what's the noodle dance? The noodle dance,
Speaker 1: I'm not going to recreate it here, so you might
Speaker 1: have to go to fleshing to Heidi Lau. But um,
Speaker 1: it's a really it's a fantastically popular chain in Asia
Speaker 1: that opened its first outpost here on the East coast,
Speaker 1: and they do crazy things like they'll give you a
Speaker 1: hand massage because the lines are so long it's so popular.
Speaker 1: They offer snacks, Um, they give you a hand massage.
Speaker 1: But the best thing and the best thing that you
Speaker 1: guys actually have to go and take a video of
Speaker 1: is um if you order these hand pulled noodles, which
Speaker 1: is a fantastic thing, just to watch a video of
Speaker 1: someone comes up to your table with with this rope
Speaker 1: of dough and starts like stretching it out behind your
Speaker 1: back in front of you, like it's crazy with like
Speaker 1: any hits like play on the boom box and so
Speaker 1: like there's music it's a party. It's wonderful. Well, and
Speaker 1: it feels like you alluded to this at the top
Speaker 1: of the conversation. Even places where you would expect to
Speaker 1: have pasta are taking it to a new level. Let's
Speaker 1: talk about a restaurant we've all been there that their
Speaker 1: pasta is unbelievable. Their new noodles are unbelievable. It's one
Speaker 1: of the hottest restaurants in Manhattan. Got to eat there
Speaker 1: with you. What are they up to? It was the
Speaker 1: best night? Um, But yeah, no restaura. So he does.
Speaker 1: So this guy Stefano Sacci, the chef um worked with Musmobotora,
Speaker 1: who's who has been ranked the best, who's the chef
Speaker 1: owner of one of the best restaurants in the whole
Speaker 1: wide world in Italy, so he knows his pasta. But
Speaker 1: recently he started making a double stuff Torlini called dopio
Speaker 1: tortoloni and it's got like two compartments, so better than
Speaker 1: one too. So for instance, for the spring he's doing
Speaker 1: like a parmesan Oh, one compartment will have parmesana when
Speaker 1: it and the other will have pusiudo and then it
Speaker 1: gets like a spring peece sauce because spring is coming,
Speaker 1: and and it's really it's wonderful, like it's a great
Speaker 1: it's a great way. It's like showing off, you know.
Speaker 1: It's somebody who has like a black belt in pasta
Speaker 1: stepping up and being like, look at what I can say.
Speaker 1: Oh cool, you can fill that with something. I can
Speaker 1: fill this with two things in separate chambers. So exactly, yeah,
Speaker 1: exactly grabbed that places I've never felt so associated, But
Speaker 1: yet I didn't feel full coming out. It just was
Speaker 1: like in heaven, like my taste buds were just all right. So,
Speaker 1: speaking of restaurants, you have a great flow chart essentially
Speaker 1: in the magazine this week that you put together and
Speaker 1: it just says very simply, so you want to open
Speaker 1: a restaurant dot dot dot walk astro. How do you
Speaker 1: even put something like this to gather n you think
Speaker 1: this with Steven Star? Um, yeah, so Stephen Star is
Speaker 1: the hottest restaurateur in the country. Like he's the hit maker,
Speaker 1: He's the guy behind um so many popular restaurants here
Speaker 1: on the East Coast from La Diplomat where everybody hangs
Speaker 1: out in d C. He reopened pasties here, which is
Speaker 1: like the hottest dining room. He did Lo Cuckoo a
Speaker 1: couple of years ago, and he also did a Bloomberg favorite,
Speaker 1: Boudhakan Bloomberg crowd favorite. So, um, he knows how to
Speaker 1: open successful restaurants up and down the spectrum. He's fantastic. Um.
Speaker 1: He has forty one restaurants now. And so we asked him.
Speaker 1: We thought it was a good moment to ask him, like,
Speaker 1: what do you look for in a restaurant, Like, how
Speaker 1: do you always go big? Do you sometimes go small spaces?
Speaker 1: Do you go concept first to line up a chef first,
Speaker 1: what neighborhoods you go into. It was, it's fascinating, it's fantastic. Well,
Speaker 1: and one spoiler here just for those of you listening,
Speaker 1: you're watching in New York. One of the boxes on
Speaker 1: here is are you in New York? And if you
Speaker 1: say yes, forget it. Yeah, yeah, move on to something else. Now.
Speaker 1: The legislation in New York. You'll hear it from more
Speaker 1: people than him. Um, And it's you know, we've seen
Speaker 1: a lot of restaurant closings in the last year. It's
Speaker 1: still like it's still in my opinion, like the like
Speaker 1: one of the best restaurants cities in the world. But
Speaker 1: it's definitely it's a challenging time to open restaurants because
Speaker 1: there's so many laws in The minimum wage has gone
Speaker 1: up in the last year, so it's it's not easy.
Speaker 1: And to that point, and you know, you and I
Speaker 1: know some restaurant owners in common, and one of the
Speaker 1: things that I've heard from them is that even you know,
Speaker 1: like tried and true chefs, tried and true operators who
Speaker 1: have had huge hit restaurants, they try and do something else.
Speaker 1: Even if the concept is sound, the economics just don't work.
Speaker 1: It's really I mean, it's it's a really challenging time
Speaker 1: to have a restaurant in New York. And so even
Speaker 1: someone like Steven Starr, who really is a hit maker
Speaker 1: m is it sees it well. On a letter note,
Speaker 1: he also says lighting is really important. I love that.
Speaker 1: I agree, well, you know, it's fantas aska. Actually, this
Speaker 1: was actually one of my big takeaways from this is
Speaker 1: that he does not like to go into office buildings
Speaker 1: because he was like, all the glass means you can't
Speaker 1: have ambiance, like you want to be able to control
Speaker 1: the control the ambiance, and so lighting is key. That's
Speaker 1: one of his secret sauce things. All right, so sauce.
Speaker 1: Actually you brought some sauce because this is just a
Speaker 1: phenomenal story. This is one of these I'm going to
Speaker 1: rip out and put on the refrigerator at home, all
Speaker 1: about chicken wings, which who doesn't love, Like, if you
Speaker 1: eat me, you love chicken wings. They're one of the
Speaker 1: best foods out there. I can't talk enough about this.
Speaker 1: So there's this like viral hits show called Hot Ones.
Speaker 1: I don't know if you've seen it. I don't know
Speaker 1: if you guys ever want to employ it, which is
Speaker 1: why I brought you some hot sauce so you can
Speaker 1: so you can try it. But this guy, Sean Evans,
Speaker 1: who's the host, has figured out how to get celebrities
Speaker 1: to talk by making the meat increasingly spicy sauces and
Speaker 1: um and so, and he gets everybody layless celebrity, you
Speaker 1: know what. So the person who's the person who's actually
Speaker 1: been the best is Charlie's Throng because she's from South Africa.
Speaker 1: So she's actually the star that flinched the least I
Speaker 1: think when she ate this like crazy hot one hot sauce,
Speaker 1: but um, like Paul Rod, DJ Khalid, Post Malone and everybody.
Speaker 1: He gets everybody is fantastic. That's k creator. She is
Speaker 1: our food and restaurant expert here at Bloomberg News and
Speaker 1: at Pursuits. And who knew that there was so much
Speaker 1: going on when it comes to noodles. I didn't that.
Speaker 1: I'm very happy to know about it. Well. That wraps
Speaker 1: up the weekend edition of Bloomberg Business Week from Bloomberg Radio.
Speaker 1: Thank you so much for joining us. I'm Jason Kelly
Speaker 1: and I'm Carol Masser. Be sure to tune into Bloomberg
Speaker 1: Business Week Radio Live Monday through Friday, starting at two
Speaker 1: pm Wall Street Time, and catch us live get our
Speaker 1: daily podcast wherever you download your podcast. You can also
Speaker 1: watch the show live on YouTube. Just search for Bloomberg
Speaker 1: Global News and you can get this week's edition of
Speaker 1: the magazine. It's on newsstands now, will be back next
Speaker 1: week at the same time. This is Bloomberg