WEBVTT - Weekend-July 10, 2021 0:00:01.040 --> 0:00:05.440 This is Bloomberg Business Week Inside from the reporters and 0:00:05.600 --> 0:00:09.200 editors who bring you America's most trusted business magazine, plus 0:00:09.240 --> 0:00:13.160 global business finance and tech news as it happens. Bloomberg 0:00:13.240 --> 0:00:16.759 Business Week with Carol Messier and Bloomberg Quick Takes Tim 0:00:16.800 --> 0:00:21.680 Stinovic on Bloomberg Radio. Hi, everyone, welcome to the weekend 0:00:21.840 --> 0:00:24.360 edition of Bloomberg Business Week. A lot going on this 0:00:24.440 --> 0:00:27.319 past week, second quarter earnings starting to roll out in 0:00:27.360 --> 0:00:30.440 full force, Fed Chair j Powell taking the debate over 0:00:30.480 --> 0:00:34.760 inflation to Capitol Hill. And we've got a batch of CEOs, Tim, 0:00:34.960 --> 0:00:38.480 the CEOs of raytheon Carnival and aerial investments all on tap. 0:00:38.560 --> 0:00:42.880 Plus the billionaire space Race reaches new heights literally, Virgin 0:00:42.920 --> 0:00:45.920 Galactic founder Richard at Branson makes a successful test flight, 0:00:46.320 --> 0:00:49.760 and Jeff Bezos, well he's up next. Washington Post space 0:00:49.760 --> 0:00:52.880 reporter Christian Davenport talks all about these so called space 0:00:52.920 --> 0:00:55.920 barons and the burgeoning market for space tourism. You're gonna 0:00:55.920 --> 0:00:57.960 be on the ground watching Jeff Bass go up into 0:00:57.960 --> 0:01:01.280 air Tuesday, nine am. That's when it's planned for. You know, 0:01:01.280 --> 0:01:03.920 these are rockets, though, so there could be delays wind 0:01:04.080 --> 0:01:05.959 that sort of thing. All right, fingers crossed, it all 0:01:06.120 --> 0:01:08.960 works out for everyone, including you. We're also going to 0:01:09.040 --> 0:01:10.600 take a close look at the business of betting on 0:01:10.680 --> 0:01:13.240 e s g A b InBev on the heels of 0:01:13.240 --> 0:01:16.840 signing a record ten point one billion dollar sustainability linked 0:01:16.880 --> 0:01:20.040 revolving credit facility. We're gonna hear from the company's CFO 0:01:20.120 --> 0:01:23.960 and chief sustainability officer. And the Republican Party remains fracture 0:01:24.160 --> 0:01:27.440 months after the impeachment of former President Donald Trump. Why 0:01:27.480 --> 0:01:30.240 a rising star in the GOP may pay a steep 0:01:30.280 --> 0:01:32.880 price for his vote to oust the commander in chief. 0:01:32.920 --> 0:01:34.679 It was one of our most read stories this week. 0:01:34.880 --> 0:01:37.240 All of that to come. We begin with this week's 0:01:37.280 --> 0:01:40.000 cover story in the magazine, which also happened to be 0:01:40.080 --> 0:01:43.080 a Bloomberg Big Take. This week, it's about the future 0:01:43.120 --> 0:01:46.000 for the drug company that's become a household name during 0:01:46.040 --> 0:01:49.680 the pandemic. We're talking about Maderna and what is moderna 0:01:49.800 --> 0:01:52.960 second act. Bob land Grath, healthcare reporter at Bloomberg News, 0:01:52.960 --> 0:01:56.160 also Bloomberg Business Week editor Joel Weber. They joined us 0:01:56.160 --> 0:01:58.200 to talk all about the rise of the newest player 0:01:58.360 --> 0:02:02.480 in big pharma. Actually, remember that exact conversation with Bob 0:02:02.760 --> 0:02:04.640 about a year and a half ago, and and he 0:02:04.760 --> 0:02:08.160 was like, so there's this company called Maderna that has 0:02:08.240 --> 0:02:10.440 this technology. It's going to be really interesting to see 0:02:10.440 --> 0:02:14.200 if it works. So here we are, Um and Bob, 0:02:14.280 --> 0:02:16.799 let's just bring you in. You know, like the what 0:02:17.160 --> 0:02:19.640 we set out here to do was to say, look 0:02:19.680 --> 0:02:23.320 like Maderna has been one of the big heroes of 0:02:23.360 --> 0:02:27.040 the pandemic, and if you can solve COVID nineteen, what 0:02:27.080 --> 0:02:29.959 else do they have? And what else does what else 0:02:30.040 --> 0:02:32.840 is mRNA capable of? So what are they working on? 0:02:33.320 --> 0:02:37.040 Ethcacy has definitely done to demonstrated very powerfully for vaccines 0:02:37.160 --> 0:02:39.480 and so now they're working on a whole host of 0:02:39.560 --> 0:02:43.160 other vaccines. There's like about fifty or more viruses discovered 0:02:43.160 --> 0:02:45.760 the last forty years, only tiny handful of vaccines. You know. 0:02:45.800 --> 0:02:48.920 Maderna thinks the technology, which is kind of modular and 0:02:48.960 --> 0:02:51.320 fast moving, can be you know, make vaccines to a 0:02:51.360 --> 0:02:54.119 lot of them. They're working on a food Vacciney're working 0:02:54.160 --> 0:02:56.400 on several of the respiratories viruses. They ultimately want to 0:02:56.440 --> 0:02:58.640 combine it to one kind of super booster that you 0:02:58.720 --> 0:03:00.880 might get like once a year and that deal with 0:03:00.919 --> 0:03:03.400 the whole host of like you know, fall winter type 0:03:03.400 --> 0:03:06.480 respiratory viruses. They're working on long term little kind of 0:03:06.600 --> 0:03:09.760 HIV and even starting to think some early trials in 0:03:09.800 --> 0:03:12.560 cancer vaccines, which has been a long promising but very 0:03:12.560 --> 0:03:14.960 difficult area. But we've got a hundred billion questions for 0:03:15.000 --> 0:03:17.000 you about that. I mean, this company hit a hundred 0:03:17.040 --> 0:03:21.640 billion dollar market cap. The expectations on it are incredibly 0:03:21.760 --> 0:03:24.600 high in terms of what Maderna can do. Can this 0:03:24.720 --> 0:03:29.440 messenger rn a technology science really translate to a lot 0:03:29.480 --> 0:03:33.600 of different vaccines ultimately or do we still not quite know. Well, 0:03:33.600 --> 0:03:35.160 we're going to have to wait and see. There's something 0:03:35.240 --> 0:03:37.640 only testing a lot of things. You know. One of 0:03:37.640 --> 0:03:39.800 the things we talked about the story is though they're 0:03:39.800 --> 0:03:42.440 certainly pursuing booster shots, we may need him at least 0:03:42.440 --> 0:03:44.720 a third booster shot at some point. It's you know, 0:03:44.800 --> 0:03:46.600 not at all clear how big. You know, the market 0:03:46.600 --> 0:03:48.200 for COVID nineteen is going to be sort of in 0:03:48.200 --> 0:03:49.800 a long term, so there is going to be pressure 0:03:49.840 --> 0:03:51.400 for them to come up with other things and new 0:03:51.440 --> 0:03:54.040 things and not be dependent on you know, an endless 0:03:54.080 --> 0:03:56.520 market for COVID nineteen boosters. And the other thing going 0:03:56.560 --> 0:03:58.960 on is that now everyone else knows, every other drug 0:03:59.000 --> 0:04:02.120 company the world knows it's this. This technology can really work, 0:04:02.520 --> 0:04:04.640 you know, at least in the infectius vaccinary. And they're 0:04:04.680 --> 0:04:07.040 all pursuing an all kind of all trying to come 0:04:07.080 --> 0:04:08.800 up with, like, you know, new or better versions of 0:04:08.880 --> 0:04:11.160 m RNA. So you spent some time at one of 0:04:11.160 --> 0:04:14.720 the production facilities for Moderna outside of Boston. It's a 0:04:14.720 --> 0:04:18.359 former Polaroid factory. What is the competitive advantage that the 0:04:18.400 --> 0:04:22.080 company has now that every other biotech company knows that 0:04:22.240 --> 0:04:24.040 m RNA has been so successful, at least when it 0:04:24.080 --> 0:04:26.719 comes to coronavirus. But the basic competitive advantage they have 0:04:26.800 --> 0:04:28.400 is they've done it. They've done a success and the 0:04:28.440 --> 0:04:31.320 only other companies that's achieved that level of success is 0:04:31.360 --> 0:04:34.320 obviously fiser BioNTech. But not every m r and A 0:04:34.480 --> 0:04:36.240 vaccine has worked as well. There's a third one that 0:04:36.320 --> 0:04:39.040 has tried, cure vact. Its trials came out a few 0:04:39.080 --> 0:04:41.159 weeks ago and it was only four eight percent effective. 0:04:41.160 --> 0:04:43.000 You can't just put it in our m RNA vaccine 0:04:43.000 --> 0:04:44.480 and have it automatically work. You've got to make the 0:04:44.560 --> 0:04:46.520 right choices and then it can work, you know, do 0:04:46.560 --> 0:04:48.480 a powerful menia spot. They are one of the two 0:04:48.520 --> 0:04:51.159 companies with real experience that doing this in a large 0:04:51.160 --> 0:04:53.480 scale now. And you know their production that you know, 0:04:53.520 --> 0:04:56.160 they haven't match Fiser, which has just been listening incredible, 0:04:56.240 --> 0:04:59.600 you know, vaccine producing Juggernauts. They haven't matched Fiser BioNTech, 0:04:59.680 --> 0:05:01.760 but and they haven't had big problems that kind of 0:05:02.120 --> 0:05:04.560 more or less made their numbers, which is impressive for 0:05:04.640 --> 0:05:06.760 a company that hadn't really made until last Yearly they 0:05:07.040 --> 0:05:08.520 had a plant off a small plant, but it was 0:05:08.520 --> 0:05:10.640 basically kind of like a pilot plant. Never made a 0:05:10.720 --> 0:05:12.600 hundred thousand doses of anything in a year, and now 0:05:12.640 --> 0:05:16.279 they're talking about as a billion doses, so that quite 0:05:16.279 --> 0:05:19.640 a scale. You've followed obviously, you know that little story 0:05:19.680 --> 0:05:21.240 in staid at the beginning where we sat next to 0:05:21.240 --> 0:05:23.040 each other in that conference from all those months ago, 0:05:23.040 --> 0:05:26.080 and you were like, so Maderna in person, that was 0:05:26.160 --> 0:05:29.040 it was in the before times, just just before everything changed. 0:05:29.480 --> 0:05:32.520 I'm curious because you've written about maderna weekend week out 0:05:32.600 --> 0:05:34.560 over the past year, and then you got to do 0:05:34.680 --> 0:05:36.800 a story like this and speak to the CEO and 0:05:36.800 --> 0:05:39.359 everything else. I'm wondering what did you learn while you 0:05:39.400 --> 0:05:41.720 were working on this story, how they did this? And 0:05:41.839 --> 0:05:44.120 you know, it's still a very small company relatives of 0:05:44.279 --> 0:05:46.560 what they've done. They like they were up to dred 0:05:46.600 --> 0:05:48.560 people nowaday. You know, they were like eight hundred of 0:05:48.560 --> 0:05:51.839 the Star last year, so they get all this relatively 0:05:51.880 --> 0:05:55.400 small number of people, which is, you know, it's impressive. 0:05:55.400 --> 0:05:58.359 They were able to to make this many doses, you know, 0:05:58.400 --> 0:06:01.120 with a few contractors and all this istant government funding, 0:06:01.120 --> 0:06:04.200 and that was significant. But until last year, until the 0:06:04.200 --> 0:06:06.760 pandemic came along, it was a startup company. There was 0:06:06.800 --> 0:06:08.720 a well funded startup, but you know, most of its 0:06:08.720 --> 0:06:10.840 about most of its parts were early trials. It wasn't 0:06:10.839 --> 0:06:12.400 planning to get anything on the market, you know, even 0:06:12.440 --> 0:06:14.120 if things went well for a few years. So it 0:06:14.279 --> 0:06:17.240 was like, you know, rather, you know, impressive scale and 0:06:17.320 --> 0:06:20.360 they certainly have big ambitions. That was Bloomberg News healthcare 0:06:20.400 --> 0:06:23.040 reporter Bob langrath in the editor of Bloomberg Business Week, 0:06:23.080 --> 0:06:26.160 Joe Webber on our Moderna cover story the company's vaccine Carol. 0:06:26.200 --> 0:06:29.040 It's proven among the most effective so far in preventing 0:06:29.080 --> 0:06:32.000 COVID and is now working on its next m R 0:06:32.080 --> 0:06:34.080 and a breakthrough. Cann't pull it off. I don't know. 0:06:34.240 --> 0:06:37.200 Lots of expectations and hope certainly from the company, but 0:06:37.520 --> 0:06:40.960 time will tell. Still ahead, three chief executives from three 0:06:41.040 --> 0:06:44.640 different sectors. We're talking aerospace and defense with Raytheon's Greg Hayes. 0:06:44.920 --> 0:06:48.120 We're setting sale with Arnold Donald of Carnival, who just 0:06:48.560 --> 0:06:51.320 is getting ships back out to sea from US ports 0:06:51.520 --> 0:06:54.920 and coming up next market recovery and potentially a looming 0:06:54.920 --> 0:06:58.000 correction and the risk reward of wider market access with 0:06:58.120 --> 0:07:01.480 John Rodgers, the co CEO of Real Investments. You're listening 0:07:01.520 --> 0:07:14.000 to Bloomberg Business Week. This is Bloomberg. This is Bloomberg 0:07:14.040 --> 0:07:17.640 Business Week with Carol Messer and Bloomberg Quick Takes. Tim 0:07:17.720 --> 0:07:22.480 Stinnoby from Bloomberg Radio, the next guest is well known 0:07:22.520 --> 0:07:25.480 to our audience and definitely the investment world. He's also 0:07:25.480 --> 0:07:28.240 on the board of Nike, McDonald's and The New York Times. 0:07:28.560 --> 0:07:31.520 He's also a powerful voice when it comes to racism 0:07:31.640 --> 0:07:35.080 and inequalities. Tim, we're talking about John Rogers, the chairman, 0:07:35.160 --> 0:07:38.200 co CEO and chief investment officer of our Real Investments. 0:07:38.360 --> 0:07:40.880 He spoke with Carrol and New York Deputy Bureau Chief 0:07:40.920 --> 0:07:44.720 Shartilla Brandtley about the benefits of business diversity, also his 0:07:44.800 --> 0:07:48.560 unique assessment of current market conditions. Check it out. I'm 0:07:48.600 --> 0:07:51.440 optimistic in this recovery is going to surprise people by 0:07:51.520 --> 0:07:53.920 strong it is. Now. Again, the downside is the recovery 0:07:54.000 --> 0:07:56.040 is so strong that it's going to force interest rates 0:07:56.080 --> 0:07:58.880 higher and inflation higher. So we have to be careful 0:07:58.920 --> 0:08:01.600 about companies that are gonna be susceptible to higher rates. 0:08:01.920 --> 0:08:05.240 But when you mentioned real estate real estate services companies, 0:08:05.280 --> 0:08:08.080 we like j l L, we like cbr E. We 0:08:08.160 --> 0:08:10.760 think those companies are gonna benefit from all the transactions 0:08:10.760 --> 0:08:14.360 as people restructure their real estate going forward. So things 0:08:14.360 --> 0:08:17.360 that are going to benefit from transition to a new economy, 0:08:17.720 --> 0:08:19.960 higher inflationary economy, those are the kind of small and 0:08:20.000 --> 0:08:23.040 midsized companies they were looking at and working onto the arial. 0:08:23.520 --> 0:08:27.600 Even as we see the return to office efforts not 0:08:27.920 --> 0:08:31.400 be as I guess accelerated as maybe some CEOs would 0:08:31.440 --> 0:08:33.920 like to see at this time. You know, it has 0:08:33.960 --> 0:08:36.640 been a sluggish here, at least here in America. But 0:08:36.679 --> 0:08:39.439 as we've done our worldwide checks, it's been remarkable how 0:08:39.440 --> 0:08:42.559 many of the European countries and Asian countries. You know, 0:08:42.600 --> 0:08:44.280 people have been eager to get the back to work, 0:08:44.320 --> 0:08:47.840 and people are filling up their office spaces. Here in America, 0:08:47.920 --> 0:08:50.040 maybe we'll go to three and four day weeks in 0:08:50.040 --> 0:08:52.960 the beginning and people will be slow to totally come 0:08:53.000 --> 0:08:56.920 back to normal. But I think you know, Americans were missing, 0:08:57.200 --> 0:09:00.280 our colleagues, were missing our friends. Business owners know that 0:09:00.320 --> 0:09:02.320 you need people in the office to be able to 0:09:02.400 --> 0:09:07.200 interact and inspire each other, share ideas, express different opinions, 0:09:07.200 --> 0:09:10.360 and move your companies forward. So eventually, over time, I 0:09:10.400 --> 0:09:13.520 think you can get back to more normality. Now, maybe 0:09:13.520 --> 0:09:15.800 people won't travel as much now that we've proven that 0:09:15.840 --> 0:09:18.760 we can do meetings by zoom, and so I would 0:09:18.760 --> 0:09:21.199 be a little cautious around some of the traditional hotels, 0:09:21.520 --> 0:09:26.400 traditional airlines. That people will still travel for entertainment and vacations, 0:09:26.400 --> 0:09:28.280 but I think there'll be a lot less business travel 0:09:28.320 --> 0:09:31.880 that is maybe permanent because of the extraordinary technology and 0:09:32.360 --> 0:09:34.880 things that we've gotten used to as a society. You 0:09:34.920 --> 0:09:37.360 did mention spacts. We had that headline the SPAC merger 0:09:37.440 --> 0:09:41.600 with space for momentous threatened by an SEC fine, whether 0:09:41.640 --> 0:09:44.360 it's meme stocks. How do you, as someone who has 0:09:44.400 --> 0:09:46.520 been investing in the market for a long time. You 0:09:46.600 --> 0:09:50.680 know that we see increasingly disruption. You see traditional fintech, 0:09:51.440 --> 0:09:56.160 traditional technology companies and also traditional banking companies. Financial companies 0:09:56.200 --> 0:09:59.200 increasingly gobble up some of these fin techs or at 0:09:59.240 --> 0:10:01.760 least look at them much more closely. How will they 0:10:01.920 --> 0:10:07.320 ultimately impact our universe or financially universe longer term? I 0:10:07.360 --> 0:10:09.960 think you will, you know, continue to see more and 0:10:10.040 --> 0:10:12.600 more mergers as time goes on. You know, one of 0:10:12.600 --> 0:10:17.400 our favorite stocks is Lazard, their traditional investment banker. They're 0:10:17.480 --> 0:10:20.280 really really good at putting deals together, and kN Jacobs, 0:10:20.280 --> 0:10:23.240 their CEO, is terrific and the team's terrific. So I 0:10:23.280 --> 0:10:25.400 think you're going to continue to see m and A. 0:10:25.480 --> 0:10:27.800 I know right now there's this push that maybe people 0:10:27.840 --> 0:10:31.120 are fearful in certain industries of too much consolidation and 0:10:31.160 --> 0:10:34.840 too much scale. But I just think over time rationality 0:10:34.920 --> 0:10:37.760 will come back, because you know, in this new society, 0:10:37.800 --> 0:10:40.640 with all the things going on digitally, there's just so 0:10:40.679 --> 0:10:43.079 many ways for companies to compete with each other effectively. 0:10:43.080 --> 0:10:44.920 And there are there are exceptions, of course, you know, 0:10:44.960 --> 0:10:47.800 the facebooks of the world and some of those giant 0:10:47.880 --> 0:10:51.000 companies that have become these huge unicorns. Well, maybe they 0:10:51.080 --> 0:10:54.280 need to be reined in on certain ways, but I 0:10:54.320 --> 0:10:57.360 think ultimately the vast majority of transactions will have to 0:10:57.480 --> 0:11:00.160 continue to occur because you need to have these need 0:11:00.160 --> 0:11:02.360 to have scale to compete with the giants. It would 0:11:02.360 --> 0:11:04.720 be unfair if the smaller and mid sized companies can't 0:11:04.800 --> 0:11:07.040 have M and A and have to compete a smaller 0:11:07.080 --> 0:11:11.360 companies against these huge, huge, monolithic giant companies that are 0:11:11.360 --> 0:11:14.120 out there in today's economy. If I can follow meme stocks, 0:11:14.160 --> 0:11:15.880 I mean, how often does somebody come up to you 0:11:16.000 --> 0:11:18.440 or you're at a social gathering on the weekend and 0:11:18.480 --> 0:11:20.000 someone's like, all right, John, what do you make of 0:11:20.040 --> 0:11:24.080 these meme stocks? Well, you know it's interesting. Um, we 0:11:24.160 --> 0:11:25.800 do get some of those calls. And you know the 0:11:26.320 --> 0:11:29.160 guy that's uh, you know, always brings my pizza from 0:11:29.400 --> 0:11:31.640 Geno's Pizza here in Chicago to my house. He's always 0:11:31.679 --> 0:11:34.520 asking about different stocks and what's happening with the meme stocks, 0:11:35.080 --> 0:11:37.280 and in particular, of course, everyone wants to talk about 0:11:37.320 --> 0:11:40.160 bitcoin and whether it's time to invest, and that they 0:11:40.200 --> 0:11:42.480 did they miss it or not miss it. But and 0:11:42.480 --> 0:11:44.240 then again, that's always a sign when you just have 0:11:44.320 --> 0:11:47.000 sort of average Americans who are doing great work in 0:11:47.040 --> 0:11:50.240 their day jobs deciding they want to be stock pickers 0:11:50.640 --> 0:11:53.920 and follow trends at the peak. Again, it's always a 0:11:53.960 --> 0:11:56.440 sign that you're getting toward the top, you know. And 0:11:56.440 --> 0:11:59.640 and I think those are signs that we really are there. 0:11:59.720 --> 0:12:02.680 And as you know, Joe Kennedy always said when he 0:12:02.800 --> 0:12:05.640 realized that we were the great depression was coming, it 0:12:05.679 --> 0:12:06.960 was time to get out of the market. In the 0:12:06.960 --> 0:12:10.559 twenties when the shoeshine boy was giving stock tips to him, uh, 0:12:10.600 --> 0:12:12.240 and he realized that was the time for him to 0:12:12.400 --> 0:12:15.000 move out of the markets. Well, let's talk about financial 0:12:15.040 --> 0:12:19.880 literacy and how that plays into alleviating your concerns. Well, 0:12:20.040 --> 0:12:21.640 you know, I think we need to continue to do 0:12:21.760 --> 0:12:24.280 more and more. We have just scratched the service when 0:12:24.280 --> 0:12:27.360 it comes to financial literacy. During the Obama administration, I 0:12:27.400 --> 0:12:29.560 had the privilege to be able to be able to 0:12:29.640 --> 0:12:33.880 chair his Council and Financial Capability for Young Americans, and 0:12:33.920 --> 0:12:35.880 we talked to the President about how can we get 0:12:35.880 --> 0:12:40.000 more financial institutions to partner with urban public schools to 0:12:40.160 --> 0:12:43.880 teach kids about the market, give kids real dollars to 0:12:43.960 --> 0:12:47.040 invest in real stocks. Be role models for young people 0:12:47.080 --> 0:12:50.679 of color to get engaged in the financial services sectors 0:12:50.720 --> 0:12:53.480 career choices. So I think we have a long way 0:12:53.480 --> 0:12:56.880 to go because this is so critically important. You know, 0:12:57.000 --> 0:12:59.760 African Americans get exposed to the markets at young ages. 0:13:00.240 --> 0:13:01.920 You know, we know the wealth gap in this country 0:13:01.920 --> 0:13:05.600 has gotten larger and larger. We've fallen further behind because 0:13:05.640 --> 0:13:08.199 of the historical discrimination that we faced in this country. 0:13:08.559 --> 0:13:10.640 So the way to catch up is to get folks 0:13:10.679 --> 0:13:13.000 involved in the best parts of the economy where the 0:13:13.040 --> 0:13:15.800 wealth and jobs are being created today, and learning about 0:13:15.840 --> 0:13:18.720 the magic of compound interest and getting comfortable in equities 0:13:19.040 --> 0:13:20.839 because we all know when you get a job now 0:13:20.920 --> 0:13:22.560 you have to be your own money manager with your 0:13:22.600 --> 0:13:25.560 four own K plan. So financial literacy is more important 0:13:25.559 --> 0:13:27.480 in this country than ever, John, How do we get there? 0:13:27.559 --> 0:13:30.000 The reason I ask is I actually came across a 0:13:30.040 --> 0:13:32.640 Federal Reserve paper that was done by our researcher about 0:13:32.640 --> 0:13:34.720 ten years ago. I think talking about the importance of 0:13:34.720 --> 0:13:39.480 financial literacy, I think about someone like you know, Wren Buffett, 0:13:39.520 --> 0:13:42.280 who talked about compound interests like knew it when he 0:13:42.320 --> 0:13:44.400 was at a young age. We have been talking about 0:13:44.400 --> 0:13:49.040 the importance of financial literacy across society for a long time, 0:13:49.240 --> 0:13:51.679 and I wonder, how do we really move the needle 0:13:51.679 --> 0:13:53.360 on this, because I agree that this is something that 0:13:53.480 --> 0:13:56.400 unlocks kind of the financial is the key that kind 0:13:56.400 --> 0:13:59.240 of unlocks financial wealth for more Americans, and certainly for 0:13:59.360 --> 0:14:01.280 Black America in you know, I think one of the 0:14:01.280 --> 0:14:02.720 things I talked about all the time. You know, my 0:14:02.760 --> 0:14:05.320 father bought stocks for me every birthday and every Christmas 0:14:05.360 --> 0:14:07.400 after I was twelve years old, and I got exposed 0:14:07.440 --> 0:14:09.360 to the markets at an early age and loved it. 0:14:09.760 --> 0:14:11.520 You know, there's a program in New York, New York 0:14:11.520 --> 0:14:13.920 City Rise that is doing that with young people, getting 0:14:13.960 --> 0:14:16.520 kids into five twenty nine programs that you know, right 0:14:16.559 --> 0:14:19.480 in kindergarten and on the way and at the Aerial 0:14:19.520 --> 0:14:22.160 Community Academy that's now twenty five years old. We give 0:14:22.240 --> 0:14:24.960 kids real money to invest in real stocks and they 0:14:25.000 --> 0:14:27.840 get to see the money grow from kindergarten through eighth grade. 0:14:28.480 --> 0:14:30.480 And I think that's just so important. You've got to 0:14:30.480 --> 0:14:33.280 get exposure, you know, get your hands a little dirty 0:14:33.320 --> 0:14:35.560 with the markets, learning how to do the research, seeing 0:14:35.560 --> 0:14:38.640 the inevitable ups and downs, but seeing how markets steadily 0:14:38.680 --> 0:14:41.720 climb even after you have some ups and downs. That 0:14:41.840 --> 0:14:45.000 was John Rogers, the chairman, co CEO and chief Investment 0:14:45.040 --> 0:14:48.000 Officer of Oriel Investments, and our thanks to Bloomberg Shartia 0:14:48.040 --> 0:14:49.880 Brantley as well. We talked about a lot of things, 0:14:49.880 --> 0:14:52.040 so if you want to hear the entire conversation, check 0:14:52.040 --> 0:14:54.680 it out on our podcast feed at Bloomberg dot com. 0:14:54.960 --> 0:14:58.120 Still ahead on Bloomberg Business Week, the aerospace and defense industry. 0:14:58.280 --> 0:15:01.360 It's of course an essential component a the US economy. 0:15:01.440 --> 0:15:04.120 It's people who actually make stuff. Our next guest is 0:15:04.200 --> 0:15:06.400 right in the middle of the latest advances in everything 0:15:06.440 --> 0:15:09.960 from airliners to missiles, and it's Raytheon Technology CEO Greg 0:15:10.040 --> 0:15:13.200 Hayes in the latest installment of our business Week talk series. 0:15:13.440 --> 0:15:20.520 This is Bloomberg Broadcasting from the financial capital of the World, 0:15:20.600 --> 0:15:24.080 Bloomberg Eleve in Frio in New York, to Washington, d C. 0:15:24.280 --> 0:15:29.000 Bloomberg to Boston, Bloomberg one oh six one to San Francisco, 0:15:29.040 --> 0:15:32.520 Bloomberg nine sixty to the country Sirius XM Chado one 0:15:32.560 --> 0:15:35.520 nine team and around the globe the Bloomberg Business app 0:15:35.640 --> 0:15:40.000 and Bloomberg Radio dot Com. This is Bloomberg Business Week. 0:15:41.040 --> 0:15:43.520 The chairman and CEO of the second largest defense company 0:15:43.520 --> 0:15:47.680 in the United States. He is Greg Hayes of Raytheon Technologies. He, 0:15:47.840 --> 0:15:50.320 by the way, became CEO following the completion of a 0:15:50.360 --> 0:15:54.840 merger involving Raytheon and United Technologies aerospace business. That was 0:15:54.880 --> 0:15:57.080 back in April of last year, when the pandemic really 0:15:57.120 --> 0:15:59.720 tightened its grips on the country. He talked about completing 0:15:59.720 --> 0:16:01.960 the d F the latest installment of our business Week 0:16:01.960 --> 0:16:05.960 talk series. Timmy also talked about his companies recovering aerospace business, 0:16:06.000 --> 0:16:10.120 defense systems, and the impact of inflation on his entire operation. 0:16:10.160 --> 0:16:12.320 He had some interesting thoughts on that and some of 0:16:12.320 --> 0:16:14.840 the comments by FED chief J. Powell. Here's some of 0:16:14.880 --> 0:16:18.240 that conversation with Greg Hayes, CEO of Raytheon. You know, 0:16:18.280 --> 0:16:20.760 I asked that questions, you know several weeks ago when 0:16:20.760 --> 0:16:23.720 I first heard German Paul talk about the effect of 0:16:23.920 --> 0:16:28.680 transitory price increases. And my concern there is what is 0:16:28.680 --> 0:16:32.080 really transitory, because if you start to see inflation in labor, 0:16:32.640 --> 0:16:35.920 that's not transitory because labor costs don't go down. They 0:16:35.920 --> 0:16:38.400 may go up more slowly. But what we're seeing right 0:16:38.400 --> 0:16:41.320 now is a lot of a lot of cost pressure 0:16:41.960 --> 0:16:44.360 at the very low end of the labor scale, and 0:16:44.360 --> 0:16:47.360 I don't think that goes away now. Will that translate 0:16:47.400 --> 0:16:50.680 into higher prices across all of the economic spectrum, I 0:16:50.680 --> 0:16:53.960 don't know. But we're also we're seeing inflation in commodities 0:16:54.200 --> 0:16:56.600 in some of the raw materials as well. It's impacting 0:16:56.640 --> 0:16:58.840 what you guys are doing absolutely every day, and so 0:16:59.320 --> 0:17:02.600 I worry the transitory, especially with all of these deficits 0:17:02.600 --> 0:17:05.240 that we're talking to and the half trillion dollar deficits. 0:17:05.520 --> 0:17:07.920 We're pumping a lot of money into the economy. People 0:17:07.960 --> 0:17:09.879 are flush with cash and they're going to spend it. 0:17:10.080 --> 0:17:12.159 That's going to drive prices up. Are we going to 0:17:12.240 --> 0:17:14.280 get off of that drug soon? I don't think so. 0:17:14.400 --> 0:17:16.000 Would you go as so far to say that FED 0:17:16.000 --> 0:17:18.000 policy is wrong based on what you're seeing in terms 0:17:18.040 --> 0:17:21.320 of economic growth and momentum from your clients and customers, Well, 0:17:21.359 --> 0:17:23.480 I don't know that. I would say German pol is 0:17:23.520 --> 0:17:25.959 necessarily wrong. I think we have to think about not 0:17:26.040 --> 0:17:29.199 just FED policy monetary policy, but fiscal policy. That is, 0:17:29.240 --> 0:17:32.520 how much can we continue to borrow and burden the 0:17:32.600 --> 0:17:35.440 next generation and the generation after that with these huge 0:17:35.520 --> 0:17:40.479 deficits just to satisfy our desire to have faster growth today, 0:17:40.880 --> 0:17:44.000 is it better to have slower, steadier growth that is 0:17:44.000 --> 0:17:47.040 more sustainable And I think that's the that's the calculus 0:17:47.040 --> 0:17:48.960 we have to think about. There's it's not just monetary 0:17:48.960 --> 0:17:51.120 it's fiscal policy as well. I want to talk about 0:17:51.119 --> 0:17:53.600 commercial aerospace. I'm just curious are your executives you and 0:17:53.680 --> 0:17:55.199 I were talking to how much you were able to 0:17:55.200 --> 0:17:57.400 work at home? Right, you weren't flying around on planes? 0:17:57.440 --> 0:18:01.160 Planes are important to you and what you do, Um, 0:18:01.200 --> 0:18:03.360 what do you anticipate for business travel? What are your 0:18:03.400 --> 0:18:06.159 guys doing in terms of business travel? So interestingly, you 0:18:06.200 --> 0:18:08.840 know what, we just really resumed business travel within the 0:18:08.920 --> 0:18:10.960 last month or so. I've been out on the road, 0:18:11.040 --> 0:18:14.400 visiting factories, talking to folks on the on the front 0:18:14.480 --> 0:18:16.960 lines and the shops and in the in the engineering 0:18:17.040 --> 0:18:20.600 organizations around the company, and we're starting to see it 0:18:20.680 --> 0:18:24.720 pick up. But certainly business travel is forever changed. I 0:18:24.720 --> 0:18:26.879 would think because of Zoom, we don't go back to 0:18:27.320 --> 0:18:30.959 pre pandemic level. Again, if you think about commercial air traffic, 0:18:31.000 --> 0:18:36.360 about seventy commercial air traffic is um for leisure that 0:18:36.440 --> 0:18:39.000 has come back, and it's come back faster, stronger than 0:18:39.040 --> 0:18:40.639 I think anybody would have said. Now you can just 0:18:40.760 --> 0:18:42.920 you know, talk to Gary Kelly at Southwest or Doug 0:18:42.920 --> 0:18:46.959 Park or American Thirty percent of business travel is the question. 0:18:47.480 --> 0:18:50.159 And what we think is like half of that of 0:18:50.200 --> 0:18:53.080 the total is mandatory travel. That is, we've got to 0:18:53.080 --> 0:18:55.880 send our technicians out to visit our products, We've got 0:18:55.880 --> 0:18:57.919 to service our products. That's going to come back, and 0:18:57.920 --> 0:19:00.720 it will come back relatively quickly. You know. Will we 0:19:00.760 --> 0:19:03.520 still see big conventions in Las Vegas? Will we still 0:19:03.520 --> 0:19:07.159 see you get together for sales conventions? I think that 0:19:07.200 --> 0:19:10.119 will come back. But there's the other question. Will all 0:19:10.200 --> 0:19:12.840 of it come back? And how soon our own views 0:19:12.840 --> 0:19:16.040 who probably don't see a full recovery in business travel 0:19:16.160 --> 0:19:21.200 until there's a lot of deals going on. You guys 0:19:21.240 --> 0:19:26.199 just finished a big deal combining assets and combining with 0:19:26.400 --> 0:19:29.639 United Technologies assets, and then you took over as the 0:19:29.680 --> 0:19:31.800 CEO of it all. Uh, And that was just as 0:19:31.800 --> 0:19:33.760 the pandemic was getting going. How tough was it to 0:19:33.800 --> 0:19:35.920 get that deal done? You have to really step back 0:19:35.960 --> 0:19:39.160 and think, you t see, over the last couple of years, 0:19:39.200 --> 0:19:40.840