WEBVTT - BI Weekend: FCC Policy, Citi Bonuses, US Earnings 0:00:02.920 --> 0:00:12.600 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:12.640 --> 0:00:14.400 with Alex Steina and Paul'sweenye. 0:00:14.520 --> 0:00:17.720 The real app performance has been the US corporate high yield. 0:00:17.880 --> 0:00:20.239 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:23.880 The semiconductor business is a really cyclical business. 0:00:23.600 --> 0:00:27.160 Breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:33.159 These are two big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:41.720 Bloomberg Intelligence with Alex Steinhall and Paul's Wheenye on Bloomberg Radio. 0:00:43.560 --> 0:00:46.080 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:46.120 --> 0:00:48.640 business stories impacting Wall Street and the global markets. 0:00:48.800 --> 0:00:50.680 Each and every week we provide in depth research and 0:00:50.760 --> 0:00:52.559 data on some of the two thousand companies and one 0:00:52.600 --> 0:00:55.160 hundred and thirty industries our analysts cover worldwide. 0:00:55.320 --> 0:00:57.240 Today, we'll look at how City Group is trying to 0:00:57.240 --> 0:00:58.800 prevent a departure of wealth. 0:00:58.560 --> 0:01:00.760 Bankers well as well look at why the tailor Best 0:01:00.760 --> 0:01:04.800 Buy is warning of uneven demand for its electronics and appliances. 0:01:05.120 --> 0:01:08.319 But first we begin with the tech media telecom space. 0:01:08.640 --> 0:01:11.679 Recently, president like Donald Trump shows Brendan Carr as the 0:01:11.720 --> 0:01:14.160 new chair of the Federal Communications Commission. 0:01:14.480 --> 0:01:17.760 As Chair, cars priorities include raining in big tech, ensuring 0:01:17.800 --> 0:01:21.399 broadcasters operate in the public interest, and unleashing economic growth. 0:01:21.520 --> 0:01:23.240 For more and what to expect, we were joined by 0:01:23.280 --> 0:01:26.440 Matthew Shettenhelm, Bloomberg Intelligence media litigation analyst. 0:01:26.640 --> 0:01:28.759 We first asked Matthew about the scrutiny a big tech 0:01:28.760 --> 0:01:30.640 will face under the new Trump administration. 0:01:31.120 --> 0:01:33.560 I think in one sense, I think you'll see Congress 0:01:33.600 --> 0:01:37.640 a little less aggressive, it moving forward with data privacy 0:01:37.800 --> 0:01:41.679 type legislation that Democrats tended to promote. But where you're 0:01:41.760 --> 0:01:45.440 going to see the risk and where I think I'm 0:01:45.440 --> 0:01:49.240 prenominantly focused right off the bat is on big tech's 0:01:49.320 --> 0:01:52.880 liability shield. This is a provision of law that's been 0:01:52.920 --> 0:01:57.480 in place since nineteen ninety six that keeps Google and 0:01:57.600 --> 0:02:01.080 Meta and other social media companies from being sued every 0:02:01.120 --> 0:02:04.960 time someone posts something harmful on social media. What you're 0:02:04.960 --> 0:02:08.880 seeing from the conservative side is increasing attacks on that, 0:02:08.960 --> 0:02:11.040 and I think you could see a proceeding at the 0:02:11.120 --> 0:02:16.120 FCC try to really focus and amplify those calls to 0:02:16.240 --> 0:02:19.200 cut into the liability shield that's been so important for 0:02:19.240 --> 0:02:20.000 those companies. 0:02:20.400 --> 0:02:24.120 Does the FCD, FCC can they change it or can 0:02:24.160 --> 0:02:26.880 they just sort of mold it on the sidelines. 0:02:27.440 --> 0:02:29.359 Yeah, that's that's a great question. 0:02:29.520 --> 0:02:32.840 The interesting thing is is this liability shield is tucked 0:02:32.880 --> 0:02:37.480 into the Communications Act that the FCC administers. So during 0:02:37.480 --> 0:02:41.120 the first Trump administration, the FCC took the position, hey, 0:02:41.160 --> 0:02:44.240 we can make rules under this because it's it's. 0:02:44.080 --> 0:02:44.679 In our law. 0:02:44.800 --> 0:02:47.000 We can implement it, but they never got around to 0:02:47.080 --> 0:02:50.320 doing it. I think the Trump administration this time is 0:02:50.400 --> 0:02:52.959 going to try to move ahead with that and say, look, 0:02:53.000 --> 0:02:55.919 we implement the Communications Act, the liability shield is tucked 0:02:55.919 --> 0:02:56.280 in there. 0:02:56.560 --> 0:02:57.480 We can make rules. 0:02:57.800 --> 0:03:00.800 What's changed since then is that the Chevron doctrine has 0:03:00.840 --> 0:03:04.160 been struck down, the Major Questions doctrine has arisen. 0:03:04.520 --> 0:03:05.600 There's a real doubt. 0:03:05.720 --> 0:03:09.560 I'm very skeptical that the FCC can bind the courts 0:03:09.680 --> 0:03:12.360 in how to apply this liability shield. But in some 0:03:12.400 --> 0:03:14.800 ways that's not the point. The point is sort of 0:03:14.840 --> 0:03:19.960 to amplify the idea that courts or that Congress should 0:03:20.080 --> 0:03:22.200 change the shield. And I think that's what you're going 0:03:22.240 --> 0:03:25.560 to see a Brendan car Let FCC do is say, look, 0:03:25.800 --> 0:03:29.400 even if we can't change the liability shield as an agency. 0:03:29.680 --> 0:03:32.040 We're going to tell you how to do that and 0:03:32.160 --> 0:03:36.840 amplify the momentum for Congress or the Supreme Court potentially 0:03:36.880 --> 0:03:37.760 to do it itself. 0:03:38.680 --> 0:03:41.840 So what do we know about the apparent FCC chair, 0:03:41.920 --> 0:03:45.360 Brendan Carr, and what should we expect from a Republican 0:03:45.400 --> 0:03:47.840 controlled FCC. What do we know about that, mister Carr. 0:03:48.440 --> 0:03:52.360 Yeah, so Brendan Carr is the most senior Republican at 0:03:52.360 --> 0:03:58.040 the FCC who knows communications law inside and out. But 0:03:58.120 --> 0:04:01.160 he also knows how to play the politics around the 0:04:01.240 --> 0:04:05.160 FCC better than anyone else there. And so he's going 0:04:05.240 --> 0:04:09.120 to do his best to make sure that he's implementing 0:04:09.280 --> 0:04:13.200 President Trump's agenda. And so while Brendan Carr is a 0:04:13.200 --> 0:04:18.599 traditional sort of free market Republican, he's also very sympathetic 0:04:18.680 --> 0:04:21.839 to the idea that there's sort of a bias against 0:04:21.839 --> 0:04:27.760 conservatives among elite media, and he's very sympathetic to supporting 0:04:27.839 --> 0:04:30.760 President Trump on that message. And so that's why you 0:04:30.839 --> 0:04:35.520 see proceedings like this going after big tech companies, potentially 0:04:35.560 --> 0:04:40.080 going after broadcasters and threatening to take away their licenses. 0:04:40.120 --> 0:04:41.839 So there's going to be a little bit of this 0:04:41.920 --> 0:04:45.080 sort of Okay, let's deregulate the democrats of regulator too much. 0:04:45.080 --> 0:04:49.320 But there's also this concern about bias against conservatives and 0:04:50.200 --> 0:04:52.279 that it's gone too much in that direction, and Brendan 0:04:52.320 --> 0:04:53.680 Carr is going to support both. 0:04:54.480 --> 0:04:56.440 So if I take a look at the actual equities 0:04:56.480 --> 0:05:00.159 that are involved, what does it mean for them? If 0:05:00.160 --> 0:05:01.919 I'm an investor and I'm looking at this, how do 0:05:02.000 --> 0:05:03.599 I price it, how do I model it? How do 0:05:03.600 --> 0:05:04.280 I think about it? 0:05:05.040 --> 0:05:05.279 To me? 0:05:05.440 --> 0:05:07.760 The I mean the biggest risk is you think about 0:05:07.760 --> 0:05:11.800 the liability shield falling away if it goes you know, 0:05:11.880 --> 0:05:16.239 in the most extreme approach, you're you're you're thinking about 0:05:16.279 --> 0:05:20.000 the big social media companies. You're thinking about Meta, you're 0:05:20.000 --> 0:05:23.839 thinking about alphabet, and you're thinking about creating a whole 0:05:23.960 --> 0:05:29.240 new field of litigation with those companies as the targets. 0:05:29.720 --> 0:05:33.760 And so you've seen a couple big settlements from those companies. 0:05:33.839 --> 0:05:36.960 With the liability shield in place, you can think about 0:05:36.960 --> 0:05:41.200 that being amplified many times over with class actions and 0:05:41.279 --> 0:05:41.839 other suits. 0:05:42.000 --> 0:05:43.839 Anytime content that's. 0:05:43.640 --> 0:05:46.400 Posted on the social on social media causes harm in 0:05:46.440 --> 0:05:49.440 the real world, you can think of limitless examples of 0:05:49.720 --> 0:05:53.200 the harm it causes anytime that that there's harm, you 0:05:53.240 --> 0:05:56.680 potentially have a lawsuit. And so I think it sort 0:05:56.720 --> 0:05:59.080 of changes the equation in terms of the cost those 0:05:59.120 --> 0:06:02.880 companies could fail in terms of potential liability if if 0:06:02.920 --> 0:06:04.839 the liability shield were wiped away? 0:06:05.240 --> 0:06:09.599 Will there be looser ownership riggish regulations on media? David 0:06:09.640 --> 0:06:12.000 Zasov from Warner Brothers Discoveries asking. 0:06:12.480 --> 0:06:15.320 Yeah, so, I absolutely So. 0:06:15.400 --> 0:06:18.520 The Republicans at the FCC have historically been, you know, 0:06:18.520 --> 0:06:22.119 they're tired of this idea of media ownership of broadcasters 0:06:22.360 --> 0:06:25.800 that they said, look, there's so much new competition for broadcasters. 0:06:26.040 --> 0:06:29.600 The problem is that there's first this political angle from 0:06:29.680 --> 0:06:33.320 President Trump saying, look they edited my sixty minutes interview wrong, 0:06:33.760 --> 0:06:36.200 And so Brendan Carr at first is kind of latching 0:06:36.200 --> 0:06:39.880 onto that political arguments. Let's go after that first. So 0:06:39.920 --> 0:06:41.960 I think media ownership sort of lurking in the background. 0:06:42.000 --> 0:06:44.599 I think they'll get there after this political noise sort 0:06:44.600 --> 0:06:45.280 of dies down. 0:06:45.839 --> 0:06:45.919 Right. 0:06:45.960 --> 0:06:50.080 Thanks to Matthew Shettenhelm, Bloomberg Intelligence media litigation analyst. 0:06:50.040 --> 0:06:52.560 This week, we focused on a Bloomberg Big Take story 0:06:52.680 --> 0:06:55.799 entitled Amazon prepares to go toe to toe with Nvidia 0:06:55.880 --> 0:06:56.800 in AI hardware. 0:06:56.880 --> 0:06:58.880 You can find it on Bloomberg dot Com and the Terminal, 0:06:58.920 --> 0:07:00.640 and the story looks at how amaz On is loosening 0:07:00.720 --> 0:07:02.880 and Video's grip on the one hundred million dollar plus 0:07:02.920 --> 0:07:04.120 market for AI chips. 0:07:04.279 --> 0:07:06.320 For more on this story, we are joined by Matt Day, 0:07:06.360 --> 0:07:07.719 Bloomberg Technology reporter. 0:07:08.040 --> 0:07:10.520 We first asked Matt for more context on the journey 0:07:10.560 --> 0:07:13.200 that Amazon has gone on when it comes to innovation 0:07:13.440 --> 0:07:14.080 and chips. 0:07:14.560 --> 0:07:16.440 So Amazon gets a lot of credit for inventing the 0:07:16.440 --> 0:07:19.920 cloud computing market and basically rented computing power, data storage 0:07:19.920 --> 0:07:21.760 all over the Internet. What they don't get so much 0:07:21.800 --> 0:07:23.760 credit for is building a lot of the hardware behind it. 0:07:23.800 --> 0:07:26.000 So you go back fifteen years and they started building 0:07:26.040 --> 0:07:28.880 their own servers, their own networking switches. Eventually they got 0:07:28.880 --> 0:07:32.520 onto to silicon to chips themselves. That's where they find 0:07:32.520 --> 0:07:34.560 themselves today is you know, they didn't set out to 0:07:34.720 --> 0:07:38.560 necessarily try to upset in video, but because they've been 0:07:38.560 --> 0:07:40.720 working on machine learning chips for the past you know, 0:07:40.800 --> 0:07:43.560 call it five six years, they have a chip they 0:07:43.560 --> 0:07:45.160 think is arriving at the right time. 0:07:45.840 --> 0:07:50.440 Talk to us about what Amazon's folks in Austin, Texas 0:07:50.480 --> 0:07:52.040 are doing what's going on that down. 0:07:51.880 --> 0:07:55.680 There, So Austin, it's a tech mecha, especially for hardware, 0:07:56.160 --> 0:07:59.880 dating back to IBM and Dell, and Amazon focuses there 0:08:00.080 --> 0:08:03.760 machine learning chip testing there. They're chip engineering down there. 0:08:03.800 --> 0:08:07.280 So myself a colleague paid a visit down there last 0:08:07.320 --> 0:08:11.320 month and there it's really a scrappy vibe. The place 0:08:11.400 --> 0:08:14.800 isn't isn't particularly pristine. There's just stuff strewn all over 0:08:14.800 --> 0:08:17.400 the place, as the story notes. But that's a little 0:08:17.440 --> 0:08:19.480 bit of the Amazon engineering ethos at work, right. They 0:08:19.480 --> 0:08:21.920 don't have to push the limits of performance, they don't 0:08:21.920 --> 0:08:23.320 have to make it real pretty. They just have to 0:08:23.320 --> 0:08:25.160 build a part that works, a part. They can build 0:08:25.200 --> 0:08:27.320 a whole lot of them in a pretty short period 0:08:27.360 --> 0:08:28.560 of time. And so that's what they're trying to do 0:08:28.560 --> 0:08:30.440 now is get those chips out to the data centers 0:08:30.480 --> 0:08:31.080 before the end. 0:08:30.960 --> 0:08:31.320 Of the year. 0:08:31.720 --> 0:08:33.600 Now is the idea that, hey, in video, we don't 0:08:33.600 --> 0:08:35.400 need you anymore at all? Or is it just sort 0:08:35.400 --> 0:08:37.480 of like we can also do this and there's room 0:08:37.559 --> 0:08:39.360 to everyone to play on different levels. 0:08:40.200 --> 0:08:42.520 Yeah, no, not at all about replacing all of Nvidia. 0:08:42.520 --> 0:08:44.240 And if you get any Amazon exec talking about it, 0:08:44.240 --> 0:08:45.880 the first sentence out of their mouth is going to 0:08:45.920 --> 0:08:47.559 be you know, we recognize in video has got a 0:08:47.559 --> 0:08:48.960 great product and it's going to be around for a 0:08:48.960 --> 0:08:50.520 long long time, you know, I said, And I don't 0:08:50.520 --> 0:08:52.480 have any hard numbers in front of me, and Amazon 0:08:52.520 --> 0:08:54.679 folks wouldn't speculate, but I think they'd consider this a 0:08:54.720 --> 0:08:57.000 victory if they could just take some of that some 0:08:57.080 --> 0:08:59.040 of that portion of the Nvidia demand. They already are 0:08:59.040 --> 0:09:01.360 serving today with video chips in their data centers. 0:09:01.720 --> 0:09:05.520 So in Vidia's biggest customers, they're big companies like Amazon, 0:09:05.640 --> 0:09:10.040 like Microsoft, like Alphabet, and all of those customers are 0:09:10.080 --> 0:09:13.600 trying to build their own chips. How is Amazon kind 0:09:13.600 --> 0:09:15.800 of positioned relative to all those players. 0:09:16.760 --> 0:09:19.320 I think one thing Amazon definitely has an advantage over 0:09:19.400 --> 0:09:22.000 its its nearest cloud rival, Microsoft, and that they started 0:09:22.040 --> 0:09:24.719 a lot earlier. Microsoft only started building its chips a 0:09:24.720 --> 0:09:27.800 couple of years ago. Amazon's been doing this since twenty thirteen, 0:09:27.880 --> 0:09:29.800 twenty fourteen, and they all kind of came to the 0:09:29.800 --> 0:09:32.839 same realization, which is that you know, listen, ultimately, a 0:09:32.920 --> 0:09:35.320 data center is just a big computer, right Like we 0:09:35.360 --> 0:09:37.920 think of computers as laptops or maybe a single rack 0:09:37.960 --> 0:09:40.400 of servers. But one of the things that the cloud 0:09:40.440 --> 0:09:42.880 revolution has done is it's allowed these companies to say, Okay, 0:09:42.880 --> 0:09:44.440 wait a minute, how is this going to work if 0:09:44.480 --> 0:09:47.600 instead of one of them in a server, I have 0:09:47.600 --> 0:09:49.440 one hundred thousand of them spread over a data center 0:09:49.520 --> 0:09:50.320 or multiple buildings. 0:09:50.360 --> 0:09:50.480 Right? 0:09:50.520 --> 0:09:53.200 How does the computer work in that situation? And that's 0:09:53.240 --> 0:09:55.280 one of the things that Generative AI and all these 0:09:55.440 --> 0:09:58.360 real hard intensive training runs have kind of forced them 0:09:58.400 --> 0:10:00.480 to do is think about these you know it, sprawling 0:10:00.559 --> 0:10:02.400 data centers as computers in and of themselves. 0:10:02.760 --> 0:10:05.520 Now, you guys went to some of these places where 0:10:05.559 --> 0:10:08.439 they're trying to build these chips. Can you describe what 0:10:08.480 --> 0:10:11.200 it's like, because we're looking at a bazillion dollar company 0:10:11.240 --> 0:10:14.640 in Amazon, right, But the what you described is not that. 0:10:15.960 --> 0:10:17.400 Oh yeah, I looked a little bit like a popour 0:10:17.400 --> 0:10:19.640 rerac at a hardware store, right at a drill press 0:10:19.640 --> 0:10:21.800 in a corner, they had a vacuum sealer and under 0:10:21.840 --> 0:10:24.640 that was one of those slow ovens to kind of 0:10:24.840 --> 0:10:26.920 dry things out dehumidifier. 0:10:26.280 --> 0:10:27.320 Maybe that's not the right word. 0:10:27.720 --> 0:10:29.679 But there's a lot of hardware sitting around, and a 0:10:29.679 --> 0:10:31.080 lot of it's really high tech, a lot of it's 0:10:31.080 --> 0:10:33.400 really expensive, you know, but the Vibe again, was just 0:10:33.800 --> 0:10:35.880 an engineering crew trying to go as fast as they 0:10:35.920 --> 0:10:38.640 can to put chips in the hand of their customers, 0:10:38.679 --> 0:10:40.920 you know, an Amazon's case, that's their own data centers. 0:10:41.320 --> 0:10:42.719 But there's a funny moment while we were there. The 0:10:42.720 --> 0:10:44.880 guy who runs the lab, a guy called Romney Sino, 0:10:45.000 --> 0:10:47.440 was yelling over to a colleague of his basically, what's 0:10:47.480 --> 0:10:49.000 your job, and the job is to ship things to 0:10:49.040 --> 0:10:49.560 data centers. 0:10:49.600 --> 0:10:49.720 Right. 0:10:49.720 --> 0:10:52.040 They're not there to push the limits of engineering. They're 0:10:52.040 --> 0:10:54.160 there to reliably, you know, ship product out and get 0:10:54.200 --> 0:10:55.920 it in the hands of their business customers. 0:10:56.000 --> 0:10:58.360 What are the customers saying about the Amazon chips? How 0:10:58.400 --> 0:11:00.360 are these Amazon chips performing in the market place? 0:11:00.679 --> 0:11:03.800 And so the Amazon has only started just started rolling 0:11:03.800 --> 0:11:05.520 out its latest chip. You know what we know from 0:11:05.520 --> 0:11:07.360 the first version is you know, it's not as good 0:11:07.400 --> 0:11:11.000 as in Nvidia. And that's particularly clear on the software level, right, 0:11:11.080 --> 0:11:12.880 I mean, no matter how good a piece of hardware is, 0:11:12.920 --> 0:11:16.000 if you can't access it with ease, that's going to 0:11:16.040 --> 0:11:17.960 be a problem for you. And that's where Nvidia has 0:11:18.080 --> 0:11:20.360 just a huge advantage. You know, they've got the open 0:11:20.360 --> 0:11:23.800 source community behind them building libraries and tools so that 0:11:23.840 --> 0:11:25.800 almost any AI thing you want to do, you can 0:11:25.840 --> 0:11:28.480 accomplish it on an navidiate ship. And so that's what 0:11:28.720 --> 0:11:30.920 customers have told us is the big hurdle for Amazon. 0:11:31.000 --> 0:11:33.440 You know. Now, Amazon is offering it's early adopter some help. 0:11:33.559 --> 0:11:35.760 They will, you know, send you engineers and help customize 0:11:35.760 --> 0:11:37.760 your work for their chips, but that's not going to 0:11:37.880 --> 0:11:39.680 scale in the long term. They're hoping they can build 0:11:39.679 --> 0:11:41.520 a software package that makes it real easy to use 0:11:41.520 --> 0:11:43.200 their hardware, but they're not there yet. 0:11:43.400 --> 0:11:46.280 Who are the geniuses behind this in Amazon? Where the names? 0:11:47.400 --> 0:11:49.160 So the main one who gets a lot of credit 0:11:49.160 --> 0:11:50.920 for it, and probably doesn't get enough outside of tech 0:11:50.960 --> 0:11:54.640 circles is James Hamilton. He's a longtime engineer at IBM 0:11:54.679 --> 0:11:57.480 and at Microsoft who Amazon poached real early into their 0:11:57.480 --> 0:12:00.120 cloud competing experiment back in two thousand and nine, and 0:12:00.160 --> 0:12:02.920 it was partly his suggestion that the company should get 0:12:02.920 --> 0:12:04.760 into the hardware business. Right He was looking at their 0:12:04.760 --> 0:12:07.880 costs and saying, listen, why are we paying Dell HP 0:12:08.120 --> 0:12:09.719 for all of these servers with a bunch of high 0:12:09.760 --> 0:12:11.520 end functions we don't need. We could build a cheaper 0:12:11.559 --> 0:12:13.880 mousetrap and if it's just good enough for us, then 0:12:13.920 --> 0:12:16.120 we can pass those savings onto our customers. So it 0:12:16.160 --> 0:12:18.679 really started this snowball of just Amazon getting into more 0:12:18.679 --> 0:12:21.120 and more corners of hardware that previously, you know, they 0:12:21.160 --> 0:12:23.600 hadn't really had much interest in, and that's really paid 0:12:23.640 --> 0:12:26.439 off in terms of how profitable the cloud businesses for Amazon. 0:12:26.880 --> 0:12:29.280 Our thanks to Matt Dave, Bloomberg Technology. 0:12:28.760 --> 0:12:32.200 Reporter, coming up a conversation with the CEO of bloom Energy. 0:12:32.480 --> 0:12:35.280 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:35.320 --> 0:12:37.640 depth research and data on two thousand companies and one 0:12:37.760 --> 0:12:40.760 hundred and thirty industries. You can access Bloomberg Intelligence via 0:12:40.840 --> 0:12:42.720 bi Go on the terminal, Paul Sweet and. 0:12:42.720 --> 0:12:46.520 A Malex Steel and this is Bloomberg. 0:12:50.240 --> 0:12:54.120 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:54.200 --> 0:12:57.679 weekdays at ten am Eastern on applecarplaying nbroud Otto with 0:12:57.720 --> 0:13:00.760 the Bloomberg Business app. Listen on demand wherever you get 0:13:00.840 --> 0:13:03.600 your podcasts, or watch us live on YouTube. 0:13:05.640 --> 0:13:07.800 We moved next to the Banking Space and Citygroup. 0:13:08.040 --> 0:13:09.640 This week we looked at a story on the Bloomberg 0:13:09.760 --> 0:13:13.000 Terminal and at Bloomberg dot Com entitled City Bonuses by 0:13:13.120 --> 0:13:16.120 time for New Wealth boss rush to revamp. 0:13:15.960 --> 0:13:18.880 And looked at how Citygroup's new CEO, Andy sigg Green 0:13:18.960 --> 0:13:22.400 led special retention bonuses for dozens of personnel for more 0:13:22.400 --> 0:13:24.680 and all of this means. We were drawn by Katherine Doherty, 0:13:24.679 --> 0:13:25.840 Bloomberg Finance reporter. 0:13:26.520 --> 0:13:28.520 We first asked Catherine how things are going now for 0:13:28.640 --> 0:13:29.520 Citygroup and it's. 0:13:29.400 --> 0:13:33.199 New CEO, Andy is one year into his new role, 0:13:33.720 --> 0:13:38.760 and he came into it with a lot of difficulties. 0:13:38.880 --> 0:13:40.320 And the basic. 0:13:40.120 --> 0:13:44.600 Infrastructure that City was working with in their wealth division 0:13:45.080 --> 0:13:50.360 was something that had been lagging peers. It was way 0:13:50.440 --> 0:13:55.400 behind in terms of speed execution. And really that was 0:13:55.480 --> 0:13:58.920 something that Andy had focused on right when he came in. 0:14:00.080 --> 0:14:03.720 And upgrading the technology was one thing. Then bringing talent 0:14:04.000 --> 0:14:07.920 was kind of the second pillar to improving the wealth division. 0:14:08.760 --> 0:14:12.559 And keeping talent is the hardest part about building a 0:14:12.640 --> 0:14:16.840 wealth business across Wall Street because it's a very competitive business. 0:14:17.280 --> 0:14:20.920 The pay is oftentimes used as a way to lure 0:14:21.480 --> 0:14:26.200 experienced advisors to competitors, and so not only are you 0:14:26.280 --> 0:14:29.720 trying to focus on keeping that talent, the talent is 0:14:29.840 --> 0:14:32.600 tied to the assets that they're managing for their clients. 0:14:32.640 --> 0:14:37.000 So anytime you lose some big advisors with millions or 0:14:37.000 --> 0:14:40.720 even billions in assets. That's going to affect your business 0:14:40.800 --> 0:14:46.520 moving forward. So Andy had a very big agenda in 0:14:46.600 --> 0:14:48.440 front of him in terms of having to clean up, 0:14:48.560 --> 0:14:52.040 and not just clean up, but then improve cities wealth 0:14:52.080 --> 0:14:55.560 business so that it could truly compete with the big 0:14:55.640 --> 0:14:56.640 peers on Wall Street. 0:14:56.760 --> 0:14:59.680 Yeah, because like when I think of Morgan Stanley, I 0:14:59.760 --> 0:15:02.200 think of wealth management I use, and that's different. When 0:15:02.200 --> 0:15:03.680 I grew up in the business, I thought about them 0:15:03.680 --> 0:15:06.480 as sales and trading and investment banking City I don't 0:15:06.520 --> 0:15:10.280 necessarily think of wealth as part as a kind of 0:15:10.320 --> 0:15:12.440 a growth driver for them. But I know in their 0:15:12.480 --> 0:15:15.680 private bank, which generates two point three billion dollars in revenue, 0:15:16.160 --> 0:15:19.680 it is high touch service for the wealthiest clients, including 0:15:19.800 --> 0:15:23.520 a quarter of the world's billionaires minimum net worth twenty 0:15:23.560 --> 0:15:26.600 five million dollars. So is this a situation for City 0:15:26.680 --> 0:15:28.480 that Jane Fraser has to just put a flag in 0:15:28.520 --> 0:15:31.600 a ground say this is a core business for City 0:15:31.680 --> 0:15:33.000 and we will invest Accordingly. 0:15:33.480 --> 0:15:36.360 Private bank is definitely one of their money makers. You 0:15:36.400 --> 0:15:39.640 can see that in the numbers. But also if you 0:15:39.800 --> 0:15:43.480 think two tiers down, you have City Gold and this 0:15:43.640 --> 0:15:46.880 is clients with avery average monthly balances of at least 0:15:46.920 --> 0:15:50.280 two hundred thousand, So it's definitely not at the private 0:15:50.320 --> 0:15:53.320 bank tier. The private bank tier. Why they're trying to 0:15:53.480 --> 0:15:57.800 keep that part of the wealth business up is because 0:15:58.000 --> 0:16:00.880 that's where the biggest assets are. That's where the revenue 0:16:00.960 --> 0:16:04.640 really gets generated when you have the wealthiest and it's 0:16:04.720 --> 0:16:09.680 not just Americans, it's oftentimes billionaires in Asia. They're really 0:16:09.760 --> 0:16:12.840 focused on growing their business outside of the US, which 0:16:12.920 --> 0:16:16.080 is different from some of the other big Wall Street 0:16:16.160 --> 0:16:19.960 banks that are more US focused in terms of building 0:16:20.040 --> 0:16:24.920 up their own private bank assets. And so City, their 0:16:24.960 --> 0:16:27.240 private bank, I would say, was their strong suit and 0:16:27.280 --> 0:16:30.040 continues to be their strong suit, but it doesn't mean 0:16:30.080 --> 0:16:31.800 that that's going to stay that way. So they really 0:16:31.880 --> 0:16:35.760 have to remain competitive keep their advisors that are catering 0:16:35.880 --> 0:16:38.880 to the wealthiest individuals, not just in the US but 0:16:39.040 --> 0:16:39.800 across the globe. 0:16:39.920 --> 0:16:42.840 Did they lose advisors because they were posed or because 0:16:42.840 --> 0:16:44.600 they let them go because they were revamping it and 0:16:44.800 --> 0:16:46.160 it so it's a combination. 0:16:47.520 --> 0:16:51.800 Just last week we reported that two of City's former 0:16:51.880 --> 0:16:55.240 private bank advisors defected to go to Bank of America. 0:16:55.400 --> 0:16:58.480 Actually in their private bank, which is interesting because that's 0:16:58.480 --> 0:17:01.200 where Andy Sig had come. You worked in the Meryl division. 0:17:01.280 --> 0:17:04.200 But still it's under the Bank of America umbrella and 0:17:04.680 --> 0:17:08.920 those two advisors they brought seven billion of assets that 0:17:09.000 --> 0:17:12.879 they managed. So that was a big kick to City. 0:17:13.000 --> 0:17:15.000 And so when you see that, but it's not i 0:17:15.040 --> 0:17:19.240 would say unique just to City. There's stories like that 0:17:19.400 --> 0:17:22.800 all the time of some of these really big advisors 0:17:23.000 --> 0:17:26.720 bringing their team to a competitor and oftentimes they're just 0:17:26.760 --> 0:17:30.800 looking for it's opportunity and most of the time that 0:17:30.880 --> 0:17:34.000 opportunity is translated and in pay all. 0:17:33.920 --> 0:17:36.960 Right, our thanks to Catherine Doherty, Bloomberg Finance Reporter. We 0:17:37.080 --> 0:17:39.560 move next to the energy space. The fuel cell maker 0:17:39.640 --> 0:17:43.040 Bloom Energy recently signed a landmark supply agreement with American 0:17:43.200 --> 0:17:46.679 Electric Power for up to one gigawatt of fuel cells 0:17:46.680 --> 0:17:50.560 and this marks the latest commercial procurement of fuel cells globally. 0:17:51.000 --> 0:17:52.520 For more and all of this, we were joined by 0:17:52.600 --> 0:17:56.200 k R. Sweetheart, CEO of bloom Energy. We first asked 0:17:56.280 --> 0:17:57.879 k Are how this deal came about. 0:17:58.320 --> 0:18:01.639 So we have being more with data centers for a 0:18:01.760 --> 0:18:05.320 very long time. Now we have over three hundred megawarts 0:18:05.400 --> 0:18:08.399 in multiple data centers, across the country. These are the 0:18:08.480 --> 0:18:11.600 smaller data centers called the edge data centers that are 0:18:11.680 --> 0:18:14.960 located where customers are somewhere in the five to ten 0:18:15.119 --> 0:18:18.679 megawat range in a particular site. So we have transacted 0:18:18.760 --> 0:18:20.960 close to three hundred megawarts, so we are a known 0:18:21.000 --> 0:18:25.400 player to data centers. Now with the hyperscalers, what's the difference, 0:18:25.520 --> 0:18:29.800 it's a much larger data centers. These are now particularly 0:18:30.000 --> 0:18:33.359 more important in terms of growth because of AI and 0:18:33.480 --> 0:18:38.040 the amount of power they need. And currently these hyperscalers, 0:18:38.080 --> 0:18:43.080 as they're growing very fast, the transmission distribution is not 0:18:43.280 --> 0:18:46.800 able to keep up with providing those hundreds of megawarts 0:18:46.840 --> 0:18:48.960 of power right at the site where you need it 0:18:49.320 --> 0:18:51.560 within the time that you need it maybe five to 0:18:51.640 --> 0:18:53.639 six years. They may be able to provide the power, 0:18:54.040 --> 0:18:56.720 but the data center really wants it today, they want 0:18:56.800 --> 0:19:02.679 it now. So we are perfectly under those circumstances because 0:19:02.840 --> 0:19:05.480 our Bloom Energy servers can be deployed in a matter 0:19:05.600 --> 0:19:10.240 of months right where the customer is, thereby not worrying 0:19:10.320 --> 0:19:15.800 about the transmission distribution gridlock and providing that reliable, clean, 0:19:16.080 --> 0:19:19.480 always on power to the data center. So that's the 0:19:19.600 --> 0:19:24.960 reason this happened, and here what happened is the electricity 0:19:25.080 --> 0:19:29.840 provider AEP said, we don't make nuclear power plants, we 0:19:29.960 --> 0:19:34.120 don't make gas turbance, we don't make fuel cells. We're agnostic. 0:19:34.200 --> 0:19:38.040 We'll buy your systems and similar to us using those 0:19:38.119 --> 0:19:41.560 other power sources to provide power to the customer. Here 0:19:41.640 --> 0:19:43.600 we can take your fuel cells and take the power 0:19:43.680 --> 0:19:46.320 you produce and give it to the data center. However, 0:19:46.480 --> 0:19:50.080