Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Tim, one of the things the consequences of the pandemic,
Speaker 2: that's maybe one of the more positive bits that's come
Speaker 2: out of the past couple of years is that women
Speaker 2: in the United States have made historic gains in terms
Speaker 2: of labor force participation in recent months. The participant pation
Speaker 2: rate for women aged twenty five to fifty four in particular,
Speaker 2: hit seventy seven point eight percent in June. That is
Speaker 2: an all time record since that data was started to
Speaker 2: be collected back in the nineteen forties. But now all
Speaker 2: of that might be at risk because twenty four billion
Speaker 2: dollars in pandemic era government aid for takecare providers is
Speaker 2: set to run out at the end of September.
Speaker 3: That's bad news, really bad news.
Speaker 2: I mean, it's such an important part of keeping women
Speaker 2: in the workforce, and so for that I want to
Speaker 2: bring in Read Pickert. She wrote this great story we
Speaker 2: have out on Bloomberg dot com in the Bloomberg terminal.
Speaker 2: Right now, she's the US Economy reporter and she joins
Speaker 2: us from our Washington DC bureau. Read first, tell me
Speaker 2: why are daycares so on the edge and so dependent
Speaker 2: on this twenty four billion dollars worth of funding that's
Speaker 2: set to run out at the end of September.
Speaker 4: So if first of all, thank you for having me on.
Speaker 4: But if we rewind the clocks back to the start
Speaker 4: of the pandemic, So when we saw daycares clothes, schools clothes,
Speaker 4: and suddenly parents, both mothers and fathers were scrambling to
Speaker 4: try to figure out what to do with their kids.
Speaker 4: We saw this huge decline in workforce participation among women
Speaker 4: ages twenty five to fifty four. And what you saw
Speaker 4: as we moved on into twenty twenty one, we saw
Speaker 4: the American Rescue Plan really step in with this billion,
Speaker 4: you know, twenty four billion dollar set of you know
Speaker 4: money for these childcare providers to help them keep their
Speaker 4: doors open. And childcare providers could use this money in
Speaker 4: a lot of different ways. So some of the main
Speaker 4: things that you saw, for instance, were you know, keeping
Speaker 4: up with the rising costs as inflation, you know, pushed
Speaker 4: up the cost of a variety of different bills that
Speaker 4: these providers had. You saw, in the case of paying
Speaker 4: their workers more or hiring more workers to open up
Speaker 4: more spots, just because you know, a lot of lower
Speaker 4: paid sectors started seeing some pretty significant wage increases in
Speaker 4: the tight labor markets. So childcare providers had a really
Speaker 4: hard time hiring and retaining their workforce. And so that's
Speaker 4: kind of the ways that these these providers have used
Speaker 4: that money. And so fast forward to now, the Century
Speaker 4: Foundation estimates that you know, more than seventy thousand providers
Speaker 4: could be forced to close. But you know, I think
Speaker 4: even putting that number even more in perspective, closing is like,
Speaker 4: you know, the worst case scenarios. So in ordered before
Speaker 4: a childcare provider clothses, they're going to try all different
Speaker 4: types of things to plug that hole. Whether that's raising
Speaker 4: tuition for parents that are already struggling to pay it,
Speaker 4: whether it's reducing hours, which you know is something that
Speaker 4: has already limited a lot of parents' ability to you know,
Speaker 4: really participate in their jobs in the workforce, and where
Speaker 4: flexible working has really stepped in, or have to have
Speaker 4: less staff, which means way less childcare spots available for
Speaker 4: children across the United States.
Speaker 5: Read.
Speaker 3: One thing that was so surprising to me, as somebody
Speaker 3: who pays so much money every month in childcare costs,
Speaker 3: was how little childcare providers get paid. There's this value
Speaker 3: chain that occurs when a parent pays a childcare provider,
Speaker 3: and I don't know where that money is going because
Speaker 3: the people who work there are not getting paid much.
Speaker 3: What's happening here, So.
Speaker 4: You're exactly right. Childcare is a profession that most people
Speaker 4: are in it for the love of the job, not
Speaker 4: for the pay. According to Bureau Labor Statistics data, the
Speaker 4: average childcare worker made fourteen dollars and twenty two cents
Speaker 4: an hour last year, which, for perspective, a lot of jobs,
Speaker 4: for instance, somewhere working at Target, for instance, the starting
Speaker 4: pay you know, may start at fifteen to twenty four
Speaker 4: dollars an hour, and so you can really see how
Speaker 4: these childcare providers it's difficult to you know, hire and
Speaker 4: keep these folks. But a lot of this, you know,
Speaker 4: goes into this idea of this broken system that we've
Speaker 4: heard people across the aisle talk about, and it really,
Speaker 4: you know, is this system where parents are paying really
Speaker 4: can't paign anymore. The providers are trying their best to
Speaker 4: pay their workers more. They want to pay their workers more,
Speaker 4: but they're paying a lot in terms of insurance and
Speaker 4: overhead and renting the space that they're in and then
Speaker 4: at the end of the day, you end up in
Speaker 4: this situation where kind of no one's quite happy. And
Speaker 4: it's part of the reason that we've really seen more
Speaker 4: band aid type efforts when it comes to the you know,
Speaker 4: Congress's role in terms of providing funding, just because the
Speaker 4: inherent system doesn't quite work economically well.
Speaker 2: Tell me about the change from before these this money
Speaker 2: was initially doled out. Was this supposed to just kind
Speaker 2: of bring these childcare providers through this tough period or
Speaker 2: was it, you know, was it to allow them to
Speaker 2: get back on their feet, or was it did it
Speaker 2: truly bring childcare to people who weren't able to afford
Speaker 2: it for their families before and was that the intention?
Speaker 4: So a mixture of all of these things. So I
Speaker 4: think the importance of talking about childcare is the pandemic
Speaker 4: shed a lot of light on how stressed this sector was.
Speaker 4: But it's been a challenging spot well before the pandemic,
Speaker 4: and I think, you know, in the case of looking
Speaker 4: at what this money in particular, did it really helped
Speaker 4: address the immediate problems Econnie was facing. The economy saw
Speaker 4: this soaring, soaring prices, and so from a childcare perspective,
Speaker 4: that meant higher costs for rent, higher costs for utilities
Speaker 4: and electricity and groceries that they're providing the children at
Speaker 4: their daycare. It meant a tight labor market where it
Speaker 4: was even harder to offer someone such a low wage
Speaker 4: in comparison to all of these other sectors and expect
Speaker 4: them to stay. And so, you know, this was a
Speaker 4: measure that was meant to help in the short term.
Speaker 4: But the reality that we're living in economically hasn't changed
Speaker 4: a lot. Prices are still really high, the labor market
Speaker 4: is still quite strong, and yet this money that helped
Speaker 4: them get through there isn't there anymore.
Speaker 2: Yeah, sorry to interrupt there, read, but I mean, why
Speaker 2: don't politicians just look at this and say, Wow, this
Speaker 2: is something we didn't know how much this money was
Speaker 2: going to do. Can't we, on a bipartisan basis, just
Speaker 2: fulfill this twenty four billion dollar measure? Why are politicians
Speaker 2: why is this, I guess even coming up, why are
Speaker 2: we facing this childcare cliffs as it's been called.
Speaker 4: So, like a lot of things in Washington, it's not
Speaker 4: so simple. This childcare is an issue that is a
Speaker 4: bipartisan issue and one that's widely supported by Republicans and Democrats.
Speaker 4: The way that folks feel that the sector should be
Speaker 4: supported differs based on who you ask. You know, one
Speaker 4: kind of promising thing that we've seen is we've seen
Speaker 4: a bipartisan childcare Caucus start to form with Representatives Rocanna
Speaker 4: and Nancy Mace bringing more awareness to this childcare cliff
Speaker 4: and this affordability challenge. But you've also seen, in terms
Speaker 4: of the appropriations bills that are now kind of getting
Speaker 4: caught up in the broader government shutdown mess, there is
Speaker 4: an increase in funding for what's known as the Childcare
Speaker 4: and Development Block Grants, which is a program that's been
Speaker 4: in place for a while. But the increase is, you know,
Speaker 4: nowhere close to the twenty four billion dollars that we
Speaker 4: saw on the American Rescue Plan, but certainly will help
Speaker 4: to some extent, but is no way offsetting that.
Speaker 3: So read just in the last minute that we have
Speaker 3: with you based on your reporting. And I know it's
Speaker 3: not your job to make predictions, but I'm a parent
Speaker 3: who pays for childcare. Right now, give me a prediction
Speaker 3: of what you think happens at the end of the month.
Speaker 4: So at the end of the month, nothing's going to
Speaker 4: immediately happen. This is a slow burning challenge that over
Speaker 4: the next six twelve months is when we start to
Speaker 4: see these centers start to close. But for parents it means,
Speaker 4: you know, particularly mothers, it means things such as cunning hours,
Speaker 4: switching to jobs that are less difficult, less productive, less
Speaker 4: time consuming and therefore often pay less, or dropping out
Speaker 4: of the workforce entirely, which would be really sad at
Speaker 4: a moment where women have really been leading this recovery.
Speaker 3: I encourage you everybody to check out this story thread
Speaker 3: of seventy thousand daycare closures in perils US workforce gains
Speaker 3: serious economic implications when we cannot take care of children
Speaker 3: in this country. The story by Reid Pickart and Kelsey Butler.
Speaker 3: Check it out on the Bloomberg Terminill, of course, also
Speaker 3: at Bloomberg dot com.
Speaker 1: If you're listening to the Bloomberg Business Week podcast, catch
Speaker 1: us live weekday afternoons from three to six Eastern Listen
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Speaker 6: Now.
Speaker 2: I've just recently returned from the Persian Golf where I
Speaker 2: was correspondent there for about three and a half years.
Speaker 2: And frankly, since the start of the pandemic, there is
Speaker 2: no part of the world probably that's flexed its financial
Speaker 2: muscle like the golf. You bankers have been chasing sovereign
Speaker 2: wealf cash. In Dubai, you know, you have a wave
Speaker 2: of Russians pouring in with their own assets hedge funds,
Speaker 2: ccrypto firms.
Speaker 7: But at the same time, you.
Speaker 2: Know, you look farther out across the Middle East and
Speaker 2: into Africa, and the pandemic and the war in Ukraine
Speaker 2: created sort of these devastating sustainability challenges for much, frankly
Speaker 2: larger populations. And that's why I'm so excited to have
Speaker 2: Norse Suade with us. She's founder and managing partner at
Speaker 2: Global Ventures, and she makes investments in the Middle East
Speaker 2: and Africa. She's normally based in Jubai, but Nor's joining
Speaker 2: us now from London, so Nor talk to me a
Speaker 2: little bit about some of the top investment themes for
Speaker 2: global ventures right now.
Speaker 8: So, first of all, thank you so much for having
Speaker 8: me and taking the time for us. As we see
Speaker 8: our part of the world, we take a look as
Speaker 8: you mentioned all of midlist in Africa, we are sector agnostics,
Speaker 8: so we invest across all sectors. What's really exciting to
Speaker 8: us right now are two key sectors at this point
Speaker 8: in time. The first is anything related to supply chain
Speaker 8: disruption and the second is anything that related to food
Speaker 8: security or agritech. And our investment theses are always really
Speaker 8: thinking through five years from now, which industries are massively
Speaker 8: different to five years ago. So where are we at
Speaker 8: inflection points? What's interesting? Where can cutting edge technology impact
Speaker 8: one hundreds of millons of lives in a very meaningful
Speaker 8: and financially awarding way as well. So when we think
Speaker 8: about supply chain and what's happened over the last two years,
Speaker 8: we think about it all the way from material science
Speaker 8: manufacturing where we still important ninety percent of everything and
Speaker 8: we want to start importing us through to logistics, so
Speaker 8: drone logistics on a commercial level versus using old trucks
Speaker 8: on rickety roads So when we think about the whole
Speaker 8: value chain of supply chain, our reckoning is if we're
Speaker 8: going to build manufacturing for this part of the world
Speaker 8: right now, if we're going to really disrupt supply chains,
Speaker 8: we're going to do them the way of twenty twenty three.
Speaker 8: We're not going to do them the way of the nineties.
Speaker 8: We're not going to build manufacturing.
Speaker 7: Facility that they're old.
Speaker 8: It's going to be three D printing at differ manufacturing.
Speaker 8: That's really one of the key areas right now is
Speaker 8: how do we come into our own when it comes
Speaker 8: to manufacturing and supply chains.
Speaker 3: Okay, so you talk management manufacturing and supply chains, but
Speaker 3: you also said another area of interest for you is
Speaker 3: anything that has to do with food accessibility, food security.
Speaker 3: Talk to me about how you are able to or
Speaker 3: working to grow food in the desert. I mean, I mean,
Speaker 3: what are the companies that you're investing in that allow
Speaker 3: for that.
Speaker 8: So there's a few, and you know, one of them
Speaker 8: is very exciting because it's really at that intersection of
Speaker 8: food and energy. So one of the company's red Sea,
Speaker 8: really has found a way to reduce energy consumption for
Speaker 8: the purpose of virtical farming.
Speaker 7: By ninety five percent by the way they desell a water.
Speaker 8: And this is really at the crux of everything because
Speaker 8: where we are there isn't ourble.
Speaker 7: Land, so you want to do vertical farming.
Speaker 8: Five years ago, vertical farming was something that was in
Speaker 8: proof of concept. We reckon five years from now, a
Speaker 8: lot of the food that's you know, being served in
Speaker 8: the region is going to be farmed in the region
Speaker 8: in these new innovative ways. And yet one of the
Speaker 8: biggest impediments to that was how much energy costs and
Speaker 8: how much energy consumption.
Speaker 3: Well to explain that, because I don't think everyone knows
Speaker 3: what vertical farming is, it's the idea that you're you know,
Speaker 3: you're stacking these crops on one another rather than laying
Speaker 3: them out on the ground. And they're greenhouses oftentimes, and
Speaker 3: you know, you need the lights and water in order
Speaker 3: for them to grow, right, And that's what makes some energy.
Speaker 7: And water is often the biggest energy consumer.
Speaker 8: So if you want to desalinate water, because a lot
Speaker 8: of these are hydroponics, so you need a lot of water,
Speaker 8: and a lot of the water that gets desalinated uses
Speaker 8: a lot of energy, and that's often.
Speaker 7: The biggest cost factor.
Speaker 8: So as we move from a world where you know,
Speaker 8: vertical farms or indoor farming and the way you stack
Speaker 8: them in hydropronics is still improved a concept and commercially unviable,
Speaker 8: and you want to take that so that that's actually
Speaker 8: how you produce most of the food. You really need
Speaker 8: to reduce energy consumption, and that's actually something that's across
Speaker 8: the region. So when we think about energy consumption, you
Speaker 8: have seven hundred and sixteen million people in the world
Speaker 8: without power, of which seven hundred million are in Africa.
Speaker 8: So when we think about how we consume energy and
Speaker 8: how we go down, you know, building businesses that require
Speaker 8: less energy, not because we you know, we care about
Speaker 8: the planet, which we obviously do, but because it's a
Speaker 8: better business because you cannot scale if you're consuming his
Speaker 8: huge amount of energy. And now that we've crack some
Speaker 8: of these things, red Seat Farms is exporting their technology
Speaker 8: and retrofitting farms in the US farms in Europe. Is
Speaker 8: this simply better tech?
Speaker 2: Yeah, But I guess one of the challenges that you
Speaker 2: always face, especially for technology that would most benefit places
Speaker 2: like Africa, places outside the Gulf in the Middle East,
Speaker 2: is that this is the return is not necessarily there
Speaker 2: to put in a lot of R and D to
Speaker 2: produce food, uh from places that don't have a lot
Speaker 2: of water, or to electrify places in Africa that have,
Speaker 2: you know, very low standards of life. I mean, can
Speaker 2: you talk to me about some of the ways that
Speaker 2: you are getting past some of these challenges.
Speaker 7: So I think that's where the opportunity sit.
Speaker 8: So for us, as we think about these technologies that
Speaker 8: are available globally, and there is R and D in
Speaker 8: our part of the world a little bit, not as
Speaker 8: much as we'd like, but a little.
Speaker 7: Bit, there's that opportunity to leap frog.
Speaker 8: So when we think about vertical farming, if we had
Speaker 8: wanted to do that the traditional way or the way
Speaker 8: that it was done even just ten years ago in
Speaker 8: North America or in Europe, that consumed a lot of energy,
Speaker 8: a lot of water which wasn't available, so we had
Speaker 8: to leap frog and think how can we do this better?
Speaker 8: And the irony is that these are two scientists, one
Speaker 8: British and one American, that were sitting in Saudi Arabia
Speaker 8: in the desert and discovered that the way that the
Speaker 8: cactus plant Pisani's water is much more energy efficient and
Speaker 8: emulated that. But the concept of leapfrogging is something that's
Speaker 8: really important. So we don't have incumbents in our industries
Speaker 8: because industries are still nascent. When you think about something
Speaker 8: like financial inclusion, just five years ago, eighty five percent
Speaker 8: of the people in the region were not financially included.
Speaker 8: Now that's down to fifty five percent. And we didn't
Speaker 8: get there by building banks. We got there with cutting
Speaker 8: edge fintech. When we think about healthcare, we have one
Speaker 8: doctor of per thousand people and mean now compared to
Speaker 8: four per thousand in North America or Europe and zero
Speaker 8: point two per thousand and South So hoar in Africa,
Speaker 8: we're never going to have enough hospitals, We're never going
Speaker 8: to have enough doctors. The question becomes how do you
Speaker 8: use technology to give healthcare access? And therefore you have
Speaker 8: the adoption of tech in a much faster way, especially
Speaker 8: given sixty percent of the population is under the age
Speaker 8: of thirty, so your digital adoption is instant and media.
Speaker 8: There are no incumbents or lobbies from the healthcare industry
Speaker 8: of the finance trying to stop these tech companies and
Speaker 8: their regulators actually want these solutions, right, so you end
Speaker 8: up on a world Sorry.
Speaker 3: Go ahead, Well, nor we only have a couple minutes left,
Speaker 3: and I want to make sure we get to the
Speaker 3: fundraising aspect of this, because you know, we talk a
Speaker 3: lot about venture capital funding drying up over the last
Speaker 3: couple of years, and I'm wondering, from your perspective, as
Speaker 3: the founder and managing partner at Global Ventures, how much
Speaker 3: of your time is spent fundraising and how hard has
Speaker 3: it been to raise money for funds.
Speaker 8: So we are on our third fund now, which we've
Speaker 8: managed to successfully raise most of this year, so we're
Speaker 8: very fortunate. I think our part of the world is
Speaker 8: still a great opportunity company is because of the lack
Speaker 8: of the quantum of capital. So last year was our
Speaker 8: peak year in terms of venture funding at three billion
Speaker 8: dollars for all of the Mena region, which is still
Speaker 8: a drop in the bucket of global venture. So anything
Speaker 8: about three billion dollars was all deals all year across
Speaker 8: all the Mena countries.
Speaker 7: So it's an nazing ecosystem.
Speaker 8: It's fast growing, it's a very young population, and it's
Speaker 8: an emerging and growing economy. So most of our investors
Speaker 8: are actually international investors in institutions in the US and
Speaker 8: in Europe that want access to growth markets, and by
Speaker 8: coming in and looking at a venture in the region,
Speaker 8: they find companies that are much more capital efficient because
Speaker 8: of the lack of capital and the ecosystem.
Speaker 7: A court of our portfolio is.
Speaker 8: EBADA positive, which for a Series A investor is highly
Speaker 8: unlikely in most other markets. And you're using technology to
Speaker 8: solve real world problems. So yeah, really the commreation of
Speaker 8: that has.
Speaker 7: Enabled growth rather than a shrinkage so far.
Speaker 2: Look, I'm just quickly here because we only have about
Speaker 2: a minute left. But I mean, look, there's so much
Speaker 2: money coming out of the Gulf right now, and you,
Speaker 2: you know, being based and deb see that probably have
Speaker 2: access to that that others don't. I mean, what priorities
Speaker 2: do you have in funding projects or what part does
Speaker 2: those investors have in funding projects that other investors you
Speaker 2: know elsewhere sitting in the United States or elsewhere don't.
Speaker 8: So you know, when we're funding projects, we're looking purely
Speaker 8: at the technology. Our investors, as I mentioned, are sixty
Speaker 8: percent of our capital does not come from the region.
Speaker 7: It comes from the US and Europe, and.
Speaker 8: People are really looking for where there are growth areas
Speaker 8: in the world where we can use tech to impact
Speaker 8: hundreds of wons of lives to get the returns we're
Speaker 8: looking for. Our founders are globally competitive, and yet the
Speaker 8: market's so nascent and young and small that valuations make sense.
Speaker 8: So I think that that applies to regional investors to
Speaker 8: global investors. I think people are just looking for great
Speaker 8: entrepreneurs building meaningful companies in growing markets.
Speaker 3: Nor Suede is founder and managing partner at Global Ventures.
Speaker 3: Joining us this afternoon from London, or I should say
Speaker 3: this evening from London. Nor thanks so much for taking
Speaker 3: the time. Really do appreciate.
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Speaker 3: Well, there's this great column from Bloomberg Opinion Today. It's
Speaker 3: written by a professor at Fordham University's a theology professor,
Speaker 3: Michael Pepper. It's all about jenerative AI in the classroom.
Speaker 3: So when he first experimented with the Chat GPT, he
Speaker 3: writes that he was not impressed, but that was before
Speaker 3: he played the GPT four, which was released back in March,
Speaker 3: and he actually found the newest version of openii's multimodal
Speaker 3: LM Large Language Model can now produce papers that are
Speaker 3: better than the average students. So that's just between different
Speaker 3: versions of Chat GPT. So it raises a lot of
Speaker 3: questions about the role that jenerative AI should play in
Speaker 3: the classroom. How should teachers use it, how should students
Speaker 3: use it? How worried should pair be that our kids
Speaker 3: are not going to learn how to do anything because
Speaker 3: of chat GPT. Hopefully Chris Callison Birch has the answers.
Speaker 3: He spent years studying generative AI. He's Associate Professor of
Speaker 3: Computer information Science at the University of Pennsylvania School of
Speaker 3: Engineering and Applied Science. He's a Sloan Research Fellow, and
Speaker 3: he's gotten faculty research awards from companies we talk about
Speaker 3: every day at Google, Microsoft, Amazon, Facebook, Roadblocks and more,
Speaker 3: and gotten funding from DARPAY, the NSF and more as well.
Speaker 3: He joins us on Zoom from Philadelphia professor.
Speaker 5: How are you great? Thanks for having me, well, thanks
Speaker 5: so much.
Speaker 3: For joining us. So a lot of parents are sending
Speaker 3: their kids back to school this week here in New
Speaker 3: York and other areas of the country. School started already.
Speaker 3: I know that one thing they're thinking about is how
Speaker 3: is my kid going to be using Chat GPT or
Speaker 3: Generative AI in the classroom versus how should he or
Speaker 3: she be using it?
Speaker 1: What are your thoughts?
Speaker 5: Absolutely so, I was listening to a podcast this summer
Speaker 5: that speculated that there were a downturn in the use
Speaker 5: of GPT as a result of its being summer break,
Speaker 5: and the reason for that is basically, Chat GPT is
Speaker 5: a homework machine, so we should see a corresponding rise
Speaker 5: again now that students are back in the classroom.
Speaker 3: Is that I think that's okay? Hold on, that's like
Speaker 3: Is that a concern though.
Speaker 5: For the for open AI or for US educators.
Speaker 3: For educators not for open AI?
Speaker 5: Certainly, certainly so. When Chat GPT was released last November,
Speaker 5: it had this breakthrough moment where everyone suddenly became aware
Speaker 5: of it, and at PEN we had this giant meeting
Speaker 5: of all the faculty where it was on everyone's radar.
Speaker 5: As a potential concern. And I think we're now just
Speaker 5: beginning to navigate what are good uses of generative AI
Speaker 5: versus not good uses of generative AI, and I think
Speaker 5: that those are going to vary depending on what level
Speaker 5: of education you're at, whether it's high school or below
Speaker 5: versus college use, and also sort of what level of
Speaker 5: mastery students have achieved already. I think there's like an
Speaker 5: interesting analogy with using calculators in the classroom, where you
Speaker 5: want students to build fundamental skills first before you give
Speaker 5: them a technology that allows them to replace those fundamental skills.
Speaker 2: So are you going to allow your students to write
Speaker 2: essays with chat GPT?
Speaker 5: I am in a computer science department, so we have
Speaker 5: fewer essays, but we anogous problem with writing code.
Speaker 3: Can chat GPT write code?
Speaker 5: Chat GPT can write code? Over the summer, I was
Speaker 5: using it and basically pair programming with it, and it's magnificent. Like,
Speaker 5: I think this is going to be a tool that
Speaker 5: enters into all sorts of disciplines and that becomes an
Speaker 5: integral part of how everyone does their regular job. And
Speaker 5: so I want my students to be able to use
Speaker 5: this technology. And I want them to be able to
Speaker 5: enhance their own skill set with it, but I want
Speaker 5: to make sure that I'm navigating it correctly. So in
Speaker 5: my mind, there's like a there's an easy distinction to make.
Speaker 5: So what we want to avoid is unthinking use use
Speaker 5: of this technology. So if you simply ask GPT to
Speaker 5: write your high school essay or to complete my programming assignment,
Speaker 5: and you do it in an unthinking manner, meaning you
Speaker 5: just submit it's output, that's clearly a harmful use of
Speaker 5: this technology where the student doesn't learn anything, we're not
Speaker 5: furthering their educational goals, and the output is crucially likely
Speaker 5: to be wrong in many interesting ways. These models are
Speaker 5: not perfect. They often hallucinate. So if you're a student
Speaker 5: listening to Boomberg Radio, you're probably clever enough to make
Speaker 5: sure that you fact check everything that it generates.
Speaker 2: So what do you want to see your students produce?
Speaker 2: And forgive my ignorance of code here, what do you
Speaker 2: want to see them produce using JGBT.
Speaker 5: So I think that the analogy that I draw is
Speaker 5: essentially like what kind of collaboration would I allow a
Speaker 5: pair of students to do? And so that kind of
Speaker 5: collaboration should be allowable between a student and the generative
Speaker 5: AI system. I wouldn't allow a student to copy directly
Speaker 5: the code from their friends without understanding it and without
Speaker 5: like thinking through and learning anything about how to do it.
Speaker 5: I allow students to discuss the problems and gain a
Speaker 5: better understanding, but not to directly copy anything. And I
Speaker 5: think the same could hold for a generative AI. So
Speaker 5: you should be allowed to understand a problem. And I
Speaker 5: think that generative AI is really magnificent as a personalized tutor,
Speaker 5: So you could use it to explore a topic, provide
Speaker 5: examples of something that you're learning in class, and maybe
Speaker 5: you could use it. So you've already mastered.
Speaker 3: So we only have a couple of minutes left, and
Speaker 3: I'm concern I'm certainly a concerned parent. My kids aren't
Speaker 3: old enough to be doing homework at this point. But
Speaker 3: I know that if I were in school, you know,
Speaker 3: this is something that we'd all be looking for help
Speaker 3: with when it comes to homework. So to remove yourself
Speaker 3: from the college professor and put yourself in the position of,
Speaker 3: you know, an eighth grade teacher or something, how do
Speaker 3: kids use this technology in a way that's actually productive
Speaker 3: and not just a crutch.
Speaker 5: Right, So students shouldn't use this to complete their homework
Speaker 5: assignments for them. They shouldn't use it when it's expressly forbidden.
Speaker 5: But if you're an educator, I think there's lots of
Speaker 5: really amazing ways that you can integrate this into your classroom.
Speaker 5: There's lots of really great uses of generative AI for creative, creative,
Speaker 5: creative applications. You can use it to generate images, to
Speaker 5: help illustrate things and really empower students to realize their
Speaker 5: creative visions in very exciting ways. My nine year old
Speaker 5: and I are designing a movie together, generating images using
Speaker 5: mid journey, creating voices using eleven labs, and all sorts
Speaker 5: of things where we have this really spectacular creative project together,
Speaker 5: and I think that those could be transferred into the
Speaker 5: classroom as well.
Speaker 3: Pretty cool talk. Explain just in thirty seconds what mid
Speaker 3: journey is and how you do something like that. It's
Speaker 3: like the chat GPT for images, right.
Speaker 5: That's right. So mid journey is a generative AI that
Speaker 5: lets you input a prompt, so you could say, AH
Speaker 5: would cut print of a playing a banjo, and it'll
Speaker 5: render that for you. And it's really amazing, so I
Speaker 5: totally recommend that parents try it out with their kids.
Speaker 5: It's great for imagination games.
Speaker 3: Very cool stuff. Hey, Chris, thank you so much for
Speaker 3: joining us. Really appreciate you taking the time this afternoon.
Speaker 3: Chris Callison Birch is an associate professor of computer information
Speaker 3: and information Science, I should say, at the University of
Speaker 3: Pennsylvania's School of Engineering and Applied Science. He joins us
Speaker 3: this afternoon on zoom You listen.
Speaker 2: Yeah, here challenges so much as to make your challenges
Speaker 2: as a parent so much more different.
Speaker 3: I know, M.
Speaker 2: A journal.
Speaker 4: Now about you?
Speaker 5: Let me drive?
Speaker 2: Oh no, no, no, no, all right, please.
Speaker 1: Excuse I want to drive.
Speaker 7: It's a good question.
Speaker 1: This is the drive to the clothes Tim thing well
Speaker 1: by around on Bloomberg Radio.
Speaker 3: It's already that time of day. We're less than eighteen
Speaker 3: minutes away from the close of US equity trading here
Speaker 3: at New York. The dow down. We just heard the
Speaker 3: numbers from Charlie half a percentage point, the S and
Speaker 3: P down seven tenths of one percent at forty four
Speaker 3: to sixty three in the NASDAC down one point two percent.
Speaker 3: Let's drive to the close with Eric Friedman, a chief
Speaker 3: investment officer at US Bank asset Man. I've been joining
Speaker 3: us on zoom from Raleigh, North Carolina this afternoon. Eric,
Speaker 3: Good to have you with us. How are you?
Speaker 6: I'm doing great. Tim, How are you today?
Speaker 3: We're doing pretty well.
Speaker 6: Uh.
Speaker 3: You know my coaker today. Simone raised a question earlier
Speaker 3: with our own Molly Smith on the economics team, and
Speaker 3: she said, you know, you look at this what we
Speaker 3: get from the anecdotal Uh, I call it anec data
Speaker 3: from the FED Beige Book, you know, the survey that
Speaker 3: it does of local areas around the country and businesses,
Speaker 3: and it seems like everything is great. What's not so great?
Speaker 6: Yeah, I think there's a couple of things that we
Speaker 6: have to think about. We've been using this analogy. Tim
Speaker 6: and Simone of the Fed acting like that personal trainer
Speaker 6: sitting next to your treadmill and really keeping that ramp elevated.
Speaker 6: And so what I think you're seeing is that the
Speaker 6: runner is still doing well. It's still jogging and keep
Speaker 6: being up a very strong pace. That the question is
Speaker 6: how long can that pace continue? And we do think
Speaker 6: there will be more of an incremental slowing as opposed
Speaker 6: to a just a absolute stop by that proverbial runner.
Speaker 6: So we'd expect the data to still be positive for
Speaker 6: the next couple of months. And there's lots of reasons
Speaker 6: for that. The labor markets in great shape, the overall
Speaker 6: wage growth remains strong, and so that gives on top
Speaker 6: of the still accumulating stimulus savings, that gives a lot
Speaker 6: of fuel if you will stopping and how can you
Speaker 6: surely meaning already even saying it. But that's the sort
Speaker 6: of thing that we think will start to slow down
Speaker 6: as we get deeper into let's call it holiday season
Speaker 6: and into the turn of twenty twenty four.
Speaker 2: What about the holidays season or the changing of the
Speaker 2: calendar pushes puts this pressure on the consumer or the
Speaker 2: overall economy.
Speaker 6: Yeah, you know, I think sill there's probably a level
Speaker 6: of leno clog, canspeakabous consumption, the desire just to keep
Speaker 6: accumulating stuff. I think there's there's still this desire to
Speaker 6: go out and travel. There's still you know, there's more
Speaker 6: talk about the replacement cycle. Of course, four years ago,
Speaker 6: in a couple of months, that's when the COVID epidemic
Speaker 6: really forced so many people to be at home and
Speaker 6: so the replacement cycle on goods starts to kick in,
Speaker 6: as well as just again making sure you're taking care
Speaker 6: of your mother in law at holiday season. Those are
Speaker 6: important things. So those are things that can drive spending.
Speaker 6: And the question, I think for all of investors, including
Speaker 6: ourselves as well, what's what's after that? Will there be
Speaker 6: enough accumulated savings and will be the job market remain healthy?
Speaker 6: We do think again we have more of a glass
Speaker 6: half full forward perspective, but there are a couple of
Speaker 6: speed bumps along the way again, back to school, return
Speaker 6: to holiday shopping season, as well as just that cumulative
Speaker 6: impact of higher interest rates. Those should serve as that
Speaker 6: again proverbial, let's call it personal trinder, keeping the button
Speaker 6: up elevated for longer than anybody would like.
Speaker 3: Now that you mentioned that, I think I am due
Speaker 3: for any iPhone this year, it's been it's been a
Speaker 3: few years.
Speaker 1: I don't know.
Speaker 3: I don't even know what I have at this point.
Speaker 3: It still works pretty well, that's the thing. So maybe
Speaker 3: I'll go three years before I do an upgrade. Okay,
Speaker 3: so Eric, I know you can't talk specific equities, but
Speaker 3: let's talk sectors here. What are you doing with capitol
Speaker 3: right now.
Speaker 6: Yeah, one is that we're trimming some gains in technology,
Speaker 6: and that's not to say that we think technology is
Speaker 6: completely overboad. There's there's a lot of things that obviously
Speaker 6: COMPRISEE technology. We think that things like cyber things like
Speaker 6: AI will remain in vogue, and so we'd just be
Speaker 6: again harvesting some gains there as opposed to just extending.
Speaker 6: And again, our long term viewpoint is that you do
Speaker 6: want to have an outsized allocation to technology and probably healthcare.
Speaker 6: Those are the two sectors that we favor on more
Speaker 6: of a enduring basis. I think the other thing that's
Speaker 6: really picking up of interest, at least in our screens
Speaker 6: is energy, and that's a space that does spit up
Speaker 6: some cash flow. They've generally been very capital disciplined as
Speaker 6: a group. They've been forced to be capital disciplined. Shareholders
Speaker 6: have said, look, you can't have this. Pavlova in a
Speaker 6: response of just when oil prices go up, you go
Speaker 6: out and try to find more that has really been
Speaker 6: rained in. And so you're seeing global demands still hang
Speaker 6: in there. You're seeing a more disciplined operating environment for
Speaker 6: EMP companies as well as R and M folks, and
Speaker 6: so that's the space we'd pay attention to. The last
Speaker 6: thing I'd say is Japan is looking more and more interesting.
Speaker 6: It obviously has had a good run already. There's all
Speaker 6: sorts of things happening within that economy that we think
Speaker 6: are attractives. Those would be a couple of areas that
Speaker 6: we'd have on your radar screens if they're not already.
Speaker 2: Yeah. On the energy front, I mean, we're looking at
Speaker 2: WTI right now at eighty seven sixty five. That's some
Speaker 2: of the highest we've been in a long time. I mean,
Speaker 2: but a lot of that seems to be dependent on
Speaker 2: the Saudi's, the Russians rather than necessarily the oil companies themselves,
Speaker 2: at least the oil price. What do you look for
Speaker 2: when you look through the sector, what kind of companies
Speaker 2: stand out as winners versus losers.
Speaker 6: Yeah, there's a couple of things that we pay attention to.
Speaker 6: And you're rightfully you point out that the macro price
Speaker 6: of oil does not necessarily mean that the oil companies, again,
Speaker 6: whether it's the super majors or the exploration production or
Speaker 6: the refiners, are necessarily going to do well. So a
Speaker 6: couple things We pay attention to number one, as I
Speaker 6: mentioned a second ago, that capital discipline. Are we seeing
Speaker 6: return of capital to shareholders? Are we seeing just blatant
Speaker 6: capex overruns? That has not the case. We're very encouraged
Speaker 6: by that. Number two is it's a related point and
Speaker 6: not to get too wonkish, but you know, return on
Speaker 6: invested capital. So once people are being more capital disciplined,
Speaker 6: are they finding ways to actually turn that capital discipline
Speaker 6: into higher airings per share? And that's something that we
Speaker 6: actually have seen consistently, particularly across the supermajors, and that's
Speaker 6: an area that again without the ability to talk about
Speaker 6: specific companies, that's a space that we think has been
Speaker 6: the most disciplined. These are the groups that will benefit
Speaker 6: from Again, not that we want the challenges in Russia
Speaker 6: or Ukraine to denistially be sources of profit, but one
Speaker 6: of the things we pay attention to is just what
Speaker 6: is a global response. And again that response has been
Speaker 6: still a lack of supply relative to demand, which we
Speaker 6: think will carry on throughout the course of this year
Speaker 6: and potentially early next year. So we look at the
Speaker 6: super majors, that'd be a place we pay attention to. Also,
Speaker 6: some of those more disciplined next equation and production managers.
Speaker 6: Those are also spots to what to pay attention to
Speaker 6: as well.
Speaker 3: I want to ask my last question in a nod
Speaker 3: to Carol, who's out on vacation and she can't get
Speaker 3: angry with me for asking you about the FED, But
Speaker 3: how close they are you watching what the FED does
Speaker 3: in September and what do you think it's going to
Speaker 3: do in November.
Speaker 6: Yeah, I think, tim, it's the it's the primary focus
Speaker 6: point right now. You know, we are in that that
Speaker 6: shoulder month period where we're pretty much done with earnings
Speaker 6: and September twenty first is looming fast upon us. And
Speaker 6: as a great Rod Stewart said, you know, this is
Speaker 6: the time and I should be back at school, and
Speaker 6: again we're all being forced to pay attention to what's
Speaker 6: happening with the FED. So we think the bias is
Speaker 6: going to be a pause for this meeting, but also
Speaker 6: to keep optionality for the balance of the year. And
Speaker 6: so we do think that not just what's happening within
Speaker 6: core services, which remains sticky, I mean that that remains
Speaker 6: a sticky area, but also some of these non core things,
Speaker 6: like you mentioned Stu sitting the oil price elevates, that's
Speaker 6: an issue that the FED member regular.
Speaker 3: All Right, Eric Friedman, the chief investment officer in the
Speaker 3: US Bank Asset Management, joining us this afternoon. I really
Speaker 3: appreciate you taking the time. You're listening and watching a
Speaker 3: Bloomberg BusinessWeek on Bloomberg Radio.
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