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: gloom War, Business finance, and tech news. The Bloomberg Business
Speaker 1: Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: You know, one of the components of Milkin. It's a
Speaker 2: lot about finance and capital flows and where the money
Speaker 2: is going, but it's also about wellness and health. And
Speaker 2: with that in mind, I want to welcome our next guest.
Speaker 2: Dale Cook is co founder and CEO of the digital
Speaker 2: behavioral health therapy platform. It's called Learn to Live. He
Speaker 2: participated in a panel. There's an app for that, hyper Health,
Speaker 2: So we have a lot to get to Welcome. Welcome,
Speaker 2: Nice to have you here.
Speaker 3: Thanks so much for having me.
Speaker 4: Carol.
Speaker 2: Let's go to the I mean I said to you
Speaker 2: before we got going, I love meditation. I think these
Speaker 2: apps have really helped people access things like that. But
Speaker 2: I also think in terms of I've heard a lot
Speaker 2: of folks finally getting a chance to talk and have
Speaker 2: some therapy online and things that they either couldn't do
Speaker 2: in the past. Tell us about the panel and some
Speaker 2: of the things that came up there is a lot
Speaker 2: of applications out there.
Speaker 3: Well, for sure, there's a lot of opportunity. As we know,
Speaker 3: mental health has not only been a large problem for
Speaker 3: many people globally and in the United States, it's getting
Speaker 3: even more and more challenging, both in terms of people
Speaker 3: suffering and those needing to find different ways to access care. So,
Speaker 3: for example, in the United States, only half of the
Speaker 3: counties in the country have at least one mental health
Speaker 3: care practitioner. So you mentioned talk therapy, and it's great,
Speaker 3: it can be great for any people, but the supply
Speaker 3: of therapists for those who need it is it's very inequitable.
Speaker 2: So we talk about food deserts, yes, like therapist desert exactly.
Speaker 3: That's a great phrase for it. On top of that,
Speaker 3: we also recognize that three out of four people in
Speaker 3: America with a mental health problem do not want to
Speaker 3: seek out traditional therapy, an in person therapist, or use
Speaker 3: teletherapy because of stigma concerns. While it's gotten better, it's
Speaker 3: still an ongoing issue. Access concerns. We just talked about that,
Speaker 3: or cost concerns, and so in the panel, I think
Speaker 3: one of the really great topics was what roles do
Speaker 3: digital health apps play and how do we assess their
Speaker 3: effectiveness their efficacy? And I think that was a key
Speaker 3: component because we talked about, for example, in the mental
Speaker 3: health space, two ways. We look at that as subjective measures.
Speaker 3: So we were talking about meditation before the session, whether
Speaker 3: or not the app you use is clinically validated. It
Speaker 3: may or may not be, but it works for you.
Speaker 3: So that's a subjective measure that's critically important. For example,
Speaker 3: the work that Never Lived does, but in our space,
Speaker 3: it's critically important for us and for our clients because
Speaker 3: they're paying for the service to show the clinical efficacy.
Speaker 3: And so there's a whole body of work that's been
Speaker 3: done really over three decades for many digital apps, even
Speaker 3: the early ones, to show clinical effectiveness, and even more
Speaker 3: important in the mental health.
Speaker 2: Space, dig a little deeper into that. So how do
Speaker 2: you show that. I do think that's really important. And
Speaker 2: I do also do think that there's a situation where
Speaker 2: you're going to understand that there's something more that's needed here, right,
Speaker 2: that's right to be able to identify that that's right.
Speaker 3: And from the time we started nine years ago, my
Speaker 3: co founder's PhD in psychology we recognize that in as
Speaker 3: much as we want to reach people in the most
Speaker 3: efficient and friendly way possible, we needed to show really
Speaker 3: meaningful clinical results. So one of the ways we do
Speaker 3: that is we measure our users, we call them members,
Speaker 3: our members progress with what we call gold standard psychometric assessment.
Speaker 3: So if you've been in for an annual physical, you
Speaker 3: may have taken the PHQ nine for depression as part
Speaker 3: of your annual physical. That's a gold standard, widely accepted
Speaker 3: assessment tool. And so if you're in a depression program
Speaker 3: with Learned to Live, you take that PHG nine at
Speaker 3: the beginning and then at the beginning of each of
Speaker 3: the eight subsequent lessons in the program, and as that
Speaker 3: score drops, we can show improvement. Interesting, but it doesn't
Speaker 3: stop there. So we take that data, we make it public,
Speaker 3: it's reviewed, it's peer reviewed, and then it's published in
Speaker 3: research journals. So that's step two, because it needs to
Speaker 3: really be what we would call unassailable data, unassailable clinical
Speaker 3: effectiveness data that our payer clients, our employer clients, our
Speaker 3: university clients say this is the gold standard, that it's
Speaker 3: been used for decades, and this digital health app can
Speaker 3: be tied to that, and so we're comfortable that the
Speaker 3: improvements we're seeing. The subjective part is important, but the
Speaker 3: actual data, the raw data that we're seeing is really,
Speaker 3: like I said, unassailable. And then in turn, it's driving
Speaker 3: meaningful cost reduction for our clients. So we can attach
Speaker 3: those two together where they say, Okay, it's not just
Speaker 3: a nice to look at app and it's not just
Speaker 3: really high engagement, which we're fortunate to get in the
Speaker 3: communities that use our application. It really works.
Speaker 2: I love the use of data, right, and just really
Speaker 2: tracking it and it's not just kind of casual at all.
Speaker 3: Right, And I think one of the nuances, and we
Speaker 3: talked about this in the session yesterday here not was
Speaker 3: it needs to be very user focused, right, So the
Speaker 3: consumer needs to be able to kind of choose their journey.
Speaker 3: It needs to be very friendly, very easy to navigate.
Speaker 3: But underneath that has to be a very structured clinical
Speaker 3: protocols that really drive the progress.
Speaker 2: So dip Joe or Jane comes in and they want
Speaker 2: to use the platforms, How does it work? What's it cost?
Speaker 2: Give us an idea of logistically how it all work.
Speaker 3: Sure, so one of the ways we think about it,
Speaker 3: So we are very direct, consumer focused in terms of
Speaker 3: how we deliver the app and make sure that you're
Speaker 3: having a great experience on the app and that you're
Speaker 3: progressing with your mental health improvement. But we have organizations
Speaker 3: who are our clients. So, for example, a large Blue
Speaker 3: Cross Blue Shield plan we serve almost thirty three million Americans,
Speaker 3: is what we cover now with our services. And so
Speaker 3: let's say you're a health plan client and you're made
Speaker 3: aware through a communication from a Blue Cross Blue Shield plan.
Speaker 3: When you come onto our site, there's a code that
Speaker 3: you enter. It's very easy and essentially you're what I
Speaker 3: call behind the curtain. There's no cost to you, and
Speaker 3: right away you're presented with an assessment that's optional for
Speaker 3: you to take, and it's a comprehensive assessment. So when
Speaker 3: you take it takes about five minutes. You can see
Speaker 3: how you score clinically across social anxiety and soomnia, substitute
Speaker 3: depression and so on, and the results of that also
Speaker 3: help guide you into the program that we think may
Speaker 3: be best for you. Right but you can override that.
Speaker 3: So if you say I don't want to do that,
Speaker 3: I really am feeling anxious. I just want to go
Speaker 3: into the anxiety program. You have full rain into that
Speaker 3: and then immediately if you want, you can engage with
Speaker 3: one of our clinician coaches that we have on staff
Speaker 3: twenty four to seven. So you don't just need to
Speaker 3: do the app on yourself, on your own and a
Speaker 3: self directed way. You can engage with a clinician anytime
Speaker 3: if you want to do.
Speaker 2: Because I do think that there's nuances right when it
Speaker 2: cots to wellness in a mental wellness, if you will
Speaker 2: a mental well being, what is it cost? So it
Speaker 2: sounds like there's a lot of coverage an acceptance that's.
Speaker 3: Right, So to the individual users, zero cost, right because
Speaker 3: the organization that you're with, your employer, your health plan
Speaker 3: is paying for it.
Speaker 2: But what acceptance has there been in general Corporate America
Speaker 2: or health some of the major health.
Speaker 3: Insurers significant acceptance. So we fifty per you know, it's
Speaker 3: hard to say what the overall penetration is. I can
Speaker 3: tell you that, you know, we've grown to covering over
Speaker 3: thirty three million Americans in a pretty short timeframe, and
Speaker 3: that's a really interesting mix of payers, large scale payers.
Speaker 3: You know, some payers we cover you know, twenty million
Speaker 3: of their you know, membership and then we're fortunate to
Speaker 3: see you know, twenty to thirty to forty percent engagement
Speaker 3: of that population just with learn to Live. And so
Speaker 3: if you consider traditional behavior health, which is one to
Speaker 3: two percent a year for population, and we're doing twenty
Speaker 3: or thirty percent, it gets very exciting for organizations.
Speaker 2: How sticky is it in terms of people who come
Speaker 2: up on the platform and then stay with it?
Speaker 3: It's incredibly sticky. I would say, you know, if we're
Speaker 3: speaking in sort of digital health app terms, roughly thirty
Speaker 3: percent of you So wrong to say, but it's important, right,
Speaker 3: I mean, when we think about reframing mental health into
Speaker 3: a daily mental fitness routine or it needs to be
Speaker 3: sticky and we need to stick with it. And so
Speaker 3: it's been very, very very sticky, very popular. About thirty
Speaker 3: percent of our users who begin with us are still
Speaker 3: interacting with us a year later.
Speaker 2: Your client retention rate is that very high.
Speaker 3: Very high? And certainly we like to think that we
Speaker 3: have an amazing team that learned to Live, but part
Speaker 3: of it is that there's tremendous need.
Speaker 2: Yeah, what's the demographics? Is there a typical demographic or
Speaker 2: is it all over all over the place?
Speaker 3: You know it's changed over the past nine years, but
Speaker 3: I would say currently there's a few different kind of
Speaker 3: bumps in the Bell curves, if you will. We have
Speaker 3: a really interesting use in sort of the nineteen to
Speaker 3: twenty two age Raine, so we offer our programs thirteen
Speaker 3: and up, and then we have another kind of tip
Speaker 3: of the curve in the early thirties, about late fifties,
Speaker 3: and then interestingly in the seventies and so we've moved
Speaker 3: into Medicare in addition to Medicaid, and we have tremendous
Speaker 3: use among seniors.
Speaker 2: I'm not surprised. I mean, having had elderly parents and
Speaker 2: depression is often you know, you see it and just
Speaker 2: talking with friends that that's pretty common. Privacy issues an
Speaker 2: excellent question.
Speaker 3: So this is where different organizations are highly differentiating in
Speaker 3: the space. And as we know, especially with COVID, there's
Speaker 3: been a proliferation of time health apps, right, and so
Speaker 3: organizations have become much more sophisticated and discerning.
Speaker 2: It's stressful just trying to figure out how to do it.
Speaker 3: It is and it's a highly personal journey, right. So
Speaker 3: for you as a user, you care what happens to
Speaker 3: the data that you're using in an app, it's a
Speaker 3: really big deal. And so for example, learn to Live,
Speaker 3: there's very strict protocols we follow. There's something called High
Speaker 3: Trust Certification, which is kind of a gold standard for
Speaker 3: health plants that you need to meet, Soft two compliance,
Speaker 3: Hippo compliance. All of these are standards that we've met
Speaker 3: years ago.
Speaker 2: But even though the data, as you said, goes to
Speaker 2: research journals and stuff like, all of that is just
Speaker 2: kind of like it's.
Speaker 3: Just that's all masked very yes, and that's with permission,
Speaker 3: So we don't ever publish. We never personally identify any
Speaker 3: of our users, even to our clients. So if you
Speaker 3: had access via a Blue Cross plan, that plan would
Speaker 3: never see your personal idelfiable data.
Speaker 2: Just last question, what are your plans for the future.
Speaker 3: Well, we're going to continue to grow and expand you know,
Speaker 3: there's a massive need for mental health program so that's
Speaker 3: one area we're going to keep adding new programs, and
Speaker 3: two we're continue to find really big ways to integrate
Speaker 3: into other points of the mental health care ecosystem.
Speaker 2: Well, really fascinating, And I feel like I'm a little
Speaker 2: stress because we got to talk a little bit about banks.
Speaker 2: So I'm going to have to shift gears, but stay
Speaker 2: in touch and let me know how things are going.
Speaker 3: As your Carol, Thanks good luck.
Speaker 2: Dale Cookie's co founder and CEO of Learned to Live
Speaker 2: here at Milkin.
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
Speaker 1: on Bloomberg dot com, the iHeartRadio app and the Bloomberg
Speaker 1: Business app, or watch us live on YouTube.
Speaker 2: Things are getting done, the world is moving forward, and
Speaker 2: that is true when it comes to aviation and clean technology,
Speaker 2: which is something that's come up a lot here at Milkin.
Speaker 2: So we want to talk about that with our next guest.
Speaker 2: Delighted to bring in about Miftakoff. He's founder and CEO
Speaker 2: of Zerio Avia. They have backing for Bill Gates, break
Speaker 2: Through Energy Ventures and Jeff Bezos Climate Pledge Fund.
Speaker 4: Welcome, Welcome, thank you, thank you. Great to be here.
Speaker 2: I love talking clean technologies, I said to you, and
Speaker 2: I love talking what's going on with aviation. Tell us
Speaker 2: about your company first of all.
Speaker 5: Yeah, so we started a company five years ago, a
Speaker 5: lill more than five years. We have built a technology
Speaker 5: in house. We're flying multiple prototypes already the largest one
Speaker 5: flying in the UK. The company is between West Coast
Speaker 5: US and the UK twenty seedars and we just announced
Speaker 5: with Alaska, one of our launch partners and airline investor,
Speaker 5: a large aircraft development, seventy six seat aircraft. That's serious
Speaker 5: that we're looking to start running on our powertrain later
Speaker 5: this year and flight next year.
Speaker 2: So tell me about your powertrain.
Speaker 5: Yeah, So it's hydrogen electric to hydrogen board the aircraft
Speaker 5: and then converting that to electricity using the fuel cells
Speaker 5: and Electrica Iron's motors.
Speaker 4: All the critical.
Speaker 5: Technology we have in the house, which is important because
Speaker 5: you cannot really use automotive technology. It's very hard to certify,
Speaker 5: so you need to develop everything from scratch your build
Speaker 5: to the whole days.
Speaker 4: So that's what we've done before that.
Speaker 5: Before zero, I did the electric car company and charging
Speaker 5: systems already in sustainable transport, so this was natural.
Speaker 2: I'm sold that.
Speaker 4: I sold that started to think about what's next.
Speaker 5: I'm a pilot myself, so flying helicopters airplanes is personally
Speaker 5: connected to the industry and didn't really started seeing you know,
Speaker 5: people talking about, you know, maybe we should stop flying
Speaker 5: and maybe we should all sit at home, and I
Speaker 5: really didn't like that.
Speaker 2: So so is what we're doing the focus on evs
Speaker 2: in their current state, not the future. In terms of
Speaker 2: alternative fuel, is it hydrogen that really makes the difference?
Speaker 2: And you think that ultimately is what takes over?
Speaker 5: I know it depends on that your book, It depends
Speaker 5: on the type of but you know, we like to
Speaker 5: think that we are unbiased. We're first principles based. Yeah,
Speaker 5: and my previous company was all about batteries.
Speaker 2: I know, is that the answer because that has problems too,
Speaker 2: and you need power to fuel those batteries.
Speaker 4: That's right, that's right.
Speaker 5: But so the secret source from my previous company was
Speaker 5: exactly around that. And I did apparently yesterday on the
Speaker 5: future of mobility and all that. We had a little
Speaker 5: bit of discussion around it, and the key was, yes.
Speaker 4: It requires a lot of new power. But those cars
Speaker 4: typically sit.
Speaker 5: In the parking lot, either at your work or at
Speaker 5: your house for ninety five percent of the time, and
Speaker 5: if they keep kept plugged in, then you can use
Speaker 5: that battery capacity to store all that renewable power. So
Speaker 5: renewable power problem is, you know, sun shines, you have power.
Speaker 5: Sun doesn't shine, you don't have power, right, and everybody
Speaker 5: quotes that as a problem. But if you have storage
Speaker 5: connected batteries connected all the time in these electric vehicles,
Speaker 5: then you can store that power use it later, right,
Speaker 5: So that's why I think will happen in the automotive space.
Speaker 4: So batteries work there.
Speaker 5: The bigger problem there is recycling off all these materials, right,
Speaker 5: because right now you know single digit percentage penetration. You know,
Speaker 5: we have enough materials is not a huge problem. But
Speaker 5: when you have you know, fifty seventy percent of all
Speaker 5: cars being electric as a lot of chart for aviation,
Speaker 5: this is a complete non starter because you know what's
Speaker 5: worked for your Tesla, right, or for my wife's Desla,
Speaker 5: because I don't have a car anymore, which is you know,
Speaker 5: a thousand cycles on the on the battery, that's three
Speaker 5: hundred thousand miles. You ver will drive three hundred thousand
Speaker 5: miles in your car. But in a commercial aircraft you
Speaker 5: go through that battery in six.
Speaker 2: Months, right, like what kind of size the mattery?
Speaker 5: Right, and then your replace, replace, replace, So material problem
Speaker 5: is huge, and even before that it wasths too much.
Speaker 4: It doesn't work.
Speaker 5: Hydrogen is the only way to do large commercial aircraft
Speaker 5: over long distances.
Speaker 2: But what about some of the concerns and problems with hydrogen.
Speaker 5: Yeah, so the main problem actually from the technology standpoints,
Speaker 5: the main problem is hydrogen takes more volume, yeah, to store.
Speaker 5: So what we are doing and we're going after the
Speaker 5: existing aircraft, existing fleets, and then existing types of aircraft,
Speaker 5: maybe new aircraft, but existing types. So what we do
Speaker 5: is we retrofit those aircraft and line fit and we're
Speaker 5: able to achieve about.
Speaker 4: Half the range. Right.
Speaker 5: So an example I mentioned in Alaska, they have thirty
Speaker 5: of those aircraft propel large propeller aircraft, seventy six seed
Speaker 5: aircraft on fleet. Those aircraft on fossil fuel, they can
Speaker 5: fly for one five hundred miles six hours in the air.
Speaker 5: Nobody flies those things for six hours. So we are
Speaker 5: coming in and we're saying we can't deliver half the
Speaker 5: range seven hundred miles, and all the operators say, well,
Speaker 5: that's fine because we fly them today three hundred miles
Speaker 5: four hundred miles max. Right, Because when they were designed
Speaker 5: back in the day, they were designed for long missions,
Speaker 5: not anymore.
Speaker 2: How big can you go in terms of like the
Speaker 2: jumbo plane that I'm going to take home from Lax
Speaker 2: back to New York. Is this ultimately what you can do?
Speaker 4: Yeah, it's cossiles.
Speaker 5: So within ten years we're hoping to get to what's
Speaker 5: called single aisle, so Boying seven thirty seven or Airbus
Speaker 5: A three twenty.
Speaker 2: And what's holding you back from doing it?
Speaker 4: Today?
Speaker 5: We need to scale the technology, the fuel cells most
Speaker 5: importantly to these large power levels, high power levels, right,
Speaker 5: So today we have the technology that power is already
Speaker 5: twenty seed aircraft and this flying, and we're submitting that
Speaker 5: engine for certification later this year, launching twenty twenty five,
Speaker 5: so two years out you'll be able to buy tickets yeah,
Speaker 5: for that aircraft. The next size is the seventy six
Speaker 5: seed aircraft. That will take us about five years to
Speaker 5: get to commercial, but you know, within ten years we'll
Speaker 5: be able to get to to get you.
Speaker 4: To New York.
Speaker 5: What's the safety Yeah, frequently asked question to the point
Speaker 5: that at some point I had, you know, second page
Speaker 5: on my presentations, Hindenberg, you know, just showing safe then
Speaker 5: and then you know the message there is technology has
Speaker 5: moved on right in eighty plus years, Yeah, so we
Speaker 5: have one hundred week meaning you know, society, right, Yeah, worldwide,
Speaker 5: we have over one hundred thousand ground vehicles operated on
Speaker 5: hydrogen by unqualified personal You can you know, anybody can
Speaker 5: walk into Toyota dealership today and buy a hydrogen car,
Speaker 5: drive off, go into the fueling station and fuel up
Speaker 5: with hydrogen, buy herself himself, you know, without any training.
Speaker 4: Yeah, and no incidents.
Speaker 2: But I don't see that anywhere, Yeah.
Speaker 5: Because you know, a hundred thousand is not a huge
Speaker 5: number with respect to you know, billions of vehicles worldwide,
Speaker 5: but they're there.
Speaker 4: California actually has like a third of them.
Speaker 2: But where are we then doing more of that versus
Speaker 2: the eb batteries?
Speaker 5: Yeah, the vehicles, the hydrogen fuel cell technology is expensive
Speaker 5: now relative to the combustion cars.
Speaker 4: Relative to battery is much more expensive.
Speaker 5: So Toyota I think still loses money on every vehicle,
Speaker 5: and those are not cheap vehicles.
Speaker 4: I think the is it double the cost of combustion
Speaker 4: it's probably ten x ten.
Speaker 2: Times, probably ten What about evy batter.
Speaker 5: Part of that is volume game as well, right, so
Speaker 5: you know you don't you don't have a long going
Speaker 5: but in aviation, everything is expensive, right, So your performance
Speaker 5: you're not based on cost, you based on performance and safety,
Speaker 5: so you have a lot more room on the cost basis,
Speaker 5: and that allows us to deploy these technologies in aviation.
Speaker 5: And coupled with the fact that you know batteries will
Speaker 5: not work sustainable aviation fuels are really fundamentally much more
Speaker 5: expensive than hydrogen than hydrogen electric, that gives us an opportunity.
Speaker 2: You have airlines lending up to order.
Speaker 5: Absolutely, we have pre orders for about ten billion dollars
Speaker 5: of worth of future revenues. Might have American Airlines, United Airlines.
Speaker 2: For bigger, for the bigger actually for.
Speaker 4: Regional planes to start with.
Speaker 5: So in the next seven years we're looking to do,
Speaker 5: you know, fulfill those orders, start fulfilling those orders. We
Speaker 5: are now taking deposits, booking productions laws, very exciting time.
Speaker 2: Unbelievable now, it's fascinating. So you think in ten years
Speaker 2: from now it will be all over, well.
Speaker 4: Not quite all over the big tween isle planes.
Speaker 5: It will take more time, right, so these are what
Speaker 5: you would take you know, from Lax to London, for example, right,
Speaker 5: So that will take some time, but I think technology
Speaker 5: will be available for all aircraft within twenty years. Yeah,
Speaker 5: and then it's a you know, how how quickly will replace.
Speaker 5: And that depends on how committed the governments are, how
Speaker 5: committed the you know, the operators are and everybody else.
Speaker 2: We'll come back and let us know how things are going.
Speaker 4: Of course, love this space.
Speaker 2: Val Michtakoff, he's founder and CEO of Zero Avia, joining
Speaker 2: us here at Milk and you're listening and watching Bloomberg
Speaker 2: Business Week, and this is Bloomberg Radio.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern on Bloomberg Radio,
Speaker 1: the Bloomberg Business app and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 6: Well, it has been a special edition of Bloomberg Business
Speaker 6: Week Radio. We have been live from the Milk and
Speaker 6: Institute Global Conference in Beverly Hills, and that's where we
Speaker 6: find our next guest, Rich Lesser, is with us. He
Speaker 6: is the global chair of BCG. Rich thanks for being
Speaker 6: with us. Charlie was just talking there about the FED
Speaker 6: today and the assertion on the part of the chairman
Speaker 6: that maybe we get a recession and if we do,
Speaker 6: it will be mild. Now, you run a rather large consultancy,
Speaker 6: and I'm wondering whether or not you share the same
Speaker 6: view here. What are businesses telling you right now?
Speaker 7: Those are two separate questions. It's a pleasure to be
Speaker 7: with you, don the first. On the first question, I'm
Speaker 7: personally leaning to the more optimistic side of that. I
Speaker 7: think we're seeing inflation pressures decreasing relatively quickly, and I
Speaker 7: think that that will continue, and my hope is that
Speaker 7: that will allow the Fed to not have to go
Speaker 7: higher on rates. I have no sense of when they
Speaker 7: might start cutting. I think they're going to be cautious
Speaker 7: on bringing them down again, but I'm hopeful that we'll
Speaker 7: see a plateauing of where we are now, and I
Speaker 7: think there's a real chance that will avoid a recession.
Speaker 7: And I thought his words that better than a fifty
Speaker 7: percent chance we avoid a recession, and most likely if
Speaker 7: we have one, it will be mild. As for me,
Speaker 7: would calibrate with what we're seeing and hearing. There's a
Speaker 7: second thing about how CEOs are feeling right now, and
Speaker 7: I would say the starting point is a high level
Speaker 7: of uncertainty. There's just so many factors macroeconomic geopolitical and
Speaker 7: various pressures that they're feeling, and I think as a result,
Speaker 7: there's a conservativism in the CEO community in response to
Speaker 7: an uncertain environment in terms of focusing very heavily on resilience.
Speaker 7: There's an underlying recognition the rate of change in the
Speaker 7: world also continues to rise, AI being the focus of
Speaker 7: the moment, so I don't want to minimize that, but
Speaker 7: i'd say uncertainty and resilience are the top of mind
Speaker 7: words for CEOs.
Speaker 6: Before we take a closer look at the kind of
Speaker 6: the global perspective, I want to get your reaction to
Speaker 6: what's been happening among some of these regional banks. We're
Speaker 6: just getting indications now that another PacWest Bank Orp. Which
Speaker 6: is headquartered right in the same city where you are
Speaker 6: right now, Beverly Hills, California, it's weighing a number of
Speaker 6: strategic options, one of which may be an outright sale,
Speaker 6: although that's really unclear at this point who might buy
Speaker 6: the bank. When you look at the contraction that we
Speaker 6: have seen within the number of lenders, We've only been
Speaker 6: talking about four or five overall, but the footprint clearly
Speaker 6: is shrinking and their ability to influence credit in the
Speaker 6: broader US economy may bee dwindling right now? Is that
Speaker 6: concerning to you at all?
Speaker 7: I think that there's an underlying negative pressure that comes
Speaker 7: from what's going on in banking right now. Negative in
Speaker 7: two senses. One is the large banks really face strict
Speaker 7: rules on lending, so to the degree that large banks
Speaker 7: are gaining share because they receive greater scrutiny, they may
Speaker 7: have less expanse of lending policies. And second that the
Speaker 7: regional banks themselves, facing all the pressures that we're seeing,
Speaker 7: are likely to be more conservative. I think it's part
Speaker 7: of the reason we're most likely to see a leveling
Speaker 7: off of FED rate increases versus what we might have
Speaker 7: expected two or three months ago, because they realized there's
Speaker 7: these downward pressures coming from the credit challenges in the
Speaker 7: US economy. I think the question is how that stabilizes
Speaker 7: in the medium term. I think there's been relatively good
Speaker 7: intervention so far to prevent a crisis from spreading that
Speaker 7: we see even in this afternoon's data, the continued pressures there,
Speaker 7: so we're not out of the woods yet, even if
Speaker 7: so far it's been navigated pretty well.
Speaker 6: Wonder get your views on the global situation, particularly US China.
Speaker 6: We had a story earlier today on the Bloomberg Terminal
Speaker 6: indicating that the senior advisors to the White House said
Speaker 6: that the American economy is vulnerable to China's law on
Speaker 6: critical mineral processing. That just is one example. We know
Speaker 6: the semiconductor story you mentioned Ai. I'm sure that when
Speaker 6: you get into some of these advanced semiconductors, that represents
Speaker 6: a real concern here. How do you view the US
Speaker 6: China relationship right now?
Speaker 7: It is probably the highest level of concern for the
Speaker 7: business community. And I would say for me as well.
Speaker 7: I mean not that I don't I don't want to
Speaker 7: minimize all these near term economic pressures we just discussed,
Speaker 7: but I'm really quite optimistic we'll navigate through that period.
Speaker 7: The underlying geopolitical tension between the US and China is
Speaker 7: a different animal. It's a wild card for the business
Speaker 7: leaders to predict where it's going to go. I think
Speaker 7: no one can predict. It's certainly not the business community,
Speaker 7: and it's extremely challenging. And you discussed the challenges of
Speaker 7: the US dependency on China for critical elements, but it
Speaker 7: goes the other way too. China relies on chips that
Speaker 7: are manufactured in Taiwan that use technology that comes from
Speaker 7: the US, from Europe, from elsewhere, so they're feeling uncertainty
Speaker 7: and risk as well. And when both sides are feeling
Speaker 7: uncertainty and you have a rapid deterioration in trust, you
Speaker 7: have a level of unpredictability which is very high. And
Speaker 7: we're observing that it continues to seem tougher and tougher.
Speaker 7: We're seeing a loss of trust almost week by week,
Speaker 7: and we hope that the political leaders on both sides
Speaker 7: can do some things to rebuild some of that trust
Speaker 7: because the downside scenarios on all sides are very high.
Speaker 6: What level of confidence do you have right now in
Speaker 6: the current administration to navigate that terrain.
Speaker 7: I am optimistic we will avoid the worst case scenarios,
Speaker 7: and I think that it is really tough right now.
Speaker 7: But I think both China and the US leadership realize
Speaker 7: that why the price that gets paid if we let
Speaker 7: things really fall off a cliff here, and I think
Speaker 7: they'll be able to avoid it. The challenge is not
Speaker 7: what the intent is. That sometimes wild cards can come
Speaker 7: that no one can predict, and when neither side is
Speaker 7: talking to the other, they put their own interpretations on it,
Speaker 7: so it's not the intent on either side. I don't
Speaker 7: think either side wants this to fall off a cliff.
Speaker 7: There's too much interdependency. It's that some of the elements
Speaker 7: that build trust and the mechanisms that allow for clear
Speaker 7: communication are not as strong as they should be right now,
Speaker 7: and we need both sides to work on rebuilding some
Speaker 7: of that.
Speaker 6: Rich, last question, I'll give you thirty seconds talking about
Speaker 6: optimism here. Are you optimistic that we're going to get
Speaker 6: a resolution to this debt sealing issue here in the US?
Speaker 7: Yes, but not without a whole lot of pain. I mean,
Speaker 7: it seems that we can't just move to things that
Speaker 7: seem basic in running a country or an economy. It
Speaker 7: seems we can only do it with extraordinary stress and
Speaker 7: down to the minute deadlines, and it's frustrating. It's frustrating
Speaker 7: for business leaders. They want predictability. But we'll get there.
Speaker 7: It will be really painful.
Speaker 6: Rich, thanks so much for taking time to chat with us.
Speaker 6: Rich Lesser is the Global Chair of VCG. Live from
Speaker 6: the Milk and Institute Global Conference from Beverly Hills here
Speaker 6: on Bloomberg BusinessWeek, and this is Bloomberg.
Speaker 1: This is the Bloomberg Business Week Podcast of a little
Speaker 1: on Apple, Spotify, and anywhere else you get your podcast.
Speaker 1: Listen live weekday afternoons from three to six Eastern on
Speaker 1: Bloomberg dot com, the iHeartRadio app, tune In, and the
Speaker 1: Bloomberg Business App. You can also want us live every
Speaker 1: weekday on YouTube and always on the Bloomberg terminale