WEBVTT - Tech Leaders Discuss AI Policy in Senate Meeting 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business. Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.680 --> 0:00:23.919 Well, we did see shares of big tech kind of 0:00:23.920 --> 0:00:27.360 mixed today. Apple was lower, Amazon was higher. More than 0:00:27.360 --> 0:00:30.280 twenty tech in civil society leaders, including the CEOs of 0:00:30.320 --> 0:00:32.960 five of the ten biggest US companies, appeared at a 0:00:32.960 --> 0:00:35.880 closed door Senate meeting today to shape how artificial intelligence 0:00:35.960 --> 0:00:38.720 is regulated. The meeting was organized by Senate Majority leader 0:00:38.800 --> 0:00:41.640 Chuck Schumer. It included a mix of personalities with diverging 0:00:41.720 --> 0:00:44.400 views on how to write the rules for AI. We're 0:00:44.440 --> 0:00:47.200 talking about people like the CEOs of Alphabet, Microsoft, Meta, 0:00:47.400 --> 0:00:50.319 and Open Ai, all invited to appear alongside rivals in 0:00:50.320 --> 0:00:54.000 industry critics to discuss possible guardrails for AI that balance 0:00:54.080 --> 0:00:57.560 the risks and rewards of this tech. Kaylee Lyons is 0:00:57.560 --> 0:00:59.640 the co host of Bloomberg Sound on weekdays at one 0:00:59.640 --> 0:01:01.760 pm one Street time, right here on Bloomberg Radio. She 0:01:01.800 --> 0:01:04.080 joins us from our Washington d C Bureau and Anna 0:01:04.200 --> 0:01:06.039 Edgerton is technology reporter at Bloomberg. 0:01:06.080 --> 0:01:06.200 Now. 0:01:06.280 --> 0:01:08.720 She joins us on the phone from Washington, d C. 0:01:09.200 --> 0:01:10.600 So Anna talked to us a little bit about what 0:01:10.640 --> 0:01:12.480 happened behind closed doors this afternoon. 0:01:13.480 --> 0:01:16.200 Yeah, you know, it was a pretty crazy scene. We 0:01:16.200 --> 0:01:18.800 were able to go in at the beginning of the meeting, 0:01:18.840 --> 0:01:20.679 but then it was not open to the public, and 0:01:20.680 --> 0:01:23.280 there's a lot of complaints about that from senators like 0:01:23.319 --> 0:01:26.600 Elizabeth Warren of Massachusetts saying, you know, we shouldn't be 0:01:26.640 --> 0:01:30.319 giving these tech CEOs the chance to basically lobby senators 0:01:30.640 --> 0:01:33.120 behind closed doors. But from talking to people who are 0:01:33.160 --> 0:01:36.039 actually in the room, they said, you know, it was 0:01:36.120 --> 0:01:39.760 mostly kind of surface level statements at the beginning, and 0:01:39.800 --> 0:01:43.080 then got into a more interesting discussion involving, you know, 0:01:43.160 --> 0:01:47.640 the security risks of open source research, you know, things 0:01:47.680 --> 0:01:51.800 about like should there be a new agency to regulate AI. 0:01:51.960 --> 0:01:55.440 So there was some discussion and it'll be interesting to 0:01:55.480 --> 0:01:57.440 see how that continues into the afternoon. 0:01:58.440 --> 0:02:01.440 I want to bring you just quickly, a red headline 0:02:01.520 --> 0:02:06.080 crossing the Bloomberg terminal right now. Arm the chip designer 0:02:06.120 --> 0:02:09.440 whose IPO is so being so closely watched by the market. 0:02:09.800 --> 0:02:12.079 According to Wall Street, Journal is set to price it's 0:02:12.160 --> 0:02:15.440 IPO at fifty two dollars a share. That would give 0:02:15.440 --> 0:02:19.359 it a valuation of fifty five point five billion dollars 0:02:19.440 --> 0:02:22.160 a share, or fifty five point five billion dollars overall 0:02:22.200 --> 0:02:26.120 on a fully diluded basis. That's seemsingly a little bit 0:02:26.160 --> 0:02:29.800 more than they were looking for initially, but roughly around 0:02:30.480 --> 0:02:33.919 that the outline that they had given. But we'll bring 0:02:33.960 --> 0:02:37.880 you more on this story in just a few minutes. Guys, 0:02:37.919 --> 0:02:43.600 I want to understand from these discussions that happened today, 0:02:43.880 --> 0:02:47.800 what do you think, Kaylee, what do you think, if anything, 0:02:48.080 --> 0:02:50.720 will be the sort of policy implications going forward for 0:02:50.840 --> 0:02:51.639 these discussions. 0:02:52.760 --> 0:02:55.960 Well, this really was just a start. That's what the 0:02:56.080 --> 0:02:58.959 organizer of the summit today, the Senate Majority Leader Chuck Schumer, 0:02:59.000 --> 0:03:01.919 said he would like to see many more of these summits. 0:03:01.919 --> 0:03:04.440 He would like to see committees in the Senate working 0:03:04.520 --> 0:03:07.520 up legislation. He said he would like to see AI 0:03:07.600 --> 0:03:10.799 regulation in a matter of months, not years. But what 0:03:10.840 --> 0:03:13.600 we know is that Congress is a pretty slow moving body, 0:03:14.080 --> 0:03:17.600 and this technology is moving very quickly. So it's kind 0:03:17.600 --> 0:03:20.640 of a race here between policymakers who all seem to 0:03:20.680 --> 0:03:22.720 agree today that they do want to get their arms 0:03:22.919 --> 0:03:25.040 around this technology, that there is a role for the 0:03:25.080 --> 0:03:28.320 federal government to play in setting guardrails around it, and 0:03:28.360 --> 0:03:31.680 then actually doing so is going to be another story. 0:03:31.760 --> 0:03:34.399 So this was really just the beginning and we'll see 0:03:34.400 --> 0:03:35.640 how things progress from here. 0:03:35.800 --> 0:03:38.760 It was quite a crew in Washington today. Tech tycoons 0:03:38.800 --> 0:03:41.200 with a combined networth of roughly five hundred and fifty 0:03:41.320 --> 0:03:44.400 billion dollars gathered in the same room Wednesday to talk 0:03:44.440 --> 0:03:47.000 about AI and how it's regulated. One of the people 0:03:47.040 --> 0:03:53.480 there was none other than On Tesla CEO x CEO 0:03:54.320 --> 0:04:00.200 SpaceX the C I guess he's not x CEO. That's 0:04:00.200 --> 0:04:02.840 a good point, thank you. Ex owner Elon Musk. Check 0:04:02.840 --> 0:04:04.760 out what he had to say to reporters. 0:04:05.080 --> 0:04:07.560 The reason that I've been souching to have people AI 0:04:07.640 --> 0:04:11.120 safety in advance of sort of anything terrible happening is 0:04:11.160 --> 0:04:16.760 that I think the consequences of AI going wrong are severe, 0:04:17.080 --> 0:04:19.240 so we have to be proactive rather they're reactive. 0:04:19.720 --> 0:04:21.359 That was none other than Elon Musk saying that we 0:04:21.400 --> 0:04:25.120 have to be proactive rather than reactive regarding AI. Kaylee. 0:04:25.240 --> 0:04:26.880 This is not anything new that he said. I mean, 0:04:26.920 --> 0:04:29.440 he's been talking about the threat of AI for years. 0:04:29.720 --> 0:04:32.159 My question for you is do lawmakers understand AI? 0:04:34.240 --> 0:04:38.479 Excellent question, Tim Well. Part of today was framed as 0:04:38.520 --> 0:04:41.480 an educational effort. The reason they were having, as Anna said, 0:04:41.520 --> 0:04:44.320 what was a kind of controversial decision to have a 0:04:44.320 --> 0:04:46.840 closed door meeting, was that they wanted these people to 0:04:46.880 --> 0:04:49.760 be candid. Knowing that you had more than twenty people 0:04:49.800 --> 0:04:51.960 there who were going to have about three minutes to speak, 0:04:52.000 --> 0:04:53.560 at least to the beginning, they were trying to get 0:04:53.560 --> 0:04:56.320 out as much information from them as they possibly could. 0:04:56.760 --> 0:05:00.039 Understanding is largely what they were seeking, in addition to, 0:05:00.160 --> 0:05:02.520 you know, potential guidance or ideas as to how to 0:05:02.560 --> 0:05:04.920 move forward on a regulatory basis. But this is the 0:05:05.040 --> 0:05:08.159 US Senate we're talking about, guys. They're not necessarily the 0:05:08.160 --> 0:05:11.040 most technologically savvy individuals that are out there. 0:05:11.200 --> 0:05:13.880 It's an understatement, so true. 0:05:14.200 --> 0:05:17.159 Yeah, I think I've heard some discussions of theirs about 0:05:17.200 --> 0:05:19.640 the Internet, and that's been around for a little while, 0:05:19.680 --> 0:05:21.520 longer than some of this artificial technology. 0:05:21.760 --> 0:05:24.200 But Ana, are there. 0:05:24.160 --> 0:05:27.559 Any areas where you know, the participants in this meeting 0:05:27.560 --> 0:05:30.240 that you understand from your sources, you know, came to 0:05:30.360 --> 0:05:34.560 some sort of agreement that maybe didn't exist before. 0:05:35.480 --> 0:05:35.720 Yeah. 0:05:35.800 --> 0:05:38.279 Two themes that kind of emerged from at least the 0:05:38.320 --> 0:05:40.400 executives in the room, if not kind of the civil 0:05:40.440 --> 0:05:44.280 society actors, were that the US should play a role 0:05:44.480 --> 0:05:47.680 in setting kind of the global governance discussion about AI. 0:05:47.800 --> 0:05:48.960 It's there's going to be the. 0:05:49.120 --> 0:05:51.800 Broad agreement that the US needs to have something to 0:05:51.839 --> 0:05:54.919 contribute to this discussion, if not in the form of legislation, 0:05:55.080 --> 0:05:57.719 then you know, these voluntary commitments that the White House 0:05:57.839 --> 0:06:00.880 has been talking about has the shared from several. 0:06:00.680 --> 0:06:03.560 Companies, So you know, that was one area of agreement. 0:06:03.600 --> 0:06:06.560 And then there was also kind of a broad understanding 0:06:06.720 --> 0:06:10.880 that regulations should focus on the end use of this technology, 0:06:10.960 --> 0:06:14.520 like how AI tools are used, rather than the actual 0:06:14.600 --> 0:06:20.000 systems themselves. Now, the civil society participants might have a 0:06:20.000 --> 0:06:23.279 different view about that because these systems are going to 0:06:23.279 --> 0:06:25.800 be powerful in ways that we don't understand. So it's 0:06:25.839 --> 0:06:28.200 not like, you know, just put cars on the road and. 0:06:28.240 --> 0:06:31.440 Let people use them as they will know. You regulate 0:06:31.480 --> 0:06:33.919 seat belts, you regulate airbags, so you know, what's the 0:06:33.960 --> 0:06:36.480 equivalent for AI. That's still going to be the task 0:06:36.560 --> 0:06:38.840 for Congress to kind of pash out one person. 0:06:38.600 --> 0:06:40.360 Who was there Anna, who doesn't necessarily have the name 0:06:40.400 --> 0:06:42.560 recognition yet among a wide group of people, I would 0:06:42.600 --> 0:06:46.720 argue with Sam Altman, the founder of Open Ai, and 0:06:46.960 --> 0:06:50.160 I'm wondering what you heard from him. He's definitely someone 0:06:50.160 --> 0:06:52.159 who I think we can at this point credit with 0:06:52.640 --> 0:06:54.320 shaping a lot of the interests that we've seen in 0:06:54.360 --> 0:06:56.960 AI since the launch of chat GPT and since the 0:06:56.960 --> 0:06:57.680 interest around it. 0:06:58.600 --> 0:06:59.480 You know, it was so. 0:06:59.440 --> 0:07:02.719 Interesting when he spoke to Congress several months ago because 0:07:02.720 --> 0:07:04.680 it was kind of the first time that this conversation 0:07:05.080 --> 0:07:07.359 really first onto the scene on Capitol Hill, and you 0:07:07.440 --> 0:07:10.800 have this kind of boyish looking doe ied CEO and 0:07:10.960 --> 0:07:13.840 very earnestly saying we need to be regulated, you know, 0:07:14.120 --> 0:07:16.520 if AI goes wrong, if you go very wrong. And 0:07:16.560 --> 0:07:20.040 so you see this kind of plea from this CEO 0:07:20.200 --> 0:07:23.120 of this new innovative company that sounded very different than 0:07:23.160 --> 0:07:26.320 what we had heard from Mark Zuckerberg and hearings past. However, 0:07:26.480 --> 0:07:29.440 in the month since then, when it comes to actual regulation, 0:07:29.600 --> 0:07:32.400 like we're seeing an EU with their AI Act, we've 0:07:32.400 --> 0:07:35.480 heard pushback from Sam Altman. So you know, he is 0:07:35.600 --> 0:07:39.720 kind of emerging as another CEO who wants to be regulated, 0:07:39.760 --> 0:07:41.680 so to speak, but only on his turn. 0:07:42.160 --> 0:07:44.440 Yeah, Kayla, you actually spoke to him on his way in. 0:07:44.480 --> 0:07:46.080 I think yeah. 0:07:46.120 --> 0:07:47.960 I yelled at him as he was getting out of 0:07:47.960 --> 0:07:52.040 his suv heading out to the Center building, and I asked, 0:07:52.120 --> 0:07:54.480 you know, what are you planning to tell senators? What's 0:07:54.520 --> 0:07:57.120 your message in your opening remarks? And he says sort 0:07:57.160 --> 0:07:59.440 of that this is an important, urgent and in some 0:07:59.520 --> 0:08:02.760 ways precedented moment. There was really kind of a theme here. 0:08:02.760 --> 0:08:05.520 It wasn't just Sam Oltman, but Senator Chuck Schumer, others 0:08:05.560 --> 0:08:07.920 as well, everyone trying to convey a sense of urgency 0:08:08.200 --> 0:08:10.800 in trying to get something done in regard to AI. 0:08:10.840 --> 0:08:13.400 And part of that conversation I thought was really interesting 0:08:13.560 --> 0:08:16.040 was about competition with China. How you don't want to 0:08:16.080 --> 0:08:18.640 have the Chinese Communist Party being the ones that are 0:08:18.720 --> 0:08:21.240 setting the rules of the road and kind of the 0:08:21.240 --> 0:08:23.640 groundwork here that the United States should be doing it. 0:08:23.680 --> 0:08:26.040 And it seems like that kind of competitive drive was 0:08:26.240 --> 0:08:28.040 in part what is really driving a lot of the 0:08:28.080 --> 0:08:30.560 desire on the part of lawmakers to do something and 0:08:30.600 --> 0:08:32.480 do something quickly here. And this is something that we 0:08:32.520 --> 0:08:34.360 know the likes of Elon Musk Raised and the Hearing 0:08:34.400 --> 0:08:35.000 today as well. 0:08:35.360 --> 0:08:38.240 Kaylee Lyons, co host of Bloomberg Sound on weekdays at 0:08:38.240 --> 0:08:40.640 one pm Wall Street Time on Bloomberg Radio from our 0:08:40.720 --> 0:08:44.040 Washington DC bureau, and Adgerton Technology Report at Bloomberg News 0:08:44.040 --> 0:08:45.679 on the phone from Washington, DC. A big thank you 0:08:45.720 --> 0:08:47.959 to both of you for beginners, the latest from Washington 0:08:48.000 --> 0:08:48.480 and AI. 0:08:49.120 --> 0:08:52.679 You're listening to the Bloomberg Business Week podcast. Catch us 0:08:52.720 --> 0:08:56.040 live weekday afternoons from three to six Eastern Listen on 0:08:56.120 --> 0:09:00.199 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, 0:09:00.440 --> 0:09:02.280 or watch us live on YouTube. 0:09:03.559 --> 0:09:04.160 Well it's the. 0:09:04.080 --> 0:09:07.400 Big news after hours certainly, but perhaps the big news 0:09:07.400 --> 0:09:13.000 for tomorrow as well. Arm Holdings pricing its IPO at 0:09:13.120 --> 0:09:15.520 fifty two dollars per share, and that's according to the 0:09:15.600 --> 0:09:17.960 Wall Street Journal. This is set to be the largest 0:09:17.960 --> 0:09:22.400 listing this year. It had intended to price forty seven 0:09:22.440 --> 0:09:24.679 to fifty one dollars per share, but Bloomberg News had 0:09:24.679 --> 0:09:27.840 reported that the company was even looking to potentially exceed 0:09:27.840 --> 0:09:30.800 those valuations, and it does appear they have. This would 0:09:30.880 --> 0:09:34.200 put this price, according to Wall Street Journal sources, would 0:09:34.240 --> 0:09:37.720 put the overall valuation of the company at fifty five 0:09:37.840 --> 0:09:41.520 point five billion dollars and it's of course start set 0:09:41.520 --> 0:09:45.400 to start trading tomorrow. Here to break down the price 0:09:46.200 --> 0:09:50.400 the IPO and the IPO market is Jane Tier. She's 0:09:50.440 --> 0:09:53.480 the senior data editor at crunch Base and joins us 0:09:53.480 --> 0:09:57.800 from Palo Alto to discuss we just got this news. Janey, 0:09:58.640 --> 0:10:00.800 what what are your thoughts here? Is this surprising to 0:10:00.840 --> 0:10:03.440 you that we kind of saw the pricing come in 0:10:03.600 --> 0:10:05.200 just ahead of the target. 0:10:06.520 --> 0:10:09.559 I think over the last few days there's been indications 0:10:09.640 --> 0:10:12.360 as the company has been doing its roadshow with institutional 0:10:12.360 --> 0:10:16.120 investors that there is a lot of interest in the armstock. 0:10:17.040 --> 0:10:20.240 They as you said, they said forty seven to fifty one, 0:10:20.240 --> 0:10:22.920 and they're pricing a little higher at fifty two, not 0:10:23.040 --> 0:10:25.679 too much higher, you know, I've seen reports of this 0:10:25.760 --> 0:10:29.800 is five to ten times oversubscribed, So definitely a lot 0:10:29.840 --> 0:10:32.960 of investor interest. And I think, you know, as we've 0:10:33.040 --> 0:10:36.880 led into this month of three companies planning to IPO, 0:10:36.960 --> 0:10:40.080 three very strong companies which we have not seen in 0:10:40.120 --> 0:10:42.640 the last eighteen months, I think all the questions have 0:10:42.720 --> 0:10:45.880 been around what are the right valuations in the market. 0:10:45.920 --> 0:10:50.000 We've seen valuations come down massively in the last eighteen months, 0:10:50.040 --> 0:10:52.840 and so where are these valuations going to sit? Is 0:10:52.880 --> 0:10:55.199 their investor interest? I think there's been a lot of 0:10:55.280 --> 0:10:57.720 questions around that, and I think it's certainly interesting to 0:10:57.760 --> 0:11:01.160 see that they're pricing a little higher than their guidance. 0:11:01.880 --> 0:11:04.040 Yeah, it is. It is interesting to see that. And 0:11:04.080 --> 0:11:06.000 one thing that's also interesting to see is just since 0:11:06.080 --> 0:11:09.720 arms US one came out, we saw Instacart, we saw Birkenstock. 0:11:11.280 --> 0:11:12.800 Is the IPO drought over at this point? 0:11:12.880 --> 0:11:13.160 Janey? 0:11:14.520 --> 0:11:16.280 I think it's a little early to say. I think 0:11:16.320 --> 0:11:18.800 everyone wants to watch these tech stocks. You know, we 0:11:19.280 --> 0:11:21.640 run a billion dollar exit board. What we try to 0:11:21.679 --> 0:11:25.000 do is track the venture back companies that have the 0:11:25.080 --> 0:11:28.079 highest valuations that go out on the public markets. And 0:11:28.120 --> 0:11:30.800 we've seen a complete dearth in twenty twenty two. It 0:11:30.840 --> 0:11:33.439 was largely spas, and I think those deals were done 0:11:33.480 --> 0:11:36.600 in twenty twenty one, and then in twenty twenty three 0:11:36.679 --> 0:11:39.560 things have completely dried up, and so I think this 0:11:39.720 --> 0:11:43.480 is really a testing to see of three very different companies. 0:11:43.480 --> 0:11:47.520 The companies we're really tracking as Instacart, Clavio, which is 0:11:47.559 --> 0:11:50.680 an email automation company largely in the e commerce space, 0:11:50.880 --> 0:11:54.559 and obviously the ARM listing. Three very very different companies 0:11:54.600 --> 0:11:56.920 who are seeking to go out in September, and I 0:11:56.960 --> 0:11:59.199 think they each have very different stories to tell, but 0:11:59.559 --> 0:12:02.480 it'll be it'll be interesting for us to watch. Is 0:12:02.520 --> 0:12:05.640 their investor appetite for each of these very different companies, 0:12:06.080 --> 0:12:08.080 How are they going to price in this market? And 0:12:08.120 --> 0:12:11.439 what do they look like three months to six months 0:12:11.440 --> 0:12:13.360 down the road. It's not only about the IPO and 0:12:13.679 --> 0:12:16.640 the IPO pop, but it's really about how these companies 0:12:17.000 --> 0:12:19.480 do in the markets in the months ahead, because we 0:12:19.559 --> 0:12:22.680 saw so many twenty twenty one and twenty twenty and 0:12:22.760 --> 0:12:26.000 twenty twenty two listings have gone down massively from their 0:12:26.040 --> 0:12:28.360 IPO price, So I think it's a test. 0:12:29.320 --> 0:12:33.800 Yeah. One of the questions here as well is whether 0:12:33.920 --> 0:12:37.320 or not ARM is pitching itself as just like we are, 0:12:37.320 --> 0:12:40.440 an AI company, or whether it's doing something else and 0:12:40.440 --> 0:12:42.959 trying to talk about its fundamentals in some way. Jenny, 0:12:43.200 --> 0:12:46.680 where do you see it's having the most success? 0:12:48.000 --> 0:12:50.200 And I think what's interesting about this IPO is that 0:12:50.240 --> 0:12:53.520 there is obviously it's on it's coming out on the 0:12:53.520 --> 0:12:56.880 backdrop of Nvidia, and you know, and that start going 0:12:56.960 --> 0:13:00.720 up incre massively I think also as part of this IPO, 0:13:00.840 --> 0:13:04.640 there are a number of companies who want to invest 0:13:04.720 --> 0:13:06.640 in the IPO. I think Apple is one of them, 0:13:06.640 --> 0:13:09.160 there's a few others. So I think there's a lot 0:13:09.200 --> 0:13:11.720 of investor interest in the chip space right now. In 0:13:11.800 --> 0:13:14.880 a AI, there's certainly a huge demand. And what was 0:13:14.920 --> 0:13:17.720 interesting in looking at their IPO filing is year of 0:13:17.760 --> 0:13:21.160 a year revenue has been pretty flat, but I think 0:13:21.160 --> 0:13:24.280 their expectation, and I think Bloomberg reported this that there 0:13:24.320 --> 0:13:26.880 is an expectation that in the next year. We're already 0:13:26.880 --> 0:13:29.480 into that because they're just reported in March for fiscal 0:13:29.480 --> 0:13:32.760 twenty to twenty three, but for the next year they're 0:13:32.840 --> 0:13:36.400 expecting revenue to be up around eleven percent and then 0:13:36.440 --> 0:13:39.440 even higher than that in the year of following. So 0:13:39.559 --> 0:13:43.200 I think they're anticipating a lot of demand for their 0:13:43.280 --> 0:13:48.200 chip designs, and so I think because of that, there 0:13:48.240 --> 0:13:51.200 is a lot of investor Investor interest is based on 0:13:51.240 --> 0:13:54.720 growth for these companies being profitable as companies but also 0:13:54.760 --> 0:13:57.920 showing growth, and even though in the last fiscal year 0:13:57.960 --> 0:14:00.400 they haven't really shown revenue growth, I think there is 0:14:00.480 --> 0:14:04.600 expectation that they will going forward. Nonetheless, this price is still, 0:14:04.880 --> 0:14:06.200 you know, many are still saying it's. 0:14:06.120 --> 0:14:09.520 A rich price, are you? How are you thinking about 0:14:09.600 --> 0:14:13.800 China's exposure excuse me, arms exposure to China. As we 0:14:13.920 --> 0:14:17.240 reported last month, ARM runs most of its China business 0:14:17.280 --> 0:14:19.880 through an independent unit called ARM Technology, which is its 0:14:19.920 --> 0:14:23.320 single largest customer and accounted for about twenty four percent 0:14:23.320 --> 0:14:27.320 of its sales in the year ended March. Does that 0:14:28.000 --> 0:14:30.040 raise any flags for you? And this isn't you know? 0:14:30.200 --> 0:14:31.920 I mean to be fair, I mean, Apple gets about 0:14:31.960 --> 0:14:35.880 twenty percent of its revenue each year from the Greater 0:14:36.000 --> 0:14:37.720 China area. But I'm wondering how you think about that 0:14:37.800 --> 0:14:38.480 as an analyst. 0:14:39.320 --> 0:14:41.720 Yeah, I think there is. I mean, there's so much 0:14:41.720 --> 0:14:44.920 demand for trips globally. China is a very very big market. 0:14:45.000 --> 0:14:48.560 They've been they've been investing in the space in order 0:14:48.600 --> 0:14:51.480 to create more independence. So I'm not quite sure what 0:14:51.520 --> 0:14:54.160 the outlook is for China, but certainly the demand globally 0:14:54.240 --> 0:14:56.560 is so big and China is a very big market, 0:14:56.600 --> 0:14:59.760 but they are seeking to create some independence, although the 0:14:59.840 --> 0:15:03.960 China market at this point is behind. 0:15:04.080 --> 0:15:08.440 What if this IPO tomorrow doesn't go that well? I mean, 0:15:08.440 --> 0:15:12.520 I remember the Facebook experience back of twenty twelve. Would 0:15:12.560 --> 0:15:14.920 it say something about AI? Would it say something about 0:15:14.920 --> 0:15:17.880 the IPO market? Speculate a little bit for. 0:15:17.920 --> 0:15:21.680 Us, Yeah, I think it will definitely say something about 0:15:21.720 --> 0:15:24.960 both of those, about the AI market specifically and about 0:15:25.000 --> 0:15:28.080 the IPO market. I think the you know, in going 0:15:28.120 --> 0:15:31.040 through this process and looking at these companies like Instacart, 0:15:31.080 --> 0:15:34.680 you know, Instacart is coming in way below even if 0:15:34.680 --> 0:15:38.720 it's internal valuation set. Recently, I think ARM has been 0:15:38.920 --> 0:15:42.080 very careful. You know, we know that SoftBank bought its 0:15:42.120 --> 0:15:45.520 own shares at a sixty four billion valuation just a 0:15:45.560 --> 0:15:49.120 month ago, and they're coming in, you know, almost ten 0:15:49.160 --> 0:15:51.640 billion below that amount. So I think there is a 0:15:51.640 --> 0:15:54.680 lot of sensitivity in the market right now around pricing, 0:15:55.440 --> 0:15:58.600 partly because of how badly tech stocks have performed in 0:15:58.600 --> 0:16:01.560 the last two years. But I also think because from 0:16:01.600 --> 0:16:04.840 many of these investors in Instacart and in ARM and 0:16:04.880 --> 0:16:08.400 in Clavio, it's not really just about these three companies 0:16:08.440 --> 0:16:11.120 about it's the opening up of the markets, and it's 0:16:11.280 --> 0:16:15.800 the ten fifty one hundred some even say two hundred 0:16:15.800 --> 0:16:18.840 companies who were looking at listing and were thinking about 0:16:18.880 --> 0:16:21.720 listing in twenty twenty one and missed the mark. There 0:16:21.800 --> 0:16:24.240 might not be quite that many who could go out 0:16:24.280 --> 0:16:26.920 in this market or into twenty twenty four, But for 0:16:27.000 --> 0:16:29.560 many of those investors, it's about these companies that are 0:16:29.560 --> 0:16:32.480 going to be going out after these IPOs, and they 0:16:32.560 --> 0:16:34.920 don't want to price this too high and have that 0:16:35.000 --> 0:16:37.280 impact the markets. And you know, interestingly, I spoke to 0:16:37.800 --> 0:16:40.400 a lawyer who worked on the Facebook IPO in twenty twelve. 0:16:40.960 --> 0:16:44.400 There was so much anticipation around the Facebook IPO. It 0:16:44.440 --> 0:16:47.080 was priced at the highest level that it could and 0:16:47.160 --> 0:16:49.520 the stock came down after it when public, The stock 0:16:49.560 --> 0:16:52.080 came down and kind of dampened the whole IPO market 0:16:52.240 --> 0:16:54.720 because it was such a big listing for about nine 0:16:54.760 --> 0:16:57.040 months after that. And so I think, given this is 0:16:57.480 --> 0:17:00.200 one of the biggest listings certainly since twenty twenty one 0:17:00.360 --> 0:17:05.159 when Revine went public, I think investors are focused on 0:17:05.280 --> 0:17:07.359 arm but they're also focused on the next set of 0:17:07.359 --> 0:17:10.480 companies to come out and don't want this, do not 0:17:10.600 --> 0:17:11.720 want the stock to collapse. 0:17:11.800 --> 0:17:14.560 Yeah, it's pretty interesting. You bring up meta Facebook now 0:17:14.640 --> 0:17:17.880 known as Meta Platforms and Rivian companies that have performed 0:17:17.920 --> 0:17:21.960 in completely different ways after hitting the public markets. Facebook's 0:17:22.000 --> 0:17:25.240 early problems notwithstanding, so I want to take a step back, 0:17:25.280 --> 0:17:27.439 and just in the last ninety seconds we have with you, Janey, 0:17:27.640 --> 0:17:31.399 talk about a completely different stage of a company, and 0:17:31.480 --> 0:17:35.159 that's of course venture capital, way before the founders are 0:17:35.160 --> 0:17:37.879 even thinking about an IPO. You do a lot of 0:17:37.920 --> 0:17:40.440 analysis on the state of venture capital. Where are things 0:17:40.480 --> 0:17:42.879 right now in terms of fundraising and in terms of 0:17:42.920 --> 0:17:44.440 availability of funds. 0:17:44.840 --> 0:17:47.680 Yeah, I think what we've seen is a huge pullback 0:17:47.760 --> 0:17:51.280 in the venture capital markets in twenty twenty two, from 0:17:51.280 --> 0:17:54.239 the second quarter and into twenty twenty three. And if 0:17:54.280 --> 0:17:56.840 you look back twenty twenty, there was north of three 0:17:56.920 --> 0:18:01.520 hundred billion globally that went into private venture back companies 0:18:01.560 --> 0:18:04.520 from seed all the way through to late stage. In 0:18:04.640 --> 0:18:07.000 twenty twenty one that doubled. It was north of six 0:18:07.119 --> 0:18:10.160 hundred billion. And what we're seeing possibly for this year 0:18:10.560 --> 0:18:12.720 in the pullback, it's going to be half of that. 0:18:12.840 --> 0:18:15.560 It'll be less than three hundred billion again. And I 0:18:15.680 --> 0:18:19.600 think the you know, the late stage market has largely evaporated, 0:18:20.040 --> 0:18:22.399 and that's because of the IPO markets that there aren't 0:18:22.440 --> 0:18:25.639 companies on a pipeline to go public. All of that 0:18:25.800 --> 0:18:28.400 money went in at the very late stage in anticipation 0:18:28.880 --> 0:18:31.760 of companies going public and that did not happen, and 0:18:31.800 --> 0:18:35.280 so that massively pulled back but ended up affecting actually 0:18:35.320 --> 0:18:37.800 every single stage pulled back as a result. 0:18:38.440 --> 0:18:40.560 Yeah, that's right. I mean, and you know, you point 0:18:40.600 --> 0:18:42.960 out that a lot of these companies have brought down 0:18:43.000 --> 0:18:48.000 their valuations here in this final stage. Janey's here, senior 0:18:48.119 --> 0:18:50.680 data editor at Crunchbase. Thank you so much for your 0:18:50.720 --> 0:18:55.440 insight on this really momentous and interesting IPO coming out tomorrow. 0:18:57.119 --> 0:19:00.679 You're listening to the Bloomberg Business Week podcast. Catch us 0:19:00.720 --> 0:19:04.840 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:19:04.920 --> 0:19:08.240 the Bloomberg Business app, and YouTube. You can also listen 0:19:08.320 --> 0:19:11.440 live on Amazon Alexa from our flagship New York station 0:19:11.880 --> 0:19:14.639 Just Say Alexa playing Bloomberg eleven thirty. 0:19:16.240 --> 0:19:18.400 Well, a few months ago, my brother sent me a TikTok. 0:19:18.440 --> 0:19:20.359 It just blew my mind. It was a demonstration of 0:19:20.359 --> 0:19:24.359 someone using photoshop. I mean, okay, like that sounds you know, 0:19:24.480 --> 0:19:27.560 why would I watch a TikTok of someone using photoshop? Well, 0:19:27.560 --> 0:19:29.280 it started with the picture of a locker room with 0:19:29.320 --> 0:19:31.600 sports equipment was strown everywhere, and then the person doing 0:19:31.600 --> 0:19:34.360 the demo was able to expand the borders of the image, 0:19:34.560 --> 0:19:37.879 and it seemed to magically grow to include other pieces 0:19:38.000 --> 0:19:42.200 of sporting equipment, more lockers. It just matched the scene perfectly. 0:19:42.240 --> 0:19:44.280 It actually looked like it was part of the original photo, 0:19:44.760 --> 0:19:47.119 even though it wasn't. It was a demonstration of the 0:19:47.160 --> 0:19:50.920 generative AI capabilities that Adobe, the maker of Photoshop Illustrated More, 0:19:51.080 --> 0:19:53.840 has built into its full suite of products. Well, today 0:19:53.920 --> 0:19:58.000 Adobe unveiling pricing for its new generative AI imaging tool Firefly. 0:19:58.200 --> 0:20:00.480 It's going to cost less than open AI's ca competitive 0:20:00.520 --> 0:20:03.520 competing service, Dolly, and you're to give us all the details. 0:20:03.680 --> 0:20:07.760 Is a Neil chakra Coffie President excuse me, a Neil Chakravati, 0:20:07.800 --> 0:20:10.679 President of Digital Experience Business at Adobe. He joins us 0:20:10.680 --> 0:20:13.199 on Zoom from San Jose, California, and Neil, good to 0:20:13.200 --> 0:20:16.960 have you with us this afternoon. So we were talking 0:20:17.000 --> 0:20:19.040 about AI a lot throughout the program today, and I 0:20:19.040 --> 0:20:22.240 think a lot of the credit to the interest in 0:20:22.280 --> 0:20:24.680 AA has to go to open ai and chat GPT 0:20:25.480 --> 0:20:27.800 just about a year ago. How long have you guys 0:20:27.840 --> 0:20:30.520 at Adobe you been working on these generative AI capabilities? 0:20:31.760 --> 0:20:33.600 Well, thanks for having me on the show. We've been 0:20:33.600 --> 0:20:36.600 working on AI what we call sense for well over 0:20:36.680 --> 0:20:39.760 ten years. And the kind of example that you just 0:20:39.800 --> 0:20:42.360 shared in your leadia in which we call generative phill, 0:20:42.440 --> 0:20:44.200 which is you take an image and then you can 0:20:44.680 --> 0:20:47.199 expand it and it'll fill it in for you. That 0:20:47.359 --> 0:20:49.840 is based on set of generative AI technologies has really 0:20:49.880 --> 0:20:53.119 come together in the last two years or so. But 0:20:53.200 --> 0:20:56.719 we'll put it all together with our knowledge of graphics vision, 0:20:56.920 --> 0:20:59.960 all the expertise we have around. 0:20:59.840 --> 0:21:03.080 M Yeah, Neil, I want to be clear as well. 0:21:03.160 --> 0:21:08.440 I have seen these TikTok's or these these reels, et cetera. 0:21:08.840 --> 0:21:11.760 They're amazing. I also neitsarily thought I was going to 0:21:11.800 --> 0:21:14.400 see a really boring video and it was very cool. 0:21:14.520 --> 0:21:16.880 It's like a whole like they like go viral. It's 0:21:16.880 --> 0:21:18.560 like a whole thing if you type it into TikTok 0:21:18.800 --> 0:21:19.080 and you. 0:21:19.080 --> 0:21:21.840 Shared one this morning, Tim, one with an iguana. You 0:21:22.040 --> 0:21:24.879 changed the setting. It's a forest, it's a beach. 0:21:25.119 --> 0:21:25.600 So cool. 0:21:25.960 --> 0:21:30.080 But what do people use this for? What's the commercial 0:21:30.119 --> 0:21:31.120 application here? 0:21:32.040 --> 0:21:33.359 Yeah? The commercial application. 0:21:33.440 --> 0:21:37.160 So if you think of any big brand, and if 0:21:37.160 --> 0:21:39.600 you think of how much content they produce for their 0:21:39.640 --> 0:21:41.840 marketing requirements, and you think of a TV campaign that 0:21:41.920 --> 0:21:43.840 they run, or when you think of content that they 0:21:43.920 --> 0:21:47.840 run in their digital campaigns, all these personalized campaigns where 0:21:47.880 --> 0:21:50.960 they have small segments of audiences that they. 0:21:50.840 --> 0:21:51.359 Want to reach. 0:21:51.560 --> 0:21:53.440 They might want to reach them via email, or through 0:21:53.440 --> 0:21:56.159 a mobile app, or through social media. So there's a 0:21:56.200 --> 0:21:59.480 lot of content that gets produced by virtually every big 0:21:59.520 --> 0:22:02.520 brand the world, and how they do it today is 0:22:03.000 --> 0:22:07.000 often it's a messy process. It's an expensive process, and 0:22:07.240 --> 0:22:09.320 they are not happy with you know, how long it 0:22:09.359 --> 0:22:11.640 takes or the kind of content that they produce, because 0:22:11.680 --> 0:22:14.400 it needs to be on brand, it needs to reflect 0:22:14.760 --> 0:22:17.639 their values, but also it needs to be appealing and beautiful. 0:22:17.960 --> 0:22:20.600 And that's really what we've focused on is how do. 0:22:20.560 --> 0:22:23.119 You take this power of this generative AI technology around 0:22:23.160 --> 0:22:26.119 Firefly make it available to marketers. And that's what we 0:22:26.119 --> 0:22:30.560 announced a product called gen Studio for brands to be 0:22:30.560 --> 0:22:33.080 able to take advantage of all of this technology and 0:22:33.160 --> 0:22:36.480 open the power of content creation to everybody in their 0:22:36.520 --> 0:22:37.480 marketing departments. 0:22:37.760 --> 0:22:41.480 One of the criticisms with AI has been, okay, well, 0:22:41.560 --> 0:22:44.800 a lot of what the generative AI relies on has 0:22:44.880 --> 0:22:49.240 been content created by people throughout the course of history, 0:22:49.240 --> 0:22:53.320 whether those are images, whether that is just text. In 0:22:53.359 --> 0:22:56.320 the case of chat GPT, it's always citing something that 0:22:56.359 --> 0:22:58.920 was created by a person. How do you make sure 0:22:59.640 --> 0:23:03.160 in this product that people are getting credit for images 0:23:03.200 --> 0:23:04.360 that they produced. 0:23:05.520 --> 0:23:08.119 Exactly, So you know, that's one of the big areas 0:23:08.160 --> 0:23:11.840 of focus for w right from the beginning, all of 0:23:11.840 --> 0:23:14.399 our products are designed to be commercially safe, which means 0:23:14.440 --> 0:23:16.560 that all of the training that we have done for 0:23:16.680 --> 0:23:20.680 Firefly and our generative AI technologies is with licensed content 0:23:20.840 --> 0:23:23.399 or content that's already in the public domain, and so 0:23:23.480 --> 0:23:27.440 that really enables us to be able to assure brands 0:23:27.440 --> 0:23:30.280 and marketers around the world that the content that's generated 0:23:30.320 --> 0:23:33.399 by this is commercially for safe and they can use. 0:23:33.240 --> 0:23:35.000 It in their campaigns. 0:23:35.440 --> 0:23:37.560 The other thing that we've done, in fact, our General 0:23:37.800 --> 0:23:40.920 con Chief Trust Officers spoke about it yesterday in Washington 0:23:41.560 --> 0:23:43.679 is really focused on what we call fair which is 0:23:44.240 --> 0:23:48.000 the Federal Anti Impersonation Right our support for making sure 0:23:48.040 --> 0:23:52.840 that artists get due credit for the intellectual property they'll 0:23:52.880 --> 0:23:54.800 produced that then gets used to. 0:23:54.800 --> 0:23:56.560 Train these AI models. 0:23:56.840 --> 0:23:59.840 That kind of transparency and making sure that there is 0:24:00.040 --> 0:24:04.199 benefit for everybody in the ecosystem is very important to us. 0:24:04.200 --> 0:24:07.000 That it will be Do you see AI products like 0:24:07.040 --> 0:24:13.760 this replacing the illustrators at Hollywood Studios for example? I mean, 0:24:13.840 --> 0:24:17.159 just considering the strikes that are going on there, do 0:24:17.200 --> 0:24:20.080 you see them replace you know, replacing the graphic designers 0:24:20.640 --> 0:24:23.000 that a lot of these companies would hire to make 0:24:23.040 --> 0:24:23.800 this kind of content. 0:24:25.400 --> 0:24:28.400 We see this AI as a copilot. We've often talked 0:24:28.400 --> 0:24:32.040 about the creative copilot that you get. This is if 0:24:32.040 --> 0:24:35.080 you think of, for example, how photoshopping the example that 0:24:35.119 --> 0:24:37.480 you use, how that people would use it. Usually they 0:24:37.480 --> 0:24:39.680 would start out with an image that they already had, 0:24:39.680 --> 0:24:41.679 and then they add layers to it, filters to it, 0:24:41.720 --> 0:24:44.400 and they make it more beautiful. So it's one way 0:24:44.400 --> 0:24:46.880 of starting the processes through this kind of genetic BAI 0:24:47.000 --> 0:24:49.240 where you can say you enter a prompt, it gives 0:24:49.280 --> 0:24:51.679 you a set of images, but then that's not the 0:24:51.680 --> 0:24:54.440 finished product. That's what you start with, and then the 0:24:54.560 --> 0:24:58.440 artist or the creative professional then goes on to use 0:24:58.560 --> 0:25:02.480 our tools and to make it on brand or make 0:25:02.520 --> 0:25:05.840 it much more visually appealing. So it's really the starting point. 0:25:06.080 --> 0:25:09.440 It's an iterative process and that's why it's really a copilot. 0:25:09.560 --> 0:25:11.119 It is not a replacement. 0:25:11.440 --> 0:25:13.159 And Neil I always like to ask people who are 0:25:13.160 --> 0:25:16.200 in your position what they visualize five ten years down 0:25:16.200 --> 0:25:18.680 the road. I mean, what we're seeing right now is 0:25:18.960 --> 0:25:21.199 pretty cool, and like I describe it, it is mind blowing. 0:25:21.240 --> 0:25:24.240 But if you could snap your fingers and create a 0:25:24.240 --> 0:25:27.280 product or create a feature, what does that look like? 0:25:28.520 --> 0:25:29.719 You know, five ten years around the road. 0:25:29.760 --> 0:25:34.520 When you think of how brands produce content, content will 0:25:34.560 --> 0:25:38.520 be individualized, personalized, the right content at the right time 0:25:38.560 --> 0:25:42.760 for every individual. Today, when companies or brands produce content, 0:25:43.200 --> 0:25:48.639 usually they produce one hero asset for example, as they 0:25:48.640 --> 0:25:50.600 call it, and then they use it in every campaign. 0:25:50.960 --> 0:25:52.040 They won't need to do that. 0:25:52.760 --> 0:25:54.760 You know, if you look out a few years from now, 0:25:55.080 --> 0:25:57.560 what they'll be able to do is produce beautiful content 0:25:57.600 --> 0:26:01.480 that's really personalized and appealing to every single individual. So 0:26:01.840 --> 0:26:05.280 if you and I are seeing a campaign from a brand, 0:26:05.640 --> 0:26:08.600 we might be seeing completely different images, completely different videos, 0:26:08.720 --> 0:26:10.960 but it'll be personalized to us and that will be 0:26:11.000 --> 0:26:12.840 made possible through this technology. O. 0:26:12.960 --> 0:26:15.000 Neil, thanks so much for taking the time and joining 0:26:15.040 --> 0:26:17.520 us this afternoon, especially on such a busy day for Adobe. 0:26:17.760 --> 0:26:21.280 That's a Neil Chakravati, President of Digital Experience Business at Adobe. 0:26:21.359 --> 0:26:23.840 Joining us on zoom from San Jose, California. 0:26:24.640 --> 0:26:28.240 You're listening to the Bloomberg Business Week Podcast. Catch us 0:26:28.240 --> 0:26:32.280 live weekday afternoons from three to six Eastern on Bloomberg Radio, 0:26:32.480 --> 0:26:35.760 the Bloomberg Business App, and YouTube. You can also listen 0:26:35.840 --> 0:26:38.960 live on Amazon Alexa from our flagship New York station, 0:26:39.400 --> 0:26:43.480 Just Say Alexa playing Bloomberg eleven thirty. 0:26:44.640 --> 0:26:46.399 Well, it's hard to believe it's already that time of 0:26:46.480 --> 0:26:49.200 year when Bloomberg Business Week on bils The Business Week 0:26:49.320 --> 0:26:52.000 B School Rankings. This is an assessment of one hundred 0:26:52.000 --> 0:26:54.680 and ten full time graduate MBA programs around the globe. 0:26:54.680 --> 0:26:57.719 It's based on data provided by participating schools, as well 0:26:57.720 --> 0:27:01.639 as responses historic questions about students nine had employers. The 0:27:01.680 --> 0:27:04.960 survey's gauge the participants level of satisfaction with learning, networking, 0:27:05.000 --> 0:27:08.800 career opportunities, skill development, and more. The person who has 0:27:08.800 --> 0:27:11.280 the herculean task of putting this all together each year 0:27:11.400 --> 0:27:14.960 is Dimitra Cassanidas, senior editor at Bloomberg Business Week. She 0:27:15.040 --> 0:27:18.240 joins us here in the Bloomberg Interactive Brokers Studio. You 0:27:18.240 --> 0:27:20.760 can read Dimetra's story on the Bloomberg Terminal and at 0:27:20.800 --> 0:27:22.879 Bloomberg dot com slash business Week and look for it 0:27:22.960 --> 0:27:26.919 next week in Bloomberg magazine, Bloomberg BusinessWeek magazine. Excuse me. 0:27:26.960 --> 0:27:29.000 Also with this is Joel Webber, the editor of Bloomberg 0:27:29.040 --> 0:27:32.280 business Week. Joel in our business they call an introduction 0:27:32.480 --> 0:27:34.879 like that bearing the lead. So come on. 0:27:35.080 --> 0:27:39.080 Five straight years again, Yeah again, they've done it again. 0:27:40.640 --> 0:27:41.800 What's in the water out there? 0:27:42.000 --> 0:27:45.480 Demitra something very special, lots of money, but. 0:27:47.119 --> 0:27:47.760 Don't choke them. 0:27:48.080 --> 0:27:51.560 The thing that makes you make money create businesses. No, 0:27:52.040 --> 0:27:54.359 I mean we're joking. There's a lot of you know, 0:27:54.400 --> 0:27:56.240 there's a lot of really important stuff that happens in 0:27:56.280 --> 0:27:58.919 a place that's right next to Palo Alto, that's in 0:27:59.000 --> 0:28:02.520 Silicon Valley, that's next to big tech companies and startups 0:28:02.520 --> 0:28:05.600 and entrepreneurs and whatever the hits are that those industries 0:28:05.640 --> 0:28:08.800 have taken this past year. It still really matters to 0:28:09.000 --> 0:28:11.879 a lot of people out there, and they it's just 0:28:12.000 --> 0:28:15.200 top class. So they are doing something right. 0:28:15.480 --> 0:28:17.560 So we do this every year. 0:28:17.600 --> 0:28:20.639 We've done this for many years. BusinessWeek has, yes, thirty 0:28:20.760 --> 0:28:26.480 six years us counting. And what's amazing is we it's 0:28:26.520 --> 0:28:29.280 all survey based, right, So how walk us through a 0:28:29.280 --> 0:28:32.800 little bit of the methodology about what goes into this 0:28:32.920 --> 0:28:37.320 so that eventually we have a ranking. In this particular instance, 0:28:37.480 --> 0:28:38.720 Stanford comes out on top of them. 0:28:38.800 --> 0:28:41.719 I mean we some of the other schools. It's survey 0:28:41.720 --> 0:28:45.280 based and it's data that is submitted based. B schools 0:28:45.280 --> 0:28:47.400 are required to submit a lot of data to other 0:28:47.600 --> 0:28:51.800 entities out there that deal with like compensation and various 0:28:51.800 --> 0:28:54.720 other things jobs and such. We require some of that 0:28:54.880 --> 0:28:58.880 same information from schools about the composition of their classes 0:28:59.000 --> 0:29:01.360 and how how much they're earning when they get out, 0:29:01.400 --> 0:29:03.520 how many students they have, and so on and so forth. 0:29:03.760 --> 0:29:06.080 And then at the same time, the key people that 0:29:06.160 --> 0:29:08.960 we think are most important in this whole universe are 0:29:09.160 --> 0:29:11.840 the recent grads. There's current students that are about to 0:29:11.880 --> 0:29:14.680 graduate alumnia over the past ten or so years, different 0:29:14.680 --> 0:29:18.400 classes and employers, and we ask them, you know, different 0:29:18.440 --> 0:29:21.400 questions to gauge whether they're satisfied with what they're learning 0:29:21.440 --> 0:29:23.840 in class, whether they think they're really being exposed to 0:29:23.880 --> 0:29:26.160 the kind of networking that you expect to get when 0:29:26.200 --> 0:29:29.040 you go to business school. That's a major one, you know. 0:29:29.200 --> 0:29:31.240 And then they also weigh in on some of the 0:29:31.280 --> 0:29:33.760 other factors that we get the data from the schools 0:29:33.760 --> 0:29:37.160 on and that all combines in a magical way with 0:29:37.240 --> 0:29:39.040 the work of Tim. You mentioned that I have the 0:29:39.040 --> 0:29:40.640 herculean task. I am not alone. 0:29:40.640 --> 0:29:41.360 I thought you did it all. 0:29:42.320 --> 0:29:45.760 We have an amazing team and the data visualization team, 0:29:45.800 --> 0:29:48.360 and the two analysts that are primarily responsible for this, 0:29:48.560 --> 0:29:52.280 Alex McIntyre and Matt Banamu, are the ones that really 0:29:52.440 --> 0:29:55.520 like pull that all together in a way that gives 0:29:55.640 --> 0:29:58.480 us this fantastic See still, still are you. 0:29:58.440 --> 0:30:00.520 Just saying their names? So they got hate too. 0:30:01.520 --> 0:30:03.440 I'm getting a hate mail, I'm hoping, Yeah. 0:30:03.360 --> 0:30:06.000 From Chicago, Darmouth, and Virginia. 0:30:06.200 --> 0:30:08.920 Okay, well let's get to those other schools, right, Yeah, 0:30:09.000 --> 0:30:09.640 So who else? 0:30:10.560 --> 0:30:13.120 Well, we've seen some consistencies, you know. Somebody just asked 0:30:13.120 --> 0:30:15.680 me a few minutes ago, like, come on, don't the schools, like, 0:30:15.800 --> 0:30:18.480 isn't it the same every year? And I'm like, no, 0:30:18.560 --> 0:30:20.880 it's not the same every year. I mean, Stanford's the 0:30:20.920 --> 0:30:24.400 same for five years, but six years ago it wasn't Stanford. 0:30:24.760 --> 0:30:27.280 We have the University of Virginia. This year jumped quite 0:30:27.320 --> 0:30:31.680 a bit because it's recent. Alumni reported starting you know, 0:30:31.760 --> 0:30:35.440 salaries and so their media and starting salary was significantly higher, 0:30:35.480 --> 0:30:38.280 like almost thirty thousand dollars higher than what had been 0:30:38.320 --> 0:30:40.680 reported by survey takers last year and the year before. 0:30:40.880 --> 0:30:44.160 Compensation does matter to people who go to business school 0:30:44.360 --> 0:30:46.760 might not be the primary factor, but it's an important one. 0:30:46.760 --> 0:30:48.560 You're going to pay all that money, You're going to 0:30:48.640 --> 0:30:50.400 do all that time for two years. You want to 0:30:50.440 --> 0:30:51.960 earn some good money. You want to pay back your 0:30:51.960 --> 0:30:54.080 student loans. You want to just know you're going to 0:30:54.120 --> 0:30:57.440 be okay. So UVA did very well this year. Several 0:30:57.440 --> 0:31:00.400 other schools moved up. Columbia moved up some. You see 0:31:00.440 --> 0:31:02.960 Berkeley has moved up. You know, you see across the 0:31:02.960 --> 0:31:05.680 board there are different factors that are boosting those scores. 0:31:05.720 --> 0:31:08.800 Whether it has to do again with the satisfaction they 0:31:08.800 --> 0:31:11.520 feel they got because of the job outcomes that they 0:31:12.000 --> 0:31:15.040 that worked out for them, or the comp or really 0:31:15.200 --> 0:31:19.920 sincerely feeling that they were just exposed to fantastic classes, teachers, 0:31:20.080 --> 0:31:23.400 learning and research. And you know, from year to year, 0:31:23.520 --> 0:31:25.840 that's what changes, and you do. You might not see 0:31:25.880 --> 0:31:27.480 it at the very top of the list, or maybe 0:31:27.480 --> 0:31:29.760 even at the very bottom, but you see movement in 0:31:29.800 --> 0:31:30.880 the list that's meaningful. 0:31:31.320 --> 0:31:34.760 Is there one category that really sets Stanford apart as 0:31:34.800 --> 0:31:37.280 opposed consistently? 0:31:37.600 --> 0:31:40.280 Well, we've seen, you know, we have these five key 0:31:40.320 --> 0:31:45.280 indexes and they're you know, compensation, learning, networking, entrepreneurship is 0:31:45.320 --> 0:31:47.920 the one that year in year out they are coming 0:31:47.920 --> 0:31:50.400 in first on among all the schools that we survey. 0:31:50.600 --> 0:31:52.960 And again that's not surprising, right given where they are, 0:31:53.280 --> 0:31:55.760 given the part of the country they're in the industry 0:31:55.760 --> 0:31:59.000 that they're very closely aligned with. It's it's an important 0:31:59.000 --> 0:31:59.600 one for them. 0:32:00.000 --> 0:32:00.280 Okay. 0:32:00.360 --> 0:32:02.080 The other thing to keep in mind here is that 0:32:02.120 --> 0:32:03.800 this isn't just a US ranking. 0:32:04.000 --> 0:32:04.360 It is not. 0:32:04.960 --> 0:32:08.040 It is an international ranking. Yes, now, we don't produce 0:32:08.040 --> 0:32:10.520 a global list, by the way, just to clarify, sometimes 0:32:10.560 --> 0:32:12.520 people think, oh, well, how come there's not one list 0:32:12.560 --> 0:32:15.920 with all the schools. Certain factors like our diversity index 0:32:16.000 --> 0:32:18.400 is really only for US schools. The way that we're 0:32:18.440 --> 0:32:21.160 able to measure that is not something we can apply 0:32:21.240 --> 0:32:24.240 to the international schools. The minute you introduce something like that, 0:32:24.320 --> 0:32:26.080 and then you can't really mix and match all the 0:32:26.120 --> 0:32:28.520 scores and say, well, what's the big long list. We 0:32:28.720 --> 0:32:31.680 look at schools in Europe, very strong, healthy market for 0:32:31.760 --> 0:32:35.960 business education Europe. We know right the ncads of the world, 0:32:36.040 --> 0:32:37.920 but there are schools that are up and coming that 0:32:37.960 --> 0:32:40.280 are doing great, like the number one school in Europe 0:32:40.320 --> 0:32:43.320 this year, Bouconi, which is a big school in Milan, Italy. 0:32:44.440 --> 0:32:47.440 You see other lots of schools in Spain. So our 0:32:47.480 --> 0:32:51.080 Europe rankings are part of this. Are Asia rankings, which 0:32:51.160 --> 0:32:53.800 are growing. We're really pushing because there's been a push 0:32:53.800 --> 0:32:56.200 that we know. It's not reflected in how many schools 0:32:56.240 --> 0:32:59.520 we have yet, but like India, another very healthy market 0:32:59.560 --> 0:33:04.120 for business education, and then Canada, so that's what we've got. 0:33:04.320 --> 0:33:07.320 Each year we do a broadcast from the number one 0:33:07.320 --> 0:33:09.520 business school in the US. We've been to Stanford for 0:33:09.560 --> 0:33:12.040 the past few years, but Joel, we haven't been to Milat. 0:33:13.680 --> 0:33:14.320 There's the ask. 0:33:14.480 --> 0:33:17.800 I'm just wondering if we're going to do an international broadcast. 0:33:18.000 --> 0:33:20.080 You put a ticket in, just don't subscribe me to it. 0:33:20.080 --> 0:33:21.600 We'll see. 0:33:21.640 --> 0:33:23.800 That's internal parlance for don't bother. 0:33:23.640 --> 0:33:24.040 Me about it. 0:33:24.080 --> 0:33:28.520 But I think I'll join you on that ticket. Yeah, 0:33:29.520 --> 0:33:31.400 I have a little bit of Italian I can draw 0:33:31.560 --> 0:33:33.200 that we'll be good, will be good. 0:33:33.280 --> 0:33:36.200 It's funny. I can already see it being like an 0:33:36.240 --> 0:33:38.760 extended stay, like we have to do a little dispatch 0:33:38.840 --> 0:33:39.920 and some research I have. 0:33:40.040 --> 0:33:42.400 We have to figure out why the business community there 0:33:42.680 --> 0:33:44.800 is so successful for these graduates. 0:33:44.840 --> 0:33:52.400 Of course Milan, Trada, Gucci, you know, fashion, Italian style 0:33:52.480 --> 0:33:55.160 and design, and it's not all that actually, no, it's 0:33:55.200 --> 0:33:59.880 not though. Lots of manufacturing, lots of consumer jobs to 0:34:00.000 --> 0:34:02.720 technology also coming out of schools like that. So you know, 0:34:02.760 --> 0:34:05.560 there are both of things you might immediately recognize in 0:34:05.560 --> 0:34:07.720 a place like Mulan, and then if you stop and 0:34:07.760 --> 0:34:09.279 you pull back, you know there are others that you 0:34:09.360 --> 0:34:10.560 might be a little surprised by. 0:34:10.640 --> 0:34:13.120 But okay, so the whole point of doing an NBA 0:34:13.440 --> 0:34:15.879 is that maybe it opened some doors that wouldn't otherwise open, 0:34:15.920 --> 0:34:18.400 and you have a new appreciation about how business works. 0:34:18.400 --> 0:34:21.680 You get some skills. What do people do when they graduate? 0:34:22.480 --> 0:34:23.560 They do lots of different things. 0:34:23.600 --> 0:34:24.600 What do you mean by jobs? 0:34:24.680 --> 0:34:26.160 Yeah, what industries are there? 0:34:26.719 --> 0:34:28.040 I mean, you know changing. 0:34:28.080 --> 0:34:30.760 We have been on the story this year on jobs 0:34:30.760 --> 0:34:33.239 and we all know this. Jobs have been tough this year. 0:34:33.600 --> 0:34:35.239 We know what's going on in the tech sector and 0:34:35.280 --> 0:34:37.000 what was going on really in the beginning of the 0:34:37.080 --> 0:34:40.400 year into the second quarter and beyond the consulting. So 0:34:40.480 --> 0:34:45.040 the top three industries are finance, consulting and tech. Finance had, 0:34:45.480 --> 0:34:52.080 you know, challenging industry this year. Cutbacks, contraction, consulting, same 0:34:52.120 --> 0:34:56.000 thing consulting unheard of in the past, started pulling back 0:34:56.440 --> 0:35:01.360 start dates and maybe even contemplating pulling back job. We 0:35:01.640 --> 0:35:03.640 have lots of students that we were in touch with 0:35:03.680 --> 0:35:06.040 on various questions where we have a back and forth. 0:35:06.040 --> 0:35:09.920 They give us their emails to just communicate and clarify answers. 0:35:10.360 --> 0:35:13.480 There were lots of responses and there were lots of 0:35:13.520 --> 0:35:15.560 things that were shared with us about the degree to 0:35:15.640 --> 0:35:19.480 which the consulting firms really had spooked lots of business 0:35:19.480 --> 0:35:23.240 school students across the country with jobs and technology, of course, 0:35:23.280 --> 0:35:26.200 but you know, the upside is we're seeing that at 0:35:26.239 --> 0:35:27.879 the same time that we're seeing a lot of new 0:35:27.920 --> 0:35:32.280 and interesting opportunities emerge. And AI is very scary for people, 0:35:32.400 --> 0:35:36.160 or something like chat GPT, which dominated the conversation, but 0:35:36.200 --> 0:35:39.080 it's not the only thing. The healthcare industry has a 0:35:39.120 --> 0:35:42.520 lot going on. There's a lot going on actually and 0:35:42.719 --> 0:35:45.480 consumer goods and even in media and entertainment. So there 0:35:45.480 --> 0:35:47.399 are ways in which the jobs are going to start 0:35:47.440 --> 0:35:49.520 to evolve. I think I don't think we're ever going 0:35:49.560 --> 0:35:54.360 to knock those three off the top three perches, you know, finance, consulting, 0:35:54.360 --> 0:35:57.920 and technology. But I think that the way that MBAs 0:35:57.920 --> 0:36:02.160 are taking the education, applying it, incorporating aspects of you know, 0:36:02.280 --> 0:36:04.920 climate change and how they're going to manage through challenging 0:36:05.000 --> 0:36:07.360 periods like what we see it every day in the news, 0:36:08.080 --> 0:36:11.160 I think the kinds of jobs are evolving and becoming 0:36:11.239 --> 0:36:14.560 just richer and more about, like it's not just that 0:36:14.600 --> 0:36:16.600 you lead a company. You lead a company in this 0:36:16.719 --> 0:36:20.680 world in these challenging times with many people that work 0:36:20.719 --> 0:36:23.799 for you, who have very different needs and what have you. 0:36:23.960 --> 0:36:27.759 So you know, it's it's becoming a much it's just 0:36:27.880 --> 0:36:29.319 many more pieces to it. 0:36:29.480 --> 0:36:31.359 Well, I guess one of the questions people ask is 0:36:31.440 --> 0:36:34.759 do you need to go to business school because I 0:36:34.800 --> 0:36:37.480 think there's this feed thought that you know, a lot 0:36:37.520 --> 0:36:39.960 of the results you're going to get from it are 0:36:40.000 --> 0:36:43.279 the people you're with, potentially, Sure, And it's interesting to 0:36:43.320 --> 0:36:47.879 see you we break down the learning component of these 0:36:47.960 --> 0:36:51.719 rankings and you'll notice that, with the exception of Virginia, 0:36:51.800 --> 0:36:54.359 the other ones in the top five are not there 0:36:54.400 --> 0:36:58.160 William and mary Georgia and Maryland Georgia Tech are the 0:36:58.200 --> 0:37:03.680 actually the top four. Would you say to someone who's saying, 0:37:03.680 --> 0:37:05.880 I don't know that I'm not necessary I'm necessarily going 0:37:05.920 --> 0:37:07.799 to learn very much from business school, And why are 0:37:07.800 --> 0:37:10.759 these folks doing it better? Maybe even than the top dogs. 0:37:10.880 --> 0:37:13.120 You know, I don't know that they're necessarily doing it better. 0:37:13.160 --> 0:37:15.400 I think respondence from those schools are giving them higher 0:37:15.400 --> 0:37:19.799 marks because it's just an area that isn't really dominating 0:37:20.000 --> 0:37:22.279 kind of the ethos and the discussion as much at 0:37:22.280 --> 0:37:25.880 the school in question. I think it's very simplistic to 0:37:25.880 --> 0:37:28.000 say that you're not going to learn something at business school. 0:37:28.000 --> 0:37:29.279 There are a lot of things you can learn at 0:37:29.280 --> 0:37:32.160 business school today when you really get into a school 0:37:32.200 --> 0:37:34.239 and just go and spend some time talking to people 0:37:34.280 --> 0:37:37.399 about the way their curriculum has evolved, how science isn't 0:37:37.560 --> 0:37:40.919 entering into it, the interdisciplinarity of it and all. There's 0:37:40.960 --> 0:37:43.239 a great deal that's changing and that you can really 0:37:43.320 --> 0:37:45.160 learn if you want to take advantage of it. It 0:37:45.280 --> 0:37:47.560 might not be for you, depending on what your goals are. 0:37:47.640 --> 0:37:49.319 Are you very happy in the job that you have 0:37:49.440 --> 0:37:51.760 right now? Do you see a path forward that doesn't 0:37:51.840 --> 0:37:53.680 require you to step off the path and maybe you 0:37:53.719 --> 0:37:57.160 get some more education. Are you achieving compensation wise what 0:37:57.200 --> 0:37:59.000 you want or are you at a point where you're 0:37:59.040 --> 0:38:01.359 really ready for a big cha. You always thought you 0:38:01.400 --> 0:38:04.239 had the makings of a manager or a leader of 0:38:04.280 --> 0:38:07.239 a business. You want to start your own company, So 0:38:07.640 --> 0:38:10.040 you have to really examine very carefully what you want. 0:38:10.200 --> 0:38:12.560 And there are so many ways that business schools today 0:38:12.600 --> 0:38:16.680 then are tailoring their programs. We measure full time MBA programs, 0:38:17.080 --> 0:38:19.799 but what you're seeing is there there's a drop off 0:38:19.960 --> 0:38:23.239 in applications and there's a concern about enrollment in these 0:38:23.280 --> 0:38:26.160 programs too, and there are a lot of reasons for it. 0:38:26.200 --> 0:38:28.319 And one of the reasons is because coming out of 0:38:28.320 --> 0:38:31.880 the pandemic. But even earlier, there are many ways that 0:38:31.960 --> 0:38:34.879 you sitting in your job, I Dimitri could decide, Hey, 0:38:35.200 --> 0:38:38.120 I'm gonna ask Bloomberg to assign me to a different beat, 0:38:38.160 --> 0:38:40.160 so there's no conflict because I'd like to go to 0:38:40.200 --> 0:38:42.080 business school, but I don't want to give up my job. 0:38:42.480 --> 0:38:44.919 And I love this program at UCLA, but I don't 0:38:44.960 --> 0:38:46.880 live in Los Angeles. But you know what, I can 0:38:46.920 --> 0:38:49.560 do it remotely and in three years, I can have 0:38:49.600 --> 0:38:52.359 a specialization in something that is really going to move 0:38:52.360 --> 0:38:54.799 me in a direction in whichever industry it is that 0:38:54.840 --> 0:38:57.800 I think is going to be most sort of suitable 0:38:57.880 --> 0:39:01.320 for me. And there's a lot of that happening. Data 0:39:01.360 --> 0:39:05.560 analytics is the most popular specialization in business school programs 0:39:05.640 --> 0:39:08.680 right now. So it's those kinds of things, and you 0:39:08.760 --> 0:39:12.239 have to look beyond just like full time MBA two year, 0:39:12.440 --> 0:39:16.000 which is what we measure, okay, but there's a lot 0:39:16.080 --> 0:39:19.080 going on in ways that can really enhance what somebody 0:39:19.160 --> 0:39:19.799 is going to do. 0:39:19.920 --> 0:39:21.640 I think one question you'd have to ask yourself, simone, 0:39:21.680 --> 0:39:23.120 is how much do you like partying and trips to 0:39:23.160 --> 0:39:25.840 Cancre because that was a big part of my business 0:39:25.880 --> 0:39:28.120 school experience. Is if that's further and further in the 0:39:28.200 --> 0:39:28.800 rear view. 0:39:29.000 --> 0:39:31.280 There are great parties in it, right. 0:39:32.120 --> 0:39:36.040 The parties are ridiculous, Demitra. We only have about a 0:39:36.080 --> 0:39:37.960 minute left, but I want to talk about that diversity 0:39:37.960 --> 0:39:41.640 index here. It's not new this year necessarily, but there 0:39:41.719 --> 0:39:45.480 are parts of it that are that are new. Talk 0:39:45.480 --> 0:39:49.040 a little bit about just the rankings there and lack 0:39:49.080 --> 0:39:51.400 of overlap between the top tens or what you're seeing. 0:39:52.360 --> 0:39:55.120 It continues to be a challenging area. It's tough to 0:39:55.160 --> 0:39:57.120 sail out right now because I think there's a lot 0:39:57.160 --> 0:39:59.399 also that we're not gonna that we're not quite clear 0:39:59.400 --> 0:40:02.120 on how it's evolve. For the schools that are going 0:40:02.160 --> 0:40:05.040 to be most directly affected by the Supreme Court decision, 0:40:05.640 --> 0:40:08.800 the affirmative Action decision. You know, some schools, like California schools, 0:40:08.800 --> 0:40:11.680 for example, will not be affected. So it's really tough. 0:40:11.760 --> 0:40:15.279 I what I can say is that schools are very concerned. 0:40:16.320 --> 0:40:19.560 Schools have been very focused on trying and working at 0:40:19.640 --> 0:40:22.480 it's a it's a tough nut to crack. I historically, 0:40:22.520 --> 0:40:25.400 you know, used to work covering big law firms. I 0:40:25.440 --> 0:40:28.080 don't I think that there's a ways to go. We're 0:40:28.120 --> 0:40:29.880 going to keep doing our index, We're going to keep 0:40:29.920 --> 0:40:31.840 trying to build on that, and schools are going to 0:40:31.880 --> 0:40:34.440 have to find a way to really kind of level 0:40:34.440 --> 0:40:36.640 the playing field, I guess, and open it up to more. 0:40:36.600 --> 0:40:40.160 Dimitro Cassini's at Bloomberg BusinessWeek and Joe Weber, the editor 0:40:40.239 --> 0:40:49.640 of the magazine, This is bloombergmark. 0:40:47.480 --> 0:40:48.160 A journal. 0:40:49.200 --> 0:40:54.320 How about you let me drive no, no, honey, please, 0:40:57.000 --> 0:40:57.719 I want to drive. 0:41:00.040 --> 0:41:01.839 It's a good question time. 0:41:04.640 --> 0:41:11.040 This is good drive to the clothes on Bloomberg Radio. 0:41:11.800 --> 0:41:14.319 It's hard to believe we're already there, just shy at 0:41:14.320 --> 0:41:17.919 eighteen minutes until the close of US markets here, Yes, 0:41:17.960 --> 0:41:20.560 I shouldn't say US equity markets. We're very pleased at 0:41:20.560 --> 0:41:23.160 back with us. Amanda Agatti, chief investment officer at PNC 0:41:23.280 --> 0:41:25.839 Asset Management Group. She joins us once again on Zoom 0:41:25.880 --> 0:41:28.759 from Philadelphia. Amanda, whenever you join us, I always think 0:41:28.760 --> 0:41:32.000 of the twelve Days of Christmas that you guys do 0:41:32.080 --> 0:41:33.920 each and every year. But it's it's full, it's not 0:41:34.000 --> 0:41:36.080 winter yet, so we're not quite there yet. 0:41:35.960 --> 0:41:39.279 Are we We're not quite there, but we're starting the 0:41:39.400 --> 0:41:42.719 work to put the analysis together. So it's going to 0:41:42.760 --> 0:41:45.160 be here before we know it. We're talking about back 0:41:45.160 --> 0:41:47.800 to school shopping, but we'll be ready for the holiday 0:41:47.800 --> 0:41:49.880 shopping season just a few short months. 0:41:49.960 --> 0:41:52.120 Okay, that sounds good. In the meantime, what do things 0:41:52.160 --> 0:41:54.640 look like in the markets between now and then when 0:41:54.719 --> 0:41:58.000 it comes to equities and what comes to fixed income. 0:41:59.160 --> 0:42:01.080 We think it's going to be kind of a choppy 0:42:01.360 --> 0:42:04.200 second half here. I think if you think about all 0:42:04.280 --> 0:42:07.000 of twenty twenty three. We really feel like it's going 0:42:07.080 --> 0:42:10.120 to be very different in the second half, almost a 0:42:10.239 --> 0:42:13.279 tale of two halves. I think, you know, based on 0:42:13.320 --> 0:42:16.120 what you're seeing today in terms of the CPI report 0:42:16.200 --> 0:42:19.520 coming in a little hotter than expected, a little bit 0:42:19.520 --> 0:42:22.440 of an acceleration there, that's kind of setting the tone 0:42:22.600 --> 0:42:25.279 for what we're likely to see in the balance of 0:42:25.360 --> 0:42:25.719 the year. 0:42:25.760 --> 0:42:25.920 Here. 0:42:25.960 --> 0:42:28.160 We think the market's just going to continue to be 0:42:28.239 --> 0:42:31.319 a little choppy, if not range bound, until we can 0:42:31.360 --> 0:42:33.680 get a little bit of clarity on some of the 0:42:33.719 --> 0:42:36.560 trajectory of key data points to tell us whether we're 0:42:36.560 --> 0:42:39.520 heading for that soft landing or we're just going to 0:42:39.600 --> 0:42:41.719 power right through that no landing scenario. 0:42:42.400 --> 0:42:44.960 Were there any bits and pieces of today's CPI report 0:42:45.000 --> 0:42:49.520 that really stuck out, struck stood out to you? Excuse me, 0:42:49.800 --> 0:42:51.160 so now to you. One of the things that Mike, 0:42:51.760 --> 0:42:55.320 that's Stuart Paul, our us economist here at Bloomberg Economics, 0:42:55.320 --> 0:42:57.800 was saying, was new car prices were his, what's yours? 0:42:59.080 --> 0:43:03.560 Well, we certainly we saw rents move in the right direction, 0:43:03.680 --> 0:43:06.000 aka a bit lower. We're seeing a little bit of 0:43:06.040 --> 0:43:09.319 a frothiness come out of auto. So that's great to 0:43:09.400 --> 0:43:11.880 see but there's still a lot of stickiness on the 0:43:11.880 --> 0:43:16.520 services side of the equation. It's notorious in terms of 0:43:16.560 --> 0:43:19.600 being sticky here, and so I think for us, it's 0:43:19.680 --> 0:43:23.480 not necessarily one data point that's confirming a trend. I 0:43:23.520 --> 0:43:25.239 think we need to see a few more of these 0:43:25.239 --> 0:43:29.879 CPI reports of a similar tone overall, that the stickiness 0:43:29.960 --> 0:43:31.600 is here and that there's still a little bit of 0:43:31.640 --> 0:43:35.319 acceleration likely ahead. But I think the CPI reports are 0:43:35.360 --> 0:43:38.400 just going to continue to be a little choppy here. 0:43:38.920 --> 0:43:41.799 I don't think that this one data point confirms what 0:43:41.840 --> 0:43:44.480 the FED should do next. We don't think that they're 0:43:44.520 --> 0:43:47.239 going to take action at the September meeting, but I 0:43:47.239 --> 0:43:49.920 do think there's still potentially at least one more rate 0:43:50.000 --> 0:43:53.200 hike in play. We're not at the fed's long term target, 0:43:53.280 --> 0:43:55.560 so they still have plenty of ammo to take another 0:43:55.600 --> 0:43:56.880 step if they feel like they need to. 0:43:57.160 --> 0:43:57.359 Is there. 0:43:57.400 --> 0:43:59.640 Are you concerned that they have over tightened or they 0:43:59.640 --> 0:44:00.680 could over titan. 0:44:02.080 --> 0:44:05.719 Well, we're certainly in restrictive territory. From a policy perspective, 0:44:05.719 --> 0:44:09.560 there's no question that financial conditions are tight here. But 0:44:09.680 --> 0:44:12.920 I think what's surprising is that the consumers hanging in there, 0:44:13.280 --> 0:44:15.480 we're starting to see some weakness. We're starting to see 0:44:15.520 --> 0:44:18.719 a little bit in terms of cracks around consumer behavior, 0:44:18.760 --> 0:44:22.440 but labor market continues to be strong. Wage growth is 0:44:22.480 --> 0:44:25.680 on a real tear here, even with a lagged effect, 0:44:25.719 --> 0:44:29.800 So there's still a decent amount of underlying strength even 0:44:29.920 --> 0:44:33.200 as growth overall is slowing here. And so I don't 0:44:33.200 --> 0:44:36.840 think we can talk too much about policy error misstep 0:44:36.960 --> 0:44:42.239 just yet because we're still in positive, though decelerating growth territory. 0:44:42.360 --> 0:44:45.759 I think the question is much more not whether they 0:44:45.800 --> 0:44:48.759 take one more step to tighten policy or not, but 0:44:48.960 --> 0:44:52.320 how long they keep rates at these fairly restrictive levels. 0:44:52.400 --> 0:44:55.200 We continue to say we're in a longer for longer dynamic. 0:44:55.280 --> 0:44:57.879 This whole process is just going to take a lot 0:44:57.960 --> 0:45:00.719 longer than what any of us investors would like to see, 0:45:00.719 --> 0:45:03.560 and so I think that's probably more important for the 0:45:03.600 --> 0:45:06.920 market's path forward than whether it's one hike in the 0:45:06.960 --> 0:45:08.000 balance of the year or not. 0:45:08.920 --> 0:45:11.799 You guys mentioned back to school just a few seconds ago. 0:45:13.360 --> 0:45:14.720 What are you sake with back to school? 0:45:15.960 --> 0:45:17.920 Well, I guess we're going to get a pretty important 0:45:17.920 --> 0:45:20.640 retail sales report tomorrow, so I guess I could tell 0:45:20.680 --> 0:45:23.239 you more after I see that report, but I think 0:45:23.280 --> 0:45:27.080 it's going to be a very important indicator for the 0:45:27.120 --> 0:45:31.080 health of the consumer and what you know, consumer behavior 0:45:31.120 --> 0:45:34.120 consumption trends look like. I think we're seeing a pretty 0:45:34.160 --> 0:45:38.960 significant shift away from a lot of big ticket discretionary spending. 0:45:39.000 --> 0:45:41.279 That's not new news. We've been on that trend for 0:45:41.320 --> 0:45:44.360 a while, but I think more recently we're starting to 0:45:44.400 --> 0:45:48.560 see the more consumer staples, you know, essentials be the 0:45:48.680 --> 0:45:51.080 area of focus. And then I think the wild card 0:45:51.160 --> 0:45:53.840 that's not getting a ton of attention out there is 0:45:53.920 --> 0:45:57.440 student loan payments coming back online here. It's going to 0:45:57.520 --> 0:45:59.640 put a lot of pressure on consumers at a time 0:45:59.719 --> 0:46:01.480 where they're already feeling the pinch. 0:46:01.760 --> 0:46:04.720 Well, could that have the effect of doing the Fed's 0:46:04.760 --> 0:46:05.279 work for it? 0:46:06.480 --> 0:46:09.799 Oh? Absolutely, it could, Yes, yes, and we do think 0:46:09.840 --> 0:46:12.719 that it will. And we also think that all of 0:46:12.719 --> 0:46:15.640 the FED policy tightening that we've seen so far hasn't 0:46:15.719 --> 0:46:19.640 fully been born out in the economy here, that there's 0:46:19.680 --> 0:46:22.440 this long lagged effect and so some of it certainly 0:46:22.520 --> 0:46:25.680 is having an impact, but there's still a decent amount 0:46:25.680 --> 0:46:27.759 of room to go. And that's why I'm saying, at 0:46:27.760 --> 0:46:29.799 the end of the day, what matters most is how 0:46:29.880 --> 0:46:33.120 long they keep rates at these levels, as to what 0:46:33.200 --> 0:46:36.279 happens with the markets path forward, and certainly whether we 0:46:36.360 --> 0:46:41.200 ultimately tip into contraction or not. But that's an underappreciated risk. Certainly, 0:46:42.120 --> 0:46:45.680 the student loan payment you know situation as it relates 0:46:45.719 --> 0:46:49.120 to consumers very much an underappreciated risk going in a 0:46:49.200 --> 0:46:49.759 bounce of the year. 0:46:49.840 --> 0:46:52.959 Yeah, I'm really interested in this, So talk a little 0:46:52.960 --> 0:46:55.239 bit about where the risks are and who would see 0:46:55.239 --> 0:46:58.680 the result of those payments increasing apart from the apart 0:46:58.719 --> 0:47:00.839 from the people who have to pay those student loans back. 0:47:01.520 --> 0:47:05.880 Well, I think it's just a general pressure on the 0:47:06.040 --> 0:47:09.320 US consumer in general. I mean, seventy percent of consumption, 0:47:10.640 --> 0:47:15.080 you know, seventy percent of GDP growth and GDP related 0:47:15.120 --> 0:47:18.120 activity in this country is tied to consumption. And so 0:47:18.480 --> 0:47:22.040 the consumer's been the lifeline over the course of the cycle, 0:47:22.520 --> 0:47:25.400 but much better shape given how late in the innings 0:47:25.400 --> 0:47:28.920 we are this time around relative to past cycles. And 0:47:28.960 --> 0:47:32.880 so this, you know, student loan debt coming back online, 0:47:32.920 --> 0:47:36.200 these payments coming do is hitting very very late in 0:47:36.239 --> 0:47:38.000 the innings, and so I think it does have the 0:47:38.040 --> 0:47:41.640 potential to zap a lot of consumer health here and 0:47:41.719 --> 0:47:45.320 may put the brakes on consumer spending and consumer behavior 0:47:45.840 --> 0:47:49.360 much faster than I think what the market's no landing 0:47:49.400 --> 0:47:51.160 scenario is pricing for this. 0:47:51.200 --> 0:47:53.640 Year, we've only got about minute left, But how do 0:47:53.680 --> 0:47:58.480 you position for the coming environment, this longer for longer 0:47:58.520 --> 0:47:59.719 scenario that you've described. 0:48:00.560 --> 0:48:04.799 Well, we have been leaning very hard into quality exposures 0:48:04.840 --> 0:48:08.840 all year, which has certainly served us well. But in general, 0:48:09.080 --> 0:48:12.200 we've been very focused on running a defensive playbook. To us, 0:48:12.239 --> 0:48:15.000 that doesn't mean raising a ton of cash and moving 0:48:15.080 --> 0:48:19.480 to the sidelines. It's staying very well diversified, leaning into quality, 0:48:19.640 --> 0:48:23.600 as I said, not taking big bets, staying pretty close 0:48:23.640 --> 0:48:26.600 to longer term strategic targets. And then what we haven't 0:48:26.600 --> 0:48:28.560 really talked about too much is what's going on the 0:48:28.560 --> 0:48:32.200 fixed income side. We're absolutely dialing back a lot of 0:48:32.200 --> 0:48:37.080 below investment grade credit oriented exposures in this environment, investors 0:48:37.120 --> 0:48:39.160 aren't being paid to take on that kind of risk 0:48:39.560 --> 0:48:43.560 at these credit spread levels, and so leaning on that 0:48:43.600 --> 0:48:46.399 side of the equation into investment grade as well. 0:48:46.880 --> 0:48:49.080 Amanda Gotti, we love it when you join us, and 0:48:49.480 --> 0:48:51.640 we've got to come back at least one time between 0:48:51.640 --> 0:48:53.920 now and the holidays. To give us an update on 0:48:54.360 --> 0:48:56.520 how you're looking at the rest of the year until 0:48:56.520 --> 0:49:01.520 we do get too hard to births September talking about 0:49:02.400 --> 0:49:06.240 yet spooky Amanda Gotti's chief investment officer at the PNC 0:49:06.360 --> 0:49:09.520 Asset Management Group, joining us once again on Sale's from Philadelphia. 0:49:09.640 --> 0:49:11.200 This is Bloomberg BusinessWeek. 0:49:12.280 --> 0:49:15.480 This is the Bloomberg Business Week podcast of a little 0:49:15.560 --> 0:49:19.120 on Apple, Spotify, and anywhere else you get your podcasts. 0:49:19.560 --> 0:49:23.120 Listen live weekday afternoons from three to six Eastern on 0:49:23.239 --> 0:49:26.600 Bloomberg dot com, the iHeartRadio app, tune In, and the 0:49:26.600 --> 0:49:29.600 Bloomberg Business App. You can also watch us live every 0:49:29.600 --> 0:49:32.960 weekday on YouTube and always on the Bloomberg terminal.