Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
Speaker 1: Podcast on Apple Podcasts, SoundCloud and Bloomberg dot com. Turn
Speaker 1: our attention now to Tesla, the shares down a little
Speaker 1: bit more than three and a quarter percent. Here to
Speaker 1: explain all is Liam Denning. He is our energy, mining
Speaker 1: and commodities columnists for Bloomberg Gadfly, and you can of
Speaker 1: course follow him on Twitter at Liam Denning. All Right,
Speaker 1: Liam elon Musk manages to put his cherry red Tesla
Speaker 1: sports car into space aboard the Falcon Heavy rocket. But
Speaker 1: can he get those are all three automobiles into show rooms?
Speaker 1: Tell us the details? Hi him? Yeah? So obviously on
Speaker 1: on Tuesday everyone got very excited about the the Falcon
Speaker 1: Heavy launch. The issue Tesla has is obviously it's great
Speaker 1: marketing to put a car into space, but what they
Speaker 1: really need is something a bit more mundane, which is
Speaker 1: a few hundred thousand Model three is just sitting on
Speaker 1: car lots in in the Bay Area. UM, they're still
Speaker 1: having problems getting production of the Model three up, and
Speaker 1: on last night's call UM they didn't give an answer
Speaker 1: to repeat repeated questions from analysts asking you know, so
Speaker 1: exactly how many are you churning out a week now.
Speaker 1: They are keeping their targets, albeit with a caveat saying
Speaker 1: that you know, these are targets and history has known
Speaker 1: that we've struggled to meet them in the past. So
Speaker 1: it's still you know, there's still a lot of uncertasied
Speaker 1: over this question. And for a company that has UM
Speaker 1: but it's still burning cash, this is this is kind
Speaker 1: of the key question. Now, when can they get production
Speaker 1: of the Model three really ramping? So Liam, last night
Speaker 1: I showed a video of that rocket Tesla, the SpaceX
Speaker 1: rocket shooting up to my eight year old son and
Speaker 1: he said, who's Elon Musk? What is this company? And
Speaker 1: I thought, you know, well, it's a car company, it's
Speaker 1: also a rocket company. It's also a tunnel company. It
Speaker 1: also is a solar company. What is it focusing on
Speaker 1: and how is it's sort of allocating it's uh negative
Speaker 1: cash flow uh and its potential borrowings to it's it's
Speaker 1: it's endeavors that sort of give it the sheen of
Speaker 1: the future, right, I mean, do they give a sense
Speaker 1: of that. Well, you know, if you take a step back,
Speaker 1: it's clear that Tesla, you know, Tesla my fantastic products.
Speaker 1: You know of the models, and if you you only
Speaker 1: have to look at what's happened to all the other
Speaker 1: carmakers in terms of how much money they're now putting
Speaker 1: into electrified vehicles to know that that Tesla has shifted
Speaker 1: the whole industry. It's basically scared them. Um, So there
Speaker 1: is that. The problem Tesla has is that while the
Speaker 1: products are generally favorably received and generate a lot of buzz,
Speaker 1: it's struggling to get it struggling to do what a
Speaker 1: lot of Silicon Valley companies have to do if they're
Speaker 1: going to become profitable businesses. And that's the scale. So
Speaker 1: you know, Tesla's whole plan has been to sell some
Speaker 1: very highly priced luxury electric vehicles and then use that
Speaker 1: momentum and use some of the money from that to
Speaker 1: their become a mass market player. And where it's struggling
Speaker 1: is to become a mass market player and the Model
Speaker 1: three is key to doing that, and thus far it's
Speaker 1: having real problems, um, getting to production levels you know
Speaker 1: that it originally talked about, which were like, you know,
Speaker 1: five hundred thousand vehicles a year. I mean, right now,
Speaker 1: based on inside EV's estimates, it's looking like it's producing
Speaker 1: I don't know, somewhere between five hundred and a thousand
Speaker 1: a week, which is you know, really speed producing five
Speaker 1: thousand to ten thousand a week. Liam, Who's going to
Speaker 1: be doing all this because I basically been looking at
Speaker 1: the higher ranks of Tesla. John McNeil who joined in,
Speaker 1: he was the global sales ahead of global sales and service,
Speaker 1: he's leaving. The former head of business development has left.
Speaker 1: Who is actually going to be doing all of this work? Um?
Speaker 1: I mean, I'm you know, Elon Musk is a capable guy,
Speaker 1: and Tesler does have a lot of brand eck with
Speaker 1: here out in out on the West coast, so you know,
Speaker 1: I'm sure they will attract whomever they need. But to
Speaker 1: your point, it's just another ref flag. I mean, part
Speaker 1: of the problem with Tesla is it does have this
Speaker 1: mystique um and this cult like quality that means even
Speaker 1: you know, flipped results and and um, you know, terrible
Speaker 1: cash burn and miss tearnings and all that sort of
Speaker 1: thing doesn't really affect the stock price too much. But
Speaker 1: at the same time, there are a lot of red
Speaker 1: flags the management turnover, the missed targets. I would say
Speaker 1: last year's Solar City deal looks very questionable to me. Um,
Speaker 1: you know this this is this is kind of the
Speaker 1: balance there. There is always plenty of fodder when Tesla
Speaker 1: reports results for both bulls and bears, which is why
Speaker 1: you see the stock not move a great deal even
Speaker 1: if the results for that are terrible. Yeah, Liam Denning,
Speaker 1: thank you so much for being with us. Liam Denning,
Speaker 1: Energy Mining and Commodities calmness with Bloomberg guard Fly. We've
Speaker 1: seen a market rise in benchmark US rates so far
Speaker 1: this year. Have we just seen the beginning or is
Speaker 1: this the end? Can we expect this to sort of
Speaker 1: be the plateau for a couple of months as people
Speaker 1: reassess their expectations. Here to talk about that with us
Speaker 1: is Leo Groshowski, chief investment officer at b n y
Speaker 1: Melon Wealth Management, which oversees two eight billion dollars. He
Speaker 1: joins us here in our eleven three oh Studios, LEO,
Speaker 1: where are we with respect to the treasury yield rise?
Speaker 1: We do have another third year auction today at one
Speaker 1: pm Eastern. Uh. There was a lot of weakness yesterday
Speaker 1: at the ten year auction. What sort of the ceiling
Speaker 1: for this cycle? Our best guests and at this point
Speaker 1: it's it's it's an educated guess. Um, we've got a
Speaker 1: range of three and a quarter percent on the upside
Speaker 1: for two thou eighteen, which we which we haven't changed,
Speaker 1: so that that was our range going into this year.
Speaker 1: We still think we could get to a three and
Speaker 1: a quarter level. It just to be clear, So ten
Speaker 1: ure yields could go to three and a quarter and
Speaker 1: then stop, we think so we think so that's our
Speaker 1: best gut and again we're we're That seemed like a
Speaker 1: very barish call a while ago, but not as much
Speaker 1: this morning at So I'm amazed though, at the degree
Speaker 1: to which the market seems to think that three percent
Speaker 1: is sort of a magic number, and you know three
Speaker 1: percent would trigger decline in the equity market. I think
Speaker 1: the market is recalibrating right. January was a recalibration for
Speaker 1: the equity market to higher earnings, and now we're seeing
Speaker 1: a market recalibrate to you know, forty basis point to
Speaker 1: fifty basis point increase in the ten year in the
Speaker 1: tenure yield. Okay, So if three is not the magic number,
Speaker 1: have we already passed it? I mean, what when does
Speaker 1: it start to matter how high treasury yields are with
Speaker 1: respect to the equity market performance? It always matters, But
Speaker 1: it's what's driving the yield higher? Okay? So that the
Speaker 1: real driver for um PE multiples, particularly late stage equity
Speaker 1: market PE multiples inflation. Right, So I think the market
Speaker 1: is correct in focusing on inflation. But our work shows
Speaker 1: that if inflation is in a range of zero to
Speaker 1: two percent, a market multiple of just over eighteen times
Speaker 1: is allowable. If inflation moves up to two, to that
Speaker 1: range historically allowed by the market is still around seventeen
Speaker 1: times earnings. So there is a gradual reduction in the
Speaker 1: PE multiple allowed by the market. As inflation begins to rise,
Speaker 1: all eyes focused on next week's CPI number. Right that
Speaker 1: that becomes a big number. Um, it looks like it's
Speaker 1: going to remain below two percent year over year. Um
Speaker 1: If we see that perk above two percent, we already
Speaker 1: have the ten uere break even tips at a two eleven. Right,
Speaker 1: that's up pretty significantly. I think directionally, you're already seeing
Speaker 1: pe multiples get questioned. Now. The market today is trading
Speaker 1: at a multiple of seventeen point five times arreestimate for
Speaker 1: this year's earnings. The good news is all of this
Speaker 1: is happening in the midst of a very very powerful
Speaker 1: learnings reporting season. Right, we're about of the way through,
Speaker 1: and of the companies based on Bloomberg's work, right are
Speaker 1: reporting better than expected earnings last year. At this time
Speaker 1: that number was it looks like we're going to have
Speaker 1: a fifteen percent year over your quarter. And the numbers
Speaker 1: that we put in place post tax reform for this
Speaker 1: year one five for the SMP operating this year are
Speaker 1: actually looking like they might be too conservative. So right
Speaker 1: now that's not been the focus. But the market's trading
Speaker 1: at a seventeen and a half times multiple on earnings
Speaker 1: this year that we think may turn out to be conservative.
Speaker 1: That's not cheap, but it's not overvalued. Leo, I wonder
Speaker 1: if you could just tell us about your day on Friday.
Speaker 1: Where were you last Friday? When the when we s
Speaker 1: some loss two you know, in front of like many
Speaker 1: in front of screens looking at the employment numbers, right
Speaker 1: and feeling feeling the recalibration occur over good news potentially
Speaker 1: being bad news. What does that feel like to a
Speaker 1: professional such as yourself, You immediately fast forward to the clothes, right,
Speaker 1: Where where might this close? Where might this go? Because
Speaker 1: remember him, We've been coming off of an extraordinary period
Speaker 1: of low volatility. I've talked I talked about throughout two
Speaker 1: thousand seventeen. It is not normal to have market returns
Speaker 1: of nearly with volatility. The VIX is now on the
Speaker 1: headlines every day. Right, last year, heads tilted when you
Speaker 1: talked about the VIX, and I had to put it
Speaker 1: in the context of one percent market moves. Last year,
Speaker 1: we had eight days in the entire year where the
Speaker 1: market closed up or down one percent. Right, We've more
Speaker 1: than had that already this year. So I think it's
Speaker 1: about investor reaction. But I'm interested in your reaction because
Speaker 1: you know your pro and your behavior. You know the
Speaker 1: behavior of what pros their behavior. It can be different
Speaker 1: than non professional investors. And I'm wondering, what did you
Speaker 1: feel on Friday and then over the weekend when you
Speaker 1: came in on Monday and we saw that four pc
Speaker 1: drop in the SMP. What was going through your mind
Speaker 1: and what was happening? What kind of energy was there
Speaker 1: in the in the office where you were. Well, Friday
Speaker 1: was a day of of sort of concern and watch right,
Speaker 1: Monday was a day of of action and overreaction. Right,
Speaker 1: and then we you quickly go into what what do
Speaker 1: we do about this? Right? And so Tuesday morning we
Speaker 1: quickly had a call with all of our clients and intermediaries,
Speaker 1: and we drew three to four times the normal audience
Speaker 1: for such a call. In mid December we had a
Speaker 1: standard call outlook two thousand eighteen. Well, the call that
Speaker 1: we hastily arranged on Tuesday more drew more than three
Speaker 1: times the audience that we drew in mid December for
Speaker 1: a market outlook call. So there there's definitely a great
Speaker 1: deal of anxiety. We're looking at a market up three
Speaker 1: actually two from March nine of oh I through last
Speaker 1: night's close. There's a lot of profits to be had
Speaker 1: that investors don't want to see whither away. So what
Speaker 1: was the main concern? What was the main question? What
Speaker 1: did you tell them? So much depends on where you're
Speaker 1: you know, if you haven't rebalanced a portfolio for a while, right,
Speaker 1: and you're you're probably still too overweight equities and this
Speaker 1: is a good wake up call and is it too
Speaker 1: late to sell? No, So hold on a second. So
Speaker 1: you actually did not say what everybody is saying out
Speaker 1: there based on uh Google searches. You didn't say by
Speaker 1: the dip, it's oh, it's like, where do you think
Speaker 1: the market's going? And you hate to answer questions with questions,
Speaker 1: but where you what's your time horizon? If you're making
Speaker 1: acid allocation views on a twelve to eighteen month forward basis.
Speaker 1: One of our conclusions was we're closer to a buying
Speaker 1: opportunity than a selling opportun Broadly speaking, Okay, however, there's
Speaker 1: two point eight trillion dollars sitting on our nation's money
Speaker 1: market mutual funds, according to the Investment Company Institute, two
Speaker 1: point eight trillion. There are a lot of investors who
Speaker 1: have been waiting for opportunities. Now, if you're waiting for
Speaker 1: ten or twenty our advice as you might not get there.
Speaker 1: And this was a sell off that had fundamental underpins
Speaker 1: but was exacerbated by technicals, and it did appear to
Speaker 1: us on Tuesday, right to be getting overdone? Okay, so
Speaker 1: you use it as an entry point if you're sitting
Speaker 1: on cash, use it if you haven't rebalanced, though, and
Speaker 1: you have an equity target that after last year, right,
Speaker 1: you're you're up seventeen or eighteen percent above your target?
Speaker 1: Is it too late to rebalance and use what's happened
Speaker 1: this week as a wake up call? Absolutely not right?
Speaker 1: So the yawns that one might normally get around diversification rebalancing,
Speaker 1: and I tell you I'm in front of clients a lot,
Speaker 1: and throughout last year, some of that gets gets the
Speaker 1: donkey nott and it's time to act. Thanks very much
Speaker 1: for being with us. Leo Groshowski. He is the chief
Speaker 1: investment officer for b N y Melon Wealth Management, helping
Speaker 1: to manage more than two hundred and thirty billion dollars.
Speaker 1: You're driving along, you really feel like you could use
Speaker 1: a cup of coffee, and instead of going to your phone,
Speaker 1: you can just hit your dashboard and then go to
Speaker 1: a store and your coffee will be ready for you.
Speaker 1: That is a vision among some automakers. And Rick Ruskin
Speaker 1: joins us now. He's senior manager for online commerce at
Speaker 1: General Motors and he joins us here my phone to
Speaker 1: talk about this program that started in December. So can
Speaker 1: you please explain to us what is this INCR e
Speaker 1: commerce platform and how has it been received since it
Speaker 1: was rolled out in December. Yeah, sure, good morning. So
Speaker 1: Marketplace is a first of its kind UH commerce platform
Speaker 1: that we've built specifically for on dash interactions and transactions
Speaker 1: and GM vehicles, UM. And it really gives the connected driver,
Speaker 1: uh the opportunity for you know, that sort of connected
Speaker 1: experience with merchants and brands that they use and they love.
Speaker 1: So as you mentioned, think about ordering and paying for
Speaker 1: your morning cup of coffee with the tap of the dashboard,
Speaker 1: or reserving parking, reserving hotel room, were even reserving a
Speaker 1: table at t g I Fridays, again, all from the
Speaker 1: dash So Rick, here's my question. I don't know if
Speaker 1: you use ways, but when I've ever used ways, which
Speaker 1: is a way to tell you the directions to get
Speaker 1: somewhere when you're driving, I'm always shocked by the number
Speaker 1: of Duncan donuts that are highlighted and advertised on the app.
Speaker 1: And I'm wondering, I imagine dalk pays Ways a lot
Speaker 1: of money for that advertising. And I'm wondering, from your perspective,
Speaker 1: do some of these uh stores, these brands pay you
Speaker 1: to be more prominently advertised on the dashboard. Yeah. So
Speaker 1: first of all, it's uh, we we are a for
Speaker 1: profit companies, So we put together a business model that
Speaker 1: really works for GM and for our merchant partners. So
Speaker 1: think of it almost as a media platform the same
Speaker 1: way that weighs. You know, first and foremost is about navigation,
Speaker 1: but they're selling those media placements. We too, give our
Speaker 1: merchant partners an opportunity to you know, build those those experiences,
Speaker 1: uh and have that presence on the dashboard. But then
Speaker 1: you know, like the advertising they buy in many different
Speaker 1: digital uh you know mediums were the same, and so
Speaker 1: they're looking for ways to connect with connected drivers. Rick,
Speaker 1: I just wonder if we could go through some of
Speaker 1: the technology partners that you have brought together for this
Speaker 1: so people can understand that it is a conglomeration of
Speaker 1: talent that is making this happen. UH Seattle area based Zvo.
Speaker 1: Now that you've got a lot of veterans there from
Speaker 1: Microsoft and Amazon, tell us what ZVO is doing in
Speaker 1: this partnership yeah, absolutely so. Um, when you think about
Speaker 1: the ways that merchants can can bring their content onto
Speaker 1: the dashboard, what was really critical for us was to
Speaker 1: find what I'll call middleware technology partners that would have
Speaker 1: that relationship with those merchant partners. They actually bring the
Speaker 1: content from the merchant partner temple at tize it and
Speaker 1: safely and securely bring it onto our dashboard in ways
Speaker 1: that have been sort of first designed and tested by
Speaker 1: our user experience and drive a workload teams. So rather
Speaker 1: than us having a direct relationship with each one of
Speaker 1: the merchants, were able to work with Zevo. Uh. And
Speaker 1: then there's a couple other partners Sonic Mobile down in
Speaker 1: Atlanta and Conversible down in Texas, Austin, Texas. Right. Well,
Speaker 1: I wanted to get to that because the Zvo part
Speaker 1: of it's to be all about machine learning technology. What
Speaker 1: does Conversible add to the picture. Well, so, first and foremost,
Speaker 1: you know, as you look at each one of those partners,
Speaker 1: Conversible was doing a lot of Alexis skill work and
Speaker 1: Facebook messenger work for various partners, and what they realized
Speaker 1: were there was that these A p I s, these uh,
Speaker 1: you know connections they had with the various merchants could
Speaker 1: be applied in a very similar way to Marketplace. So
Speaker 1: what we look to them to do is to bring
Speaker 1: some of those relationships that they had already established to Marketplace.
Speaker 1: So that's where Conversible, very similarly to Zevo and or Psionic,
Speaker 1: are tapping into those existing relationships they have. I just
Speaker 1: want to talk about the experience of it. I mean,
Speaker 1: is there only a certain limited number of stores that
Speaker 1: you can access from your dashboard? Can you talk to
Speaker 1: your dashboard? Is it going to be like uh O
Speaker 1: strider or is it all tapping? And how do you
Speaker 1: make sure that people don't get distracted? Yeah, well so
Speaker 1: a lot of great questions in that roll up. UM
Speaker 1: So first, um the um I've been working on this
Speaker 1: platform since day one, so as we started to develop
Speaker 1: a user experience and testing all, you know through our
Speaker 1: driver workload team, there is a very limited scope to
Speaker 1: the number of partners that you would see on the
Speaker 1: dash at any given time. Then, uh, it's really important
Speaker 1: to understand this is not about establishing a first time relationship.
Speaker 1: This is about expanding a relationship that you might have
Speaker 1: already you know, created with a mobile app. So you know,
Speaker 1: Dunkin Donuts is one of our partners. I have a
Speaker 1: dunkin Donuts account. When I link that account to my dashboard,
Speaker 1: now I'm I'm seeing stuff that's familiar to me. I'm
Speaker 1: seeing my recents, my favorites. My payment method is already
Speaker 1: on file with Duncan. So when I go in and
Speaker 1: I open up marketplace and I want to order that
Speaker 1: cup of coffee, well, look, I'm I'm performing one of
Speaker 1: the rituals I would in the morning. I'm ordering my
Speaker 1: favorite And it really is just a few taps on
Speaker 1: the dash to get it done, about as simple as
Speaker 1: changing the radio station. Well, you know what Lisa really wants,
Speaker 1: rick as she wants someone to hand her the coffee
Speaker 1: in the car when you push the button pick up
Speaker 1: my kids, gives me groceries, want to do it all.
Speaker 1: I think that's called an assistant. But just a question
Speaker 1: though about the payment side of this. Is that something
Speaker 1: that let's say JP Morgan Chase is involved with with
Speaker 1: payments for this. Yeah, so where we are currently is
Speaker 1: that we want the merchant to remain your merchant of
Speaker 1: record again safe, safely and securely through a token ized process. Um,
Speaker 1: you know from my dashboard through that rig partner that
Speaker 1: I mentioned, like Zevo over to the merchant. All of
Speaker 1: the tokens are telling you that yep, you're having an interaction.
Speaker 1: We gotta we gotta press we gotta press the button
Speaker 1: because we're out of time. I want to thank you
Speaker 1: very much. Rick Ruskin, he is the senior manager Online
Speaker 1: Commerce for General Motors. Just how much will automation change
Speaker 1: the workforce over the next fifteen years? Here to talk
Speaker 1: about that with us as Karen Harris, Managing director of
Speaker 1: Macro at Trends at Bain and Company, and she joins
Speaker 1: us by phone. Karen, thank you so much for being
Speaker 1: with us. You just released this report that you authored
Speaker 1: Labor twenty thirty, the Collision of Demographics, Automation and Inequality.
Speaker 1: UM I want you just to start with automation, since
Speaker 1: there's been a lot of discussion about whether that will
Speaker 1: eliminate a lot of jobs and create really a two
Speaker 1: tiered society. How much will that come to fruition over
Speaker 1: the next few decades. Thanks Lisa, I'm really happy to
Speaker 1: be here. It is certainly something that we see having
Speaker 1: a very disruptive effect over the next few decades. We
Speaker 1: see what's happening right now is the labor force. We
Speaker 1: still have to start with demographics, even talking about automation,
Speaker 1: because the question is how that impacts jobs, and how
Speaker 1: that impacts the way we live and work, what we buy.
Speaker 1: The labor force is about to experience a very steep deceleration.
Speaker 1: Even shifting life stages working later take the little of
Speaker 1: the edge off right, living longer, healthier lives, but it
Speaker 1: doesn't compensate for the fact that the population, the working
Speaker 1: population is overall shrinking and in many markets and then
Speaker 1: some in some markets just growing much more slowly, which
Speaker 1: in the short term will push wages up. And in
Speaker 1: fact we're seeing some of that impact today in the
Speaker 1: markets as the with the increased volatility around x dictations
Speaker 1: of rising interest rates. But that natural process of rising
Speaker 1: wages will be short circuited in our view, by automation
Speaker 1: um and that front end automation usage your point will
Speaker 1: feel buoyant in our By our estimates, we see another
Speaker 1: eight trillion dollars in investment needed to build and deploy
Speaker 1: that wave of automation, and that surge will temporarily shield
Speaker 1: workers from the full impact. But beneath that surface and
Speaker 1: what bain is seen is that the majority of workers
Speaker 1: will feel the impact of automation as either jobs are
Speaker 1: lost or new jobs that should have been created don't
Speaker 1: show up, or wages struggle to climb past the point
Speaker 1: where automation alternatives actually become cheaper. And so that sets
Speaker 1: us up for this ebb and flow where you have
Speaker 1: a big wave of automation investments, that feeling of buoyancy
Speaker 1: and growth. But at the end of that, the full
Speaker 1: x of automation laid bears as many as workers may
Speaker 1: become displaced, and that means incomes become skewed even further
Speaker 1: towards the top, towards those are who who are employed.
Speaker 1: That lack of demands as people are unemployed, that pervasive
Speaker 1: economic insecurity, that impact on growth is what leads to
Speaker 1: that boom and bus cycle that we're concerned about, Karen,
Speaker 1: Before we get to labor and wondering, if you could
Speaker 1: just describe what you believe the world will look like,
Speaker 1: or indeed your world, our world will look like in
Speaker 1: five to seven years, what will the environment be like,
Speaker 1: and maybe give us some thoughts about what kinds of
Speaker 1: jobs and what kinds of situations are people most likely
Speaker 1: to face. Sure, pim, thank you. It's uh. It's an
Speaker 1: interesting it's a tough question because part of the challenge
Speaker 1: we had at Bain in putting this work together is
Speaker 1: that there are each of these forces push and pull
Speaker 1: on each other. Um it creates a dynamic. And so
Speaker 1: what we see playing out right in the short term,
Speaker 1: we've already I've already spoken about how wages are gonna
Speaker 1: rise over the next short period of time as the
Speaker 1: workforce shrinks, but that adjustment gets cut off through automation.
Speaker 1: Then we see a rise in new sorts of jobs.
Speaker 1: Somebody has to program computers to understand AI right. Artificial
Speaker 1: intelligence requires exposure to larger and larger volumes of information,
Speaker 1: for example, and so we could see somebody has to retrofit.
Speaker 1: Let's take the service sector, which is where we think
Speaker 1: the ripest opportunities are for automation. Take a restaurant where
Speaker 1: you could have an automated prep chef. Just as an example,
Speaker 1: we're all familiar with, right something that does all the
Speaker 1: chopping so that the chef can do the more advanced preparation.
Speaker 1: We'll see have two robots chopping onions and celery. They
Speaker 1: don't necessarily need to work side by side. You could
Speaker 1: stack them on top of each other, which means you
Speaker 1: fit out the kitchen, and in fact it mains view.
Speaker 1: A big chunk of the investments in service sector automation
Speaker 1: will come from not just the actual robotics and tools themselves,
Speaker 1: but also from the infrastructure changes that come around that,
Speaker 1: and that will insulate workers from jobs. So put him
Speaker 1: to your question. By the early to mid part of
Speaker 1: the next decade, we could see a very buoyant economy,
Speaker 1: workers employed in those in the capacity of deploying many
Speaker 1: of the tools that will then eliminate the job opportunities
Speaker 1: later on rising interest rates as we see this capital
Speaker 1: investment boom. So I think the major point and the
Speaker 1: biggest watch out that had been we want businesses to
Speaker 1: think about is the much much greater volatility of this
Speaker 1: next cycle than what we've seen really for the past
Speaker 1: few decades, even including that global financial crisis. Karen, what's
Speaker 1: the most irreplaceable type of worker going forward? Even with
Speaker 1: the boom and automa Asian? In other words, how can
Speaker 1: you guarantee a paycheck going forward no matter what the automation? Sure,
Speaker 1: I think there are there are many sectors, um I
Speaker 1: think some of the most important sectors become ones that
Speaker 1: are around asking the right we call them the sort
Speaker 1: of the normative questions, understanding what people need. Some of these, ironically,
Speaker 1: I think some of the more protected sectors, ironic, based
Speaker 1: on the conversations we have today, are not necessarily advanced
Speaker 1: in engineering and coding. In fact, a lot of coding
Speaker 1: will be automated over the next over the next couple
Speaker 1: of decades, but in fact the ability to for businesses,
Speaker 1: for leaders, for um, for workers to understand and delight
Speaker 1: their customers, understand those customer needs and really develop the
Speaker 1: kinds of products that suit them. Either at the high end,
Speaker 1: right we see more and more customization and and niche products,
Speaker 1: but also where people as incomes are constrained, how do
Speaker 1: we create a better quality of life at a lower cost,
Speaker 1: and that is those are the kinds of businesses that frankly,
Speaker 1: companies like higher Um out of China and Huawei have
Speaker 1: done an excellent job doing what are the good enough
Speaker 1: features that really suit markets where income is more constrained. Karen,
Speaker 1: does increased automation mean that the governments around the world
Speaker 1: will have to change the way they tax their citizens
Speaker 1: as work becomes more automated and robots perhaps don't necessarily
Speaker 1: pay taxes. It's a great it's a it's a really
Speaker 1: critical issue. Right what we see it, Bean is certainly
Speaker 1: the state is governments are going to likely play a
Speaker 1: more active and and uh involved role in thinking about
Speaker 1: the markets. Is the answer taxation. I'm not a policy expert.
Speaker 1: Certainly there are examples of government and prevention that have
Speaker 1: created a lot of positive economic impact for the outside
Speaker 1: of their specific programs. The Space race, so the works
Speaker 1: projects during the depression, um the universal basic education examples
Speaker 1: where big government investments have paid positive dividends over time.
Speaker 1: But there's I mean, the reality is, with a shrinking
Speaker 1: pool of workers in changing taxation may not be the answer.
Speaker 1: Thanks very much. We got to leave it there. Karen
Speaker 1: Harris is managing director macro Trends Group of Bane and Company.
Speaker 1: Check out the report Labor the Collision of Demographics, Automation
Speaker 1: and inequality. Thanks for listening to the Bloomberg P and
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