WEBVTT - Apple Eyes Satellites As Way To Beam Data To Devices 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel Podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.760 Along with my co host Lisa Brahmas. Each day we 0:00:07.880 --> 0:00:10.440 bring you the most noteworthy and useful interviews for you 0:00:10.520 --> 0:00:12.640 and your money. Whether at the grocery store or the 0:00:12.640 --> 0:00:15.960 trading floor. Find a Bloomberg Penl podcast on Apple podcast 0:00:16.120 --> 0:00:18.000 or wherever you listen to podcasts, as well as that 0:00:18.040 --> 0:00:22.040 Bloomberg dot com. Well, it doesn't look like we are 0:00:22.120 --> 0:00:25.720 getting something from Apple when it comes to satellites and 0:00:25.880 --> 0:00:30.200 the infrastructure that they're creating in order to have faster, better, 0:00:30.400 --> 0:00:34.400 more reliable access. Uh sure. Overd is here shrug in 0:00:34.440 --> 0:00:38.320 her shoulders, making some interesting faces. She's a she's a 0:00:38.320 --> 0:00:43.239 calmness covering tech. This is radio. Actually not think it is. 0:00:43.440 --> 0:00:46.560 Honestly like these are These are fantastic expressions and sort 0:00:46.600 --> 0:00:49.040 of say everything that you need to say. You're dubious. Okay, 0:00:49.080 --> 0:00:51.960 just hold on a second. Just just buy your shrug 0:00:52.240 --> 0:00:55.480 and the face that you just made. Bloomberg opinion columnist 0:00:55.480 --> 0:00:57.920 Shia Overday. My guess is at your take on this 0:00:58.840 --> 0:01:02.320 is that it's a and this guy kind of investment 0:01:02.880 --> 0:01:05.880 that is something that they can do with their oodles 0:01:06.000 --> 0:01:10.840 of cash. And that seems feasible. Uh maybe, yeah, So 0:01:11.200 --> 0:01:13.720 I think that my reason for the shrugging is that 0:01:13.959 --> 0:01:17.240 there are a lot of companies working on UM what 0:01:17.319 --> 0:01:22.000 are called kind of low Earth orbit satellites UM that 0:01:22.040 --> 0:01:26.520 are in theory will be used to provide better or 0:01:27.280 --> 0:01:31.679 more available mobile internet service. So, you know, Jeff Bezos, 0:01:31.800 --> 0:01:35.160 both Amazon and his Blue Origin Space company are working 0:01:35.160 --> 0:01:38.280 on a project. So it's SpaceX, the Elon Musk company. 0:01:38.360 --> 0:01:41.880 There's a number of smaller startups like one Web that 0:01:41.920 --> 0:01:46.240 are also working on these projects. And the idea seems cool, right. 0:01:46.280 --> 0:01:50.120 It's that right now, providing mobile internet it requires a 0:01:50.160 --> 0:01:52.520 lot of physical infrastructure on the ground, right you have 0:01:52.560 --> 0:01:55.560 cell phone towers and all these base stations, and as 0:01:55.600 --> 0:01:57.640 we move into a five G world, there's going to 0:01:57.720 --> 0:02:01.440 be even more of these nests sary UM to kind 0:02:01.440 --> 0:02:06.080 of provide efficient and reliable mobile internet. And so the 0:02:06.120 --> 0:02:08.800 idea is that we can fire a whole bunch of 0:02:08.840 --> 0:02:13.840 satellites into space that may be a more effective solution 0:02:14.000 --> 0:02:17.160 to provide mobile internet, particularly in places that are rural 0:02:17.320 --> 0:02:21.520 or remote, either in the developing world or in places 0:02:21.600 --> 0:02:24.639 like the Arctic or Alaska or rural Iowa or whatever. 0:02:25.040 --> 0:02:27.840 But it's gonna be it's gonna be very expensive, and 0:02:27.880 --> 0:02:30.000 it's gonna take a very long time, and there's legitimate 0:02:30.040 --> 0:02:33.320 questions about whether any of this stuff is technologically feasible. 0:02:33.480 --> 0:02:35.800 It's interesting, and we also saw today with the Boeing 0:02:36.080 --> 0:02:38.640 launch and then the failure to reach the space station. 0:02:39.040 --> 0:02:42.040 The satellite business is a tough business. Uh. There's a 0:02:42.040 --> 0:02:44.400 lot of failed satellite companies out there, and there's a 0:02:44.400 --> 0:02:45.960 lot of bond holders out are holding on the paper 0:02:46.000 --> 0:02:50.440 and they're really concerned. There's spaces literally littered with failed 0:02:50.480 --> 0:02:54.160 satellites up there. If your Apple is I guess the 0:02:54.240 --> 0:02:56.320 question a lot investors have is because I think the 0:02:56.360 --> 0:02:58.480 surprise a lot of investors is is it better to 0:02:58.560 --> 0:03:00.760 kind of do it yourself or just kind of outsourced. 0:03:00.800 --> 0:03:02.919 I guess yeah, it's a very good point, and you're 0:03:02.960 --> 0:03:05.720 right there. There are a lot of failed satellite companies 0:03:05.760 --> 0:03:08.919 out there, including satellite broadband companies. So we'll see how 0:03:08.919 --> 0:03:12.720 this progresses. On the other hand, look, we do want companies, 0:03:12.760 --> 0:03:16.120 particularly companies like Apple that throw off lots of cash 0:03:16.360 --> 0:03:20.760 to invest in put in promising future projects. And we 0:03:20.800 --> 0:03:23.560 talked about earlier with Amazon. Right, we've seen the investments 0:03:23.639 --> 0:03:26.800 they've made in their infrastructure with things like warehouses and 0:03:26.840 --> 0:03:30.280 their delivery operation that that has really paid dividends in 0:03:30.360 --> 0:03:34.440 transforming the company and getting packages to people's homes faster. 0:03:34.840 --> 0:03:37.640 I have a crazy idea, and we were talking about 0:03:37.640 --> 0:03:41.880 this John Butler of Bloomery Intelligence earlier. Why does an 0:03:41.920 --> 0:03:45.160 Apple with its crazy billads of cash just by a 0:03:45.240 --> 0:03:50.160 T and T by Verizon? Okay, I mean it's a look, 0:03:50.280 --> 0:03:54.240 it's a totally it's a totally fair question. And look, 0:03:54.360 --> 0:03:57.240 we did see we have seen circumstances in the past 0:03:57.320 --> 0:04:01.040 where Google they did not buy one of the telecom companies, 0:04:01.040 --> 0:04:06.040 but they did have their own um Internet and cable 0:04:06.120 --> 0:04:10.160 television company, which they have significantly scaled back because they 0:04:10.200 --> 0:04:13.960 felt that they couldn't really make it work on a 0:04:14.080 --> 0:04:16.279 large scale the way that you know, the sort of 0:04:16.320 --> 0:04:18.679 comcasts and A T and T s of the world 0:04:18.720 --> 0:04:20.720 make it work. It'since I'm looking at the A T 0:04:20.800 --> 0:04:23.240 and T. I'm sorry. The Apple shares fifty two week 0:04:23.320 --> 0:04:26.599 high today, uh stocks up seventy percent year to date, 0:04:26.880 --> 0:04:30.680 market cap of one and a quarter trillion dollars share. 0:04:30.720 --> 0:04:36.080 It just seems like whatever they're doing, shareholders just love it. 0:04:36.120 --> 0:04:37.920 So I guess the big issue for this company has 0:04:37.920 --> 0:04:41.279 been can it pivot from a phone only company, hence 0:04:41.320 --> 0:04:43.880 it only company, to a more of a diversified services company. 0:04:44.040 --> 0:04:46.080 Looks like the market saying yes, I think that's right, 0:04:46.120 --> 0:04:48.360 and the market is saying yes, I certainly have doubts 0:04:48.360 --> 0:04:52.200 about whether that transformation is real. Um it is. It 0:04:52.320 --> 0:04:55.200 is very interesting to look at what Apple is spending 0:04:55.240 --> 0:04:58.800 money on. So this is a company that has, as 0:04:58.839 --> 0:05:02.200 a share of revenue, tripled their expenditure on research and 0:05:02.240 --> 0:05:06.200 development the last five years. That Apple, for a tech company, 0:05:06.279 --> 0:05:08.800 is still spending a relatively small share of their revenue, 0:05:08.800 --> 0:05:12.280 about six percent of their revenue on research and development projects. 0:05:12.279 --> 0:05:15.080 So that's everything from the stuff that is going into 0:05:15.080 --> 0:05:18.520 phones right now to these kind of future satellite projects 0:05:18.600 --> 0:05:22.640 and augmented reality glasses and driverless cars and whatever comes next. 0:05:23.000 --> 0:05:25.800 So I think investors have been very willing to be 0:05:25.880 --> 0:05:29.479 patient on seeing some of those longer term projects payoff. 0:05:29.960 --> 0:05:33.440 It is right now affecting Apple's profit that you see 0:05:33.720 --> 0:05:37.640 the profit margin at Apple has gone. The operating profit 0:05:37.680 --> 0:05:40.960 margin used to be five years ago and now it's 0:05:41.000 --> 0:05:43.520 twenty four percent. It's at the lowest level. It's been 0:05:43.560 --> 0:05:46.320 in a decade and one big reason for that is 0:05:46.360 --> 0:05:51.479 this heavy spending on research and development. Yeah, I know exactly. 0:05:51.600 --> 0:05:56.000 It's fair enough. It is still a massively profitable company. 0:05:56.240 --> 0:05:57.960 Thanks so much for joining a shore of a Bloomer 0:05:58.000 --> 0:06:00.640 Opinion technology commas. You can read all of her work 0:06:00.680 --> 0:06:02.839 and all the other great work done by our folks 0:06:02.839 --> 0:06:05.520 at Bloomberg Opinion, at Bloomberg dot com, slash opinion or 0:06:05.640 --> 0:06:09.360 on the terminal op I n go. They do fantastic work. 0:06:09.360 --> 0:06:11.720 Really give me, I think, unique views into a lot 0:06:11.760 --> 0:06:13.320 of industries, a lot of companies, a lot of the 0:06:13.320 --> 0:06:16.040 news items going on UH, and they're really well informed. 0:06:16.080 --> 0:06:18.160 And I heard you to read that Bloomberg Opinion work. 0:06:18.200 --> 0:06:36.599 Outstanding stuff on the terminal end on the website. Well, 0:06:36.720 --> 0:06:39.880 a year ago today, where were we A year ago today? 0:06:40.000 --> 0:06:43.800 We were down, you know, close to the markets. Were 0:06:43.839 --> 0:06:46.640 doing that. You're doing exactly what Tom Kane does exact 0:06:46.800 --> 0:06:48.760 day because he's not here, so you're you know, so 0:06:48.839 --> 0:06:50.800 I am doing it. What a difference of year makes 0:06:50.839 --> 0:06:53.320 a year ago? Our next guest kim In Peter Kenny, 0:06:53.360 --> 0:06:56.120 founder of the Strategic Board Solutions UH and Kenny, a 0:06:56.240 --> 0:06:59.760 company he was in this studio a year ago, saying 0:07:00.360 --> 0:07:04.240 things aren't so bad. Let's get constructive. Peter Kenny, thanks 0:07:04.240 --> 0:07:07.000 so much for joining us. Where do you stand now? 0:07:07.120 --> 0:07:10.160 You boy? You a you were super right? Thank you? 0:07:10.880 --> 0:07:13.440 What do we do now? Do you think? You know? 0:07:13.880 --> 0:07:16.240 It's been a great year. I kind of expected this 0:07:16.840 --> 0:07:19.400 pretty much more or less to the point on the 0:07:19.520 --> 0:07:22.400 SMP five. I'm still very constructive, believe it or not, 0:07:22.520 --> 0:07:24.080 in spite of the fact that we've just seen a 0:07:24.920 --> 0:07:29.520 gain for the SMP five this year. I'm still constructive, 0:07:29.600 --> 0:07:33.280 but much more modestly so. So instead of the tent 0:07:33.360 --> 0:07:35.480 that we saw this year, I'm looking at maybe between 0:07:35.560 --> 0:07:37.960 six and nine percent next year. May get us to 0:07:38.800 --> 0:07:41.280 by the end of the year. The reason why I'm 0:07:41.320 --> 0:07:43.160 still constructive in spite of the fact that we've seen 0:07:43.200 --> 0:07:46.360 a gain is because we have very low interest rates, 0:07:46.800 --> 0:07:50.720 great economic data, clear signs of re engagement in terms 0:07:50.720 --> 0:07:54.040 of growth in the U. S. Economy, great news and 0:07:54.160 --> 0:07:59.000 the trade front, and consumer sentiment, income employment. This stuff 0:07:59.080 --> 0:08:02.280 is just super strong, and I think that we're going 0:08:02.320 --> 0:08:05.040 to continue to see that. You know, the tide lift 0:08:05.240 --> 0:08:07.680 all right, Peter, there's a difference between six or nine 0:08:07.720 --> 0:08:12.720 percent returns that steadily get developed over the year. That 0:08:12.840 --> 0:08:14.560 seems to be different than what people think is going 0:08:14.600 --> 0:08:16.160 to happen, where it's going to be front load in 0:08:16.160 --> 0:08:17.920 the front half of the year and the back half 0:08:18.000 --> 0:08:21.520 is going to be kind of rough based on political uncertainty. 0:08:21.600 --> 0:08:24.800 Would you agree with that assessment? Absolutely? Okay, yes, So 0:08:24.840 --> 0:08:26.720 in the first half of the year, what kind of 0:08:26.720 --> 0:08:30.200 returns can people expect? I think first, by the end 0:08:30.200 --> 0:08:31.840 of the second quarter, I think you're gonna look at 0:08:31.840 --> 0:08:35.400 maybe seven to nine. But it is definitely going to 0:08:35.440 --> 0:08:38.840 be much more choppy than we saw this year, even 0:08:38.880 --> 0:08:40.880 in the first half, even in the first half, and 0:08:40.920 --> 0:08:43.400 I would suggest that the volatility that we see peak 0:08:44.120 --> 0:08:47.800 next year will be in the first half. Really why well, 0:08:47.840 --> 0:08:50.479 a couple of things. First of all, the cbo EUM 0:08:50.760 --> 0:08:55.480 options are suggesting that there's complacency in the market, and 0:08:55.559 --> 0:08:57.760 pretty much everything else is suggesting that as well. And 0:08:57.800 --> 0:08:59.120 the fix if you look at the fixed with a 0:08:59.120 --> 0:09:02.080 twelve handles complacency in the market. When you see those 0:09:02.120 --> 0:09:06.480 two um indicators at the press levels that they're at there, 0:09:06.720 --> 0:09:09.640 it's almost a near certainty that something is going to 0:09:09.679 --> 0:09:12.439 disrupt that calmness in the market. And I think that 0:09:12.440 --> 0:09:15.520 that's likely to happen somewhere Q one, Q two. Now, 0:09:15.640 --> 0:09:17.800 I'm still constructive on the year, but I do think 0:09:17.800 --> 0:09:20.280 we're going to start seeing some volatility. It's just we 0:09:20.400 --> 0:09:23.240 just had too long a period without it. So is 0:09:23.559 --> 0:09:25.839 how much of your you know, six to eight, six 0:09:25.880 --> 0:09:30.040 to nine percent kind of return scenario predicated upon a 0:09:30.240 --> 0:09:35.920 very benign FED? Big part that great, Yes, that's a 0:09:36.000 --> 0:09:38.079 huge part of this, because you know we're heading into 0:09:38.120 --> 0:09:40.560 an election year and we all know that the FED 0:09:40.679 --> 0:09:45.600 historically in an election year tends not to be active 0:09:45.600 --> 0:09:47.640 in the market in terms of shifting policy. Now, the 0:09:47.720 --> 0:09:49.600 FED has already told me I was suggesting maybe we 0:09:49.600 --> 0:09:52.360 could have a rate increase at the data Lisa quote 0:09:52.400 --> 0:09:57.600 unquote rejected that. If she's right, She's absolutely right. Now 0:09:57.640 --> 0:09:59.600 we're going to continue to see the FED ad liquidity 0:10:00.480 --> 0:10:03.800 because you know, we have the Repoke conversation. But that said, 0:10:03.840 --> 0:10:05.160 I don't think we're going to see much in the 0:10:05.160 --> 0:10:07.600 way for its side. Yet you reject that as well. Yes, 0:10:07.760 --> 0:10:09.560 I mean, it just seems implausible to me. They are 0:10:09.600 --> 0:10:11.959 so shell shocked by what happened last year in December 0:10:12.000 --> 0:10:14.640 that there's no way they're going to do that. Rightly. Okay, 0:10:14.640 --> 0:10:16.679 So the question is we're gonna actually see inflation pick up. 0:10:17.280 --> 0:10:20.840 I think we may see a degree of inflation. And 0:10:20.880 --> 0:10:23.439 the reason why I say only a degree in spite 0:10:23.440 --> 0:10:25.800 of what we saw today in the data, is because 0:10:26.000 --> 0:10:29.960 the global economy is not going to allow inflation to 0:10:30.080 --> 0:10:33.439 really rise above where we're seeing it right now. But then, 0:10:33.679 --> 0:10:36.760 how much inflation do we need to see before it 0:10:36.800 --> 0:10:39.600 disrupts the sort of complacency that we see around no 0:10:39.720 --> 0:10:42.160 inflation and that that's being priced into. I don't think 0:10:42.200 --> 0:10:44.839 that inflation is going to be the driver of what 0:10:44.960 --> 0:10:48.360 upsets the complacent. I don't I just don't see it. 0:10:48.720 --> 0:10:54.320 You know, we're seeing great, great employment numbers, great confidence, 0:10:54.360 --> 0:10:57.000 and great income gains, and we're seeing that in really 0:10:57.000 --> 0:11:00.720 healthy spending, but we're not seeing it through to the 0:11:00.760 --> 0:11:04.040 economy in terms of making things more expensive, with the 0:11:04.040 --> 0:11:06.360 exception of some real estate some pockets, of course, but 0:11:06.400 --> 0:11:08.160 that's been a thing that we've been dealing with for now, 0:11:08.200 --> 0:11:11.000 for three or four or five years. We've seen in 0:11:11.040 --> 0:11:15.360 twenty nineteen in this grind up in the market. You know, 0:11:15.559 --> 0:11:17.800 periods during the year would be people were saying I 0:11:17.840 --> 0:11:20.000 gotta go defensive, and then we'd see people going back 0:11:20.000 --> 0:11:22.839 into more cyclicals or maybe even the growth stocks. How 0:11:22.880 --> 0:11:25.720 do you how do you think the will be in 0:11:25.800 --> 0:11:27.600 terms of do I take a little bit more risk 0:11:27.640 --> 0:11:30.040 with microL folio or I get a little bit more defensive. Well, 0:11:30.080 --> 0:11:31.559 I think that people who have been around for any 0:11:31.600 --> 0:11:34.040 period of time at all are And I was with 0:11:34.240 --> 0:11:39.560 a couple of pretty significant individuals last night. In terms 0:11:39.600 --> 0:11:42.959 of the markets, the sense is that listen, if I'm 0:11:42.960 --> 0:11:45.960 putting the money money to work in the market right now, 0:11:46.600 --> 0:11:49.640 I'm nervous. I'm nervous. Why because of the run up 0:11:49.679 --> 0:11:52.960 we've seen, you know, So, I think if people are 0:11:53.400 --> 0:11:56.959 looking at their overall portfolio, they're going to look at 0:11:57.200 --> 0:12:01.840 a more defensive posture that's going to be fueled by policy, 0:12:01.840 --> 0:12:04.320 in other words, a degree of certainty that the markets 0:12:04.360 --> 0:12:08.559 might not otherwise provide. And I'm speaking specifically of infrastructure. Okay, 0:12:08.600 --> 0:12:11.600 what do you think will be the worst performing asset class? 0:12:11.640 --> 0:12:17.199 Of what's the big loser? I think it's going to 0:12:17.240 --> 0:12:21.719 be utilities. Interesting, I think it's going to be utilities. 0:12:22.240 --> 0:12:25.920 And the primary reason I say that is because UM 0:12:25.960 --> 0:12:29.959 with utilities pricing is largely baked in. There's very little 0:12:30.040 --> 0:12:33.360 alpha out there that you can harvest that is going 0:12:33.400 --> 0:12:36.600 to be priced into a market where there's going to 0:12:36.640 --> 0:12:39.000 be a lot of liquidity and there's going to be 0:12:39.080 --> 0:12:41.319 a lot of money slashing around on the market. It's 0:12:41.360 --> 0:12:43.760 not going to be looking for dividends, right Well, so 0:12:43.840 --> 0:12:45.600 on the flip side, what's going to be the absolute 0:12:45.640 --> 0:12:50.280 best performing asset class? I love infrastructure, for UM, love 0:12:50.320 --> 0:12:55.560 heavy construction. UH continue to be very, very engaged in 0:12:55.760 --> 0:12:59.120 real estate space. I think in spite of the fact 0:12:59.120 --> 0:13:01.840 that we're seeing pockets I think it's you're seeing pockets 0:13:01.840 --> 0:13:06.840 of over I would suggest inflation in some real estate markets, 0:13:07.040 --> 0:13:10.120 but I think that's also fueling a wider growth in 0:13:10.200 --> 0:13:14.200 real estate demand and exposure in terms of investment. So 0:13:14.360 --> 0:13:17.840 secondary and third tertiary markets are seeing real benefit. Now, 0:13:18.160 --> 0:13:19.640 do you think we're actually gonna get a trade deal 0:13:19.640 --> 0:13:21.839 that's actually on paper that somebody can see. Are we're 0:13:21.840 --> 0:13:23.960 just gonna get tweets? We're going to get a trade 0:13:23.960 --> 0:13:29.719 deal and is going to be a significant tailwind to 0:13:29.880 --> 0:13:35.840 the global narrative. And that's that's the that's that's the thing. 0:13:36.040 --> 0:13:39.760 It's it's really how the globe looks at what the 0:13:39.800 --> 0:13:43.360 opportunity is in trade again. Yeah, narrative is the key operative. 0:13:43.400 --> 0:13:45.040 It's not clear what that will do, but the narrative 0:13:45.040 --> 0:13:47.439 matters because it matters for business confidence. We saw it 0:13:47.440 --> 0:13:49.360 in the fourth quarter last year. It really narrator mat 0:13:49.559 --> 0:13:53.400 On the flip side, yea, all narrative terrible than narrative wonderful. 0:13:53.920 --> 0:13:56.960 Now we're narrative pretty good. Peter Kenny, thank you so 0:13:57.040 --> 0:13:59.400 much for being with us. Peter Getty, founder and Strategic 0:13:59.400 --> 0:14:04.040 Boards illusion Um, founder of Strategic Board Solutions, joining us 0:14:04.040 --> 0:14:22.880 here in our interactive broker studios. Well, have you ever 0:14:22.880 --> 0:14:25.560 stepped back and thought, where does all the world's garbage 0:14:25.600 --> 0:14:28.600 got a lot? I never did until I saw a 0:14:28.680 --> 0:14:31.520 recent Wall Street Journal article talking about it and they 0:14:31.520 --> 0:14:33.840 said most of it has been going to China historically. 0:14:33.840 --> 0:14:36.440 But now I was China saying, gee, maybe not anymore. 0:14:36.720 --> 0:14:39.600 Julia Atwood, head of Advanced Materials for Bloomberg any f 0:14:40.000 --> 0:14:41.920 joins us to chat about this. She's in our Paris 0:14:42.000 --> 0:14:44.920 office today, Lucky for Julia. So Julia, this was an 0:14:44.960 --> 0:14:48.520 interesting story. Again, A lot of trash historically has gone 0:14:48.560 --> 0:14:51.800 to China for processing. Then I get starting last year 0:14:51.840 --> 0:14:54.840 they said, we're not really interested in your trash what's 0:14:54.840 --> 0:14:58.240 the story here, Hi guys, thanks for having me. Yeah, 0:14:58.400 --> 0:15:02.080 the story is really interesting ing, especially because China is 0:15:02.160 --> 0:15:04.520 kind of half of it, and then the circular economy 0:15:04.560 --> 0:15:07.800 is the other half of it. So what China said was, 0:15:08.600 --> 0:15:11.440 we don't want your trash anymore because it's too dirty, 0:15:11.560 --> 0:15:14.080 it's too poorly sorted, and we think of it as 0:15:14.200 --> 0:15:17.920 toxic waste. So they have basically said, we are moving 0:15:17.920 --> 0:15:21.280 towards advanced manufacturing. We want to make the really difficult stuff. 0:15:21.320 --> 0:15:24.760 We don't need any more waste plastic to use to 0:15:24.880 --> 0:15:28.560 make toys or simpler products. So they called it their 0:15:28.680 --> 0:15:32.640 National Sword Policy, and it was really about how they're 0:15:32.720 --> 0:15:35.640 changing their manufacturing focus and the quality of what they 0:15:35.640 --> 0:15:38.440 were getting from other countries. Julia, I think about this 0:15:38.520 --> 0:15:41.040 all the time, in part because I'm trying to understand. 0:15:41.320 --> 0:15:45.240 Let's say you get take out Chinese food and you're 0:15:45.240 --> 0:15:48.400 going to recycle the plastic containers. How much do you 0:15:48.440 --> 0:15:52.240 have to wash them in order to have them properly recycled. 0:15:52.240 --> 0:15:54.360 I know this is crazy to to be talking about this, 0:15:54.400 --> 0:15:56.680 but it's actually it goes to the fundamental heart of 0:15:56.720 --> 0:16:00.680 this right m M. It does absolutely, because it's a 0:16:00.680 --> 0:16:04.080 totally different story if you've got something that's really clean 0:16:04.200 --> 0:16:07.040 and really well sorted, because then recyclers can get a 0:16:07.080 --> 0:16:10.040 high value product out of it at the end. Um 0:16:10.160 --> 0:16:12.360 So the recyclers would tell you, my god, put it 0:16:12.400 --> 0:16:16.120 in the dishwasher, have it clean, sterilized, and put it 0:16:16.160 --> 0:16:19.600 into a completely separate bin. So they want something perfect. 0:16:19.920 --> 0:16:23.000 Why they want something perfect? Why can't we come up 0:16:23.040 --> 0:16:25.960 with technology that just does that? I mean, because that's 0:16:26.040 --> 0:16:30.680 if that's the huge obstacle between reusing and not reusing. Uh, 0:16:30.720 --> 0:16:33.480 you know, it's going to take a whole lot of education, luck, 0:16:33.640 --> 0:16:36.400 and probably failure to get this right. Why can't we 0:16:36.400 --> 0:16:39.880 just come up with better technology? Well, we have because 0:16:39.920 --> 0:16:42.080 I think a lot of people have realized that trying 0:16:42.080 --> 0:16:45.920 to convince a mass of consumers is difficult, and you 0:16:45.960 --> 0:16:48.720 want to be thinking about asking companies to do something 0:16:48.720 --> 0:16:50.800 because they're kind of a point source for all of 0:16:50.840 --> 0:16:54.440 these products. So there are better technologies on the sorting side, 0:16:54.480 --> 0:16:59.160 whether you're using robotics or computer vision to pick out 0:16:59.200 --> 0:17:02.320 the right plastic. But what's also really interesting is that 0:17:02.360 --> 0:17:05.719 the packaging makers themselves are going back and looking at 0:17:05.720 --> 0:17:08.240 the re design of saying what can I do to 0:17:08.359 --> 0:17:11.560 be better. And then there are some companies who are 0:17:11.600 --> 0:17:15.280 just sidestepping the whole thing completely, looking into new processes 0:17:15.320 --> 0:17:19.560 like chemical recycling that can deal with a few more contaminants. 0:17:19.880 --> 0:17:22.080 There are a bunch of ways that we can sidestep 0:17:22.119 --> 0:17:25.159 these problems through better technology. Can you give us a 0:17:25.200 --> 0:17:28.080 sense of how, I don't know if how the world 0:17:28.160 --> 0:17:30.199 has done in terms of recycling, or maybe how the 0:17:30.240 --> 0:17:32.600 western developed world has done. I mean, over the last 0:17:32.600 --> 0:17:36.840 ten or twenty years, is the world recycling materially more 0:17:36.880 --> 0:17:41.639 than it used to? Not? Really, it depends on which 0:17:41.680 --> 0:17:44.399 country you pick. The really stand out example of the 0:17:44.440 --> 0:17:47.000 people who have done very well with their recycling is 0:17:47.040 --> 0:17:50.600 actually South Korea. And the reason why they did so 0:17:50.600 --> 0:17:53.120 well is because they introduced something called the pay as 0:17:53.160 --> 0:17:56.199 you throw scheme that they actually got charged by the 0:17:56.240 --> 0:17:59.760 amount of waste per household they were generating, rather than 0:18:00.160 --> 0:18:02.560 having a flat fee buried somewhere in your taxes that 0:18:02.600 --> 0:18:05.560 you can't see now in Europe. In the US, we've 0:18:05.600 --> 0:18:08.879 actually seen some recycling rates starting to go down because 0:18:08.880 --> 0:18:12.760 it's just getting too expensive for municipalities to do. So 0:18:12.880 --> 0:18:16.320 what's the US going to do with China now rejecting 0:18:16.880 --> 0:18:21.520 our recycling well, what I think is the most interesting 0:18:21.760 --> 0:18:24.240 part of this whole question is how other parts of 0:18:24.280 --> 0:18:27.399 the supply chain have started to get involved. So China 0:18:27.480 --> 0:18:29.880 saying we're not going to take plastic waste made all 0:18:29.880 --> 0:18:33.160 the waste managers sit up and take notice. But what's 0:18:33.200 --> 0:18:35.359 happening at the other end of the supply chain is 0:18:35.400 --> 0:18:38.840 consumer companies are coming under pressure to be more sustainable 0:18:38.840 --> 0:18:41.600 and recycle more because of all the terrible images of 0:18:41.680 --> 0:18:44.680 plastic waste in the ocean. So what started to happen, 0:18:44.800 --> 0:18:47.920 especially in the US, is these brand owners have said, 0:18:49.160 --> 0:18:51.760 we can't be held responsible for this, we have to 0:18:51.800 --> 0:18:55.560 start making investments. So we recently saw an Espresso give 0:18:55.600 --> 0:18:58.680 over a million dollars to a recycling company to install 0:18:58.760 --> 0:19:01.840 a new line to cycle those little aluminum pods for 0:19:01.880 --> 0:19:04.960 your coffee. So the waves managers are kind of sitting 0:19:05.000 --> 0:19:08.760 around saying, Okay, when do I get my million dollars? Like, 0:19:08.960 --> 0:19:11.360 when is the brand coming to the rescue to help 0:19:11.440 --> 0:19:15.920 us fix our recycling infrastructure. Coca Cola, Pepsi, Corred Doctor 0:19:16.000 --> 0:19:19.120 Pepper together they're putting a hundred million dollars into better 0:19:19.119 --> 0:19:22.639 curbside recycling. So really it's the companies that are leaving 0:19:22.840 --> 0:19:25.720 leading it, not the policy makers. All right, just a 0:19:25.760 --> 0:19:29.560 quick question. If the garbage isn't going to China, where 0:19:29.640 --> 0:19:32.560 is it going. A lot of it is actually being 0:19:32.560 --> 0:19:36.960 stored in Japan. They just have massive storage facilities that 0:19:37.000 --> 0:19:39.680 are holding onto the waist and hoping prices are going 0:19:39.720 --> 0:19:43.440 to increase because most scrap is actually traded and there's 0:19:43.480 --> 0:19:44.800 a little bit of light at the end of the 0:19:44.840 --> 0:19:48.120 tunnel because we're starting to see prices for the kind 0:19:48.160 --> 0:19:51.359 of plastics that go into detergent bottles actually being higher 0:19:51.359 --> 0:19:54.240 than new material. So the markets are going to rebound. 0:19:54.960 --> 0:19:58.680 Julia Atwood, thank you so much. Really interesting. Julia Atwood, 0:19:58.680 --> 0:20:02.400 head of Advanced Materials for Bloomberg, the benef Bloomberg New 0:20:02.520 --> 0:20:05.040 Energy Finance. She is normally based in New York, but 0:20:05.080 --> 0:20:07.680 in Paris today. And I gotta say I think about 0:20:07.680 --> 0:20:10.200 it all the time. You started by asking how often 0:20:10.200 --> 0:20:11.720 do you think about it? And I think about it 0:20:11.760 --> 0:20:13.600 all the time because I think about how much to 0:20:13.880 --> 0:20:18.000 clean each item, and then if you end up washing 0:20:18.000 --> 0:20:20.960 it with a lot of water, is that ineffective or effective? 0:20:21.040 --> 0:20:23.040 I mean, I know I sound really tortured when I 0:20:23.080 --> 0:20:24.480 when I go into this, but I think about it. 0:20:24.600 --> 0:20:28.120 Every time there's some plastic container, it's like, well, how 0:20:28.200 --> 0:20:31.800 much effort should you put into making it spotless? It's interesting, 0:20:31.840 --> 0:20:34.000 you know here at Bloomberg and all the Bloomberg offices 0:20:34.040 --> 0:20:37.720 around the world really really focused on recycling and really 0:20:37.720 --> 0:20:40.040 take the time to have all the separate bins and 0:20:40.320 --> 0:20:43.800 separated and we have all the compostable things. I just 0:20:43.880 --> 0:20:47.479 wonder what other companies and what are the households, to 0:20:47.520 --> 0:20:49.480 what degree are they taking it? I just don't know. Well, 0:20:49.480 --> 0:20:51.320 and at what point do you just bring your own dish? 0:20:51.480 --> 0:20:53.320 I mean, I'm serious, Like, at what point do we 0:20:53.400 --> 0:20:57.600 just stop with the disposable stuff? I don't know. Interesting questions. 0:21:12.400 --> 0:21:15.480 Holiday shopping starting to wrap up here. We have Christmas 0:21:15.520 --> 0:21:18.479 in a few days Hanakah starting on Sunday. Let's get 0:21:18.480 --> 0:21:21.560 a sense of how things are out there in retail land. 0:21:21.560 --> 0:21:23.840 We welcome my good friend Jim Fallon, editorial director for 0:21:23.880 --> 0:21:26.080 Woman's where Daily joins us here in our Bloomberg Inner 0:21:26.240 --> 0:21:29.200 Active Broker studio, braving the cold of New York City. 0:21:29.520 --> 0:21:31.520 So Jim, give us a sense here where you know, 0:21:31.600 --> 0:21:35.840 we kind of came into the holiday shopping season cautiously optimistic. 0:21:36.080 --> 0:21:38.240 I heard numbers of you know, kind of fourish percent 0:21:38.359 --> 0:21:41.359 growth in terms of retail sales around the holidays. What 0:21:41.400 --> 0:21:45.880 are you finding? Basically, those those forecasts ended up being accurate. 0:21:45.960 --> 0:21:48.240 It looks like it's going to be about four percent growth, 0:21:48.280 --> 0:21:52.040 maybe even a little higher. We were cautiously optimistic. I 0:21:52.080 --> 0:21:55.000 think the jobs picture, the overall strength of the economy, 0:21:55.320 --> 0:21:59.560 fed into a consumer optimism that really hasn't waned. But 0:21:59.640 --> 0:22:02.439 I think what's happened is that the shopping happened early, 0:22:02.680 --> 0:22:05.280 then there was a lull, and now you'll see this weekend, 0:22:05.440 --> 0:22:08.200 the store is busy on this Super Saturday, last Saturday 0:22:08.200 --> 0:22:11.760 before Christmas. When we came into this holiday shopping season, 0:22:11.800 --> 0:22:13.280