Speaker 1: This is Bloomberg Business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news As it happened. Bloomberg
Speaker 1: Business Week with Carol Messier and Bloomberg Quick Takes. Tim
Speaker 1: Stinovic on Bloomberg Radio. Hi, everyone, Welcome to the weekend
Speaker 1: edition of Bloomberg Business Week. It was another week of
Speaker 1: volatility in the equity trade. Stocks whipsode by debt ceiling
Speaker 1: and fiscal spending negotiations to him and also, oh yeah,
Speaker 1: we talked about inflation. We even talked about stack lation.
Speaker 1: It does seem like investors for the Q four really
Speaker 1: need to buckle up right, Yeah, exactly, but it really
Speaker 1: has created more uncertainty and volatility in the markets. We
Speaker 1: are a lot going on this broadcast. Yeah, really big
Speaker 1: show coming your way. We have the founder, chairman and
Speaker 1: CEO of Dell Technology is none other than Michael Dell.
Speaker 1: He's gonna talk all about price pressures and supply chains
Speaker 1: in the tech sector along with his new book It's
Speaker 1: called Plain Nice. But when a CEO's journey from founder
Speaker 1: to leader? Can I be fair? Tim? And I have
Speaker 1: to look at a lot of books. We talked to
Speaker 1: a lot of authors. Sometimes we can read some of
Speaker 1: the books. Sometimes we read Don't get Tory too much.
Speaker 1: Don't tell everybody this book. We read and loved it.
Speaker 1: It's really good. Yeah, and it really details I mean,
Speaker 1: he is a tech whiz kid created this company. I
Speaker 1: mean he was working on computers when he was a
Speaker 1: kid in high school. Um, you know, years old, he's
Speaker 1: building out this company remarkable well, and also details the
Speaker 1: take private element of the company and the way the
Speaker 1: company was able to transform as a private company and
Speaker 1: come back bigger and better create a company. Take it public,
Speaker 1: take it private, take it public again. Really cool, We
Speaker 1: get into that. Hey. Also this week, Tim and I
Speaker 1: participated in Bloomberg invest Global. It's an event highlighted by
Speaker 1: a number of financial heavyweights, including Gray Scale CEO Michael Sonnenschein,
Speaker 1: who will hear from later on when it comes to
Speaker 1: the crypto landscape. The someone also highlighted the analytical power
Speaker 1: of Bloomberg Intelligence and Bloomberg Global Data, and I spoke
Speaker 1: with Bloomberg Intelligence chief equity strategist Gina Martin Adams, who
Speaker 1: said that rising prices, well, they're really something that invests
Speaker 1: just cannot afford to ignore. I think we need to
Speaker 1: pay attention to it for a number of reasons, but
Speaker 1: most profoundly in the short run. We need to pay
Speaker 1: attention to it because even though policymakers are telling us
Speaker 1: it's not going to be around forever, it is still
Speaker 1: sticking around for a little longer than anyone had anticipated,
Speaker 1: at least in the short run. And we're saying that
Speaker 1: reflected an analyst expectations. So far, roughly half of SMP
Speaker 1: company estimates for operating margins, which is the manifestation of
Speaker 1: inflation pressures in the earning stream, those estimates have dropped
Speaker 1: for third quarter and for fourth quarter season. We've not
Speaker 1: yet seen a down draft in the forward twelve month
Speaker 1: that look which I think we want to watch for.
Speaker 1: That was Bloomberg Intelligence Chief equity strategist Gina Martin Adams.
Speaker 1: And speaking of earning scroll, we are also going to
Speaker 1: hear from chip Burg, president and CEO of Levi Strauss,
Speaker 1: the data maker, coming off of a really strong third quarter. Yeah. Absolutely,
Speaker 1: also talking about a buyback, So we'll get to that
Speaker 1: a little bit later. On all of that to come,
Speaker 1: we begin with a look at this week's issue of
Speaker 1: Bloomberg Business Week mag zine, and to him, let's start
Speaker 1: with the cover story. It's all about tether, the world's
Speaker 1: most popular stable coin. So for those who don't know,
Speaker 1: it's a type of cryptocurrency favored by traders because it's
Speaker 1: backed by real U S dollars. So every tether it's
Speaker 1: well supposed to be worth one dollar and backed by
Speaker 1: one dollar, right, and so with sixty nine billion tethers
Speaker 1: now in circulation, stay with me, everyone, there should be
Speaker 1: sixty nine billion dollars in real money to back those coins. Right. Well,
Speaker 1: the thing is, nobody seems to know exactly where that
Speaker 1: money is, and that's part of the reason U S
Speaker 1: regulators are taking notice. Another important story that we discussed
Speaker 1: comes from the business section of the magazine, and it
Speaker 1: turns out that racial and gender diversity at elite law
Speaker 1: firms is lacking to the point where some big name
Speaker 1: clients they're actually dock in legal fees. It's so interesting.
Speaker 1: It's a story by our Ellen Milligan and Todd Gillespie,
Speaker 1: and it details the pressure that's being put on these
Speaker 1: mega firms, mega law firms to include more women and
Speaker 1: people of color on their teams. So we're talking about
Speaker 1: companies putting pressure on these law firms. Companies like Facebook,
Speaker 1: HP and of artists. They're all spending billions on outside
Speaker 1: council and they say diverse legal teams deliver more creative
Speaker 1: and well rounded advice. Ironically, though, these are the company's
Speaker 1: jim that are working on diversity, but they have a
Speaker 1: long way to go. So it's just kind of funny.
Speaker 1: It's like wait a minute, glass houses, etcetera. Exactly. I
Speaker 1: do think it's interesting though, because we did talk about
Speaker 1: this in the context of Facebook and Facebook more than
Speaker 1: you know, one billion dollars in legal fees that have
Speaker 1: paid last year, and how that's not going to go
Speaker 1: down anytime soon if we look at what's happening with Facebook.
Speaker 1: So these huge law firms want to keep these big clients.
Speaker 1: They're so important to them. It's also a challenge when
Speaker 1: it comes to the pipeline because even though there's real
Speaker 1: lack of diversity, it's hot. Yeah, it starts, you know,
Speaker 1: lower down. It starts with those first year associates and
Speaker 1: even goes as far back as law school and making
Speaker 1: sure to increase diversity in law school. So that pipeline
Speaker 1: is created. Also this week, we talked about a couple
Speaker 1: of things that some of our listeners might enjoy on
Speaker 1: occasion in their spare time. Potent b an interesting story
Speaker 1: from Bloomberg News Toronto bureau chief Danielle Boco of on
Speaker 1: Canadian pot farmers. They bought up a bunch of land
Speaker 1: and they really hope to get in on the ground
Speaker 1: floor of a nascent cannabis tourism industry. But it's harder
Speaker 1: than it sounds. But it turns out the country's complex
Speaker 1: series of regulations are hampering business in a big way.
Speaker 1: So that's a story we chuckled a little bit about it,
Speaker 1: had some fun with puns, but nonetheless it just shows
Speaker 1: again this is an industry that's trying to find its
Speaker 1: way forward, but it's not so easy, and it depends
Speaker 1: on geography, country, rules, regulations. It's a really interesting tension though,
Speaker 1: because there are a lot of proponents of the industry
Speaker 1: who say, hey, this is not just good for the industry,
Speaker 1: but it's good for the country. It's good for tourism,
Speaker 1: it's good for the economy. But if we can't get
Speaker 1: past these rules and regulations and actually allowed to flourish,
Speaker 1: similar to the way that the wine industry in California,
Speaker 1: for example, even the wine industry just outside of Toronto
Speaker 1: is flourishing. Then it's it's not going to get off
Speaker 1: the ground. And then there's also in the magazine the
Speaker 1: so called M I T. Beer game. We're not talking
Speaker 1: about pong beer pong, know what it's about. I thought
Speaker 1: it was when I first saw that, which is why
Speaker 1: Tim's like, yeah, okay, I'll put this at the top
Speaker 1: of my reading list. That story from our economics team,
Speaker 1: all about a decades old business school simulation exercise illuminating
Speaker 1: how human error can snag up supply chains. We talked
Speaker 1: about supply chains a lot. That story you can find
Speaker 1: in the magazine, which is on newstands online and also
Speaker 1: on the Bloomberg terminal. And you want to stick around
Speaker 1: for the whole show, because later on a Bloomberg Business
Speaker 1: we contribute or details his findings as part of the
Speaker 1: staff at Walt Disney World. And guess what, it wasn't
Speaker 1: all magical, though it was certainly colorful. You do not
Speaker 1: want to miss this Eleven things I never knew about
Speaker 1: Disney World until I worked there. I love this story.
Speaker 1: All that and more straight ahead coming up though. Next
Speaker 1: Levi strauss out with third quarter earnings. They were better
Speaker 1: than expected. The company's president and CEO, Chipberg, joining us
Speaker 1: to talk about the quarter, the outlook, and how he
Speaker 1: plans to keep the nearly one seventy year old company
Speaker 1: and iconic brand moving forward. You're listening to Bloomberg Business Week.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Spinovik from Bloomberg Radio.
Speaker 1: Levi Strausson company this past week posted third quarter sales
Speaker 1: at top Wall Street expectations. It's a sign that consumers
Speaker 1: are still willing to shop for apparel despite ongoing uncertainty
Speaker 1: around COVID nineteen, or at least they're willing to shop
Speaker 1: for Levi's. Let's just put it up. I mean, at
Speaker 1: the beginning of the pandemic, I wore Jeanes NonStop and
Speaker 1: actually wore through some of them. Did you really took
Speaker 1: this is? It actually took weeks to get a new pair.
Speaker 1: This was like the beginning when I didn't realize that
Speaker 1: the supply chain French would be there. That is really funny. Well,
Speaker 1: the dnamaker also boosted its full year profit outlook, but
Speaker 1: there are still challenges ahead. The president and CEO Chitberg
Speaker 1: stopped by to talk to us about supply chain bottlenecks,
Speaker 1: the competitive landscape, and of course, the company's recent strong
Speaker 1: earnings report. We're really pleased with the quarter, especially when
Speaker 1: you're consider the macro economic headwinds that we've been facing,
Speaker 1: supply chain challenges and everything else. Our team around the
Speaker 1: world is just doing an exceptional job executing. We've delivered
Speaker 1: sales growth at versus last year, but importantly we were
Speaker 1: up three versus pre pandemic, and um you know, we
Speaker 1: expect to be up versus in the fourth quarter as well.
Speaker 1: So really good quarter, strong profit delivery. But you know,
Speaker 1: we've we've just done a great job navigating all of
Speaker 1: the challenges that are facing the industry. I can hear
Speaker 1: it in your voice. I think both Tim and I
Speaker 1: are looking at them. So tell us about the challenges.
Speaker 1: I mean, what is it that you can't get, what
Speaker 1: is it that you have to pay a lot more for?
Speaker 1: Tell us about that? Well, I think you know, UH
Speaker 1: supply chain challenges have been in the news and have
Speaker 1: affected really all of the soft line UH and apparel
Speaker 1: stocks over the last three three months or so. UH.
Speaker 1: Pork challenges are obviously an issue. COVID is impacting a
Speaker 1: number of countries in Asia. Many factories are shut down.
Speaker 1: But what we've got going for us is I actually
Speaker 1: believe our global supply chain is a competitive advantage. UM.
Speaker 1: We have a huge amount of scale. UM. We source.
Speaker 1: We made a decision a long long time ago that
Speaker 1: we were not going to put all of our eggs
Speaker 1: in one basket. UM. We source from twenty four different countries.
Speaker 1: No country represents more than our total volume UM. And
Speaker 1: we also cross source. About half of all of our
Speaker 1: volume is crosssourced, meaning we could make that same product
Speaker 1: in different factories in different countries, which gives us an
Speaker 1: incredible amount of agility. So that if a factory shuts
Speaker 1: down unfortunately because of COVID, we've can quickly move that
Speaker 1: production to somewhere else that's still operating. So that's given
Speaker 1: us a ton of of agility. I mean, just to
Speaker 1: dimensionalize that the atnouncement in the news a lot here lately, UM,
Speaker 1: we're importing less than four percent of our product right
Speaker 1: now from Vietnam um uh, and so that's that's big.
Speaker 1: We've also been really agile on the on the shipping front.
Speaker 1: In fact, we've locked up about seventy of our shipping
Speaker 1: through the first half of next year of the capacity
Speaker 1: that we need. Uh and we've been able to you know,
Speaker 1: ship deliveries from the West coast to the East coast
Speaker 1: given the West coast court challenges. So our diversified supply
Speaker 1: chain and the team that we've got really is a
Speaker 1: big competitive advantage. We left you know, we did one
Speaker 1: and a half billion dollars of revenue in the quarter.
Speaker 1: We left ten million dollars of revenue on the table
Speaker 1: from unfilled orders. Really a great really, a great job.
Speaker 1: Common prices have surge year over a year, according to
Speaker 1: Bloomberg Intelligence, Shipping prices, I know for you have increased.
Speaker 1: You did say yesterday, levis indicated that you have pricing
Speaker 1: power and you're able to pass on some of these
Speaker 1: increased costs that you face two consumers. How much pricing
Speaker 1: power do you have? How much more our customer is
Speaker 1: going to pay for their levis? Well, A couple of
Speaker 1: things to first of all, um, you know, there's it's
Speaker 1: clear inflation is here. And it's not just cotton, it's everything.
Speaker 1: It's labor, costs, it's shipping costs, it's truck costs, it's
Speaker 1: it's really everywhere. UM. We saw it coming over a
Speaker 1: year ago, and we took pricing. We've been taking pricing
Speaker 1: for the last year. Are au r s are up
Speaker 1: pretty significantly over the last two years, and it's because
Speaker 1: we saw inflation coming and we've been pricing ahead of
Speaker 1: inflation and have been successful. It's sticking and so a
Speaker 1: lot of that, and that's part of the reason you're
Speaker 1: seeing such high gross margins fifty seven and a half
Speaker 1: percent gross margins this past quarter. We've been in the
Speaker 1: fifty seven's for the last three quarters, UM, and it's
Speaker 1: because we've successfully passed on pricing. We don't buy cotton,
Speaker 1: We buy fabric from mills, and we've already negotiated our
Speaker 1: cost of good soul through the first half of with
Speaker 1: a slow single digit one cost inflation built into our
Speaker 1: cost of goods. We're in the midst of negotiating the
Speaker 1: second half. I expect that's going to be higher. Obviously,
Speaker 1: given what's happening to cotton, we're expecting it's gonna be
Speaker 1: somewhere in the mid single digit area. If it's more
Speaker 1: than that, we may have to take additional pricing, but
Speaker 1: priced ahead of inflation, and feel that we're in a
Speaker 1: pretty good place right now. We're also confident in the
Speaker 1: strength of the brand that if we need to take
Speaker 1: more pricing, we can do that very surgically and and
Speaker 1: you know, and recover the higher costs to maintain your margins.
Speaker 1: Basically exactly. Hey, listen, you said, I thought it was
Speaker 1: interesting tip you said, um, that you saw inflation coming
Speaker 1: about two years ago. Are you saying that there were
Speaker 1: problems in the supply chain prepare endemic? Because I think
Speaker 1: this speaks to we are trying to figure out inflation
Speaker 1: transitory or not. Right, it's the big big question of
Speaker 1: the day. What would you say someone who has to
Speaker 1: manage your supply chain so carefully? Is this a bigger
Speaker 1: deal that lasts, that stays with us longer. Yeah, it
Speaker 1: wasn't really two years ago we saw coming. It was
Speaker 1: about right, kind of coincidental with the pandemic and the lockdowns. Um,
Speaker 1: we knew that there was already going to be pressure
Speaker 1: from a labor standpoint. We were seeing that here in
Speaker 1: the US in particular. Um, you know, I know there's
Speaker 1: a lot of debate about whether inflation is transitory or not,
Speaker 1: I personally believe it's here to stay. And that's why
Speaker 1: we started taking pricing action early. Is you know, instead
Speaker 1: of a big huge leap and prices, it's it's better
Speaker 1: to get the consumer there slowly over a series of
Speaker 1: price increases and and and so we got going on
Speaker 1: it early. And I think we're out ahead of the curve.
Speaker 1: Are au r s are up kind of in the
Speaker 1: mid to high single digit area versus a year ago
Speaker 1: and two years ago. UM, so I believe it's here
Speaker 1: to say. I mean we're looking at higher late labor
Speaker 1: cost wage wages are going up pretty significantly around the world.
Speaker 1: There's shortage of of labor for different types of skills.
Speaker 1: So I think we're looking at this for at least
Speaker 1: the next couple of years. That was Levi Stross, president
Speaker 1: and CEO Chipburg the stock hire by so far this year,
Speaker 1: we'll still ahead. On Bloomberg Business Week, bain and Company
Speaker 1: out with its annual technology report, and as you might imagine,
Speaker 1: the rift between the United States and China looming over
Speaker 1: the entire tech sector. The head of Baines Technology and
Speaker 1: Cloud Services practice in the America's joins US to discuss
Speaker 1: the impact of the great decoupling. This is Bloomberg broadcasting
Speaker 1: from the financial capital of the world Bloomberg eleven Frio
Speaker 1: in New York to Washington, d C. Bloomberg to Boston,
Speaker 1: Bloomberg one oh six one, to San Francisco, Bloomberg nine
Speaker 1: sixty to the country Sirius XM Chado one nineteen and
Speaker 1: around the globe the Bloomberg Business app and Bloomberg Radio
Speaker 1: dot com. This is Bloomberg Business Week. Late last month,
Speaker 1: Bade and Company put out its Technology REPORTE TIM. It
Speaker 1: was ninety two pages of the new Technology economy. It
Speaker 1: provides insights and trends on everything from big tech, m
Speaker 1: and A venture capital, software, hybrid cloud, the talent wars,
Speaker 1: and yes, of course chip shortages and supply chains. But
Speaker 1: layering over it all, well, it's the ongoing spat between
Speaker 1: the U S and China. Absolutely, and that was also
Speaker 1: in our news flow this week. Ann Hecker is head
Speaker 1: of Baynes Technology and Cloud Services practice in the America.
Speaker 1: She joined us to break down the report really talk
Speaker 1: about the impact of that widening rift between the world's
Speaker 1: superpowers and the world's two biggest economies. It really has accelerated,
Speaker 1: I think over the last couple of years. So when
Speaker 1: we think of this and decoupling, even you know, two
Speaker 1: or three years ago, we used to lay out three
Speaker 1: scenarios that you know, we used to be in a
Speaker 1: world is more globalization, and then we moved to one
Speaker 1: of globalization, which is a term I think the economist
Speaker 1: coined where there would still be global trade, but there'll
Speaker 1: be more tariffs, more sanctions that would flow some things down.
Speaker 1: And then the third would be do we moved into
Speaker 1: a more decoupled world where you really do start to
Speaker 1: see the development of independent economies and supply cheeses that
Speaker 1: really just have fewer linkages across those And we used
Speaker 1: to debate up how fast would you be moving towards
Speaker 1: that more decoupled scenario, and I think we've moved faster
Speaker 1: than anyone expected. Um. I don't think it's going to
Speaker 1: be linear. I think will probably move some to the
Speaker 1: left sum to the right over time. But a few
Speaker 1: data points that have really I think show this is
Speaker 1: if you look at foreign direct investments, UM tech related
Speaker 1: foreign direct investment has dropped from who do you think
Speaker 1: are ultimately based on the latest tech report that you
Speaker 1: guys put out, who are the winners and losers? Yeah,
Speaker 1: that's a great question when we look at it. UM
Speaker 1: part of the report we looked at was just how
Speaker 1: much technology has really UM broadened in its impact across
Speaker 1: all industry. So sometimes we look at, you know, the
Speaker 1: tech companies, but we also looked in this report about
Speaker 1: how companies outside of traditional tech channels, so your retail companies,
Speaker 1: financial service, healthcare, consumer products, and the research there we
Speaker 1: showed that companies across all industries that take a more
Speaker 1: tech driven strategy or have a lot of UM tech
Speaker 1: as an underpinning in their business model are actually outperforming
Speaker 1: others in their own industry. So, while we can think
Speaker 1: of technology companies as a vertical in and of itself,
Speaker 1: the UM enabling aspect of technology and embracing that across
Speaker 1: all different industries, companies that have successfully done that are
Speaker 1: outperforming their peers that haven't done that yet. And can
Speaker 1: you give us for the sake of case study or
Speaker 1: or or so so people understand examples, can you share
Speaker 1: historical examples where where one company has embraced that type
Speaker 1: of shift and one hasn't and we've seen out performance. Well, sure,
Speaker 1: so you can see some of some of the examples
Speaker 1: would be would be on your listeners are very aware
Speaker 1: of like companies like an Amazon or an Ali Baba
Speaker 1: kind in the consumer space that it really just a
Speaker 1: kind of what we would call born check right, that
Speaker 1: they were born with the technology underpinning. And then I
Speaker 1: think you can see some examples in industrials and financial
Speaker 1: services where more traditional companies have really embraced technology, either
Speaker 1: whether it be payments or how do they think about
Speaker 1: telehealth where they've now added new lines of business or
Speaker 1: new ways of delivering their goods to the consumers that
Speaker 1: they've kind of embedded technology into their delivery even if
Speaker 1: they weren't kind of a born in the cloud type
Speaker 1: company we do. It is really such an interesting time
Speaker 1: and I guess we just keep wondering, you know, what
Speaker 1: is the next big thing in terms of our world
Speaker 1: and what happens um If there is a decoupling, I
Speaker 1: want to go back to that because that's where we started.
Speaker 1: If we have that decoupling, uh, And it does seem
Speaker 1: like we're moving towards that because we are already seeing
Speaker 1: just a strained relationship, but we've been there before re
Speaker 1: China before. If we are in terms of the tech world,
Speaker 1: it just means kind of too tech development verticals. That's
Speaker 1: how we it plays at and that's okay because there's
Speaker 1: still a lot of money to go around and still
Speaker 1: big markets to play in. That's where this a whole
Speaker 1: coupling gets very challenging because if you actually look at
Speaker 1: the technology value chain, UM, no one country can do
Speaker 1: it alone. Right now, we are still a very global
Speaker 1: supply chain, and there's um it's a very unique value chain,
Speaker 1: and that it is very segmented and highly specialized. So
Speaker 1: each country has areas where they're quite strong, and then
Speaker 1: also key competencies or parts of the value chain that
Speaker 1: they're missing. So for example, UM, China really needs semiconductor
Speaker 1: capital equipment that's nicefully in the U S or Europe.
Speaker 1: They need access to leading edge manufacturing process technology for semiconductors,
Speaker 1: which is strong, and the US, Korea and Taiwan. The
Speaker 1: US really is needs o d in capacity um PCB capacity,
Speaker 1: which is very heavily in China right now. The US
Speaker 1: also needs more leading edge silicon capacity, which again you
Speaker 1: know the US has some, but a lot of it's
Speaker 1: in Taiwan, a lot of it's in Korea, and then
Speaker 1: if you keep going down the value chain, there's different
Speaker 1: areas where different countries have quite a bit, but everyone
Speaker 1: is still very dependent on each other, which is what
Speaker 1: one thing that just makes the coupling so tricky is
Speaker 1: it's very hard to do. Right now, that's Anne Hecker.
Speaker 1: She's head of Baines America's Technology and Cloud services practice
Speaker 1: in the America's We should know that President Joe Biden
Speaker 1: and Chinese counterpart are planning a virtual bilateral meeting by
Speaker 1: the end of the year. You're listening to Bloomberg Business Week.
Speaker 1: Coming up next one of the most successful investors of
Speaker 1: all time. That's founder, chairman, and CEO of Dell Technologies,
Speaker 1: Michael Dell. Is joining us great and wide ranging conversation.
Speaker 1: This is Bloomberg. Yeah, you're listening to Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick takes Tim Stinovik from
Speaker 1: Bloomberg Radio. Well to call our next guest, one of
Speaker 1: the biggest names in technology. Yeah, it would be an understatement.
Speaker 1: When he first incorporated the company he founded back in
Speaker 1: four it was known as Dell Computer Corporation. At the time,
Speaker 1: Michael Dell was just nineteen years old, and nearly four
Speaker 1: decades later, he's detailing his climb to the top of
Speaker 1: his industry and new book it's called a plain, Nice
Speaker 1: but Win, a CEO's journey from founder to leader until
Speaker 1: We started off by asking the billionaire innovator about tech
Speaker 1: and the near to medium term, as volatility and potential
Speaker 1: regulatory constraints cast some doubts on its growth prospects. You know,
Speaker 1: I think it will be a sector that continues to
Speaker 1: outgrow the economy. And you know, if you think about
Speaker 1: the way technology is being used, it's now going way
Speaker 1: beyond the I T departments. And you know, it used
Speaker 1: to be when we're selling things, it was it was
Speaker 1: to the I T departments and now, uh, you know,
Speaker 1: technology is a folcal for everything. So I think as
Speaker 1: a sector, you know, it'll it'll outgrow GDP, probably by
Speaker 1: a significant amount um. You know, we'll we'll see, but certainly, uh,
Speaker 1: you know, this year has been great for for our company.
Speaker 1: Fift growth in the last quarter and second half is
Speaker 1: looking strong as well. Yeah, and shares this year significantly
Speaker 1: higher as well. Michael, I'm'm wondering about how much that
Speaker 1: I T spend from companies around the world was pulled
Speaker 1: forward during the COVID nineteen pandemic, and if you have
Speaker 1: concerns about slowing growth, and so much of that spend
Speaker 1: was pulled forward. If you if you think about this
Speaker 1: from the perspective of a company or an organization, sort
Speaker 1: of the only thing that worked during the lockdowns was
Speaker 1: digital technology, and so companies are just accelerating older investments
Speaker 1: in that. And if you if you think about hybrid work, uh,
Speaker 1: you know, that feels like it's becoming more of a
Speaker 1: permanent way that work gets done. And that's an enormous
Speaker 1: demand stimulant for us and certainly a great uh you
Speaker 1: know tailwind. There are you know, seven hundred million PCs
Speaker 1: out there on the day that you know, Windows eleven
Speaker 1: gets introduced that don't run Windows eleven. So you put
Speaker 1: all that together with with the expansion, you know, it
Speaker 1: feels like uh and and certainly there have been supply
Speaker 1: chain challenges even though we're shipping record numbers of machines,
Speaker 1: more than we've ever shipped. Uh, you know, it feels
Speaker 1: like the demand growth is going to continue in a
Speaker 1: pretty robust way. Here will help me with those supply
Speaker 1: chain challenges. Michael I mean, computing is on the long
Speaker 1: list of industries that have been hurt by the semiconductor shortage.
Speaker 1: At this point, when do we start to see that
Speaker 1: supply and demand get back and step Well, it takes
Speaker 1: about three years to build a new semi charactor plant,
Speaker 1: so uh, you know, when when when did the you know,
Speaker 1: we're we're we're only eighteen months into this, and so
Speaker 1: if you believe there's a demand acceleration that's significant, you know,
Speaker 1: it's going to take a while for uh, supply to
Speaker 1: catch up with demand. Uh. You know, we're we're all
Speaker 1: challenged by that. You know, as I said, even though
Speaker 1: we're we're we shipped more last quarter than ever, the
Speaker 1: backlogs are still at record high levels. Is there panic buying? Though?
Speaker 1: Do you think because of concerns ever supply chain that
Speaker 1: we're seeing some of that you know, double awarding being
Speaker 1: done by companies just to make sure that they've got
Speaker 1: what they needed. As a result, at some point, we'll
Speaker 1: see some kind of bubble burst as a result of it.
Speaker 1: You know, we've been watching the cancelation rates very carefully, uh,
Speaker 1: and we have incredible data on this and we haven't
Speaker 1: really seen that. Um. You know, what we've heard from
Speaker 1: our customers and partners is that our supply chain is
Speaker 1: generally functioning better than others. And while they might not
Speaker 1: uh you know, like the lead time that we give them,
Speaker 1: it's highly predictable, reliable, um and you know, haven't haven't
Speaker 1: really seen uh, you know, signs of distress there in
Speaker 1: terms of you know, people ordering and then canceling. And
Speaker 1: you know, it hasn't hasn't been a factory Michael. The
Speaker 1: chip shortage has revived talks of European or US hardware
Speaker 1: or chip manufacturing. I'm wondering if you think that that's
Speaker 1: necessary at this point. I think it's a good thing. Uh.
Speaker 1: You know, we have not really had you know, industrial policy,
Speaker 1: right has been a kind of uh dirty phrase that
Speaker 1: nobody wants to talk about. But when you have China
Speaker 1: investing so aggressively in these strategic industries and you know,
Speaker 1: the US and Europe not, it creates a real challenge.
Speaker 1: And you know, the theme and supply change has been
Speaker 1: resilience and moving from just in time to just in case.
Speaker 1: And you know, given the importance of all these industries
Speaker 1: to the future and everything that's going on in five G,
Speaker 1: I think having government support to create the infrastructure, uh,
Speaker 1: you know, for for our for our technology future. Semi
Speaker 1: charactors being an enormous part of that. Yeah, I would
Speaker 1: be in support of that. Hey, Michael, one more thing
Speaker 1: on supply chain. I mean, you guys seem to have
Speaker 1: done a better job at kind of managing your supply
Speaker 1: chain than some of your peers and keeping yourself supplied
Speaker 1: with components. How is that possible? And I am curious
Speaker 1: if if you're eating some of the higher costs here
Speaker 1: are ultimately our our higher costs being passed off to consumers. Well,
Speaker 1: there's definitely been component and cost inflation, and uh, you
Speaker 1: know that's something that we all feel, and it's a
Speaker 1: it's a it's a shared experience, if I can call
Speaker 1: it that. You know, we have had a supply chain
Speaker 1: strength in our company for for decades and I think
Speaker 1: it's proven, uh proven itself. Well, you know during the
Speaker 1: last year or so. Uh, you know, when a lot
Speaker 1: of companies outsourced things, I think they also outsourced uh
Speaker 1: in many cases, a complete understanding of all the components
Speaker 1: that go in uh to to to these machines. And
Speaker 1: you're seeing instances where you know, fifty dollar product is
Speaker 1: held up by a one dollar part. You really have
Speaker 1: to have a detailed understanding of the entire supply chain, uh,
Speaker 1: in order to run it efficiently and effectively. Hey, your
Speaker 1: book is a great read. Play nice but when, and
Speaker 1: it talks about your journey from founder to leader and
Speaker 1: you really we've in the creation of your company, but
Speaker 1: then you also we've in taking the company private. Uh.
Speaker 1: It's really a fun read. You talk about acquisitions and
Speaker 1: and the transformations you were making at your company. Now,
Speaker 1: one of the things that came up recently at an
Speaker 1: investor day is what you expect in terms of further
Speaker 1: m and A for the company, and also some rumors
Speaker 1: of maybe taking it private again. Is that a possibility.
Speaker 1: I don't have any plans to do that. To talk
Speaker 1: about our capital allocation, you know now that a couple
Speaker 1: of days ago we got a double notch upgrade by
Speaker 1: SMP to investment grade. You know, we're doing a large
Speaker 1: share buy back, gonna issue issue a dividends starting in
Speaker 1: the first quarter. And you know, we paid down enormous
Speaker 1: amount of debt and feel really great about how how
Speaker 1: the company's position going forward, and and look, um, you
Speaker 1: know what we what we said, is that, you know,
Speaker 1: don't don't hold your breath for sort of massive m
Speaker 1: and a like the kind that we did, you know
Speaker 1: when we when we did the largest acquisition merger ever
Speaker 1: ever in tech. It'll it'll be on a lot smaller scale. Well,
Speaker 1: what are the areas of interest that that pique your interest?
Speaker 1: What are the areas of tech right now where you
Speaker 1: think there is an opportunity to expand to So you know,
Speaker 1: we have an enormous business in a huge tam in
Speaker 1: cloud infrastructure and all things uh, you know, end user
Speaker 1: computing and you know software to find you know, data
Speaker 1: centers and really enabling our customers to accelerate their digital
Speaker 1: transformation multi cloud, you know, security, edge five G. These
Speaker 1: are all new multi billion dollar businesses that we're building
Speaker 1: and we'll do that organically. We'll do it with partnerships
Speaker 1: and we'll do it with you know, selected acquisitions to
Speaker 1: to help us accelerate. Hey, Michael, I want to get
Speaker 1: back to the book and talk a little bit about it.
Speaker 1: As Carol mentioned, it is a great read. The title
Speaker 1: really struck me. Play nice, But when the idea of
Speaker 1: playing nice is something I think a lot of parents
Speaker 1: tell their kids, but your parents said play nice? But
Speaker 1: when how did that stick to you? Yeah, it's one
Speaker 1: of my first memories as a as a child, and
Speaker 1: uh this is what my parents told told me and
Speaker 1: my two brothers when we would go out in the
Speaker 1: street and play ball. And uh yeah, it's it's been
Speaker 1: uh relatively uh straightforward and uh kind of unifying principle
Speaker 1: that we we've talked about a dell all lot. And look,
Speaker 1: I think dealing forth rightly with integrity and uh you know, honesty,
Speaker 1: and you know, building a reputation over time uh matters
Speaker 1: and you know pays, uh you know, dividends over time.
Speaker 1: Uh and and and look, winning is is a part
Speaker 1: of this. It's it's who we are. And and uh
Speaker 1: you've got to balance balance the two and do it successfully.
Speaker 1: I think I've been able to do that for the
Speaker 1: most part. Uh. The book. The book talks about, uh
Speaker 1: you know all of that, and you know many occasions
Speaker 1: when it didn't exactly go the way I planned, but
Speaker 1: we learned from it along the way, and you know,
Speaker 1: that's what life is all about. So was it always
Speaker 1: easy to play nice when you're dealing with the likes
Speaker 1: of someone like Carl con I mean, it's really kind
Speaker 1: of fun the passages in the book to be quite honest,
Speaker 1: and dinner at his house, and um, it was really
Speaker 1: it was interesting to hear the exchange where you're like,
Speaker 1: you know, what are you gonna do with the company?
Speaker 1: What's your strategy? But was it hard to deal with
Speaker 1: someone like that or what was that experience? Like? It
Speaker 1: was very hard? You know, I didn't really have much
Speaker 1: experience dealing with somebody who would just go on television
Speaker 1: and a lie. You know that that's not something I
Speaker 1: had experienced very often in my in my business career. Um.
Speaker 1: But you know, ultimately, as I talked about in the book,
Speaker 1: I did go to his house and confront him and
Speaker 1: you know, really saw that he didn't have any plan
Speaker 1: whatsoever for the company. That's Deale Technologies Founder, chairman and
Speaker 1: CEO Michael Dell on the tech sector and of course
Speaker 1: his new book. Check it out. It's just out play
Speaker 1: nice but when a CEO's journey from founder to leader.
Speaker 1: You can hear the entire interview at Bloomberg dot com
Speaker 1: and it'll be featured in an upcoming installment of Business
Speaker 1: Week Talks in Bloomberg business Week that wraps up the
Speaker 1: first hour of the weekend edition of Bloomberg Business Week
Speaker 1: from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanivac.
Speaker 1: Coming up in our next hour, our cover story it's
Speaker 1: all about Tether, their crypto stable coin backed by real
Speaker 1: u S dollars sixty nine billion of them. So where
Speaker 1: exactly is all that money? That is a great question.
Speaker 1: Plus true to worries From the most magical place on Earth,
Speaker 1: a Bloomberg Business Week contributor goes undercover inside Disney World.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week inside from
Speaker 1: the reporters and editors who bring you America's most trusted
Speaker 1: business magazine, plus global business finance and tech news as
Speaker 1: it happened Sloomberg business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Hi, I'm Carol
Speaker 1: Messer and I'm Tim stock Plenty ahead in our second
Speaker 1: hour of the weekend edition of Bloomberg Business Week, including
Speaker 1: a look behind the curtain at the most magical place center.
Speaker 1: We're talking about Disney World. It's a fun one. Plus
Speaker 1: a deep conversation on bitcoin and the broader crypto market.
Speaker 1: Carol does that with Gray Scale CEO Michael Sonensheine. It's
Speaker 1: part of our Bloomberg invest Global event. Right, it's a
Speaker 1: week where we saw a bitcoin once again top fifty
Speaker 1: thou dollars, and we've seen that certainly before, lots of
Speaker 1: all atility in that market. First up this hour, though,
Speaker 1: let's get to this week's cover story. It's also related
Speaker 1: to crypto, but it looks through a different lens. It's
Speaker 1: about Tether, the world's most popular and mysterious stable coin. Well,
Speaker 1: to help us understand what Tether is and the character
Speaker 1: is behind it and why US regulators are scrutinizing it's
Speaker 1: purported at sixty billion dollar market, we turned to the
Speaker 1: man who wrote the story, Bloomberg News Financial Investigations reporter
Speaker 1: Zeke Fox. He joined us along with Business Week editor
Speaker 1: Joel Webber. Yeah, so it's it's been a mystery for years.
Speaker 1: There's always been this cryptocurrency called Tether that's worth a
Speaker 1: dollar because each coin is supposedly backed by a dollar
Speaker 1: in the bank. But there have always been these critics
Speaker 1: who are saying, where are these dollars? Really? Does this
Speaker 1: company really have the money it claims? And this year
Speaker 1: they've been printing like a crazy amount of tether's. So
Speaker 1: there's now sixty nine billion of them, which means the
Speaker 1: company is supposed to have sixty nine billion of real
Speaker 1: dollars where of real US cash. It needs to be
Speaker 1: backed by real US cash exactly. That's what they promised.
Speaker 1: And I went out to try and figure out, all, right,
Speaker 1: where is this money, what have they done with it?
Speaker 1: How much of it did you find? It was a
Speaker 1: little disappointed because I was hoping they would just be
Speaker 1: like a pile of gold somewhere, but I realized that
Speaker 1: that's not uh, that's not really how how money work. Yeah. Um,
Speaker 1: But it turns out that they're one of the biggest
Speaker 1: banks is down in the Bahamas, and I went and
Speaker 1: met with the chairman of the bank. It's called del Tech,
Speaker 1: and he said that they hold about fifteen billion. I
Speaker 1: think he said of the of the sixty nine, but
Speaker 1: he's not quite sure. He can't speak for He said
Speaker 1: that money safe, it's here with us, but he can't
Speaker 1: speak for the rest of it. Um. So I mean,
Speaker 1: the reason this is really important is that, uh, tether
Speaker 1: is sort of like at the center of the cryptocurrency world.
Speaker 1: You might think it's kind of like pointless, like why
Speaker 1: would you even want a cryptocurrency that wasn't to make
Speaker 1: you rich? But this is the one that you use
Speaker 1: to send money from one exchange to the other to
Speaker 1: place your bets at the exchange. Essentially, if you think
Speaker 1: of the cryptocurrency exchanges as like giant casinos, these are
Speaker 1: the chips, and all the casinos make you get the
Speaker 1: same chips, which are tethers. So it's like the connection
Speaker 1: between all the different parts of the cryptocurrency world. And
Speaker 1: so if these coins aren't worth one dollar, it could
Speaker 1: throw all these markets out of whack. Would be like
Speaker 1: a huge deal for for all of crypto worth mentioning
Speaker 1: what he did before he was a Bahammed Bahamed banker. Yes,
Speaker 1: so very impressive, dude, Jean Chalapin the chairman of del Tech,
Speaker 1: he actually is. The first big success was creating the
Speaker 1: cartoon about the cyborg cop inspector gadget or cyboard. H Yeah,
Speaker 1: so he got got very rich from from that and
Speaker 1: making also some other cartoons. He uh sold his studio,
Speaker 1: moved to the Bahamas, where he bought this beautiful pink
Speaker 1: colonial mansion that you probably saw in the James Bond
Speaker 1: foam casino Royale. It was the it was the it
Speaker 1: was the villains, it was the villain's house and that
Speaker 1: and it's certainly nice enough to be that. And he
Speaker 1: then bought this bank in the Bahamas, And I mean,
Speaker 1: it's the whole thing is kind of is hugely hard
Speaker 1: to wrap your mind around. But essentially tether needs to
Speaker 1: have it needs banks. It needs banks to hold money
Speaker 1: because people send tether real money to get the tether coins.
Speaker 1: And they've had a lot of trouble over the years
Speaker 1: finding banks that will do business with them because a
Speaker 1: lot of banks have just not wanted to do business
Speaker 1: with cryptocurrency companies in general. And so he this del
Speaker 1: tech bank of the Bahamas is one of the few
Speaker 1: that would and really save them at a time when
Speaker 1: they were struggling to figure out what to do with
Speaker 1: their money. Might this be a Ponti scheme? So that's
Speaker 1: what some of the harshest critics have said. I mean,
Speaker 1: the information that I got is that, um, they are
Speaker 1: taking this money and investing it and rather than it
Speaker 1: just being totally a giant scam, it's all made up.
Speaker 1: It's more about a conflict of interest where when you
Speaker 1: buy a tether coin. You really wanted to be safe,
Speaker 1: you really want to get your dollar back no matter
Speaker 1: what if you uh yeah, but if you're the it
Speaker 1: turns out that the the way it structured, the owner
Speaker 1: of the tether company, he's not sitting on six billion dollars.
Speaker 1: He can invest that money in different things and if
Speaker 1: any earnings on those investments go to am so even
Speaker 1: if he earns like one, that's six and ninety million
Speaker 1: dollars and uh, there's not much expenses in running this company.
Speaker 1: It's a really small operation. So his incentive is to
Speaker 1: invest in weird stuff to try and make some money.
Speaker 1: And what I found was that, in fact, a fair
Speaker 1: amount of it billions was invested in Chinese commercial paper,
Speaker 1: which is kind of like, uh, something that people on
Speaker 1: Wall Street really avoid. Like there's a most commercial papers
Speaker 1: held by money market funds, and they just basically will
Speaker 1: not buy Chinese commercial paper. There's very few of them
Speaker 1: have much of it. That was Bloomberg News Financial Investigations
Speaker 1: reporter Zeke Fox along with Business Week editor Joel Weber.
Speaker 1: It's the cover of this week's edition of Bloomberg business Week.
Speaker 1: Coming up, we'll stick with cryptocurrencies and talk about the
Speaker 1: promise the volatility of bitcoin with Great Scale CEO Michael
Speaker 1: Son and Chine. This is Bloomberg. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Bloomberg Quick Takes Tim Stinovik
Speaker 1: from Bloomberg Radio. Well, this past week we took part
Speaker 1: in Bloomberg invest Global. It's an event that's put on
Speaker 1: by our Bloomberg Live team and it brings together the
Speaker 1: expertise of the world's largest newsroom with the biggest newsmakers
Speaker 1: in finance. It was an unbelievable line up. There's so
Speaker 1: much information at Bloomberg dot com and on the terminal,
Speaker 1: so I highly recommend that you check it out. I
Speaker 1: actually had the chance to catch up with Gray Scale
Speaker 1: CEO Michael Sonenshine and Sebastian Baya. He's president of One
Speaker 1: River Digital at One River Asset Management. We talked about
Speaker 1: a lot of things, including whether cryptocurrencies should be in
Speaker 1: institutional portfolios and the volatility and the bitcoin trade. It's
Speaker 1: not for everybody, the same way that every investment opportunity
Speaker 1: is not something that every investor ends up actioning for
Speaker 1: their portfolios. I think one of the important things that
Speaker 1: Sebastian brought up that really should be something that you know,
Speaker 1: viewers and those listening in should take away from this
Speaker 1: conversation and throughout, you know, the entire Bloomberg Investor event
Speaker 1: is just how early it is. You are seeing tremendous
Speaker 1: coverage around cryptocurrency and popular financial media. Um, you're seeing
Speaker 1: the on rams into the ecosystem continue to get developed,
Speaker 1: but it really is still early days. Bitcoin has only
Speaker 1: been around for the last ten or twelve years, and
Speaker 1: so one of the important things to remember when we
Speaker 1: think about institutions is that there are still some legal
Speaker 1: and operational hiccups when it when it comes to whether
Speaker 1: or not they can allocate. Many of them don't have
Speaker 1: the legal or operational wherewithal to hold a bearer instrument
Speaker 1: like bitcoin directly or like ethereum directly, and so what
Speaker 1: we're starting to see is some of these institutions either
Speaker 1: leverage investment vehicles that can give them that type of exposure,
Speaker 1: whether that's through great scale or otherwise, or they're actually
Speaker 1: developing dedicated funds whose documentation and investment mandate actually does
Speaker 1: allow for that type of exposure. So while I would
Speaker 1: say that it's still early days, that is probably The
Speaker 1: most important takeaway for folks listening to this that it's
Speaker 1: not somehow when you see price movements um that suddenly
Speaker 1: the wave has been missed or or somehow crypto has
Speaker 1: gotten away from them. Well, it's Sebastian. You know, on
Speaker 1: our planning call you talked about a colleague who said, man,
Speaker 1: we've seen cryptocurrencies or bitcoin, have you know bubbles and bursts?
Speaker 1: What five six times are ready? So to that, you know,
Speaker 1: that's certainly spaces of the volatility, but does it also
Speaker 1: speak to the resiliency of the crypto area in terms
Speaker 1: of it continues to come back. Absolutely, we think that
Speaker 1: this asset class is new and important, and it's much
Speaker 1: more than one or two assets, right. Um. We think
Speaker 1: that the resiliency you've seen in the case of bitcoin
Speaker 1: and with ethereum relates ultimately to the powerful impact that
Speaker 1: these assets could have in changing the way that we
Speaker 1: move assets. Right. So, the web moves information and you
Speaker 1: see people talk about web three point out what are
Speaker 1: they talking about? What they're talking about here is that
Speaker 1: cryptocurrency will likely be the way that we move assets
Speaker 1: around the world. That's why that's why institutions are paying
Speaker 1: more attention to these to these assets and these opportunities,
Speaker 1: and that's why they're not deterred by the high volatility
Speaker 1: and the uncertain nature of the assets and how they're held. Uh.
Speaker 1: You know, that's why candidly, we were brought into the
Speaker 1: space by one of our largest clients last year when
Speaker 1: we entered the markets, and we've made the largest institutional
Speaker 1: allocation to Bitcoin and ethereum when bitcoin was a fifteen
Speaker 1: thousand and ethereum was at four hundreds um O. Our
Speaker 1: client and other clients are definitely concerned about the volatility
Speaker 1: and UH and the way which is assets trade, but
Speaker 1: they see the potential um and they need As Michael said,
Speaker 1: there are hiccups, and with regards to legal and operational
Speaker 1: there are clearly structural impeditents. At a high level you
Speaker 1: can summarize as partners and plumbing. Right, this industry is growing.
Speaker 1: It's partners and plumbing to enable institutions to on board,
Speaker 1: and they're coming because they see that this may well
Speaker 1: may well be the way by which assets move in
Speaker 1: the future. And it's much bigger than a couple of
Speaker 1: assets that are a little bit vaulatial in your portfolio.
Speaker 1: I want to get into regulate the regulatory environment, because
Speaker 1: that's certainly a big piece of this. Let me just
Speaker 1: ask you, because you talked about bitcoin, you talked about etherorium.
Speaker 1: Those are two that we talked about a lot here
Speaker 1: at Bloomberg. Um, is it going to be a smattering
Speaker 1: of different currencies that stay with us? I mean, we
Speaker 1: pull up our monitor and the list is rather long,
Speaker 1: and we know that there's a ton out there is
Speaker 1: a Bitcoin that continues to be the dominant cryptocurrency. Is
Speaker 1: it ethereum? There were some stories that I was reading
Speaker 1: this morning that the flows are moving out of bitcoin
Speaker 1: and into ethereum. Um. Michael, what do you think do
Speaker 1: we do we know at this point? I don't think
Speaker 1: we know at this point. I think that the digital
Speaker 1: currency ecosystem is continuing to allow for new use cases
Speaker 1: and new protocols to come into the fold. We've recently
Speaker 1: looked very substantially at protocols that are part of the
Speaker 1: defy or decentralized finance ecosystem. We've started to see the
Speaker 1: confluence of digital assets and gaming, digital assets and privacy,
Speaker 1: digital assets and file storage, digital assets and video streaming.
Speaker 1: Right we're starting to start moving into these new use
Speaker 1: cases that were not yet imagined when Bitcoin and ethereum
Speaker 1: and other major protocols had been created and brought into
Speaker 1: the fold. Now, while that is certainly the case and
Speaker 1: the barrier to entry to launching new assets is relatively low,
Speaker 1: we would suspect that over time the hundreds, if not
Speaker 1: thousands of digital currencies will ultimately get consolidated. We often
Speaker 1: think about, you know, maybe analogizing digital assets to the
Speaker 1: precious metals family, and we look at things like gold, silver, attinam, palladium, etcetera,
Speaker 1: all being part of a singular family of precious stones
Speaker 1: or precious metals. However, each of them have an addressable
Speaker 1: market and addressable use case and a different price, and
Speaker 1: through that lens you may find that there's a cohort
Speaker 1: of digital assets that grow and thrive and coexist, and
Speaker 1: each of them do in fact occupy their own addressable market,
Speaker 1: have their own use cases in their own prices, whether
Speaker 1: or not that's bitcoin, ethereum, other assets. It's early days,
Speaker 1: so it's hard to say what that will look like.
Speaker 1: But if there's any telling how this ecosystem evolves, certainly
Speaker 1: going to see the emergence of more protocols before we
Speaker 1: see consolidation. Michael, do you have a price on bitcoin though,
Speaker 1: since that seems to be the dominant player though that
Speaker 1: we talk about. You know, I never give bitcoin price predictions.
Speaker 1: I've been in this industry for eight years, and what
Speaker 1: I can tell you is really just what investor behavior
Speaker 1: has been. As you said, the bitcoin price has moved
Speaker 1: around quite a lot, even recently, and so when we
Speaker 1: see dips and prices, we often see that as an
Speaker 1: opportunity and investors moving in to buy those dips if
Speaker 1: they find mentally have not changed their perception or their
Speaker 1: conviction and an investment, but they can buy an asset
Speaker 1: ten fifteen, sometimes cheaper than they could a day two
Speaker 1: days ago. Well that's a compelling opportunity, and investors tend
Speaker 1: to action those types of opportunities. That was Gray Scale
Speaker 1: CEO Michael Sonensheine and Sebastian Baia, president of One River
Speaker 1: Digital at One River Asset Management. And you can catch
Speaker 1: that entire conversation just check out Bloomberg Live dot com
Speaker 1: search on Bloomberg invest Global. Still to come on Bloomberg
Speaker 1: Business Week. Why Canada's dreams of a booming pot tourism
Speaker 1: industry could be going up and smoke, so he did.
Speaker 1: They're very clever. Plus Disney Confidential, how the world's busiest
Speaker 1: resort keeps the magic going. You'll want to hear this
Speaker 1: someone going undercover at Disney. This is Bloomberg and Casting
Speaker 1: from the financial capital of the world, Bloomberg eleve in
Speaker 1: Frio in New York to Washington, d C. Bloomberg to Boston,
Speaker 1: Bloomberg one O six one to San Francisco, Bloomberg nine
Speaker 1: sixty to the Country Sirius XM Chado one nineteen and
Speaker 1: around the globe the Bloomberg Business app and Bloomberg Radio
Speaker 1: dot Com. This is Bloomberg Business Week. Alright, So by
Speaker 1: land grow bunt to marijuana, welcome in tourists, and then
Speaker 1: repeat that had been the plan for some of Canada's
Speaker 1: biggest cannabis producers. Tim Well. It turns out the country's
Speaker 1: complex regulations around the drug are dashing hopes in a
Speaker 1: burgeoning industry. From more on a piece that you'll find
Speaker 1: in this week's issue, we turned to our editor Joel Weber,
Speaker 1: also Bloomberg News Toronto bureau chief Danielle Bokov. I went
Speaker 1: out to do this story in the first place because
Speaker 1: I was pitched by a PR firm that represents some
Speaker 1: Ontario growers, and they had written to me about these
Speaker 1: kind of dreams that some of the producers in Canada
Speaker 1: where where pod is now legal, had in terms of
Speaker 1: way to ways to actually sell cannabis from their farms.
Speaker 1: And I thought this was really intriguing because the idea
Speaker 1: is kind of lovely, right, and they're talking about sort
Speaker 1: of leveraging things like wine tourism, maybe even coaching some
Speaker 1: of those tourists. And you get this sort of idea
Speaker 1: that what you're going to see is people traveling along
Speaker 1: these sort of quiet country roads from vineyard to apple
Speaker 1: orchards to pot farm, sampling Ontario's bounty. And it just
Speaker 1: turned out that that's not what is happening. Why is
Speaker 1: that exactly though? I mean, is it? I mean, you
Speaker 1: paint a really nice picture of what you could actually do.
Speaker 1: It's it's exactly like being at a winery, right, But
Speaker 1: it does. But I mean, in some instances, Danielle, you
Speaker 1: write that the people who work at these um these
Speaker 1: these facilities can't even sample their own product. Yeah, there
Speaker 1: are so many rules in terms of what they're they're
Speaker 1: not allowed to do in the way they have to
Speaker 1: do things. So I mean, let's start with what they
Speaker 1: are allowed to do, which is if they get the
Speaker 1: correct license. There's an amendments to their licenses, and it
Speaker 1: is a very long and bureaucratic process, then they are
Speaker 1: legally allowed to sell some weed on site, um in
Speaker 1: a very convoluted way. So so technically what they actually
Speaker 1: have to do is they have to route some of
Speaker 1: their product through the Ontario Cannabis Store, which is the
Speaker 1: government regulated buyer, so that the government still gets it's
Speaker 1: cut um. But they can do it without it actually
Speaker 1: leaving the property. So that's great. It means that they
Speaker 1: don't have all the shipping costs and all of that um.
Speaker 1: But they can't take people on tours of the fields
Speaker 1: because they're worried about contamination. They can't offer sampling, they
Speaker 1: can't serve food, they can't serve wine. Uh. If they
Speaker 1: do open a gift shop you mentioned, the windows have
Speaker 1: to be blacked out because they can't risk their being
Speaker 1: a minor in the parking lot who sees inside. So
Speaker 1: you're not kind of talking about, you know, a roadside
Speaker 1: stand selling eggs. You're not going to see patios with
Speaker 1: tables and and umbrellas set up. Uh, it's yeah, it's
Speaker 1: there's not much left when you when you take all
Speaker 1: those balls, just like smoke a little bit and let's
Speaker 1: figure out these rules and make it all Like why
Speaker 1: can't we all just be happy? I'm just saying, don't
Speaker 1: need to smoke. You know, that's right, that's true, So
Speaker 1: Joel Webber, editor Bloomberg Business Week. So I still can't
Speaker 1: get over when we just like have amazing photos of
Speaker 1: like a lot of ganja in the magazine. If there
Speaker 1: is going to be a tourism boom, Daniel, what what
Speaker 1: do you what do we think it might look like?
Speaker 1: What are going to be? Where is there hope? You know,
Speaker 1: I have a hard time believing it's going to happen
Speaker 1: if the regulations don't change. And that is kind of
Speaker 1: I think what was kind of at the heart of
Speaker 1: the story, Right, It's like you have these people, I said,
Speaker 1: there are puns everywhere, but you have these people with
Speaker 1: these high hopes and and then you're faced with the reality. Right,
Speaker 1: they have this kind of evangelical almost excitement about their
Speaker 1: product and the potential and the medicinal aspects of it,
Speaker 1: and and you pull up in front of their operation.
Speaker 1: And the first thing you see is the security. There
Speaker 1: are high spences, there's armed wire there. You know, it's
Speaker 1: it's not it's not as I would want to have
Speaker 1: my vacation. But you know, so all right, you know,
Speaker 1: because we know investors have been hot and heavy for
Speaker 1: this world and we've seen kind of booms and busts
Speaker 1: with it, I feel like, um, Danielle, what's the the
Speaker 1: outlook here? Well, things change? Um, I don't know, how
Speaker 1: does it? How do you how do you or what
Speaker 1: are you hearing in terms of how it ultimately plays
Speaker 1: out longer term here. I think there's still a tremendous
Speaker 1: market for cannabis obviously, and um, when I was speaking
Speaker 1: to Brendan Ditmar, who's the master grower there, he's also
Speaker 1: doing a lot of experimentation with PHC, which is obviously
Speaker 1: the component of cannabis that gets you high. And that's
Speaker 1: really the reality is where the market is. Certainly in
Speaker 1: Canada right now, the demand is forever higher levels of
Speaker 1: p HC and there is a lot of money that
Speaker 1: can be made doing that. And so I think that
Speaker 1: what is going to happen is that for those growers
Speaker 1: who are willing to go through all of the steps
Speaker 1: and invest a huge amount of money on just the
Speaker 1: hope of getting a license because it all has to
Speaker 1: be done up front. Um, if they managed to get
Speaker 1: their license, they'll be selling to to Ontario regulated stores
Speaker 1: and they'll be making their money. That right. That's Bloomberg
Speaker 1: News Toronto Bureau chief Danielle Bokov along with the editor
Speaker 1: of the magazine, Joel Webber. You're listening to Bloomberg Business
Speaker 1: Week coming up Secrets from the most magical place on Earth.
Speaker 1: Bloomberg Senser reporter inside Disney World to reveal what really
Speaker 1: goes on behind the scenes. And there's some pretty shocking stuff.
Speaker 1: Oh my god. You don't want to be Jack Sparrow.
Speaker 1: You don't, well, maybe you do? Well, maybe, well, that's
Speaker 1: a good point. You want to hear this. This is Bloomberg.
Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes. Tim Stinovik from Bloomberg Radio. So abandoned children,
Speaker 1: lusting after people dressed as fictional characters, and spreading the
Speaker 1: ashes of deceased relatives and inappropriate places. Tim, what does
Speaker 1: that sound like to you? Know? Some dystopian parallel universe
Speaker 1: or I don't know, under going undercover at Disney World, right,
Speaker 1: And that's exactly what Brandon Pressor did in Pursuits. We're
Speaker 1: gonna talk about that in just a moment. Let's bring
Speaker 1: in Bloomberg Pursuits editor Chris Rouser, who joins us with
Speaker 1: a look at this week's Pursuits section. So, first of all,
Speaker 1: this isn't the first time Brandon Pressor has kind of
Speaker 1: gone undercover for you guys. Know. So we have this
Speaker 1: amazing reporter, Brandon, who has this uncanny ability to convince
Speaker 1: luxury destination travel outfits to let him go and work there.
Speaker 1: So we've sent him to work as a waiter at Nobu,
Speaker 1: as a ski instructor at Aspens, a deckhand on a
Speaker 1: super yacht, as a butler at the Plaza Hotel. All
Speaker 1: of these places has let him go and work there,
Speaker 1: and he has this uncanny ability to talk to staff
Speaker 1: to get them to tell his secrets, to see really
Speaker 1: crazy stuff. And every time a place agrees to let
Speaker 1: us do it, we're always like, what didn't you read
Speaker 1: the other stories? This is going to be in print.
Speaker 1: And Brandon came to us and said, hey, I want
Speaker 1: to do Disney And we were like, no way is
Speaker 1: that going to work? And it did, and they set
Speaker 1: him up as a staff member as a cast member
Speaker 1: with it, which is what they call it at Disney,
Speaker 1: and he got to see a lot of sides of
Speaker 1: how it works and it's just a really amazing piece.
Speaker 1: So so Brandon, come on in here and talk a
Speaker 1: little bit about this set the scene for us. What
Speaker 1: did you do? Who? Who? Who did you represent as
Speaker 1: a cast member? Sure? Yeah, spent about a week at
Speaker 1: Walt Disney World and um every day I sort of
Speaker 1: shadowed a different cast member all over the park. So
Speaker 1: I worked with the photo Photopaths team to document special
Speaker 1: events like king sen eras and gender reveals and engagements. UM.
Speaker 1: I shadowed the Dapper Dans, which has been sort of
Speaker 1: in house a cappella group, um as they go through
Speaker 1: the park singing. I worked with one of the elite
Speaker 1: concierge teams at one of the higher end hotels, um
Speaker 1: as they catered to everyone's needs. Uh. And I actually
Speaker 1: got to work in the hippo stables at the Kingdom.
Speaker 1: You've got to work there. That was that was a privilege,
Speaker 1: that that was a true privilege and and and actually
Speaker 1: the highlight of the entire experience. To be honest, you
Speaker 1: know so much of what they do at Disney. Having
Speaker 1: been there with my daughter, I have to say when
Speaker 1: she said at the end, um, Mom, can we just
Speaker 1: go live in in a castle, I'm like, I'm in
Speaker 1: with you. They create this atmosphere that you really do
Speaker 1: buy in. You know, there's not a million Cinderella's all
Speaker 1: around you there, There's only one at one time that
Speaker 1: you kind of run into. And I mean all of
Speaker 1: this is very carefully orchestrated, right absolutely. I mean you know, really,
Speaker 1: you know, this story has a lot of like fun
Speaker 1: color about, you know, the different kinds of guests. But really,
Speaker 1: at the end of this is a love letter to Disney, because, um,
Speaker 1: what they do just can't be replicated by any other
Speaker 1: theme park or really on any other kind of hospitality initiative.
Speaker 1: It is perfect service that they offer, well almost perfect.
Speaker 1: It's not like you can really leave your kids with
Speaker 1: Mary Poppins because you actually happens it did. Um, you know,
Speaker 1: it was really funny. And I have to be totally honest, Um,
Speaker 1: while I was there, obviously I was kind of poking
Speaker 1: around to see how far I could push things on,
Speaker 1: how many questions I could ask, And Um, Disney really
Speaker 1: put up a wall as far as um getting information
Speaker 1: about the characters, and that characters with a capital C
Speaker 1: M because they want to preserve the magic at all costs.
Speaker 1: So I had to kind of nose around and chat
Speaker 1: with some people, UM on my own, and that's when
Speaker 1: I sort of came across some really funny tidbits, like
Speaker 1: the fact that Mary Poppins does such a convincing job
Speaker 1: of being warm and friendly that suddenly parents feel like
Speaker 1: it's perfectly okay to abandon there's still stridd with her
Speaker 1: and go off and have a fun time. What other
Speaker 1: what other bad behavior did you hear about in terms
Speaker 1: of the guests? Um. What's funny because the cast members,
Speaker 1: the staff, they are so in love with their jobs
Speaker 1: and so in love with providing service that it really
Speaker 1: took ten fifteen tries to get them to talk about
Speaker 1: the sort of unmagical behavior. Um. And and finally, when
Speaker 1: I you know, pop the lid. UM. A lot of
Speaker 1: it was about guests being ornery in the late afternoon.
Speaker 1: And this is I think very Orlando specific, because it
Speaker 1: rains in the afternoon, it's incredibly humid. And people who
Speaker 1: go to Walt Disney World, which really sort of feels
Speaker 1: like the Mothership. You know, they're coming from all over
Speaker 1: the world. They're spending a week, and you know, when
Speaker 1: you're day five in the humidity, in the rain and
Speaker 1: it's the afternoon, or your kids are whining, you kind
Speaker 1: of lose it. Um. So it's like really dealing with
Speaker 1: a lot of meltdowns. Whether that's kind of you know,
Speaker 1: going to the bathroom in line because you don't want
Speaker 1: to get out of line, and adults it does, yeah,
Speaker 1: and ye are actually perfectly happy. You know, some members
Speaker 1: are actually trained, the cast members trained to spot kids
Speaker 1: in line that are doing like the p dance where
Speaker 1: they have their like legs across and and they actually
Speaker 1: will go up to different guests and be like, listen,
Speaker 1: it looks like your child has a p I'll save
Speaker 1: your place in line, go use the bathroom. It's totally fine.
Speaker 1: You know, cast members really have an eye for that
Speaker 1: kind of thing. But you know they can't catch everyone. Hey,
Speaker 1: what's it like to be Captain Jack Sparrow? It was
Speaker 1: so the most thing and that that I was sort
Speaker 1: of wondering is you know, obviously a lot of children
Speaker 1: have UM their star struck when they see uh a Cinderella,
Speaker 1: and I was sort of wondering, how do adults feel, UM,
Speaker 1: and I thought that it would be some men kind
Speaker 1: of maybe hitting on a snow White or Cinderella. But
Speaker 1: it turns out that categorically it's sort of the bad
Speaker 1: guy male characters that get hit on by women and UM.
Speaker 1: A former cast member told me that when they debuted
Speaker 1: Jack Sparrow, UM, women were so in love with him
Speaker 1: that they would slip their key cards of their hotel
Speaker 1: room into his pocket. Yes, everybody who's listening, you heard that, right,
Speaker 1: and tell him to keep wearing a costume, right, yes,
Speaker 1: And they're like, I know you're not Johnny Depp. I
Speaker 1: you know, maybe your room six or three. You keep
Speaker 1: the costume on, all right? So there are those those
Speaker 1: women who are out there who are thinking Johnny Depp
Speaker 1: when it comes to Jack Sparrow. Um. What about those
Speaker 1: you know who run into Christopher Orlando? Who's that? So?
Speaker 1: You know, I thought this was one of the cutest things. Um.
Speaker 1: The cast members are really precious about their costumes, and
Speaker 1: they are club costumes even if you're just you know,
Speaker 1: a ride operator. If you were inn sanitation, everyone is
Speaker 1: on stage. Um. And the one thing that you home
Speaker 1: because everything is sort of rigorously laundered. Uh, this when
Speaker 1: you take home is your name tag. And there's this
Speaker 1: whole you know, prestige around the name type when you
Speaker 1: get your name tag, your officials, Disney cast member. Um.
Speaker 1: But you know, if there's a day where you're stressed
Speaker 1: and you accidentally forget your name take at home. They
Speaker 1: have these backup name tags for you when you check in,
Speaker 1: and it's there's dozens name tags that are printed. Chris
Speaker 1: from Orlando. Do you get your first name and where
Speaker 1: you're from? And it's sort of the perfect agnostic, gender
Speaker 1: neutral name that anyone could wear. And since everyone lives
Speaker 1: in Orlando, that works a wall Disney World. Um, you
Speaker 1: know it's not false. So you you followed around of photographers,
Speaker 1: you saw wedding proposals. You said, sometimes wedding proposals go
Speaker 1: wrong and they shoot them anyway. Um, but you said
Speaker 1: that you described a circle of life, so like birth
Speaker 1: and birth celebrations, gender reveals, and then sometimes people try
Speaker 1: to spread ashes at the park. Yeah, so every stage
Speaker 1: of life is represented and it was really interesting because, Um,
Speaker 1: one of the castomers that I worked with, he said, really,
Speaker 1: about five percent of people are celebrating something use the
Speaker 1: concierge and he's constantly, you know, sending goodies to people's rooms.
Speaker 1: Um and usually in that everything from you know, beating
Speaker 1: cancer to sobriety to a wedding anniversary and a wedding.
Speaker 1: And I thought one of the most interesting things with
Speaker 1: some people have such a connection with Disney that they
Speaker 1: request before they passed away for their ashes to be spread,
Speaker 1: and usually it's at the Haunted Mansion, which the last line,
Speaker 1: UM in the audio is there's room for one more,
Speaker 1: so why not let it be Grandma. Oh my gosh. Listen,
Speaker 1: it's been such a fun chat and it's such a
Speaker 1: great read. Another great you know behind the scenes look
Speaker 1: by you, Brandon. And there's a lot more to uh
Speaker 1: in the article in in Pursuit. So we highly recommend
Speaker 1: everybody check it out. Listen. Thank you so much, Brandon Pressor.
Speaker 1: He's a Blueberg Business Week contributor. Chris. Just quickly, Um,
Speaker 1: you also talked a little bit about a little bit
Speaker 1: more Disney in the in the issue. Yes, so this
Speaker 1: is so we did all this because it's their fiftieth
Speaker 1: anniversary and we um and they're changing some of the
Speaker 1: rules at Disney, so their sun setting, the fast past system, uh,
Speaker 1: and they're making a new one called Genie Plus, and
Speaker 1: there's a lot of pandemic restrictions. So we have a
Speaker 1: whole section about Disney hacks, like what you need to
Speaker 1: know to make your trip work, because, as you know,
Speaker 1: there's a lot of ways that can go wrong or
Speaker 1: be kind of a pain in the neck. Chris Rowser,
Speaker 1: thank you so much. He is the editor of Bloomberg
Speaker 1: Pursuits and definitely check it out. The new issue is out,
Speaker 1: um that's up. Or we can addition to Bloomberg Business
Speaker 1: Week from Boomberg Radio. Thanks so much for joining us.
Speaker 1: I'm Carol Messer and I'm Tim Stanek. Be sure to
Speaker 1: tune into our Bloomberg Business Week daily show. There's Monday
Speaker 1: through Friday and starts at two pm Wall Street Time
Speaker 1: on Bloomberg Radio. What character would you be all right
Speaker 1: to be continued? I can't say Captain Jack spar just on. Okay,
Speaker 1: thank you, Chris, right exactly. You can also watch our
Speaker 1: daily broadcast on YouTube. Just search Bloomberg Global News. Also
Speaker 1: check out our Bloomberg Business Week podcast. You can find
Speaker 1: it at Bloomberg dot com, Apple, or wherever you get
Speaker 1: your podcast. Bloomberg Business Week available on newstands, now, at
Speaker 1: Bloomberg dot com and on the Bloomberg terminals. You can
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Speaker 1: slash q T, and streaming platforms like Roku, Apple TV,
Speaker 1: Samsung TV and more. Have a great weekend everyone. This
Speaker 1: is Bloomberg. H