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. S
Speaker 1: Bloomberg business Week with Carol Messier and Bloomberg Quick Takes
Speaker 1: Tim Stenovic on Bloomberg Radio. Hi, everyone, welcome to the
Speaker 1: weekend edition of Bloomberg Business Week. I'm Karl mass Or.
Speaker 1: Tim Stanovic is off this week, and he missed the
Speaker 1: latest release of one of the Fed's favorite inflation metrics.
Speaker 1: We're talking about core PC personal consumption expenditures. It was
Speaker 1: up less than expected for the smallest game since November,
Speaker 1: still though high. We'll talk though about how persistent inflation
Speaker 1: might affect your July four festivities. We'll get to that
Speaker 1: in just a moment. Also ahead, Nobel Laureate Paul Krugman
Speaker 1: on where he thinks the US economy is headed, look
Speaker 1: at the dark side of the late Jack Welch's celebrated
Speaker 1: corporate legacy, and we'll dig into the Heist Issue, Bloomberg
Speaker 1: Business Week's annual double issue dedicated to tales of robbery,
Speaker 1: s ams and snitches. All of that to come first
Speaker 1: up if you're thinking of having friends over for the
Speaker 1: Fourth of July, brace yourself. Hosting a party of ten
Speaker 1: could cost eleven percent more than it did last year.
Speaker 1: That's according to the Wells Fargo July fourth Food Inflation Report.
Speaker 1: Bloomberg News senior markets reporter Katie Greifeld and I spoke
Speaker 1: with Carol Flynn, ag tech analyst at Wells Fargo, and
Speaker 1: we asked her where to find some relief this fourth
Speaker 1: of July. It's absolutely a pain point. Food price inflation
Speaker 1: is hitting everybody's wallets. Um. And we wrote this UH
Speaker 1: research just to figure out where that pinch of inflation
Speaker 1: could be potentially solved by finding relative value and more
Speaker 1: palatable price points. And so what walk us through some
Speaker 1: of those relative value plays? Feelss like I'm talking about
Speaker 1: stocks here, but when it comes to food in particular,
Speaker 1: I mean, one are the substitutions that one could make
Speaker 1: if they are trying to host a party and not
Speaker 1: you know, pay a fortune for it. Well, that's a
Speaker 1: great question. You know, it's year over year in UH
Speaker 1: food price accloration that we're looking at here, and the
Speaker 1: substitutions are truly going to be UM things like, what
Speaker 1: else can we put on our grill. It looks like
Speaker 1: brisket is going to be more um affordable than try
Speaker 1: hip this time. Maybe, if you're gonna stick with the
Speaker 1: Hamburger patties, take a look in the frozen food section,
Speaker 1: anything that's sort of had shelf stay, book stability, or
Speaker 1: frozen foods versus perishable. You're gonna see some specials out
Speaker 1: there in some lost leaders. Um, it's gonna take a
Speaker 1: little more effort to make sure this is um the
Speaker 1: food price, the budget is taken care of. All right,
Speaker 1: Carol Kate is already weighed in, She goes, I'm not
Speaker 1: gonna eat shrimp and port tacos. I heard that there
Speaker 1: are so many prigans in the produce department, and you
Speaker 1: don't have to have that. That's I mean, that's the
Speaker 1: beauty of an American food and agricultural system. I mean,
Speaker 1: we have an incredible, incredible we'll see your foods available.
Speaker 1: But are shrimp tacos actually cheaper this time around? The
Speaker 1: reason we brought up shrimp is actually shrimp prices have
Speaker 1: not increased over the last five years. But you look
Speaker 1: at the other proteins on the grill, and they're looking
Speaker 1: at twelve or fifteen percent year over year increases. So
Speaker 1: again all about relative value. So we'll see the shoppers
Speaker 1: looking for relative value. If shrimp is already on your grill,
Speaker 1: you may have more of it this time. If there's
Speaker 1: something else that you like, um, then you're going to
Speaker 1: be maybe looking for substitutions in the frozen case or
Speaker 1: some new innovative menu items like shrimp. Uh no, I don't.
Speaker 1: I was gonna say shrimp prices probably haven't gone up
Speaker 1: because it's a weird food. It is that a weird food.
Speaker 1: It's a great food, weird texture, were not a fan.
Speaker 1: But in any case, I also want to talk about
Speaker 1: alcohol because personally I don't really like beer, more of
Speaker 1: a white wine gal, but a lot of people drink
Speaker 1: beer and other beverages at the fourth of July. What's
Speaker 1: the outlook there. It does look like some of the
Speaker 1: higher priced beverages in the beer case are up, and
Speaker 1: we're already seeing demand flow to the domestic um super
Speaker 1: premium brand, so people are already making a change. And
Speaker 1: the white wine and especially killed white wine is still
Speaker 1: out there, and there's some great, amazing brands that are
Speaker 1: at lower price points. If you're still looking to still
Speaker 1: you know that, you know, to prepare with a really
Speaker 1: nice wine, you're gonna be okay, okay, alright, So talk
Speaker 1: to me too about veggies or things like avocados between
Speaker 1: now have been expensive. We've talked about shortages. I feel
Speaker 1: like over the last year or so, where are we
Speaker 1: on that. Well, avocado shortages is another story altogether. You know,
Speaker 1: mostly supply chain. There's always a perishability issue and weather
Speaker 1: driven issues. Um, But California avocados are just about to
Speaker 1: come into season, into the peak of the season. So
Speaker 1: look for your in your protuce department. Again, seasonality is
Speaker 1: going to drive a lot when their hire supply. You're
Speaker 1: going to see prices get moderated and things move quickly.
Speaker 1: It's very dynamic space in the in the protest section, So, um,
Speaker 1: talk about sort of weird textures. People talk about that
Speaker 1: with avocados, but once you are a fan, it's usually
Speaker 1: a lifetime issue. So so are you saying they're expensive
Speaker 1: but they're around No, I actually think that price is
Speaker 1: going to come down because we're gonna better supplies because
Speaker 1: we're coming into the California see the avocados. Actually, I
Speaker 1: am not in avocado every single morning half of all.
Speaker 1: Not an entire avocado left the record ship. But we've
Speaker 1: covered the main course, We've covered beverages. What about dessert.
Speaker 1: What's the outlook there? Well, I think you might want
Speaker 1: to look at some of the non dairy alternatives. I'm
Speaker 1: a big fan of the real milk people, so don't
Speaker 1: forget the real live cream. But it does look like
Speaker 1: those are those priceges have gonna be up substantially. That
Speaker 1: was well Spargo actech analyst Carol Flynn coming up a
Speaker 1: new book reveals what maximizing shareholder value really entails and
Speaker 1: says the late Jack Welch has celebrated leadership techniques actually
Speaker 1: crushed the soul of corporate America. In many corners of
Speaker 1: the business world, he is still a hero, and that's
Speaker 1: part of the debate. I wanted to stir up not
Speaker 1: just a referendum on Welch himself, but a broader conversation
Speaker 1: about what we admire, what we look up to, the
Speaker 1: kind of business leaders we want to be putting up
Speaker 1: on those pedestals. Author of New York Times reporter David
Speaker 1: Gillis joins us, next, you're listening to Bloomberg Business Week,
Speaker 1: this is Bloomberg. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes. Tim Stenovik from Bloomberg Radio.
Speaker 1: The Manager of the Century. Fortune called him upon his retirement.
Speaker 1: Others referred to him as a rock star CEO, a
Speaker 1: champion of six Sigma and Stack rankings. His name became
Speaker 1: synonymous with consistent and predictable earnings growth and shareholder gains
Speaker 1: as well and with M and A chop cuts off
Speaker 1: shoring and outsourcing. We are talking about the man who
Speaker 1: broke capitalism, or at least that's what a new book
Speaker 1: calls Jack Welch joining us as David gillis Corner Office columnist,
Speaker 1: an award winning business reporter for The New York Times,
Speaker 1: author of The Man Who Broke Capitalism. How Jack Welt
Speaker 1: gutted the heartland and crushed the soul of Corporate American
Speaker 1: How to undo his legacy. David joins us via zoom
Speaker 1: in Canada. David um delighted. We've been looking forward to
Speaker 1: talking with you. How did he go from being somebody
Speaker 1: who was, you know, as we said, the Manager of
Speaker 1: the Century and we lauded him for his consistency, to
Speaker 1: someone who we realized, you know, was doing some financial engineering. Well,
Speaker 1: I think that evolution of of how we think about
Speaker 1: him is still very much underway. You know, there are
Speaker 1: still people who vehemently dispute with my characterization of him.
Speaker 1: In many corners of the business world, he is still
Speaker 1: a hero, and that's part of the debate. I wanted
Speaker 1: to stir up not just a referend him on Welch himself,
Speaker 1: but a broader conversation about what we admire, what we
Speaker 1: look up to, the kind of business leaders we want
Speaker 1: to be putting up on those pedestals. So listen, Welch
Speaker 1: himself had ups and downs during his tenure. We have
Speaker 1: to remember, shortly after taking over, he wasn't called the
Speaker 1: manager of the center. He was called neutron Jack because
Speaker 1: everyone was so upset with his mass layoffs and factory closures.
Speaker 1: But over the course of his twenty years as CEO,
Speaker 1: he was able to repair that initial damage to his
Speaker 1: reputation and go out from the company on top. So this,
Speaker 1: you know, process of thinking about the legacy of a
Speaker 1: man so consequential. I don't know that it's ever over.
Speaker 1: And what I'm trying to do with this book is
Speaker 1: put his tenure in perspective, yes, but also make it
Speaker 1: a conversation, I hope about more than just one man,
Speaker 1: but about a system. And it's a system that I
Speaker 1: don't need to tell you both has created all sorts
Speaker 1: of bizarre negative externalities and strange consequences and inequalities that
Speaker 1: we as a society are still wrestling with every day. Well,
Speaker 1: David talked more about that system, and you know, we'll
Speaker 1: just roll in it. I mean, how do we go
Speaker 1: from the manager of the century into, as you say,
Speaker 1: the man who broke capitalism? I think the story for
Speaker 1: me really begins in the post war years. Actually, that
Speaker 1: was what some people call the golden age of capitalism.
Speaker 1: And it was so fun to hear just g. S. Stock,
Speaker 1: you know, mentioned in the ticket right before this segment,
Speaker 1: because g E. It's a reminder has been this influential
Speaker 1: Bell Weather Bedrock Corporation for more than a century. But
Speaker 1: back then, in the late forties, the fifties, the sixties,
Speaker 1: the way GE treated its employees, the way IBM and
Speaker 1: Johnson and Johnson treated their frontline employees was just fundamentally
Speaker 1: different than the way we think about major multinational corporations
Speaker 1: treated most of their employee is today, which is to say,
Speaker 1: back then, in this golden age of capitalism, companies and
Speaker 1: ceo s were excited about paying people better and better wages.
Speaker 1: They were eager to share the wealth that they were
Speaker 1: creating with their employees, with their suppliers, and even with
Speaker 1: the government. In the book, I cite the nineteen fifty
Speaker 1: three g E annual report where the company boasts about
Speaker 1: paying so many taxes. That's a world away from where
Speaker 1: we are today. And part of the way, a big
Speaker 1: part of the way we got there was through the
Speaker 1: way Welch changed g E. Upon taking over g E,
Speaker 1: everything I just described basically went out the window, and
Speaker 1: Welch brought to the job this maniacal focus on increasing
Speaker 1: shareholder value and on making g E the most valuable
Speaker 1: company in the world. And we can talk about the
Speaker 1: ways in which a kit it, but it's that it's
Speaker 1: that change in perspective that has partnered us from there
Speaker 1: to so one thing I'm curious about, and you get
Speaker 1: very much into ge capital and again that was another
Speaker 1: thing that we said, Oh, how great they've got this
Speaker 1: finance arm. Geither into all these things. They're a microcosm
Speaker 1: of the economy but they were actually overexposed to financial
Speaker 1: But that, you know, and some of what we're talking
Speaker 1: about is not new. Like I think about people who
Speaker 1: came on and were critical of G and its consistency
Speaker 1: and were suspect um, you know, there were those certainly
Speaker 1: naysayers that were out there. Um, when you we look back,
Speaker 1: should somebody have been held accountable? I mean they did
Speaker 1: pay some fines correct sec fines, um later on in
Speaker 1: terms of I believe they're accounting. I'm not sure if
Speaker 1: I'm saying it exactly correctly, but um, should they Should
Speaker 1: people have been held accountable for what they were doing
Speaker 1: or what they were doing was it was legal but
Speaker 1: maybe a little squishy, well a lot in there. It's
Speaker 1: not my job to say how and when we hold
Speaker 1: executives accountable. And I think it's also parting to point
Speaker 1: out that during the eighties and nineties there was just
Speaker 1: much less transparency than there is today. You know, Sarvings
Speaker 1: Oxley was passed after Jack Walts required. What happened though,
Speaker 1: is right after he retired. Bill Gross, who of course
Speaker 1: married child, just wrote a great book about UH, was
Speaker 1: among the first to say you know this eighty quarters
Speaker 1: in a row of meeting or beating analyst expectations like
Speaker 1: that doesn't happen naturally. Something is going on here. And
Speaker 1: then it was several years after that, as you referenced
Speaker 1: that under mult g E settled sweeping accounting fraud charges
Speaker 1: with the SEC that pointed to years and years of
Speaker 1: impropriety in terms of how they managed the books, how
Speaker 1: they managed their earnings. So listen, I don't think we
Speaker 1: can ever know exactly what was going on there, but
Speaker 1: what is clear and what welch is owned deputies said
Speaker 1: on the record then and even to this day, was
Speaker 1: that g E Capital was the key that let the company,
Speaker 1: let the parent corporation meet or beat those analysts expectations
Speaker 1: quarter after quarter in this most unnatural way, and that
Speaker 1: they did it with a flurry, you know, within the
Speaker 1: last week or two of a quarter, just funding tuning
Speaker 1: exactly whatever numbers wanted to you know, hit the number
Speaker 1: that they thought that the street wanted to see. And David,
Speaker 1: I want to talk about the the end of the title,
Speaker 1: how to undo his legacy? Walk us through that. Well,
Speaker 1: it's not easy. Listen. Uh, We're in a moment and
Speaker 1: I've covered CEOs for the last decade or so. You
Speaker 1: all know this. There's a different ethos in business today.
Speaker 1: CEOs are talking about their responsibilities and who they serve
Speaker 1: in new ways. You know. Called it stakeholder capitalism, call
Speaker 1: it cs R, E, S G, whatever you want. There's
Speaker 1: I think a broad recognition from companies, from CEOs, from
Speaker 1: the Business Roundtable that this era of shareholder primacy has
Speaker 1: probably run its course and that it's time to start
Speaker 1: considering a whole, much broader group of stake horse And
Speaker 1: that's easy to say, in practice, it's super hard to do.
Speaker 1: That was David Gallis. He's a New York Times reporter,
Speaker 1: author of the new book The Man Who Broke Capitalism,
Speaker 1: How Jack Welch gutted the heartland and crushed the soul
Speaker 1: of corporate America and How to undo his legacy. That
Speaker 1: book it is out now. Katie Gray felt of course,
Speaker 1: joining us there as well. Still ahead on Bloomberg Business Week,
Speaker 1: why the recent landmark rulings on abortion and guns shows
Speaker 1: the Supreme Court is ready to jolt America's Google system.
Speaker 1: This is Bloomberg broadcasting from the financial capital of the World,
Speaker 1: Bloomberg eleven Frio in New York to Washington d C,
Speaker 1: Bloomberg to Boston, Bloomberg one O six one to San Francisco,
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Speaker 1: nine team and around the globe the Bloomberg Business app
Speaker 1: and Bloomberg Radio dot Com. This is Bloomberg Business Week.
Speaker 1: Big recent High Court decision. You know that the Supreme
Speaker 1: Court overturning Roe versus Wade were now roughly half of
Speaker 1: the United States have either already or are expected to
Speaker 1: enact bands and other restrictions on abortions. And just one
Speaker 1: day before that ruling came out, the Court's conservative majority
Speaker 1: struck down a New York law that prevented most people
Speaker 1: from carrying a handgun in public. Greg Store covers the
Speaker 1: High Court for Bloomberg News. He writes that a group
Speaker 1: of republic injustices are poised to jolt the US legal system.
Speaker 1: It's a court that has been very aggressive. The Conservatives
Speaker 1: clearly have their seat. Collective sea legs. Uh. You know,
Speaker 1: these rulings on abortion and guns in the last few
Speaker 1: days were notable not only for the tremendous practical implications,
Speaker 1: but also the way they went about the reasoning, very
Speaker 1: sweeping reason reasoning about how to interpret the Constitution and
Speaker 1: in particular what rights are in there and what rights aren't.
Speaker 1: So how do we as US citizens think that this
Speaker 1: continues to play out. Well, the Court's going to have
Speaker 1: another huge term next next year. Um, they have big
Speaker 1: cases on affirmative action, religious and gay rights, UH, clean
Speaker 1: Water Act case, and they're just getting started the Uh
Speaker 1: you know, based on what we've seen from what the
Speaker 1: Court did this term. Uh, they are determined to They're
Speaker 1: willing to overturn precedents. They read the Constitution through that
Speaker 1: originalist lens of looking at the words and what they
Speaker 1: meant at the time, and they're going to evaluate American
Speaker 1: tradition and history as as they see it to see
Speaker 1: what sorts of rights were protected at the time the
Speaker 1: Constitution or perhaps the Fourteenth Amendment were enacted. And for
Speaker 1: the most part, that mode of analysis gives you very
Speaker 1: very conservative results. What are the cases that are set
Speaker 1: to be argued before them? And given what we know
Speaker 1: about this court already, I think it's I don't know,
Speaker 1: I mean, it seems like it's we have a good
Speaker 1: understanding of what these justices believe and how they've interpreted
Speaker 1: the Constitution thus far. So I don't even know if
Speaker 1: you know this better than I would. But are things
Speaker 1: actually up in the air at all with some of
Speaker 1: these cases, because it's kind of clear how some of
Speaker 1: these justices think. Yeah, it certainly is. And oftentimes the
Speaker 1: question is just whether the court's going to choose to
Speaker 1: get into an area once they've taken up a case. Uh,
Speaker 1: it's pretty clear which way they're going to go. So
Speaker 1: good example is the I mentioned affirmative action. They're gonna
Speaker 1: in the fall take up cases challenging the use of
Speaker 1: race and college admissions at at Harvard and the University
Speaker 1: of North Carolina. There's also a case, a variation of
Speaker 1: that case a few years ago, where the baker didn't
Speaker 1: want to make a cake to celebrate the same sex wedding.
Speaker 1: In this case, it involves a website designer who doesn't
Speaker 1: want to design web pages for same sex weddings. And UH,
Speaker 1: with both those cases and some others, there's not a
Speaker 1: huge amount of doubt about which way the court's going
Speaker 1: to go. Maybe there's some question about how far they'll go. Um,
Speaker 1: But but in terms of the direction, UH, get been
Speaker 1: given the makeup of this court, and you know their
Speaker 1: their their willingness to issue rulings that may prove unpopular,
Speaker 1: like like quite possibly the abortion or ruling will prove unpopular. Uh. Again,
Speaker 1: it's it's pretty clear which way the court is going
Speaker 1: to go. Greg. You know, I do wonder and I
Speaker 1: wonder what's the conversations you're having with academic scholars of
Speaker 1: the Supreme Court and you too, who have followed it
Speaker 1: for so long about there are issues in modern life
Speaker 1: that I think it's safe to say the fathers of
Speaker 1: the Constitution couldn't even think about, you know what I mean. So,
Speaker 1: how do we have to think about an evolution of
Speaker 1: our Supreme Court, maybe a more modern Supreme Court. Yeah,
Speaker 1: that's a really you know, it's interesting, Carl, he used
Speaker 1: the word fathers there, because of the Constitution was drafted
Speaker 1: by men, the fourteenth of men meant, and it was
Speaker 1: ratified in eighteen sixty eight by men. And in the
Speaker 1: case of abortion, you know, very much a right that
Speaker 1: affects women, uh in a way that it doesn't affect men.
Speaker 1: And I think that's actually going to be a real
Speaker 1: uh A point of contention going forward is that this
Speaker 1: is a court that looks to as I said earlier,
Speaker 1: you know what what rights had traditionally been there. You know,
Speaker 1: they did a survey of American law and and and
Speaker 1: talked about you know what, what where abortion was allowed,
Speaker 1: where it wasn't allowed throughout throughout history and to the
Speaker 1: extent that history doesn't reflect all the modern realities, including
Speaker 1: the modern reality that you know, women women vote that uh,
Speaker 1: black people vote in a way that they it was
Speaker 1: very hard for them to do before the civil rights era. Um.
Speaker 1: You know, it's a question of whose constitution are they
Speaker 1: interpreting And so very much what I'm talking to to
Speaker 1: folks on on the liberal side of things over the
Speaker 1: last few days, that's the kind of stuff I'm hearing.
Speaker 1: So Um, it's just interesting to think about the history
Speaker 1: of the courts and kind of where this goes ultimately.
Speaker 1: Should we anticipate any kind of structural changes? I know,
Speaker 1: right off of you know, Friday's decision, people are talking about,
Speaker 1: you know, expanding the Supreme Court. Does anything change? Well,
Speaker 1: you know, the problem of course for those who want
Speaker 1: to expand the court is, uh, you know, they don't
Speaker 1: have the votes right now, and there's no sign that
Speaker 1: they're going to have the vote. Our thanks to Bloomberg
Speaker 1: Supreme Court reporter Greg Store. We should note that Stephen
Speaker 1: Bryer officially retired from his post this past week, and
Speaker 1: Katangi Brown Jackson was sworn in as the Court's first
Speaker 1: black female justice. You're listening to Bloomberg Business Week. Up next,
Speaker 1: world famous economist Nobel Laureate Paul Krugman on the High Court, inflation,
Speaker 1: and the biggest risk facing the Federal Reserve. 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. Our next
Speaker 1: guest is a Nobel Laureate columnist for the New York Times.
Speaker 1: He's also the author editor of more than two dozen books,
Speaker 1: as well as Distinguished Professor of Economics at the City
Speaker 1: University of New York Graduate Center, and he is someone
Speaker 1: we want to hear from at pivotal moments for the
Speaker 1: U S economy and really the country as a whole.
Speaker 1: He really looks at everything. While talking about, of course,
Speaker 1: the one and only Paul Kruegeman, My co host him
Speaker 1: Stanivic and Paul Sweeney of Bloomberg Surveillance spoke with Krugman
Speaker 1: recently about the FEDS path forward, and other pressing macro
Speaker 1: economic concerns, such as the potential impact of the Supreme
Speaker 1: Court's abortion ruling on our labor landscape. One of the
Speaker 1: big driving forces of change in the US economy of
Speaker 1: the past couple of decades has been this um kind
Speaker 1: of unequalizing as the knowledge economy has wanted to gravitate
Speaker 1: towards big cities with highly educated populations. Um. And now
Speaker 1: there's gonna be additional factor, which is um, if companies
Speaker 1: want the kind of workers that they can get in
Speaker 1: those locations, are they going to want to locate in
Speaker 1: the states that are going to be have really overregressive
Speaker 1: social policies. The kinds of social policies that that they're
Speaker 1: the workers they want really don't like. So you really
Speaker 1: have to think, you know, how how does Texas or
Speaker 1: Florida fair in this kind of competition for business, in
Speaker 1: this new legal environment, this federal reserve. They have a
Speaker 1: balancing act, they're very tough balancing act to reign in
Speaker 1: inflation while not going too far and pushing this economy
Speaker 1: into a recession. How do you think that plays out? Well,
Speaker 1: it's I mean, the fundamental problem is not does not
Speaker 1: actually look to me to be all that hard. It's
Speaker 1: a weird thing to say, but it's pretty clear that
Speaker 1: the US economy got overheated. UH fiscal monentary policy, Um,
Speaker 1: it was misjudged. I was among the people who misjudged it.
Speaker 1: And the U s economy got overheated. And so we
Speaker 1: have most of the inflation we're seeing as special factors
Speaker 1: that will go away. Russia won't invade Ukraine every every month,
Speaker 1: but there's a good, solid extra maybe two points of inflation.
Speaker 1: Excess inflation that results from an overheated economy. Cooling off
Speaker 1: that overheating is not fundamentally a hard thing to do,
Speaker 1: and and needn't be all that hard, needn't even involve
Speaker 1: a recession, just a little bit of a an uptick
Speaker 1: in the unemployment rate. The problem is precision. I mean,
Speaker 1: the Fed is not sure however heated the economy is.
Speaker 1: It doesn't know exactly how much of our of a
Speaker 1: rate rise is needed to do this. So the chance
Speaker 1: of of you know, overdoing it, of slamming that breaks
Speaker 1: a little too hard and causing a bit of a
Speaker 1: skid is definitely there. So it's a reasonable chance that
Speaker 1: will have something that will be formally a recession. But
Speaker 1: the chance of a really you know, sort of early
Speaker 1: eighties type grueling and anti inflation flight, uh that that
Speaker 1: doesn't look serious. How deep of a recession could we have?
Speaker 1: How long have the recession? How high could unemployment go?
Speaker 1: It's well, how high it could go could be over
Speaker 1: I mean, it probably has to rise over four. And
Speaker 1: it's not hard to come up with a story in
Speaker 1: which the FED bobbles the thing badly enough that it
Speaker 1: briefly goes above five. But briefly. There's nothing at all
Speaker 1: in there to suggest that we need um an unemployment
Speaker 1: rate that's over five for any extended period of time,
Speaker 1: and the Fed will of course correct if it does
Speaker 1: look like we're heading in that direction. So, just to
Speaker 1: that point, Paul Larry Sumners is out with an idea
Speaker 1: of five years a five percent unemployment needed to bring
Speaker 1: down CPI. That doesn't necessarily seem to hold water to you.
Speaker 1: That looks to me like Larry is for reasons, I
Speaker 1: do not understand thinking that we need something that's like
Speaker 1: a um a sort of a half vulcar, that we
Speaker 1: need a massive period of excess unemployment for an extended
Speaker 1: period of time. To crush inflationary expectations, so, which is
Speaker 1: what we had in the early eighties, Except everything every
Speaker 1: indicator I look as says that inflationary expectations are actually
Speaker 1: pretty mute. It when you consider the price of gas,
Speaker 1: the fact that surveys are showing that people expect only
Speaker 1: three percent inflation over the next five years, um that
Speaker 1: they break even rate, and the bond market is is
Speaker 1: well under three percent. Now, I just don't understand where
Speaker 1: the idea that we need to do something like a
Speaker 1: vulcre in the economy of twenty two is coming from.
Speaker 1: But what about the idea that so much of this
Speaker 1: inflation is outside of the Fed's control and so much
Speaker 1: is due to demand to supply constraints. Excuse me? And
Speaker 1: the FED, you know, has famously blunt tools. How can
Speaker 1: the FED get this under control? If if they can't
Speaker 1: drill for oil, if they can't refine oil, and if
Speaker 1: they can't build houses. Know what the FED does? Is it? It? It? Uh?
Speaker 1: You know, give me the monitary policy to deal with
Speaker 1: the things I can and to accept the things I can't.
Speaker 1: The Montreal J. Powell, it's a it's a these these
Speaker 1: things will pass. That's the whole point. I mean, the
Speaker 1: big misjudgment that many of us made was to focus
Speaker 1: only on these things and that they were transitory and
Speaker 1: uh um and would pass fairly quickly. But they will pass,
Speaker 1: and so what the FED needs to do is to
Speaker 1: get some kind of underlying inflation rate back to around
Speaker 1: his two percent range, and then the other stuff will eventually.
Speaker 1: I mean, gas prices are already coming down. So think
Speaker 1: about the the things that really are the appropriate targets
Speaker 1: of monetary policy on a global perspective, Paul, I mean,
Speaker 1: you know a lot of folks have said that the
Speaker 1: US federal reserves behind the curve, but I look across
Speaker 1: the pond and I see the Bank of England. Okay,
Speaker 1: twenty five basis points. We heard from Christine Leogard at
Speaker 1: the ECB that they're thinking about raising interest rates next meeting.
Speaker 1: How do you think about the the European response, and
Speaker 1: maybe from the Bank in Japan as well, relative of
Speaker 1: where there the fet is. Well, what's the funny thing
Speaker 1: about Monterrey policy? Is it? Um? It's it Terrey policy
Speaker 1: starts having an effect before it actually happens, right the
Speaker 1: uh So we look at the actual amount by which
Speaker 1: the FED has raised rates, and it isn't that much yet,
Speaker 1: but if you look at the rates that matter for
Speaker 1: the economy, mortgage rates, corporate bond rates, they're way way up.
Speaker 1: So the anticipation of future FED rate hikes has already
Speaker 1: done a lot. And the peculiar thing is that although
Speaker 1: the e c B hasn't raised rates as much as
Speaker 1: the FED, um the those indicators of what people are
Speaker 1: expecting are every bit as big, if anything bigger in
Speaker 1: Europe than they are right now. The the fact of
Speaker 1: the e c B is is pursuing a tighter monetary
Speaker 1: policy than the FED is, which seems to me to
Speaker 1: be crazy. I mean, the the underlying inflation rate in
Speaker 1: Europe is probably substantially lower than it is here. They
Speaker 1: didn't have an American rescue plan, they don't have the
Speaker 1: rapid wage increases that we've been seeing. So I'm my
Speaker 1: concern is not that the e CP is behind the curve.
Speaker 1: My concern is actually that the e CP is way
Speaker 1: ahead of the curve and that that they're going to
Speaker 1: do what historically the ECP has tended to do, which
Speaker 1: is to over contract. Interesting, all right, so you mentioned
Speaker 1: kind of wages. That's kind of where I wanted to go.
Speaker 1: The the labor market has been just spectacular. We've got,
Speaker 1: you know, more job openings than we know what to
Speaker 1: do with here. Are you concerned? Do you think we
Speaker 1: will in fact see meaningful wage inflation because the five
Speaker 1: percent uh, you know, we we see it's just not
Speaker 1: keeping up with that headline number. Yeah. Well, the the numbers,
Speaker 1: I mean, wage rates now are are rising depends on
Speaker 1: We're having a lot of problems with adjusting because we
Speaker 1: have a changing composition of the pandemic and all of
Speaker 1: that has really screwed up with our ability to interpret
Speaker 1: the data. But I would have said that we seem
Speaker 1: to be having wage growth in the fine ish percent range,
Speaker 1: which given productivity growth, is underlying inflation, and the probably
Speaker 1: full or a bit less range, which is consistent with
Speaker 1: the other indicators we have. So basically and wage growth,
Speaker 1: if anything, seems to be slowing, even though we haven't
Speaker 1: yet had a uh significant as an unemployment, it looks
Speaker 1: as if they wage numbers are are coming down a bit.
Speaker 1: So wages are not They're they're not They're not an
Speaker 1: additional problem. They're basically telling the same story as everything
Speaker 1: else is. We'll have some anecdotal evidence of inflation. Did
Speaker 1: you get a raise? The best hogies in the world
Speaker 1: are hog Haven from Princeton, New Jersey, and they actually
Speaker 1: did raise the prices on the hogies. There was down
Speaker 1: there a couple of weeks ago, and they haven't raised
Speaker 1: I mean, I don't think so. So they're making up
Speaker 1: for some lost time. Paul Krugman, down in Princeton, you're
Speaker 1: seeing some inflation down there. Oh yeah, well, I mean
Speaker 1: it looked lots of things. I mean, it's ah um.
Speaker 1: I'm surprised to actually give them the way that a
Speaker 1: lot of companies that behave. They didn't just make the
Speaker 1: hogies smaller, which would both be a way to conceal
Speaker 1: the price increase and probably be good for your health. Inflation,
Speaker 1: it's a real thing. I've actually noticed it happening with
Speaker 1: ice cream containers I'm buying are smaller. Uh. Paul, I'm
Speaker 1: wondering about the peak federal funds rate. If you would
Speaker 1: give a prediction and as to where you think it
Speaker 1: will end up. Yeah, I mean that this is that's
Speaker 1: that's that's a that's a mystical art. And even the
Speaker 1: people who do it well do it badly. Uh. So
Speaker 1: you know, I'd say three hundred paces points. What do
Speaker 1: I know it's And the truth is nobody knows. J.
Speaker 1: Powell doesn't know. We're we really are. The FIT is
Speaker 1: feeling its way forward here as it should be. I mean,
Speaker 1: the at any time, any attempt to lock in a
Speaker 1: rigid path, given the uncertainties about not just about the
Speaker 1: effects of policy, but even about where we are. I mean,
Speaker 1: the US economies clearly overheated. How much overheated? I don't know,
Speaker 1: so no, I mean this is yeah, I I mean
Speaker 1: I I don't have any reason to think that the No.
Speaker 1: I my guess is that the markets are probably overstating
Speaker 1: how much the FET is going to raise rates that
Speaker 1: it's probably um, We're probably going to be seeing just
Speaker 1: as inflation went up faster than people thought it would
Speaker 1: as the economy overheated, inflation probably come down faster than
Speaker 1: people thought it would as the economy cluls off. Our
Speaker 1: thanks to Nabell Lauride economist Paul Krugman for joining Bloomberg's
Speaker 1: Paul Sweeney joining Tim Steneviek for that interview as well.
Speaker 1: That wraps up our first hour of the weekend edition
Speaker 1: of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser. Ahead.
Speaker 1: In our next hour, we dig into the annual Bloomberg
Speaker 1: Business Week heist issue and some of the wildest, most
Speaker 1: lucrative crimes ever uncovered. Plus how serial entrepreneur Mark Laurie's
Speaker 1: latest multibillion dollar venture aims to put your favorite restaurants
Speaker 1: on wheels. This is Bloomberg. This is Bloomberg Business Week
Speaker 1: inside from the reporters and editors who bring you America's
Speaker 1: most trusted business magazine. Plus global business finance and tech
Speaker 1: news as it happened, s Bloomberg Business Week, Carol Messer
Speaker 1: and Bloomberg Quick Takes Tim Stenovik on Bloomberg Radio. Plenty
Speaker 1: ahead in our second hour of the weekend edition of
Speaker 1: Bloomberg Business Week, including the growing trend of using cannabis
Speaker 1: for chronic pain and sexual wellness, plus the startup with
Speaker 1: an e commerce pedigree and reportedly multibillion dollar valuation that
Speaker 1: may turn out to be the next big idea in
Speaker 1: mobile food delivery. The CEO of Mark Laurie's Wonder Group
Speaker 1: stops by first up. Though this hour we get into
Speaker 1: a special double issue of the magazine Bloomberg Business Week
Speaker 1: is all about the heist issue. This week and always
Speaker 1: it's a great, great Summer read. Includes a story about
Speaker 1: how the one hundred forty year old security firm a
Speaker 1: d T linked up with tech giant Google, which also
Speaker 1: happens to be one of its biggest threats. Bloomberg Business
Speaker 1: Week editor Joel Webber and Bloomberg News technology reporter Austin
Speaker 1: Carr have more. It's a company that got its roots
Speaker 1: started in the telegraph business. Ad T actually stands for
Speaker 1: American District Telegraph UM. And they've really been around the
Speaker 1: security space for for that many years, you know, investing
Speaker 1: in alarm systems and and those yard signs that everyone
Speaker 1: recognized in the suburbs UM. But in the last couple
Speaker 1: of years they've faced a lot of disruption from Silicon Valley,
Speaker 1: particularly from companies like Amazon and Apple, Microsoft, Samsung, and
Speaker 1: especially Google. And this is a story really about these
Speaker 1: two companies that in many ways we're competing just a
Speaker 1: few years ago, now realizing they actually need each other
Speaker 1: to get to the next stage of growth in the
Speaker 1: Spark Home and Spark Security spake. All Right, so you
Speaker 1: say they both need each other. How come they were
Speaker 1: missing components to to sort of really grow out their
Speaker 1: market share in the smart home. UM. Basically, Google has
Speaker 1: an insanely sophisticated AI infrastructure. They have thousands of engineers
Speaker 1: expert in everything from facial recognition to voice recognition. Uh.
Speaker 1: They have this massive portfolio of of beloved consumer hardware,
Speaker 1: uh you know them under the brand Nest they make
Speaker 1: really high tech service stats and cameras and video O doorbells.
Speaker 1: UM A D Team. Meanwhile, it's a boke ratone based
Speaker 1: company that they didn't really have much tech to be honest,
Speaker 1: they really outsourced all their hardware development. UM. You know,
Speaker 1: I've spent a lot of time at the A D
Speaker 1: T offices and it looks nothing like the Google's offices
Speaker 1: and Mountain View. There's not you know, the sort of
Speaker 1: R and D labs that we're sort of used to
Speaker 1: writing about. UM. But what they do have is this
Speaker 1: massive army of thousands of installers who go around they're
Speaker 1: really expert at at wiring up homes with all this
Speaker 1: security infrastructure, and then they also handle seven installation. And
Speaker 1: so basically the idea is that these two companies came together,
Speaker 1: one that was focused on more uh do it yourself
Speaker 1: devices with with Google and the other that wants to
Speaker 1: do the professional installation for you, and the question will
Speaker 1: be whether that's something consumers want to pay for and
Speaker 1: indeed subscribe for him for months on end. Well, let's
Speaker 1: talk about to do it yourself angle and for that
Speaker 1: we bring in Joel Webber. He's the editor of Bloomberg
Speaker 1: Business Week. He's with us in the Bloomberg Interactive Broker studio. Joel,
Speaker 1: I'm I'm you know. I was reading this, this story
Speaker 1: by Austin that's on the upcoming issue, the Heist issue
Speaker 1: of Bloomberg Business Week, and there was this part where
Speaker 1: Google thought that people would want to you know, drill
Speaker 1: drill holes in their wall and set up their own nest,
Speaker 1: drop draw or drop cameras. And I thought back to
Speaker 1: the anxiety attack I had when I was trying to
Speaker 1: install the next thermostat, which is owned by Google. Austin writes,
Speaker 1: I couldn't. I could not get it hooked up, and
Speaker 1: I had to actually call a professional in order to
Speaker 1: make sure that we had heat that night, because you
Speaker 1: know that over here. Yeah, I can't figure. I don't
Speaker 1: even if you supposed to do that, when the when
Speaker 1: the temperatures wildly uh influx. UM. So to bring it
Speaker 1: to a place not about us Austin UM Boca ra Tone,
Speaker 1: not not known for being a hotbed of of tech innovation. UM,
Speaker 1: And I'm curious, you know what, what did you learn
Speaker 1: about the company and its culture? I mean, a hundred
Speaker 1: year old company, there's not that many of those to
Speaker 1: begin with. It was pretty fascinating going down there. You
Speaker 1: know this this is really a company that is really
Speaker 1: obsessed with its its history. When you go to their
Speaker 1: headquarters UM, which is in boke Raton. First of all,
Speaker 1: they do have a big at T blue octgon yard
Speaker 1: sign out front, which is perhaps uh the one place
Speaker 1: where you don't need that sign because no one's going
Speaker 1: to likely break into an ad T company. In the
Speaker 1: front hall, they have you know, hundreds of a hundred
Speaker 1: plus years of history all arranged there from the original
Speaker 1: what was called the callback call box back the day
Speaker 1: with telegraph dials to call the police or the fire department. UM.
Speaker 1: They have the original nineteen eighties call boxes that the
Speaker 1: key pads and the control panels that you're used to
Speaker 1: seeing in sort of mcmansion's in the suburbs that are
Speaker 1: sort of yellowing because they haven't been upgraded for decades.
Speaker 1: And this is a company that's trying to jump into
Speaker 1: the twenty one century, even though it's sunk in many
Speaker 1: ways in the twentieth and nineteenth century, if not um
Speaker 1: and so what I learned from going down there is
Speaker 1: just that they didn't really have much infrastructure to build on.
Speaker 1: When I went to their tech lab, which is called
Speaker 1: the Boca Lab, it's around the corner from their headquarters,
Speaker 1: and it's it's basically had a little strip mall. I
Speaker 1: mean it was next to a children's gymnastics center, a
Speaker 1: custom closet denied uh you know, uh custom closet designer office,
Speaker 1: And when I went inside, it's a lot of cubicles,
Speaker 1: it's very small, it's just got a brown carpet it
Speaker 1: And from most of the time they just they're mostly
Speaker 1: validating other people's hardware. They're not actually inventing their own.
Speaker 1: They didn't have a product arm. In fact, their product
Speaker 1: group used to report to marketing or the I T department.
Speaker 1: It was really about building you know, sales channels or
Speaker 1: web tools to make things easier for their installers. But
Speaker 1: they didn't have really a design group as their ct
Speaker 1: O to only we've never done an industrial design of
Speaker 1: a product before, which is, for for someone who writes
Speaker 1: a lot about Silicon Valley, pretty shocking to hear at
Speaker 1: this point. There's also this element within this story, Austin,
Speaker 1: that it's like you set up of what could be
Speaker 1: a heist within a heist, which is the best kind
Speaker 1: of heist, as you know from prior heist excursions with us,
Speaker 1: which is basically like a T, A D and T
Speaker 1: is getting into business with someone that maybe eventually doesn't
Speaker 1: need them. How does the company tackle something like that?
Speaker 1: So A d C actually spells that out in their
Speaker 1: their ten K risk factors. They do note that one
Speaker 1: of the ironies of this big partnership, which involves Google
Speaker 1: taking a four fifty million dollar steak in ad T,
Speaker 1: is that Google could just end up a major competitor
Speaker 1: if they decide to offer their own security services and
Speaker 1: sort of supplant uh the A D T subscriptions that
Speaker 1: that they offer directly to customers. Um, and that's a
Speaker 1: huge risk. That story from Bloomberg News technology reporter Austin Carr,
Speaker 1: who joined us along with the editor of Bloomberg business Week,
Speaker 1: Joe Weber up next our Heist issue cover story and
Speaker 1: Art Crime for the Ages takes us from the jungles
Speaker 1: of Cambodia all the way to New York's Metropolitan Museum
Speaker 1: of Art. Stick around, that's coming up. This is Bloomberg.
Speaker 1: This is Bloomberg business Week with Carol mass here and
Speaker 1: Bloomberg Quick Takes Tim Stinnovan from Bloomberg Radio. Let's get
Speaker 1: to the cover story, the latest installment of the Bloomberg
Speaker 1: business Week Heist issue. It takes readers on a journey
Speaker 1: from Southeast Asia all the way to the Big Apple
Speaker 1: and explains how an art dealer's empire thrived on decades
Speaker 1: of epic plunder. Here with that tale are Matt Campbell,
Speaker 1: Asia editor for Bloomberg business Week, along with Bloomberg Business
Speaker 1: Week Editor Joe Weber. Is incredible. But the story, though,
Speaker 1: is that it really speaks to Cambodia and artifacts at Cambodia,
Speaker 1: but also the sea change within the art world, where
Speaker 1: artifacts that were looted decades ago are now in the
Speaker 1: crosshairs of investigators who are trying to actually return them.
Speaker 1: Um so, so Matt talked to us about Douglas Slashford,
Speaker 1: who is he? Exactly so Drega Slashford, the late Douglas Flashford,
Speaker 1: who died was a British businessman who lived virtually his
Speaker 1: whole adult life in Bangkok, uh and among other activities,
Speaker 1: he was for a period of about forty years arguably
Speaker 1: the top dealer in the world of statues from Cambodia,
Speaker 1: the spectacular Khmer Empire sculptures and some of them a
Speaker 1: thousand years old or more. And he really built an
Speaker 1: art dealing empire. And there are works in a very
Speaker 1: fancy private collections and huge important museums like the met
Speaker 1: in the British Museum with links to Latchford all over
Speaker 1: the world. But but as has now become a parent,
Speaker 1: he was a part of a looting network and was
Speaker 1: facilitating essentially the looting and laundering of statues that were
Speaker 1: being ripped from temple, having their origins obscuward and then
Speaker 1: trafficked onto the international art market. So what did that
Speaker 1: network really look like? There is there has been a
Speaker 1: perception of Latchford sometimes in the past as as kind
Speaker 1: of a tomb raider himself, and that in fact is
Speaker 1: not true. He directed this operation and he did everything
Speaker 1: that he did essentially from his apartment in Bangkok. But
Speaker 1: what he did was by whatever was coming over the
Speaker 1: border from this network of looters and brokers within Cambodia,
Speaker 1: who do the last was a buyer. He helped create
Speaker 1: a huge market for stolen antiquities uh, and certainly had
Speaker 1: contact with the brokers who were deciding to some extent
Speaker 1: what got looted and what caught out of Cambodia. So
Speaker 1: while he was not himself smashing and grabbing statutes, he
Speaker 1: was really the essential node in this operation. Without him,
Speaker 1: and particularly without his very energetic salesmanship which made these
Speaker 1: Cambodian statutes into really big money objects, you know, selling
Speaker 1: for for high six and even seven figure prices. Uh,
Speaker 1: this looting would never have occurred on the scale that
Speaker 1: it did. And what are the artworks themselves? So we
Speaker 1: need to do a little bit of a little bit
Speaker 1: of background history here. Cambodia a thousand or so years
Speaker 1: ago was the center of something called the Khmer Empire,
Speaker 1: which was the Hindu and Buddhist monarchy stretching encompassing all
Speaker 1: of contemporary Cambodia as well as much of Thailand and Vietnam.
Speaker 1: Was this very powerful civilization Ongore with the capital Onger
Speaker 1: a lot being the site of people are familiar with.
Speaker 1: And these Cambodian kings commissioned massive statues. You know, these
Speaker 1: are four ft tall five ft tall, you know, six
Speaker 1: hundred pounds stone objects depicting gods and warriors or themselves,
Speaker 1: you know, or or their wives and children. Really beautiful figures.
Speaker 1: And actually when you spend a little time with these objects,
Speaker 1: as I have, it's very easy to see how you
Speaker 1: could become obsessed with them, as Douglas Flatchford was. You
Speaker 1: went to the Cambodian Jungles, tell us about what you
Speaker 1: saw and kind of the massive I mean some of
Speaker 1: these there's some pictures in the magazine. They really are
Speaker 1: are stunning, but they're they're massive and take us to
Speaker 1: also where you know, who knew that feet would be
Speaker 1: so key in figuring out this high stiff you will? Well.
Speaker 1: So one of the things that that strikes you about
Speaker 1: visiting temples in Cambodia is, first of all, they are spectacular,
Speaker 1: and they are amazing places and and and sort of
Speaker 1: overwhelming to see you in person. But but as you
Speaker 1: look a little more closely, you realize what's not there
Speaker 1: is that these buildings are empty because there were statues.
Speaker 1: They used to be full of statues. But the statues
Speaker 1: are all gone. They were all taken years and years ago.
Speaker 1: Some were taken under the French, others later, you know,
Speaker 1: during the Cambodian Civil War and the camer Rouge period
Speaker 1: and then this really big period of looting which I
Speaker 1: described in the story in the nineties, and that was
Speaker 1: really the golden age of Temple Robin in Cambodia. And however,
Speaker 1: this looting was sort of crude and left behind remnants
Speaker 1: and fragments and actually, as you alluded to, feet uh
Speaker 1: and and one of the key anecdotes and the story
Speaker 1: relates to matching a pair of statues that had made
Speaker 1: it into Western collections to their feet which were still
Speaker 1: in fit you on the ground broken off. And of
Speaker 1: course it's possible, you know, with with computer technology, to
Speaker 1: three D match these objects together and to determine this
Speaker 1: statue came from this place. And then if you can
Speaker 1: interview witnesses, find people who remember that being taken, you
Speaker 1: can actually nail down the when as well, when and
Speaker 1: how did this heist begin to unravel. So this has
Speaker 1: been a long and kind of interesting, very interesting process
Speaker 1: where You've had a number of private citizens, heritage activists, archaeologists,
Speaker 1: other people involved in antiquities in one way or another
Speaker 1: who have had suspicions about this trafficking network for over
Speaker 1: a decade now. But things really began to unravel in
Speaker 1: the mid when US prosecutors, specifically in the Southern District
Speaker 1: of New York, began to take an interest in antiquities
Speaker 1: trafficking and antiquities trafficking from Cambodia. So there have been
Speaker 1: a series of indictments now at both federally and at
Speaker 1: the state level in New York of people involved in
Speaker 1: one way or another with the Lashford operation. And in
Speaker 1: nineteen lash for himself was indicted on fraud and conspiracy
Speaker 1: charges by St. N Y and that really signaled that
Speaker 1: there was this extremely serious law enforcement effort underway. However,
Speaker 1: Latchford died about a year after that indictment. He was
Speaker 1: very sick at the time, eight years old and never
Speaker 1: went to trial. I feel like there are three key
Speaker 1: players in your story, and we've covered um Douglas Latchford.
Speaker 1: There's the individual who helped him in digging up in
Speaker 1: you know, finding they aren't getting it out of Cambodia.
Speaker 1: There was also an internationally connected attorney that the U
Speaker 1: s Department of Justice turned to, Brad Gordon. How important
Speaker 1: was he in kind of helping figure this all out?
Speaker 1: Brad Gordon is a really crucial character in this narrative
Speaker 1: and and is really a remarkable character. He is an
Speaker 1: American lawyer who's lived in Asia much of his career,
Speaker 1: had lived in Cambodia for over a decade now, and
Speaker 1: he was hired by the d J about ten years
Speaker 1: ago to begin investigating some of these staffs on behalf
Speaker 1: of the US government on the Cambodian side, and Brad
Speaker 1: really became obsessed by it, totally hooked on the challenge
Speaker 1: of figuring out where these objects were taken and UH
Speaker 1: and how they might be returned to Cambodia ultimately. And
Speaker 1: in that effort he found a really crucial witness, a
Speaker 1: Cambodian man named talk Tick, who actually Brad referred to
Speaker 1: with a code name Lyons and Lyon it turned out,
Speaker 1: was a master looter, an extremely prolific looter, and someone
Speaker 1: who helped Brad and measurably put it all together. And
Speaker 1: of course, another great story from Bloomberg Business Week Asia
Speaker 1: editor Matt Campbell. Check out the entire read in the magazine.
Speaker 1: Tell Webber with us there as well. Still to come
Speaker 1: on Bloomberg Business Week, how government regulation of the cannabis
Speaker 1: industry could help lead to safer conception. This is Bloomberg
Speaker 1: Broadcasting from the financial capital of the World, Bloomberg eleven
Speaker 1: Rio in New York to Washington, d C. Bloomberg to
Speaker 1: Boston Bloomberg one oh six one, does San Francisco, Bloomberg
Speaker 1: nine sixty to the country Sirius xm Chado one nineteen
Speaker 1: and around the globe the Bloomberg Business app and Bloomberg
Speaker 1: Radio dot Com. This is Bloomberg Business Week. So about
Speaker 1: two weeks ago, the Bloomberg noted that the U s.
Speaker 1: Cannabis market size is expected to reach forty billion by
Speaker 1: and expected to expand at a compound annual growth rate
Speaker 1: of nearly fift over that time. That's a new report, tim,
Speaker 1: that's up by grand View Research. Growth driven, at least,
Speaker 1: this report said, by increased legalization. Okay, so with this
Speaker 1: increased legalization, how are people who are using cannabis using it? Well,
Speaker 1: curely just got some new data. They did this survey
Speaker 1: with Harris Paul, and it found that of adults who
Speaker 1: are over the age of twenty one who have ever
Speaker 1: consumed cannabis, they've actually done so for health and wellness purposes,
Speaker 1: Carol as opposed to well, you know, recreational I would alright,
Speaker 1: So let's get to our guests with us is Stacia
Speaker 1: would cook She is clinical cannabis pharmacistic purely joining us
Speaker 1: via zoom in New York City. So tell us a
Speaker 1: bit more about how people are using it, because we
Speaker 1: do see growth um stasia in the industry. So tell
Speaker 1: us a bit more though about specifically where people are
Speaker 1: using it and for what reasons. Yeah, you know, I
Speaker 1: think um this survey really helped clear up a lot
Speaker 1: of the stigma surrounding cannabis. People think that it's for escapism,
Speaker 1: for you know, fun, recreational purposes. But what we're really
Speaker 1: seeing is it, by and large, the people that are
Speaker 1: consuming cannabis are doing so for help and wellness. It's
Speaker 1: for stress, it's for anxiety, it's for sleep. And the
Speaker 1: bigger takeaway is it over half of these people are
Speaker 1: using cannabis instead of pharmaceuticals. And I think one thing
Speaker 1: the COVID nineteen pandemic did was sort of shift people
Speaker 1: towards more UM natural homeopathic sort of remedies, and cannabis
Speaker 1: falls into that. For a lot of people, How are
Speaker 1: they using it? Not? Not? What are they using it for?
Speaker 1: How are they using it? Are they being edibles? Are
Speaker 1: they smoking it? Or are they Yeah? I mean, I
Speaker 1: think that's the most fascinating fascinating thing about it. People
Speaker 1: think cannabis, they think smoking UM. Smoking is actually bad
Speaker 1: for you, no matter what it is. So we see
Speaker 1: a lot of vaporization UM and I think that's a
Speaker 1: good opportunity to remind people that we're talking about legal,
Speaker 1: regulated products. So these are products that are sold through
Speaker 1: legal state markets. They're tested, they don't have pesticides, they
Speaker 1: don't have contaminants. There's nothing else in these vaporized products
Speaker 1: other than pure cannabis oil and the turpenes found within
Speaker 1: the plant. UM. That's really important because illicit market products
Speaker 1: are not regulated that way. We're seeing a lot of
Speaker 1: contaminated products. So these regulated products are are much safer
Speaker 1: for people to consume. But we're also seeing the pharmaceutical
Speaker 1: industry technology brought into cannabis. So if you think of
Speaker 1: a traditional cannabis edible that takes like an hour to
Speaker 1: kick in and can last for eight hours. We can
Speaker 1: change that with nanoformulation that makes cannabis easier to be
Speaker 1: absorbed by the body. So you can can stumeent in
Speaker 1: a beverage in a gummy formation. It's going to work
Speaker 1: in like fifteen minutes and only last for an hour
Speaker 1: or two. So people can really customize the products that
Speaker 1: you're they're using to the symptoms that they're looking for.
Speaker 1: If you want to sleep all night, you can use
Speaker 1: something that's gonna last all night. If you just need
Speaker 1: something for anxiety or stress, right now, we have products
Speaker 1: for that too. So the versatility of the products really
Speaker 1: determined sort of what you're using them for. So tell me, though, Stacia,
Speaker 1: who should be using it? Because when you say homeopathic,
Speaker 1: and I know there's been um, you know, a lot
Speaker 1: moving forward in terms of greater oversight of homeopathic remedies,
Speaker 1: but I mean, you know, I want transparency. I want
Speaker 1: to know what I'm kind of getting into. Yeah. Absolutely.
Speaker 1: I think one of the things that we see a
Speaker 1: lot are people that are comfortable with the idea of
Speaker 1: cannabis for cancer, for multiple sclerosis, for Parkinson's disease, like
Speaker 1: these really severe disease states, and there's a lack of
Speaker 1: understanding that it actually can be utilized for things like arthritis,
Speaker 1: for menstrual ramps, for migraines, for stress, for anxiety. I mean,
Speaker 1: we have patients and consumers coming in all the time
Speaker 1: for much simpler symptoms. And even more importantly, not all
Speaker 1: cannabis causes euphoria. I think that's also a huge misunderstanding
Speaker 1: that if you use cannabis you're going to be stoned.
Speaker 1: That's absolutely not the case. The products come in a
Speaker 1: lot of different formulations, doses, ratios, so we can really
Speaker 1: customize what you're getting and how it's going to affect
Speaker 1: you for your lifestyle. But I guess what I wanted
Speaker 1: to go back to is remind me where we are
Speaker 1: in terms of f d A oversight of all of this. There's, yeah,
Speaker 1: there is no FDA oversight right now. It's all state
Speaker 1: by state regulated, but that's where that regulation comes into place.
Speaker 1: So the testing, the formulations, all of that is essentially
Speaker 1: pharmaceutical grade um even without FDA oversight. Do we get
Speaker 1: to a point where there is that FDA oversight or
Speaker 1: we get to a point where you know, I'm actually
Speaker 1: going to my primary care physician and she or he
Speaker 1: is recommending that I go to the pharmacy and pick
Speaker 1: up some cannabis, not going to you know, a dispensary exactly. Yeah.
Speaker 1: I mean that would require federal, federal legalization, and that's
Speaker 1: something I think the industry is definitely moving toward UM
Speaker 1: because access is huge. Like right now, UM, someone who
Speaker 1: is a patient in New York say they can't travel
Speaker 1: to a different state legally with their medicine UM, and
Speaker 1: that's a problem. So we need that accessibility to open
Speaker 1: up UM for people to be able to consume and have,
Speaker 1: you know, whatever they're using it for, to be able
Speaker 1: to cross state lines, have consistent product UM. You know,
Speaker 1: that's all something we're moving toward. But I think, you know,
Speaker 1: removing the stigma and seeing what people are using it
Speaker 1: for is a huge step in that direction. That's Stacia Woodcock,
Speaker 1: she's clinical cannabis pharmacist Overy. Curately, you're listening to Bloomberg
Speaker 1: Business Week coming up? Can you really really get a stake?
Speaker 1: By Bobby Flay from a food truck, The CEO of
Speaker 1: startup Wonder explains how his company is putting gourmet meals
Speaker 1: on wheels. We'll talk to Scott Hilton on the other side.
Speaker 1: This is Blee. You're listening to Bloomberg Business Week with
Speaker 1: Carol Masser and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio.
Speaker 1: Earlier this month, we noted that the food trucks startup Wonder,
Speaker 1: led by Jet dot Com founder Mark Lori, has raised
Speaker 1: three d fifty million dollars. That was another three fifty million,
Speaker 1: and that latest funding raise giving Wonder a three and
Speaker 1: a half billion dollar valuation according to people familiar with
Speaker 1: the matter. With more and how Wonder is putting investors
Speaker 1: money to work and how the business is going, we
Speaker 1: caught up with Scott Hilton. He's the CEO of Wonder.
Speaker 1: He worked with Mark Lori at Jet and then Walmart.
Speaker 1: Scott was former chief Revenue officer of the US e
Speaker 1: commerce operation at Walmart. We though, wanted to hear more
Speaker 1: about Wonder, So food truck, that's kind of the first
Speaker 1: thought that people have, but it really is something completely different.
Speaker 1: So what what we are is it's on demand dining,
Speaker 1: so customers can order be an app. They have access
Speaker 1: to a range of restaurants from everyday food you know, pizza,
Speaker 1: burgers all the way up to find dining like Bobby
Speaker 1: Flay steak uh. As soon as they order, a mobile
Speaker 1: restaurant will show up at their location and cook that
Speaker 1: food hot uh and fresh right there at their location
Speaker 1: and serve it through their door. So within minutes after ordering,
Speaker 1: they enjoy really a restaurant quality meal wherever they are
Speaker 1: at their home or at a park or at work.
Speaker 1: I'm so in after getting delivery after delivery that's cold
Speaker 1: and not at all, even if it's from a great restaurant,
Speaker 1: it just doesn't doesn't fly. Um So, tell us about
Speaker 1: the growth that you're seeing. Give us an idea of
Speaker 1: the metrics, who are your customers, where you're seeing the growth,
Speaker 1: and what you want to do with all this money. Yeah,
Speaker 1: so we uh we serve twenty two towns now in
Speaker 1: New Jersey. It's about a hundred households uh and it
Speaker 1: ranges in old demographics from something that looks more Middle
Speaker 1: America all the way up to a little bit wealthier towns.
Speaker 1: All those towns are growing. Customers have been really going
Speaker 1: crazy for this, um are We have really high scores
Speaker 1: and it's it is a truly a great experience. UM.
Speaker 1: It was one of the reasons that the company was
Speaker 1: founded is is looking at the delivery platforms, Uber, Eat, Store, Dash, etcetera.
Speaker 1: They were growing like crazy before the pandemic UM, but
Speaker 1: the but the customer experience was really lacking. UM. There
Speaker 1: was the quality of the food problem, cold or you know, uh,
Speaker 1: you know, kind of moist food as a steams on
Speaker 1: the way to the customer, as well as just having
Speaker 1: access to those great restaurants. So that's really at the
Speaker 1: core of what we're what we're trying to solve, and
Speaker 1: it's working in all segments, and so we're continuing to expand.
Speaker 1: Most of the money that we've raised is going into
Speaker 1: the mobile restaurants themselves, the fleet UM, as well as
Speaker 1: just covering normal operating expenses, but the bulk of the
Speaker 1: bulk of the money is for expanding and going and
Speaker 1: using it for the mobile restaurants. One thing that caught
Speaker 1: my eye though, in reading about this a few weeks
Speaker 1: ago in the Wall Street Journal, is that Mark Laurie
Speaker 1: said to the Washington and All that the company have
Speaker 1: aims to have a national footprint by twenty thirty five.
Speaker 1: That's many, many, many years away, And I mean you've
Speaker 1: worked at several different companies in that time period and
Speaker 1: the number of years that it would it would have
Speaker 1: I think Marcus probably started and sold two different companies
Speaker 1: for hundreds of millions of dollars and several billion dollars
Speaker 1: in that you know, thirteen years that it would take
Speaker 1: to get to five. Why such a long period of time, Well, uh,
Speaker 1: we're starting here in the northeast, um, in the Tri
Speaker 1: State area, and will the time being be focused there
Speaker 1: as we grow out, but very quickly. The way how
Speaker 1: we structured this model is we've been building up the infrastructure.
Speaker 1: It actually has taken its years to get the methods
Speaker 1: figured out how to do this. We prep and park
Speaker 1: cook our food in a fairly large scale central kitchens.
Speaker 1: That food is sent out in her cold chain to
Speaker 1: this fleet. Um. We can do that in parallel, you know,
Speaker 1: in many cities. So as we continue to grow, we'll
Speaker 1: be opening up different areas simultaneously across the country. But
Speaker 1: it just takes time to kind of get that infrature
Speaker 1: infrastructure going before we uh you know, start to scale
Speaker 1: beyond the northeast. What the trickiest part of it is
Speaker 1: it people is it is. You talked about this infrastructure
Speaker 1: that you know takes a while to set up. Um,
Speaker 1: what is the trickiest part. There's no single thing that
Speaker 1: stands out. You know if you ask me that same
Speaker 1: question maybe two years ago, Uh, it was could we
Speaker 1: actually create this incredible food in this process? And that
Speaker 1: the answer is hands down, yes, we can do it.
Speaker 1: And so after that, it's really just more kind of
Speaker 1: vanilla flavored execution. It's not to say that there's not
Speaker 1: a lot of hard parts, but uh, we have a
Speaker 1: fleet production capability. We build these mobile restaurants, upfit them
Speaker 1: ourselves as well as outside parties do it for us. Uh,
Speaker 1: scaling the food production, hiring the labor. So far, we
Speaker 1: haven't bumped into anything that really stands out. It's just
Speaker 1: a bunch of little things. What about prices. It sounds
Speaker 1: like something great to do for a party, But how
Speaker 1: much does it cost to bring a Bobby Flay steak
Speaker 1: to your house? Yeah, so Bobby Flays that are that's
Speaker 1: our most expensive restaurant. That's definitely a fine nine experience,
Speaker 1: and we see people doing it as a special occasion.
Speaker 1: For example, Bobby Flay State went crazy on Valentine's day,
Speaker 1: but we serve all the way down to sort of
Speaker 1: like you said at the beginning, Burgher's Pizza one of
Speaker 1: our restaurants. A couple of our restaurants we serve family style.
Speaker 1: It's even more affordable. We have to currently and we're
Speaker 1: gonna be offering more. But for one of his his Takorea,
Speaker 1: it's effectively a taco bar. You can it feeds a
Speaker 1: family of four to five. You pick your proteins, you know,
Speaker 1: like cardinas or chicken, your side of rice, side of beans, corn,
Speaker 1: you can add on guacamole, so that goes for fifty dollars.
Speaker 1: So it's a very affordable. It's official. I'm on the
Speaker 1: wait list and Wonder is gonna let me know when
Speaker 1: they are near my home. So I'm kind of looking
Speaker 1: forward to Scott when it's gonna be, He'll tell you now,
Speaker 1: all right, Scott Hilton, chief executive officer at Wonder, former
Speaker 1: chief revenue officer of US e Commerce at Walmart, When
Speaker 1: will you come to Jersey City. I can't give a
Speaker 1: specific date, but it will be probably in the next
Speaker 1: couple of years. Right now, we're headed north to Bergen
Speaker 1: County right now in the Westfield. Every serving towns around there,
Speaker 1: and then we're headed north. All right, Well that's where
Speaker 1: I grew up in Bergen County. I get it. Like
Speaker 1: I was thinking about how this works, and it's probably
Speaker 1: easier right for your trucks to pull up somewhere where
Speaker 1: they can easily park. You've also got a neighborhood that's
Speaker 1: um to be fair, uh, a wealthier neighborhood where they
Speaker 1: can do this. I mean, I'm curious about the metrics
Speaker 1: and how you kind of price this all out. You know,
Speaker 1: how do you cover costs and where do you kind
Speaker 1: of you know, weird weird does profits come from? Ultimately?
Speaker 1: Is it? Is it just building it up on volume?
Speaker 1: How do you how does this play out? Now? Actually,
Speaker 1: in this business, the margins and food are really really good,
Speaker 1: very different than than say retail. When you're looking at it,
Speaker 1: say a typical restaurant, you know, they're they're looking at
Speaker 1: a food cost that's maybe in some cases. So you're
Speaker 1: starting off with really good margins. And we we're verticalized.
Speaker 1: We own this whole thing. We're we're developing, uh the
Speaker 1: processes for the food we prep at our own facility.
Speaker 1: So we've got a nice, healthy juicy variable profit UM,
Speaker 1: and that's how we get it to work. It's very
Speaker 1: different than UM if you're logistics player, uh like a
Speaker 1: door Dash or Uber each where you're really just trying
Speaker 1: to take a cut. Or even in retail UM, you
Speaker 1: know you're you're not getting as healthy and margin as
Speaker 1: you see in the food industry. And by the way,
Speaker 1: you see that in the multiples that restaurant change. The
Speaker 1: big restaurant chains get their typically three x multiple on
Speaker 1: their top line versus retailers are typicate one x. Companies
Speaker 1: like Amazon obviously get a little bit of an extra
Speaker 1: kicker there because they're the platform play, you know, high
Speaker 1: growth UM. But restaurant chains have really, really healthy margins.
Speaker 1: I wonder what the competitive moat here is. What if
Speaker 1: somebody's listening in California right now and says, hey, this
Speaker 1: is a great idea. We know that wonder is not
Speaker 1: going to be here, you know, for five ten years,
Speaker 1: I'm going to start doing this. Why won't they Why
Speaker 1: won't they succeed? Like you? Yeah, well, we may be
Speaker 1: in California before before ten years, but um, the reality
Speaker 1: is we've been at this for years and have spent
Speaker 1: an enormous amount of energy. UM, it's definitely not for
Speaker 1: the faint hearted, and we have to deconstruct every single
Speaker 1: dish and get them to work in this process. And
Speaker 1: it's getting them to work means having amazing, amazing food quality,
Speaker 1: but also being able to serve it at the speed
Speaker 1: that supports the profitability because we definitely want to move
Speaker 1: through move food through the mobile restaurant in a fast
Speaker 1: pace we can get onto the next customer. What did
Speaker 1: you learn from your e commerce experience, whether it's Walmart
Speaker 1: or elsewhere that applies to what you're doing now or
Speaker 1: what you're doing do you kind of throw out the
Speaker 1: old rules completely? Well, look, every situation you really have
Speaker 1: to tailor to what's going on and what the business is.
Speaker 1: There's some general rules of thumb that always applies. Making
Speaker 1: sure that you first of all have a good strategy UH,
Speaker 1: you know in terms of being able to execute on
Speaker 1: it and having economics workout. But after that, it's really
Speaker 1: getting the right team assembled. We've got some of the
Speaker 1: best UH team members that have stayed with us from
Speaker 1: company to company that we've been on this journey. UM.
Speaker 1: As well as making sure you've got the right structure
Speaker 1: structures of the team's work well together. Every every team
Speaker 1: member needs to be in the right position. Uh. And
Speaker 1: that's the only way you can really scale and grow
Speaker 1: it quickly. That's Scott Hilton, chief executive Officer of Wonder
Speaker 1: And that wraps up the weekend edition to Bloomberg Business
Speaker 1: Week from Bloomberg Radio. Thanks so much for joining us.
Speaker 1: I'm Carol Masser. Be sure to tune into Bloomberg Business
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Speaker 1: and the whole Bomberg Business Week team, I'm Carol Masser.
Speaker 1: Have a great and happy holiday weekend. We'll have full
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Speaker 1: at five pm Wall Street Time on Monday July four.
Speaker 1: Stay safe, everyone, This is Bloomberg