1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul Sweene. You, 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma Wicks. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor, find a Bloomberg Penil podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:21,880 Speaker 1: at Bloomberg dot com. Let's switch gears there now to 8 00:00:22,400 --> 00:00:25,480 Speaker 1: we work. Talk about a company that has had a 9 00:00:25,600 --> 00:00:29,360 Speaker 1: rough couple of weeks. First of all, it's evaluation appears 10 00:00:29,400 --> 00:00:32,600 Speaker 1: to have been dressed dramatically from forty seven billion dollars, 11 00:00:32,600 --> 00:00:34,600 Speaker 1: So what might be something in the ten to fifteen 12 00:00:34,640 --> 00:00:38,559 Speaker 1: billion dollar range? Now, even the chair, the CEO is 13 00:00:38,640 --> 00:00:40,680 Speaker 1: under pressure to resign, So let's get the latest. We 14 00:00:40,760 --> 00:00:44,479 Speaker 1: bring in Sure overday. She's a technology columnist for Bloomberg Opinion, 15 00:00:44,560 --> 00:00:46,880 Speaker 1: joining us here in our Bloomberg inter after Broker studio. 16 00:00:46,960 --> 00:00:49,320 Speaker 1: So sure, it's been a tough couple of weeks for 17 00:00:49,320 --> 00:00:53,200 Speaker 1: this company, for this CEO. What's the latest here? Because 18 00:00:53,240 --> 00:00:55,640 Speaker 1: it looks like the board might be meeting today. Yes, 19 00:00:55,720 --> 00:00:58,200 Speaker 1: that is the latest that our colleagues at Bloomberg News 20 00:00:58,200 --> 00:01:00,880 Speaker 1: and other news outlets have reported the the we Work 21 00:01:00,960 --> 00:01:03,840 Speaker 1: board is meeting, maybe as early as today, and one 22 00:01:03,880 --> 00:01:08,119 Speaker 1: of the things they may talk about is um removing 23 00:01:08,160 --> 00:01:11,400 Speaker 1: Adam Newman or pressuring Adam Newman, who's the co founder 24 00:01:11,400 --> 00:01:13,600 Speaker 1: and CEO of the company, to step down from the 25 00:01:13,640 --> 00:01:18,440 Speaker 1: CEO position, which is uh, just the latest very weird 26 00:01:18,480 --> 00:01:21,640 Speaker 1: twist and what has been a very very weird corporate saga. 27 00:01:21,880 --> 00:01:25,360 Speaker 1: So is he being basically the fall guy here? It 28 00:01:25,520 --> 00:01:27,880 Speaker 1: does feel that way. I mean, the thing to understand 29 00:01:27,920 --> 00:01:31,800 Speaker 1: about all this is that this is ultimately there's ultimately 30 00:01:31,880 --> 00:01:35,399 Speaker 1: two players that matter in we Work, and that is 31 00:01:35,640 --> 00:01:39,319 Speaker 1: we Works, Uh Adam Newman, the co founder and CEO, 32 00:01:39,640 --> 00:01:42,559 Speaker 1: and Massio Shi sone who's the head of soft Bank, 33 00:01:42,640 --> 00:01:46,880 Speaker 1: which is UM we Works biggest outside investor, and Son, 34 00:01:46,959 --> 00:01:50,720 Speaker 1: until I guess now has been Adam Newman and we 35 00:01:50,800 --> 00:01:56,160 Speaker 1: Works biggest backer. In the face of resounding doubts from 36 00:01:56,440 --> 00:02:00,560 Speaker 1: many other people, including SoftBank's own investors and it's very 37 00:02:00,640 --> 00:02:05,040 Speaker 1: large vision fund investment fund, and Massa has stood by 38 00:02:05,200 --> 00:02:09,080 Speaker 1: Newman again. Something must have changed in the in the 39 00:02:09,160 --> 00:02:12,280 Speaker 1: calculus of Son and soft Bank. I do not know 40 00:02:12,320 --> 00:02:15,000 Speaker 1: what it is, but it's clear that they are turning 41 00:02:15,960 --> 00:02:19,560 Speaker 1: billions ten billions that would yeah, well yeah, the valuation 42 00:02:19,600 --> 00:02:22,080 Speaker 1: cut I think it was is probably the thing that 43 00:02:22,120 --> 00:02:26,560 Speaker 1: would change the minds of even um sort of idiosyncratic 44 00:02:26,760 --> 00:02:30,880 Speaker 1: billionaires like Maayoshi. So what's I mean? In reality? Though 45 00:02:31,480 --> 00:02:33,799 Speaker 1: they can't force him out of the CEO spot can 46 00:02:34,040 --> 00:02:38,480 Speaker 1: doesn't he still have some super voting stock? Yes, so 47 00:02:38,639 --> 00:02:42,839 Speaker 1: I can't pretend to understand the corporate structure and what 48 00:02:43,080 --> 00:02:47,160 Speaker 1: is or isn't possible. But yes, Adam Newman controls the 49 00:02:47,240 --> 00:02:51,960 Speaker 1: votes in this company, and he can remove the entire board. Um, 50 00:02:52,000 --> 00:02:55,000 Speaker 1: but there is also stipulation that you can see and 51 00:02:55,040 --> 00:02:57,320 Speaker 1: we works i PO documents that the board has the 52 00:02:57,560 --> 00:03:00,680 Speaker 1: power to remove the CEO. Now, I don't know how 53 00:03:00,840 --> 00:03:03,200 Speaker 1: those two things could be in conflict, and so I 54 00:03:03,200 --> 00:03:06,360 Speaker 1: don't know how to resolve those. Um, if it gets 55 00:03:06,400 --> 00:03:09,560 Speaker 1: to that, what do you think that Adam Newman did wrong? 56 00:03:12,360 --> 00:03:15,040 Speaker 1: So I don't want to put all the blame on 57 00:03:15,200 --> 00:03:19,200 Speaker 1: Adam Newman. Look, this is a company that has been 58 00:03:19,320 --> 00:03:25,200 Speaker 1: run in rather wild fashion for years, and that was 59 00:03:25,360 --> 00:03:29,400 Speaker 1: enabled by all of the investors in this company, including 60 00:03:29,560 --> 00:03:33,560 Speaker 1: soft Bank, and so everything that we work is today, 61 00:03:33,639 --> 00:03:40,360 Speaker 1: which is this cash burning, maybe financially unsustainable company run 62 00:03:40,400 --> 00:03:44,320 Speaker 1: by self dealing CEO. That was all information that was 63 00:03:44,440 --> 00:03:47,920 Speaker 1: known and enabled by every investor in this company the 64 00:03:48,000 --> 00:03:50,480 Speaker 1: last few years. And that top of that list is 65 00:03:50,520 --> 00:03:53,880 Speaker 1: soft Bank. So everybody deserves blame for the company getting 66 00:03:53,880 --> 00:03:56,800 Speaker 1: to the position that it is today. So let's flip 67 00:03:56,800 --> 00:03:59,560 Speaker 1: it on its head. Is there anything that Adam Newman 68 00:04:00,080 --> 00:04:03,880 Speaker 1: rings to we Work and frankly cult of personality among 69 00:04:03,960 --> 00:04:08,200 Speaker 1: them that would be problematic if the company was stripped 70 00:04:08,200 --> 00:04:10,760 Speaker 1: of it? Yeah? Look, I mean I you have to 71 00:04:10,800 --> 00:04:13,760 Speaker 1: give Adam Newman credit. Again. It may seem baffling to 72 00:04:13,800 --> 00:04:16,560 Speaker 1: those of those of us on the outside, but he 73 00:04:16,680 --> 00:04:20,159 Speaker 1: has been a very effective pitchman for this company, both 74 00:04:20,200 --> 00:04:25,520 Speaker 1: with investors, um and with other business partners and employees. 75 00:04:25,600 --> 00:04:29,200 Speaker 1: So you know, again, this company is what it is 76 00:04:29,240 --> 00:04:32,760 Speaker 1: today because of Adam Newman, both the good things and 77 00:04:32,839 --> 00:04:36,320 Speaker 1: the bad things about We Work. My question is if 78 00:04:36,360 --> 00:04:39,920 Speaker 1: you if you remove Newman from if Newman is removed 79 00:04:39,960 --> 00:04:42,480 Speaker 1: or it steps down from the CEO position, do things 80 00:04:42,520 --> 00:04:45,320 Speaker 1: really change? I mean, this is now a weekend company. 81 00:04:45,960 --> 00:04:48,480 Speaker 1: It's reputation. I don't think I've ever seen a company, 82 00:04:48,640 --> 00:04:50,360 Speaker 1: certainly not on the doorstep of an I P O 83 00:04:50,839 --> 00:04:55,600 Speaker 1: where the sentiment about it is so relentlessly negative, and 84 00:04:55,880 --> 00:04:58,440 Speaker 1: in a way, removing the CEO or having the CEO 85 00:04:58,480 --> 00:05:01,159 Speaker 1: step down is sort of acknowledge ament of how messed 86 00:05:01,240 --> 00:05:04,599 Speaker 1: up it is. And so I don't know what happens 87 00:05:04,680 --> 00:05:07,640 Speaker 1: with or without Adam Newman in the CEO position. It's interesting. 88 00:05:07,680 --> 00:05:11,480 Speaker 1: I like your thought that you know, really his behavior, 89 00:05:11,520 --> 00:05:13,760 Speaker 1: of the company's behavior. The company's just the whole rise 90 00:05:13,839 --> 00:05:16,800 Speaker 1: has been enabled by a whole host of investors, led 91 00:05:16,800 --> 00:05:19,680 Speaker 1: by soft Bank. So to me, the only thing that's 92 00:05:19,760 --> 00:05:22,520 Speaker 1: changed in the last two weeks is the valuation. That's 93 00:05:22,520 --> 00:05:25,200 Speaker 1: the only thing that that's changed. And what that does. 94 00:05:25,400 --> 00:05:30,240 Speaker 1: It shows that soft Bank miss priced and the other 95 00:05:30,279 --> 00:05:32,920 Speaker 1: investors anything above ten or twelveillion dollars that's on them, 96 00:05:32,960 --> 00:05:35,360 Speaker 1: that's not on Adam Newman. So it's one can make 97 00:05:35,360 --> 00:05:37,160 Speaker 1: an argument, which I'm sure the Adam Newman camp is 98 00:05:37,200 --> 00:05:40,080 Speaker 1: going to make, that he is perhaps being used as 99 00:05:40,200 --> 00:05:43,920 Speaker 1: escapegoat for what is a arguably a flawed business model 100 00:05:44,279 --> 00:05:47,040 Speaker 1: and a flawed valuation which the public markets are now 101 00:05:47,080 --> 00:05:49,800 Speaker 1: shining a light upon. I think that's absolutely right that look, 102 00:05:49,880 --> 00:05:52,440 Speaker 1: this shows you some of the inherent flaws in the 103 00:05:52,480 --> 00:05:56,119 Speaker 1: soft bank business model is soft bank investment model, which 104 00:05:56,200 --> 00:06:01,159 Speaker 1: is we poor, we train our cash ucas on these companies, 105 00:06:01,360 --> 00:06:05,320 Speaker 1: and we make their success inevitable just by virtue of 106 00:06:05,400 --> 00:06:08,000 Speaker 1: having more capital than anybody else. The downside of that, 107 00:06:08,040 --> 00:06:10,640 Speaker 1: as you pointed out, is that they have so much 108 00:06:10,680 --> 00:06:16,480 Speaker 1: money that valuations inherently become inflated. And the downside of 109 00:06:16,520 --> 00:06:19,400 Speaker 1: that is what happens if nobody else but soft Bank 110 00:06:19,480 --> 00:06:22,560 Speaker 1: agrees um what this company's work. And I think what's 111 00:06:22,640 --> 00:06:26,160 Speaker 1: changed in the private to public thing in T nine 112 00:06:26,680 --> 00:06:29,440 Speaker 1: is Uber. It just kind of changed the whole dynamic, 113 00:06:29,480 --> 00:06:32,040 Speaker 1: which is, if you can't convince me, public shareholder to 114 00:06:32,320 --> 00:06:34,240 Speaker 1: mutual fund in Boston, that you have a path of 115 00:06:34,279 --> 00:06:38,559 Speaker 1: profitability that I can value, then I have a hard time, 116 00:06:38,880 --> 00:06:40,719 Speaker 1: you know, giving you the valuation you're looking forward. So 117 00:06:40,720 --> 00:06:43,800 Speaker 1: there's it's almost a pre uber post Uber timeframe, and 118 00:06:43,880 --> 00:06:46,120 Speaker 1: unfortunate for we Work, they came post I think that's 119 00:06:46,560 --> 00:06:48,680 Speaker 1: it's a good point. Obviously we can't go back in time, 120 00:06:48,720 --> 00:06:51,120 Speaker 1: but I do wonder if Uber hadn't gone out first 121 00:06:51,320 --> 00:06:53,640 Speaker 1: and kind of fallen a little bit on its face, 122 00:06:54,160 --> 00:06:56,720 Speaker 1: would we work? We would the we work situation be 123 00:06:56,760 --> 00:06:58,640 Speaker 1: a little bit different. I would point to remember Blue 124 00:06:58,680 --> 00:07:01,640 Speaker 1: Apron from two years ago. That was a company again 125 00:07:02,240 --> 00:07:05,160 Speaker 1: that once it went public, everybody was like, this company 126 00:07:05,200 --> 00:07:08,000 Speaker 1: doesn't make sense, and then it had. It took a 127 00:07:08,080 --> 00:07:12,280 Speaker 1: significant valuation haircut and has continued to decline precipitously. So 128 00:07:12,360 --> 00:07:14,920 Speaker 1: that shows you that Uber wasn't the first time where 129 00:07:15,200 --> 00:07:20,040 Speaker 1: public investors questioned UM, a highly touted company that had 130 00:07:20,040 --> 00:07:22,320 Speaker 1: a lot of question works around its business model. Sure 131 00:07:22,360 --> 00:07:24,400 Speaker 1: of it A thank you so much for the insight 132 00:07:24,440 --> 00:07:27,000 Speaker 1: show over a Bloomberg opinion columnist joining us here in 133 00:07:27,040 --> 00:07:45,680 Speaker 1: our interactive Brokers studios. We're joined by John Author's senior 134 00:07:45,800 --> 00:07:49,240 Speaker 1: editor for Bloomberg Markets, and Culver Kadonna, chief US economists 135 00:07:49,240 --> 00:07:52,320 Speaker 1: for Bloomberg Economics. So John, let's follow up on that 136 00:07:52,480 --> 00:07:55,960 Speaker 1: wide ranging interview that Tom Keene and Jonathan Faroe just 137 00:07:56,040 --> 00:07:59,400 Speaker 1: had with a former New York Fed chairman President John 138 00:07:59,600 --> 00:08:04,040 Speaker 1: UM Bill Dudley. So key takeaways for you as it 139 00:08:04,120 --> 00:08:06,720 Speaker 1: relates to some of his discussion about the report market. 140 00:08:06,720 --> 00:08:09,000 Speaker 1: He seemed to be suggesting that kind of a short 141 00:08:09,120 --> 00:08:12,760 Speaker 1: term issue, nothing major to be concerned about. Yes, I 142 00:08:12,800 --> 00:08:16,280 Speaker 1: think he was definitely trying to do his bit to 143 00:08:16,640 --> 00:08:20,200 Speaker 1: calm things down. I think it is interesting bearing in 144 00:08:20,280 --> 00:08:23,560 Speaker 1: mind that there's been a lot of anger in the 145 00:08:23,640 --> 00:08:29,400 Speaker 1: last week about the dismissal of all the early enforced 146 00:08:29,400 --> 00:08:32,240 Speaker 1: early retirement of Simon Potter, who was very much regarded 147 00:08:32,240 --> 00:08:34,800 Speaker 1: as Bill Dudley's man, and who is the guy who 148 00:08:34,840 --> 00:08:37,600 Speaker 1: would have been in charge of dealing with the response 149 00:08:38,400 --> 00:08:42,199 Speaker 1: last week, and who has been quoted. I don't think 150 00:08:42,240 --> 00:08:45,800 Speaker 1: he wanted to be quoted publicly, but talked to be 151 00:08:45,920 --> 00:08:50,400 Speaker 1: of a and Bloomberg gathered that the typing Potter has 152 00:08:50,440 --> 00:08:54,480 Speaker 1: been making some criticisms of the way that the Fed 153 00:08:54,559 --> 00:08:57,000 Speaker 1: has handled this, the new Fetters handled this, So I 154 00:08:57,000 --> 00:08:59,559 Speaker 1: think he was going quite a long way out of 155 00:08:59,600 --> 00:09:03,719 Speaker 1: his way to be to downplay the degree of conserve 156 00:09:03,559 --> 00:09:05,920 Speaker 1: of criticism, the degree of anger that there has been 157 00:09:05,960 --> 00:09:09,760 Speaker 1: in the market about about the New York Fed itself 158 00:09:09,920 --> 00:09:12,840 Speaker 1: and its response, and whether there's been something wrong in 159 00:09:12,880 --> 00:09:16,079 Speaker 1: the way that Williams has taken over from him. He's 160 00:09:16,120 --> 00:09:19,480 Speaker 1: being diplomatic. That's that's a really interesting point. Carcadona also 161 00:09:19,559 --> 00:09:23,160 Speaker 1: joining US GPS economist Karl what was your biggest takeaway? Well, 162 00:09:23,160 --> 00:09:25,120 Speaker 1: I think it was important to see that he wasn't 163 00:09:25,160 --> 00:09:28,600 Speaker 1: raising any red flags, because there is this notion that 164 00:09:28,679 --> 00:09:30,559 Speaker 1: maybe the FED was you know, a day late and 165 00:09:30,600 --> 00:09:33,600 Speaker 1: a dollar short to respond to the situation. But now 166 00:09:33,640 --> 00:09:37,400 Speaker 1: things are well under control. So they did announce uh, 167 00:09:37,440 --> 00:09:41,559 Speaker 1: you know, recurring operations extending beyond month end, plus a 168 00:09:41,760 --> 00:09:45,520 Speaker 1: longer term operations. So that that really is taking a 169 00:09:45,880 --> 00:09:50,120 Speaker 1: buzuka to the problem and should be a very solid 170 00:09:50,200 --> 00:09:53,800 Speaker 1: temporary patch. What I was looking for in terms of 171 00:09:53,840 --> 00:09:57,040 Speaker 1: a little bit more color was maybe some timing about 172 00:09:57,160 --> 00:10:01,320 Speaker 1: when the balance sheet does start to grow again. Uh. 173 00:10:01,360 --> 00:10:03,800 Speaker 1: And again we shouldn't call it QUWI. I wouldn't even 174 00:10:03,840 --> 00:10:09,880 Speaker 1: call it QUI light, but an expansion of this point 175 00:10:10,480 --> 00:10:17,160 Speaker 1: exactly prudent reserve management. When will prudent reserve pr When 176 00:10:17,160 --> 00:10:20,320 Speaker 1: will PRM kick in? Uh? And that's going to have 177 00:10:20,320 --> 00:10:22,600 Speaker 1: to happen relatively soon or we are going to see 178 00:10:22,600 --> 00:10:26,840 Speaker 1: these funding strains extend through the latter half. Just understand, Carl, 179 00:10:26,920 --> 00:10:32,480 Speaker 1: is this the permanent um fix for this repo issue. 180 00:10:32,679 --> 00:10:36,480 Speaker 1: The permanent fix will be expanding the reserves over time 181 00:10:36,520 --> 00:10:39,520 Speaker 1: that reserve management operation. What they're doing now is really 182 00:10:39,520 --> 00:10:42,160 Speaker 1: a temporary patch and it should work. Right. Seventy five 183 00:10:42,160 --> 00:10:45,160 Speaker 1: billions of repos on a on a daily basis should 184 00:10:45,480 --> 00:10:48,880 Speaker 1: be enough to add to sufficient liquidity back into the system. 185 00:10:49,040 --> 00:10:51,880 Speaker 1: They could certainly expand that if they needed to. Unlikely 186 00:10:52,160 --> 00:10:56,679 Speaker 1: that that would actually become a problem. But the reality is, uh, 187 00:10:56,880 --> 00:11:00,439 Speaker 1: relatively soon before year end, for sure, the FED is 188 00:11:00,480 --> 00:11:02,520 Speaker 1: going to have to embark on this balance sheet expansion. 189 00:11:02,559 --> 00:11:06,080 Speaker 1: And the reason for that is as the economy expands 190 00:11:06,640 --> 00:11:09,480 Speaker 1: the banking system, banking system has to keep a pace 191 00:11:09,520 --> 00:11:11,840 Speaker 1: with it, and that means that reserves have to grow 192 00:11:11,880 --> 00:11:14,800 Speaker 1: along with economic growth. So I want to shift gears 193 00:11:14,840 --> 00:11:16,800 Speaker 1: a little bit because I'll tell you what my biggest 194 00:11:16,840 --> 00:11:19,240 Speaker 1: takeaway was. I thought that actually, probably one of the 195 00:11:19,240 --> 00:11:21,840 Speaker 1: most interesting things that he said is that, uh, the 196 00:11:21,920 --> 00:11:26,680 Speaker 1: risk is not necessarily right now looking like deflation. It's 197 00:11:26,720 --> 00:11:29,520 Speaker 1: looking like he's seeing a little bit more of a 198 00:11:29,600 --> 00:11:32,880 Speaker 1: pickup in inflationary trends. Not the risk, but that he's 199 00:11:32,880 --> 00:11:36,480 Speaker 1: actually seeing the trend go in the opposite direction. And John, 200 00:11:36,640 --> 00:11:40,680 Speaker 1: I thought that was interesting because it's kind of counter 201 00:11:41,000 --> 00:11:44,160 Speaker 1: to what the market has been implying. It's drastically counter 202 00:11:44,240 --> 00:11:47,840 Speaker 1: to what the market has been implying. I actually nervously 203 00:11:47,920 --> 00:11:51,920 Speaker 1: took a quick look at the break Heavens Well allows 204 00:11:52,000 --> 00:11:54,000 Speaker 1: minute and they're down again too. This, yes, that's what 205 00:11:54,080 --> 00:11:59,160 Speaker 1: I'm saying. Last week's core CPN numbers. Okay, the Fed 206 00:11:59,240 --> 00:12:03,679 Speaker 1: cares more about ec even core CPI, but they were up. 207 00:12:03,960 --> 00:12:05,640 Speaker 1: They were the highest they've been, off the top of 208 00:12:05,679 --> 00:12:09,560 Speaker 1: my head in a decade um. It does certainly look 209 00:12:09,640 --> 00:12:12,880 Speaker 1: as though you're finally getting the feed through with about 210 00:12:12,920 --> 00:12:15,439 Speaker 1: the kind of lag you would have expected from all 211 00:12:15,520 --> 00:12:18,120 Speaker 1: the jolt of adrenaline that was that was delivered during 212 00:12:18,160 --> 00:12:21,560 Speaker 1: the tax tax cutter for eighteen months or so ago. 213 00:12:21,920 --> 00:12:26,400 Speaker 1: And that in turn does give you a very ample 214 00:12:26,480 --> 00:12:29,439 Speaker 1: explanation for why the FED at this point is so 215 00:12:29,760 --> 00:12:33,319 Speaker 1: in such a different place from the market. I think 216 00:12:33,880 --> 00:12:37,800 Speaker 1: the other possibility, and this is one of the things 217 00:12:37,880 --> 00:12:41,360 Speaker 1: that Powell arrived really trying to make a big signal 218 00:12:41,400 --> 00:12:44,160 Speaker 1: that he was going to be different from his predecessors, 219 00:12:44,320 --> 00:12:48,000 Speaker 1: is that he didn't buy that US monetary policy had 220 00:12:48,120 --> 00:12:50,120 Speaker 1: as big an impact on the rest of the world 221 00:12:50,640 --> 00:12:55,000 Speaker 1: as others had said. If you are looking at the 222 00:12:55,080 --> 00:12:57,880 Speaker 1: rest of the planet, particularly the Eurozone, you are much 223 00:12:58,000 --> 00:13:01,320 Speaker 1: more likely to be really worried about inflation then if 224 00:13:01,360 --> 00:13:04,240 Speaker 1: you're just looking at the US, where it looks like 225 00:13:04,440 --> 00:13:08,440 Speaker 1: we have a not by the comparison with the seventies 226 00:13:08,480 --> 00:13:11,480 Speaker 1: and eighties. But we have a minor league inflation problem 227 00:13:11,679 --> 00:13:14,520 Speaker 1: dreaming here, which suggests we shouldn't be cutting rights. So Carl, 228 00:13:14,600 --> 00:13:16,679 Speaker 1: what do you think is it related as you know, 229 00:13:16,960 --> 00:13:19,160 Speaker 1: just what John was saying about inflation, where we might 230 00:13:19,200 --> 00:13:21,880 Speaker 1: be what we've experienced with the repo market in the 231 00:13:21,960 --> 00:13:24,680 Speaker 1: last week. Where do you think the FED is right now? 232 00:13:24,800 --> 00:13:27,079 Speaker 1: Is I think about the next level meetings? Sure? Well, 233 00:13:27,120 --> 00:13:30,560 Speaker 1: I think the Fed is, And again Bill Dudley suggested 234 00:13:30,640 --> 00:13:33,000 Speaker 1: there's not as much division on the committee as maybe 235 00:13:33,000 --> 00:13:35,680 Speaker 1: looking at the dot plot would otherwise have You believe 236 00:13:36,280 --> 00:13:40,000 Speaker 1: the Fed is very much looking at taking insurance out 237 00:13:40,120 --> 00:13:44,080 Speaker 1: to extend a record long economic expansion, and that means 238 00:13:44,160 --> 00:13:48,000 Speaker 1: that they're watching the trade negotiations very carefully. And if 239 00:13:48,080 --> 00:13:51,320 Speaker 1: we do see a significant escalation of tariffs in mid 240 00:13:51,400 --> 00:13:55,680 Speaker 1: October a scheduled and more follow through in December as scheduled, 241 00:13:55,720 --> 00:13:57,800 Speaker 1: than the FEED is going to have to act more forcefully. 242 00:13:57,880 --> 00:14:01,079 Speaker 1: So right now, even the as devish doves on the 243 00:14:01,120 --> 00:14:04,959 Speaker 1: committee are signaling a willingness for just one additional high 244 00:14:05,000 --> 00:14:08,640 Speaker 1: game where seven dots excuse me, cut, there were seven 245 00:14:08,720 --> 00:14:13,080 Speaker 1: dots calling for a cut by year end. I think 246 00:14:13,240 --> 00:14:16,160 Speaker 1: that that's going to continue to drift downward if we 247 00:14:16,280 --> 00:14:18,599 Speaker 1: see those additional tariffs that come into play. And so 248 00:14:18,800 --> 00:14:21,360 Speaker 1: my team's view is we'll see a rate cut in 249 00:14:21,440 --> 00:14:25,800 Speaker 1: October and of October and another follow through in mid December, 250 00:14:25,960 --> 00:14:27,480 Speaker 1: and we can look at what's happening in the market 251 00:14:27,520 --> 00:14:31,160 Speaker 1: here right there was risk off in August, September was 252 00:14:31,160 --> 00:14:35,000 Speaker 1: a little bit of renewed optimism, and now as October looms, 253 00:14:35,040 --> 00:14:37,480 Speaker 1: it looks like we're going back into a risk off mode. 254 00:14:37,960 --> 00:14:41,880 Speaker 1: Yields her down, and really the compelling issue for the 255 00:14:41,960 --> 00:14:44,880 Speaker 1: Fed towards YR end is going to be a trade 256 00:14:45,000 --> 00:14:49,360 Speaker 1: headwinds stiffening and also the FED having to cut further 257 00:14:49,520 --> 00:14:54,640 Speaker 1: to uninvert the yield curve. So I'm just curious going forward. 258 00:14:54,960 --> 00:14:58,560 Speaker 1: First of all, whether Bill Dudley has any impact on 259 00:14:58,640 --> 00:15:00,480 Speaker 1: the Federal Reserve at this point in the fact he 260 00:15:00,600 --> 00:15:03,000 Speaker 1: is no longer with it. I mean, how much do 261 00:15:03,520 --> 00:15:07,760 Speaker 1: former FED members and leaders have on the current FED 262 00:15:08,080 --> 00:15:12,120 Speaker 1: john It depends on which former leader it is, evidently, 263 00:15:12,120 --> 00:15:16,160 Speaker 1: I think I think Stanley Fisher, who apart from anything else, 264 00:15:16,720 --> 00:15:20,240 Speaker 1: wrote that, literally wrote the textbook that most current FED 265 00:15:20,320 --> 00:15:24,080 Speaker 1: governors read when they did their original economics degrees. I 266 00:15:24,280 --> 00:15:26,840 Speaker 1: read Dornbush and Fisher when I did my economics degree, 267 00:15:27,680 --> 00:15:31,760 Speaker 1: as he's come out beginning to suggest that negative rates 268 00:15:31,920 --> 00:15:35,320 Speaker 1: and helicopter money are things that can at least be considered. 269 00:15:36,120 --> 00:15:39,240 Speaker 1: That makes which is not something I remember thinking was 270 00:15:39,280 --> 00:15:43,160 Speaker 1: even remotely a possibility from my reading of the Dornbush 271 00:15:43,200 --> 00:15:46,400 Speaker 1: and Fisher all those years ago. That that's very influential 272 00:15:46,520 --> 00:15:49,360 Speaker 1: he's beginning to create give them permission to go to 273 00:15:49,440 --> 00:15:52,360 Speaker 1: a space that they didn't really previously. Intellect would be 274 00:15:52,400 --> 00:15:56,160 Speaker 1: like a go, But that's Stan Fisher. Bill Dudley, I 275 00:15:56,320 --> 00:16:00,480 Speaker 1: doubt is as influential as Stan Fisher. That's said, the 276 00:16:00,600 --> 00:16:06,200 Speaker 1: New York Fed is unquestionably first among equals. The New 277 00:16:06,280 --> 00:16:09,720 Speaker 1: York Fed governor is always on, gets to vote in 278 00:16:09,760 --> 00:16:13,240 Speaker 1: the f O m C. The New York Fed always 279 00:16:13,560 --> 00:16:17,800 Speaker 1: votes with the governor. Paul Volker moved to the move 280 00:16:17,920 --> 00:16:20,360 Speaker 1: to the big the hot seat from being from running 281 00:16:20,400 --> 00:16:23,720 Speaker 1: the New York Fed. Previous New York Fed governors do 282 00:16:23,920 --> 00:16:30,440 Speaker 1: matter more. Um final point, I it's very unusual. It 283 00:16:30,560 --> 00:16:34,160 Speaker 1: was very unusual to see the Fed itself really feel 284 00:16:34,160 --> 00:16:37,880 Speaker 1: the need to say no, this is wrong, to build 285 00:16:37,920 --> 00:16:42,840 Speaker 1: Dudley's original um op ed for Bloomberg Opinion, which we 286 00:16:42,920 --> 00:16:46,680 Speaker 1: are delighted he wrote for us, We're very happy chose 287 00:16:46,760 --> 00:16:49,280 Speaker 1: us as and we were delighted to continue that that 288 00:16:49,400 --> 00:16:53,280 Speaker 1: relationship that he built, built it that he foster debate 289 00:16:53,320 --> 00:16:56,680 Speaker 1: through us. But it was quite interesting that they really 290 00:16:56,720 --> 00:16:58,760 Speaker 1: did say, no, we don't agree with our former New 291 00:16:58,840 --> 00:17:02,600 Speaker 1: York Cha just being onto what John said there. Uh 292 00:17:02,840 --> 00:17:04,760 Speaker 1: you know, I think there was an important, too too 293 00:17:04,800 --> 00:17:08,920 Speaker 1: important observation, so one as a uh relates to the 294 00:17:09,119 --> 00:17:12,360 Speaker 1: ongoing situation in the repo market. I think that Bill 295 00:17:12,440 --> 00:17:16,280 Speaker 1: Dudley has tremendous way because the Dudley Potter fed you know, 296 00:17:16,520 --> 00:17:19,600 Speaker 1: was there during the crisis and really understands how these 297 00:17:19,680 --> 00:17:22,280 Speaker 1: things operate. And uh, you know, he was way out 298 00:17:22,280 --> 00:17:25,560 Speaker 1: in front talking about banks, you know, the reserves being 299 00:17:25,640 --> 00:17:28,400 Speaker 1: at a higher level post crisis and where we were 300 00:17:28,920 --> 00:17:31,560 Speaker 1: pre crisis. So number one, he has tremendous authority on 301 00:17:31,640 --> 00:17:35,000 Speaker 1: that front. In number two, he did throw negative rates 302 00:17:35,080 --> 00:17:36,960 Speaker 1: under the bus, and he's the discussion. The hurdle is 303 00:17:37,160 --> 00:17:40,119 Speaker 1: very very that will definitely get to that CARCA down 304 00:17:40,160 --> 00:17:42,959 Speaker 1: in chief you as economist at a later conversation. Unfortunately, 305 00:17:43,040 --> 00:17:44,359 Speaker 1: thank you so much for being with us, and of 306 00:17:44,440 --> 00:17:47,840 Speaker 1: course our sincere thanks John Author, senior editor for a 307 00:17:47,920 --> 00:17:51,320 Speaker 1: Bloomberg Market's both joining us in our interactive broker studios. 308 00:18:07,359 --> 00:18:10,879 Speaker 1: In this current era of technology, it really is the 309 00:18:10,920 --> 00:18:13,520 Speaker 1: STEM careers that are in the front and center that 310 00:18:13,600 --> 00:18:17,600 Speaker 1: are most needed as well as often has paid. There 311 00:18:17,680 --> 00:18:20,440 Speaker 1: is a question why are there so few women who 312 00:18:20,480 --> 00:18:22,639 Speaker 1: are entering the field? Joining us down to discuss this, 313 00:18:22,760 --> 00:18:26,399 Speaker 1: Corliss Murray, senior vice president, head of Engineering at Abbot 314 00:18:27,200 --> 00:18:30,600 Speaker 1: based in Chicago, to talk about a new blueprint that 315 00:18:30,720 --> 00:18:33,960 Speaker 1: they have come up with to get more girls into 316 00:18:34,320 --> 00:18:37,600 Speaker 1: the STEM field. Before we get started on that, though, Corless, 317 00:18:37,600 --> 00:18:39,280 Speaker 1: can you just give us a sense of what it 318 00:18:39,359 --> 00:18:41,760 Speaker 1: means to be senior vice president and head of Engineering 319 00:18:41,800 --> 00:18:44,800 Speaker 1: at Abbott. Yes, Lisa, and thank you so much for 320 00:18:44,880 --> 00:18:47,879 Speaker 1: the opportunity to to speak to your audience today. UM. 321 00:18:48,400 --> 00:18:54,000 Speaker 1: I'm responsible for UM, the corporate quality, engineering and regulatory organizations, 322 00:18:54,080 --> 00:18:58,159 Speaker 1: and our team supports all of Abbott's businesses worldwide and 323 00:18:58,320 --> 00:19:01,479 Speaker 1: we do that through a number of for such as UM. 324 00:19:01,640 --> 00:19:04,560 Speaker 1: It could be everything from structural and architectural support to 325 00:19:04,760 --> 00:19:09,840 Speaker 1: special technical areas including governance of quality policies and procedures 326 00:19:10,200 --> 00:19:13,879 Speaker 1: and regulatory strategy. So let's gives a sense you know, 327 00:19:13,960 --> 00:19:17,560 Speaker 1: we we know the numbers in terms of women in 328 00:19:17,680 --> 00:19:21,360 Speaker 1: STEM underrepresented. Gives a sense of kind of what Abbott 329 00:19:21,680 --> 00:19:24,240 Speaker 1: is thinking about in terms of its blueprint for you know, 330 00:19:24,359 --> 00:19:29,199 Speaker 1: getting young women involved in STEM. Well, I think one 331 00:19:29,240 --> 00:19:31,520 Speaker 1: of the things that we have found very consistently and 332 00:19:31,680 --> 00:19:34,240 Speaker 1: it lines up what other research that has been conducted, 333 00:19:34,720 --> 00:19:37,480 Speaker 1: and that is that many, as not most, girls don't 334 00:19:37,640 --> 00:19:40,800 Speaker 1: enter these fields because of lack of exposure and lack 335 00:19:40,880 --> 00:19:44,040 Speaker 1: of role models and encouragement. And so for us, being 336 00:19:44,119 --> 00:19:47,320 Speaker 1: a science based company, it is essential for us to 337 00:19:47,520 --> 00:19:51,280 Speaker 1: be able to bring women to help with the diversity 338 00:19:51,359 --> 00:19:54,840 Speaker 1: of ideas and innovation as well as representing the markets 339 00:19:54,880 --> 00:19:58,840 Speaker 1: quite frankly in which we operate UM. And so it's 340 00:19:59,200 --> 00:20:01,040 Speaker 1: it's a part of our foundation and a part of 341 00:20:01,080 --> 00:20:04,280 Speaker 1: our talent focus UM at all levels the new organization. 342 00:20:04,440 --> 00:20:06,680 Speaker 1: And so, but you have to begin with building that 343 00:20:06,840 --> 00:20:10,359 Speaker 1: pipeline and making certain that we're reaching these young women 344 00:20:10,520 --> 00:20:12,760 Speaker 1: early in life UM, so that they can get a 345 00:20:12,840 --> 00:20:14,720 Speaker 1: feel for what it is that that they can do 346 00:20:14,960 --> 00:20:18,000 Speaker 1: as far as their careers may go. Okay, so this 347 00:20:18,119 --> 00:20:20,000 Speaker 1: has been a big question which is how do you 348 00:20:20,119 --> 00:20:22,040 Speaker 1: exactly counter and the idea that you came up with 349 00:20:22,119 --> 00:20:27,600 Speaker 1: a blueprint a detailed playbook for successful high school girls 350 00:20:27,720 --> 00:20:30,560 Speaker 1: going into an internship program. Can you give a sense 351 00:20:30,760 --> 00:20:35,160 Speaker 1: of what the playbook is? So the playbook is actually 352 00:20:35,359 --> 00:20:38,720 Speaker 1: UM built similar off our college intern program. And and 353 00:20:38,800 --> 00:20:42,840 Speaker 1: what we do is we work with based on criteria 354 00:20:42,920 --> 00:20:45,040 Speaker 1: to select students to come into the program. We work 355 00:20:45,080 --> 00:20:48,480 Speaker 1: with high schools that UH they have curriculums that are 356 00:20:48,520 --> 00:20:51,879 Speaker 1: Project Lead the Way or the International Baculide Program, and 357 00:20:52,040 --> 00:20:55,000 Speaker 1: these are programs that UM would make sure that these 358 00:20:55,080 --> 00:20:57,560 Speaker 1: young people are getting some of the higher advanced levels 359 00:20:57,600 --> 00:21:01,320 Speaker 1: of science and math exposure. UM. We then take that 360 00:21:01,680 --> 00:21:05,280 Speaker 1: bring it into our organization and work with assignment managers. 361 00:21:05,320 --> 00:21:09,720 Speaker 1: Assignment managers or individuals that actually work in the professions 362 00:21:09,960 --> 00:21:12,200 Speaker 1: UM day in and day out. So they could be 363 00:21:12,320 --> 00:21:17,200 Speaker 1: cybersecurity experts, they could be UM, you know, mechanical engineers, architects, 364 00:21:17,320 --> 00:21:21,399 Speaker 1: civil engineers and electrical engineers, biomedical engineers. And then we 365 00:21:21,680 --> 00:21:26,320 Speaker 1: actually develop assignments that are real projects that are done 366 00:21:26,400 --> 00:21:30,399 Speaker 1: by these engineers and others like them. And we create 367 00:21:30,480 --> 00:21:32,680 Speaker 1: these assignments for the students and we expose them to 368 00:21:32,800 --> 00:21:36,120 Speaker 1: it and the blueprint goes into a lot of detail 369 00:21:36,359 --> 00:21:39,080 Speaker 1: on everything around how to work and pardner with a 370 00:21:39,160 --> 00:21:42,760 Speaker 1: school to how to work and identify assignments to what 371 00:21:42,960 --> 00:21:46,400 Speaker 1: we call an intern week where they're exposed to other 372 00:21:46,560 --> 00:21:50,960 Speaker 1: things such as how to conduct yourself in a professional environment, um, 373 00:21:51,440 --> 00:21:54,359 Speaker 1: you know, basic business ethics and things of that nature, 374 00:21:54,960 --> 00:21:58,480 Speaker 1: so that they're well rounded. So court less um Abbott 375 00:21:58,560 --> 00:22:01,200 Speaker 1: that is a you know, it's a glow little healthcare company. 376 00:22:01,240 --> 00:22:06,119 Speaker 1: I'm sure lots of demand for engineering math type folks 377 00:22:06,359 --> 00:22:09,320 Speaker 1: at your company. How do you go about at Abbott 378 00:22:09,359 --> 00:22:11,920 Speaker 1: trying to ensure that you attract the best and brightest 379 00:22:12,320 --> 00:22:14,560 Speaker 1: uh and and you know, get a fair representation in 380 00:22:14,640 --> 00:22:16,760 Speaker 1: your workforce. And I know, I'm sure a lot of 381 00:22:16,800 --> 00:22:19,919 Speaker 1: these jobs that you have are very important and uh 382 00:22:20,280 --> 00:22:24,680 Speaker 1: but define you getting the right talent. We are getting 383 00:22:24,680 --> 00:22:27,399 Speaker 1: the right talent and we are a company that people 384 00:22:28,040 --> 00:22:29,880 Speaker 1: want to be a part of. You know when when 385 00:22:29,960 --> 00:22:32,920 Speaker 1: you look at not only the technical work that we do, 386 00:22:33,040 --> 00:22:36,000 Speaker 1: but you look at the environment that we have where 387 00:22:36,119 --> 00:22:39,760 Speaker 1: we've been recognized for you know, being working mothers, working women, 388 00:22:40,480 --> 00:22:43,720 Speaker 1: be at you know, scientists, you know, UM innovation. We've 389 00:22:43,720 --> 00:22:46,720 Speaker 1: been recognized on a lot of different venues. And so 390 00:22:47,080 --> 00:22:51,919 Speaker 1: when you combine UM the total environment along with an 391 00:22:52,000 --> 00:22:56,840 Speaker 1: environment that encourages development of people. UM, these young people, 392 00:22:56,880 --> 00:22:59,800 Speaker 1: we find they're excited about the technologies that we create. 393 00:23:00,320 --> 00:23:03,000 Speaker 1: They're excited about the people that they work with. Because 394 00:23:03,359 --> 00:23:06,040 Speaker 1: the mentors and the assignment managers that work with them 395 00:23:06,680 --> 00:23:09,920 Speaker 1: love developing others and and they want these young people 396 00:23:09,960 --> 00:23:12,879 Speaker 1: to be successful, and they're excited to share their professions 397 00:23:12,920 --> 00:23:15,600 Speaker 1: with them and help them to have a better indication 398 00:23:15,720 --> 00:23:18,440 Speaker 1: of what they potentially could do. So I think that 399 00:23:18,800 --> 00:23:22,600 Speaker 1: Abbott creates a holistic environment where people want to be 400 00:23:22,680 --> 00:23:25,440 Speaker 1: a part of our organization so we get our fair 401 00:23:25,520 --> 00:23:28,280 Speaker 1: share of talent. If you will to come into this organization. 402 00:23:29,160 --> 00:23:31,600 Speaker 1: Courtlos Marie, thank you so much for joining us. Corliss 403 00:23:31,600 --> 00:23:34,080 Speaker 1: as a senior vice president, head of Engineering and Abbott 404 00:23:34,280 --> 00:23:51,600 Speaker 1: talking about getting young women into STEM related fields. It 405 00:23:51,760 --> 00:23:54,399 Speaker 1: was a tremendous story to read the concept of a 406 00:23:54,520 --> 00:23:58,600 Speaker 1: hundred and fifty thousand tourists stranded on overseas beaches and 407 00:23:58,680 --> 00:24:02,159 Speaker 1: in vacation hotspots. The UK government is now trying to 408 00:24:02,520 --> 00:24:04,840 Speaker 1: get back to the country in what is being called 409 00:24:04,880 --> 00:24:09,400 Speaker 1: the largest repatriation in peacetime history. This all comes after 410 00:24:09,440 --> 00:24:14,160 Speaker 1: the collapse of tour operator Thomas Cook Group. My question is, Paul, 411 00:24:15,119 --> 00:24:18,520 Speaker 1: why did this come such a huge surprise and shock 412 00:24:18,720 --> 00:24:21,480 Speaker 1: suddenly to leave so many people stranded? And here to 413 00:24:21,560 --> 00:24:24,480 Speaker 1: answer that question is Richard Weis's reporter for Bloomberg News 414 00:24:24,680 --> 00:24:26,919 Speaker 1: joining us from Frankfurt. So Richard, what is the answer 415 00:24:27,000 --> 00:24:31,200 Speaker 1: to that question. Well, the honest answer is it didn't 416 00:24:31,280 --> 00:24:34,760 Speaker 1: come as a surprise to those who follow the company closely. 417 00:24:34,880 --> 00:24:37,600 Speaker 1: Of course, the timing was a surprise that this happened 418 00:24:37,680 --> 00:24:41,200 Speaker 1: at two in the morning local time last night. But 419 00:24:41,320 --> 00:24:44,040 Speaker 1: they just want to add a little bit of contracts contexts. 420 00:24:44,040 --> 00:24:47,119 Speaker 1: As you say, this is the biggest repatriation since the 421 00:24:47,200 --> 00:24:51,800 Speaker 1: Second World War. There's hunead fifty thousand Brits stranded abroad 422 00:24:52,600 --> 00:24:55,600 Speaker 1: at this point in time, So the British government is 423 00:24:55,760 --> 00:24:59,920 Speaker 1: tasked with bringing about twenty thousand people home every day. 424 00:25:00,320 --> 00:25:03,040 Speaker 1: So if you take a seven four seven jumbo jet, 425 00:25:03,119 --> 00:25:07,080 Speaker 1: which seats about just under five that's forty jumbo jets 426 00:25:07,240 --> 00:25:10,040 Speaker 1: every day for about a week, to be organized by 427 00:25:10,080 --> 00:25:12,639 Speaker 1: a government which doesn't have a fleet of such size 428 00:25:12,680 --> 00:25:14,600 Speaker 1: for such a task. So that gives you a feel 429 00:25:14,640 --> 00:25:17,760 Speaker 1: for what the bridge are undertaking as we speak. So 430 00:25:17,880 --> 00:25:20,560 Speaker 1: it's again I have to admit I really don't understand 431 00:25:20,680 --> 00:25:23,600 Speaker 1: how this happened and how I just can't take my 432 00:25:23,720 --> 00:25:26,040 Speaker 1: ticket that I guess is no longer valid and maybe 433 00:25:26,359 --> 00:25:29,080 Speaker 1: get another airline to honor it and fly back home. 434 00:25:29,200 --> 00:25:31,760 Speaker 1: But is that not an option for these people? The 435 00:25:31,840 --> 00:25:34,639 Speaker 1: good thing is that in Europe for a lot of 436 00:25:34,760 --> 00:25:38,920 Speaker 1: these things there's consumer protection. In the UK it's called atoll. 437 00:25:39,080 --> 00:25:42,040 Speaker 1: It essentially means in a case like this, the government 438 00:25:42,119 --> 00:25:45,960 Speaker 1: will step in and organize a transport and you even 439 00:25:46,000 --> 00:25:47,520 Speaker 1: have to pay for it, and if you're lucky, you 440 00:25:47,600 --> 00:25:50,480 Speaker 1: can even stay for the remainder of your holiday at 441 00:25:50,560 --> 00:25:53,320 Speaker 1: your hotel. Of course, at the moment this happens, like 442 00:25:53,560 --> 00:25:56,080 Speaker 1: last night, this causes shock and awe with the fact 443 00:25:56,160 --> 00:25:58,879 Speaker 1: that people, but in the end most of the bridge 444 00:25:58,960 --> 00:26:01,840 Speaker 1: on vacation at the moment, will probably be able to 445 00:26:02,119 --> 00:26:04,760 Speaker 1: spend the days on the beaches there and they will 446 00:26:04,840 --> 00:26:07,920 Speaker 1: get home taken possibly even by the same aircraft that 447 00:26:08,040 --> 00:26:11,560 Speaker 1: they flew into. The destination. Was just with the difference 448 00:26:11,760 --> 00:26:14,840 Speaker 1: that the government charges it from wherever owns it, lessers 449 00:26:15,080 --> 00:26:18,360 Speaker 1: most likely to fly them home, and that money comes 450 00:26:18,400 --> 00:26:20,880 Speaker 1: from a fund that all two operators have to pay 451 00:26:20,920 --> 00:26:24,000 Speaker 1: into So Richard, I hate being pedantic here, but I 452 00:26:24,040 --> 00:26:27,000 Speaker 1: want to go back to the two am filing here 453 00:26:27,760 --> 00:26:31,560 Speaker 1: or announcement. I mean, what transpired that led to such 454 00:26:31,600 --> 00:26:35,200 Speaker 1: a sudden shuddering of the entire operation in anyway with 455 00:26:35,400 --> 00:26:39,240 Speaker 1: no contingency plan whatsoever to continue to sort of make 456 00:26:39,280 --> 00:26:42,080 Speaker 1: things go smoothly until the orderly wind down of the 457 00:26:42,160 --> 00:26:45,959 Speaker 1: company and its operations could be completed. It sounds very 458 00:26:46,080 --> 00:26:48,720 Speaker 1: dramatic that that's happened tonight at two am, and that's 459 00:26:48,880 --> 00:26:53,520 Speaker 1: what actually did happen. However, there's a strong rationale behind it. 460 00:26:54,080 --> 00:26:58,679 Speaker 1: When a company is bankrupt or have to be liquidated, 461 00:26:58,760 --> 00:27:01,680 Speaker 1: like in this case, the question is where are the 462 00:27:01,800 --> 00:27:04,840 Speaker 1: asset and who owns them? So the administrator has to 463 00:27:05,280 --> 00:27:07,720 Speaker 1: go in basically count everything and see what can I 464 00:27:08,000 --> 00:27:11,560 Speaker 1: turn into cash. So if I ground an airline and 465 00:27:11,640 --> 00:27:13,919 Speaker 1: Thomas Cook is a huge airline with more than one 466 00:27:14,040 --> 00:27:16,639 Speaker 1: hundred jets in the leisure sector, that's one of the 467 00:27:16,640 --> 00:27:19,600 Speaker 1: biggest airlines across Europe, when I ground an airline at 468 00:27:19,680 --> 00:27:22,639 Speaker 1: two in the morning, chances are most of the jets 469 00:27:22,720 --> 00:27:25,560 Speaker 1: are going to be at their home airports, meaning in 470 00:27:25,640 --> 00:27:28,879 Speaker 1: the UK this is the UK company, so the insolvency 471 00:27:28,960 --> 00:27:32,840 Speaker 1: administrator will be able to actually get their hands on 472 00:27:32,960 --> 00:27:35,159 Speaker 1: the jets and sell them later on. So there's some 473 00:27:35,320 --> 00:27:39,520 Speaker 1: practical reasons behind this timing. So this is a you know, 474 00:27:39,920 --> 00:27:42,760 Speaker 1: Thomas Cook has been around for a hundred seventy eight years. 475 00:27:43,640 --> 00:27:46,880 Speaker 1: What happened to this company to push it to where 476 00:27:46,920 --> 00:27:50,480 Speaker 1: we are today. Well, um, if you go back and 477 00:27:50,560 --> 00:27:53,760 Speaker 1: look into the history books, it was founded by a 478 00:27:53,880 --> 00:27:57,919 Speaker 1: preacherman who wanted to keep people in Victorian England from drinking. 479 00:27:57,960 --> 00:28:01,000 Speaker 1: So it's actually fascinating history. The problem is in the 480 00:28:01,119 --> 00:28:03,919 Speaker 1: last fifteen or twenty years or so, they haven't been 481 00:28:04,080 --> 00:28:06,680 Speaker 1: quite up to speed with the changes in the industry 482 00:28:07,240 --> 00:28:11,680 Speaker 1: as the low cost carriers emerged also across Europe and 483 00:28:12,160 --> 00:28:15,680 Speaker 1: ticket prices continued to fall over the last couple of years. 484 00:28:16,080 --> 00:28:19,879 Speaker 1: At the same time, online rivals, both travel agents and 485 00:28:20,200 --> 00:28:23,320 Speaker 1: pure online travel agents as you know in booking dot 486 00:28:23,440 --> 00:28:28,200 Speaker 1: Com for example, pushed into this market and squeezed the 487 00:28:28,280 --> 00:28:32,680 Speaker 1: margins that were already slim and highly seasonal. It's a 488 00:28:32,720 --> 00:28:35,159 Speaker 1: business where in the summer the money comes in and 489 00:28:35,280 --> 00:28:37,680 Speaker 1: in the winter you have to pay the hotels that 490 00:28:37,880 --> 00:28:41,080 Speaker 1: you buy your beds from. In bulk, so it's very 491 00:28:41,160 --> 00:28:44,160 Speaker 1: seasonal and you have to be able to withstand shocks. 492 00:28:44,720 --> 00:28:48,520 Speaker 1: For example, across Europe, a lot of the important destination 493 00:28:48,600 --> 00:28:53,080 Speaker 1: countries are Tunisia, Egypt, Turkey, and all these countries had 494 00:28:53,120 --> 00:28:56,680 Speaker 1: political turmoil in the past couple of years, and some 495 00:28:56,880 --> 00:29:00,000 Speaker 1: of them even had incidents that shut the entire country 496 00:29:00,200 --> 00:29:02,160 Speaker 1: is down for a couple of months. Out of a 497 00:29:02,280 --> 00:29:05,080 Speaker 1: perspective from a tour operator, so that means you may 498 00:29:05,200 --> 00:29:08,680 Speaker 1: have spent money on sending hundreds of thousands of guests 499 00:29:08,760 --> 00:29:11,280 Speaker 1: there and in the end you can't. So if you 500 00:29:11,320 --> 00:29:13,840 Speaker 1: don't have a big financial buffer, this is a very 501 00:29:13,920 --> 00:29:16,120 Speaker 1: tough business to be in. Richard Wis, thank you so 502 00:29:16,280 --> 00:29:20,040 Speaker 1: much for bringing this story to us. Just extraordinary. Richard Rice, 503 00:29:20,200 --> 00:29:24,360 Speaker 1: Bloomberg News based in Frankfort. Thanks for listening to the 504 00:29:24,400 --> 00:29:27,000 Speaker 1: Bloomberg P and L podcast. You can subscribe and listen 505 00:29:27,040 --> 00:29:30,360 Speaker 1: to interviews at Apple Podcasts or whatever podcast platform you prefer. 506 00:29:30,800 --> 00:29:33,600 Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa A. 507 00:29:33,680 --> 00:29:36,200 Speaker 1: Bram Woyits. I'm on Twitter at Lisa bramwo Wits. One 508 00:29:36,440 --> 00:29:39,040 Speaker 1: Before the podcast, you can always catch us worldwide. I'm 509 00:29:39,080 --> 00:29:39,880 Speaker 1: Bloomberg Radio