Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
Speaker 1: Wait inside from the reporters and editors who bring you
Speaker 1: America's most trusted business magazine, plus global business, finance and
Speaker 1: tech news. The Bloomberg Business Week Podcast with Carol Messer
Speaker 1: and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Well, our next guest follows the US economy, really the
Speaker 2: global economy has for decades. Weigh in on the trends
Speaker 2: that describe us and divide us financially, economically, and so
Speaker 2: much more. Let's get to the interview this hour with
Speaker 2: us as Nobel Laureate economist and Columbia professor Joseph Stieglitz.
Speaker 2: He was an economic advisor to presidents, including chair of
Speaker 2: the Council of Economic Advisors that was during the Clinton administration.
Speaker 2: Former chief economist at the World Bank, He's written numerous
Speaker 2: books and research papers. His latest book, The Road to Freedom,
Speaker 2: Economics and the Good Society. He joins us here in
Speaker 2: New York City. Professor Stieglitz, So great to be talking
Speaker 2: with you once again. It's been a while, but great
Speaker 2: to have you here, and we want to talk about
Speaker 2: the book. But we would be remiss not to ask
Speaker 2: you your take on today's economic environment and the stickiness
Speaker 2: of inflation. What is the smart conversation that you think
Speaker 2: we should all be having here at Bloomberg when it
Speaker 2: comes to today's US economic environment.
Speaker 3: From the point of view of economics, having two and
Speaker 3: a half or even three percent inflation is not a
Speaker 3: big deal. You know, the two percent target was pulled
Speaker 3: out of thin air. It was not based on economic science.
Speaker 3: What we want to be sure of is that we
Speaker 3: don't have runaway inflation. And inflation has clearly been tamed,
Speaker 3: it's been brought down, it's stable. It lectuates from month
Speaker 3: to month, but it is not a major problem. We
Speaker 3: should be focusing on other things, continuing economic growth, making
Speaker 3: sure that all Americans share in that growth. Those are
Speaker 3: the kinds of things that we ought to be thinking
Speaker 3: more about.
Speaker 4: So, Professor Stieglitz, should the Fed abandon the two percent
Speaker 4: inflation goal? Should they have a different inflation goal, a
Speaker 4: different metric that they should be held accountable to.
Speaker 3: Yes, I think they should. I think they should be
Speaker 3: talking about keeping it within a range to maybe three,
Speaker 3: three and a half four percent. You know, there's actually
Speaker 3: some economic science that says, especially in a time of
Speaker 3: major structural change, such as we're going through, having a
Speaker 3: little higher inflation actually is helpful in reallocating resources in
Speaker 3: the presence of downward nominal rigidities of wages, because what
Speaker 3: guides the movement of resources from one place to another
Speaker 3: is relative wages, and if some wages are sticky downward,
Speaker 3: you want other wages to go up enough to move labor,
Speaker 3: and that means you're going to have to have more inflation.
Speaker 3: So actually a little higher inflation is actually good for
Speaker 3: the economy.
Speaker 2: Do you think the FEDS management of the economy has
Speaker 2: been a good one in terms of policy?
Speaker 3: Quite frankly no, But bluntly, let's go back to when
Speaker 3: inflation broke out after the pandemic and the Russian invasion
Speaker 3: of Ukraine. The question was what was the cause, the
Speaker 3: primary cause of the inflation. It was unambiguous. It was
Speaker 3: the pandemic and war related interruptions in supply chains and
Speaker 3: rising prices caused by shortages of oil and food. It
Speaker 3: was demand shifts. People wanted to live in different places,
Speaker 3: and that meant housing prices went up where there was
Speaker 3: a scarcity, but didn't go down as much where there
Speaker 3: was where people didn't want to. Like in parts of
Speaker 3: New York, raising interest rates actually impedes the ability of
Speaker 3: the economy to respond to that kind of structural to
Speaker 3: that kind of challenge. We needed to build more houses
Speaker 3: in the places where there was a scarcity, and having
Speaker 3: higher interest rates actually works makes it more difficulty. They
Speaker 3: also have a model of the economy that's based on competition.
Speaker 3: That might have been true some time ago, but we
Speaker 3: have an economy with a lot of market power at
Speaker 3: firms are trading off. If they raise their prices, they
Speaker 3: get more profits today, they lose profits in the future.
Speaker 3: And in that trade off, if when you raise the
Speaker 3: interest rate, they value those future losses less, and they
Speaker 3: were induced to raise their prices, more ms go up.
Speaker 3: And a marked aspect of the inflation that we've just
Speaker 3: been through is that markets have increased enormously.
Speaker 4: Hey, Professor Stieglitz, I just wanted to speaking of the FED, Carol,
Speaker 4: I know you would.
Speaker 2: Well one one thing before we have a bigger, broader
Speaker 2: cust and it's certainly been to jump in on that. Well,
Speaker 2: what do you think then we should be cutting rates
Speaker 2: already that were behind the curve right now?
Speaker 3: Yes, I think I think the risks are asymmetric. I
Speaker 3: think with Europe already slowing down in recession, we don't
Speaker 3: know where China is going to be going. I think
Speaker 3: uh proudents would have as uh uh going back to
Speaker 3: a more normal infrast rate. The higher interest rates are
Speaker 3: are really not going to be taming inflation. That that
Speaker 3: model was wrong. In another way, they drammatically had said
Speaker 3: that we're going to need five percent of inflation for
Speaker 3: five percent unemployment for some time in order to get
Speaker 3: inflation down. There were absolutely we got inflation down where
Speaker 3: in a period where we kept unemployment relatively low. So
Speaker 3: their analysis of the economy was just off. And meanwhile
Speaker 3: they have put at risk our banking system. We had
Speaker 3: a problem in Selcom Valley Bank partly because of the
Speaker 3: enormous changes in terms structure which their policies led to.
Speaker 3: And we're facing a deck crisis in the developing countries
Speaker 3: and emerging markets. So there is enormous one sided risk.
Speaker 3: I believe in the policies that they've been pursuing well.
Speaker 4: On the FED, Professor Stieglitz, I got to ask you
Speaker 4: about this Wall Street Journal report that broke last night
Speaker 4: that said how former Trump administration officials are coming up
Speaker 4: with plans to take on the independence of the Federal Reserve,
Speaker 4: essentially at one end of the spectrum, even allowing if
Speaker 4: President Trump gets re elected him to weigh in on
Speaker 4: FED policy when it comes to interest rates. Talk a
Speaker 4: little bit about your reaction to if this were to
Speaker 4: come to fruition, how important the independence of the FED
Speaker 4: is and if that would really put at risk the
Speaker 4: model of the independence of the US financial system.
Speaker 3: Well, I think Trump is himself a major argument why
Speaker 3: you want to have independence of the FED. You don't
Speaker 3: want somebody who doesn't understand monetary policy, who would put
Speaker 3: at risk the long run stability of the economy for
Speaker 3: the short term electoral advantage of having a hot economy
Speaker 3: right before an election. That's precisely why there is an
Speaker 3: argument for independence. So, you know, I believe in the
Speaker 3: accountability of the FED. It is a public institution. We
Speaker 3: had previous chairman of the FED. We're very cognizant that
Speaker 3: I remember Paul Voker saying Congress created us and Congress
Speaker 3: can uncreate us. So there is a kind of accountability
Speaker 3: that responsible to heads of the FAT understand. But we
Speaker 3: certainly don't want Donald Trump to be running monetary policy.
Speaker 2: All right, we do want to dig into your book
Speaker 2: because you've been thinking a lot about the meaning of freedom,
Speaker 2: and I think we throw the word a down a lot.
Speaker 2: I think the folks who created the United States are
Speaker 2: founding fathers thought about freedom a lot and the difference
Speaker 2: though between what that really means, and maybe it comes
Speaker 2: down to, as you think about it, the values that
Speaker 2: we all have in society tell us about how we
Speaker 2: need to kind of maybe redefine freedom and what it
Speaker 2: means in terms of citizens more broadly and generally, as
Speaker 2: well as economically in terms of their success.
Speaker 3: Sure you know, I approached the issue obviously as an economist,
Speaker 3: and as an economist we think of freedom is free
Speaker 3: to do what you can do. What are the choices
Speaker 3: that you can make. Somebody who is at the point
Speaker 3: of starvation doesn't really have any freedom. He has to
Speaker 3: do what he can to survive, and so expanding the
Speaker 3: set of choices that an individual is available is a
Speaker 3: way of saying that he has more freedom. And here
Speaker 3: there are a couple of ideas I put forward in
Speaker 3: my book. The first is that in our integrated urban
Speaker 3: twenty percentury economy, one person does the expansion of his
Speaker 3: freedom may lead to less freedom of others. Isaiah Berlin,
Speaker 3: the great Oxford philosopher, put it this way. He said,
Speaker 3: freedom for the woolfs has often meant death for the sheep.
Speaker 3: In the context of the US, for instance, freedom to
Speaker 3: carry in AK forty seven means that people will die,
Speaker 3: and it means that our school children are not free
Speaker 3: from fear. They have to learn what to do if
Speaker 3: a gunman comes into the classroom, and teachers have to
Speaker 3: go to school worried about whether they'll be attacked. Freedom
Speaker 3: not to wear masks is exposed to taking away the
Speaker 3: freedom of others to live. So we have to balance
Speaker 3: these freedoms. There are trade offs. Many cases, those trade
Speaker 3: offs are easy. Freedom to pollute takes away the freedom
Speaker 3: to have somebody with asthma to even live, let alone
Speaker 3: the freedom of all of us to live in our Atlanta.
Speaker 3: So there, I think we have to constrain the freedom
Speaker 3: of the pluters and the freedom of exploiters.
Speaker 2: So we're talking with Joseph Stieglitz, Nobel Laureate Economists, Professor
Speaker 2: of economics at Columbia University, and we're talking about his
Speaker 2: new book, The Road to Freedom economics and the good society.
Speaker 2: All right, So if wethink Professor Stieglitz the idea of freedom,
Speaker 2: so it's maybe more inclusive or it's a broader definition.
Speaker 2: How do we do that within society? With corporations the
Speaker 2: need to be profitable for those we are in earning season.
Speaker 2: We look at companies and their reports and that's how
Speaker 2: we kind of measure them, grade them. What does government
Speaker 2: need to do? How can we maybe be better if
Speaker 2: you will for more?
Speaker 3: Well, first, let me emphasize that in the world I've
Speaker 3: just described, there's an important role for regulations. Corporations often
Speaker 3: don't like that, but we have to remember us of
Speaker 3: our economy is to improve the lives and livelihoods of
Speaker 3: our citizens. It's not the other way around that the economy.
Speaker 3: The economy is supposed to serve society, not the other
Speaker 3: way around. There's another aspect. Regulations can't actually expand the
Speaker 3: freedom of all of us. Think about stop likes. If
Speaker 3: we don't have stop stop likes, we have gourdlock. None
Speaker 3: of us has the freedom to move. Stop likes works
Speaker 3: are a little bit of coercion, mean that I have
Speaker 3: to take turns, but by taking turns, we all have
Speaker 3: more freedom, and that basic idea extends much more broadly.
Speaker 3: People don't like to pay taxes, that that's a they
Speaker 3: often feel kind of coercion. But when those tax revenues
Speaker 3: are used productively, like they were to invest in the
Speaker 3: Internet and invest in the m R A platform that
Speaker 3: led to the vaccine against COVID nineteen, that expands our
Speaker 3: freedom to do. And so we have to look at
Speaker 3: this in I would say in a little bit more
Speaker 3: holistic way.
Speaker 4: Well, I want to go to your taxes point, because
Speaker 4: I'm curious if you could wave a magic wand or
Speaker 4: implement some sort of tax policy here in the US,
Speaker 4: what would it be? How could you reinvent it? Would
Speaker 4: you broaden the tax space, would you lean more on
Speaker 4: corporate taxes? Would you tax wealth more? What, in your
Speaker 4: opinion would work?
Speaker 3: Well, I begin by analyzing would are some of the
Speaker 3: key problems on our society basis? And one of them
Speaker 3: is inequality one of the reasons. And a second problem
Speaker 3: is the growth of market power, which has been enormous
Speaker 3: in the last few decades, and those two are obviously linked.
Speaker 3: When you have more market power, the fruits of that
Speaker 3: market power go to those at the top. We also
Speaker 3: have more economists called monoposity power. Firms have market power
Speaker 3: over workers and have driven down their wages significantly below
Speaker 3: a competitive level. So I want to have more anti
Speaker 3: trust policy, more competitive labor market policies, but that can
Speaker 3: take time. Meanwhile, there's a lot of monopoly rents, and
Speaker 3: so part of what I would begin by doing is
Speaker 3: increasing corporate confix taxes, which are not a tax on
Speaker 3: return to capital. They are a tax on this monopoly profits.
Speaker 3: I'd also like to have environmental taxes. Firms that are engaged,
Speaker 3: including the environment, ought to pay for the damage that
Speaker 3: they're doing. Remarkably, America, those at the top pay a
Speaker 3: lower percentage of their taxes than those down below. Even
Speaker 3: some of our richest people have commented that they think
Speaker 3: they're right more wrong.
Speaker 2: Well, can I ask you, like on a day when
Speaker 2: we're looking at a company and forgive me, I'm just
Speaker 2: singling out because it popped. Shares of Alphabet are now
Speaker 2: a two trillion dollar market cap company this week, you know,
Speaker 2: next week. Last week. We've been obsessed with, certainly what
Speaker 2: we call the Magnificent seven, the big megacap technic companies.
Speaker 2: They're very big, Amazon we talked with an author recently,
Speaker 2: so entrenched certainly in our world, and you think about
Speaker 2: their reach. Are these the companies, the individuals, whether it's
Speaker 2: an Amazon, whether it's a Meta, whether it's an alphabet
Speaker 2: that you think you talked about growth of market power?
Speaker 2: Is it too much at this point in your view
Speaker 2: that something needs to be done to rain them in
Speaker 2: or do the benefits outweigh the downside here?
Speaker 3: Well, they do give benefits, but they have a lot
Speaker 3: of downsides. They need to be better regulated. Europe has
Speaker 3: done a better job at regulating them. The digital harms
Speaker 3: are are quite obvious and have been by now well documented.
Speaker 3: But talking narrowly now about market power, I think we
Speaker 3: ought to do what we can to limit their market power,
Speaker 3: but tax the fruits of that market power, the revenues
Speaker 3: that they get at a much higher rate. You know,
Speaker 3: if you ask the question, would Jeff Bezos or the
Speaker 3: founders of Google or Zuperbird stop working if we tax
Speaker 3: their wealth in a way, say a three percent? You know,
Speaker 3: so any answer is obviously they would continue to work.
Speaker 4: But do you think that they would leave the United States?
Speaker 3: Well, we have imposed what we call an exit tax
Speaker 3: that those with a lot of wealth and don't feel
Speaker 3: who don't feel loyalty at the United States can leave.
Speaker 3: We allow them to leave, but they have to pay
Speaker 3: a tax that represents attacks on the groups of the
Speaker 3: wealth that they've accumulated while they've been in the United States.
Speaker 3: And that tax is significant, and it is a deterrent.
Speaker 3: And if it's not, it may be that we ought
Speaker 3: to consider raising that tax. But I don't think people
Speaker 3: like Zuckerberg Musk are going to leave the United States.
Speaker 3: They realize the benefits of American citizenship.
Speaker 4: We're speaking right now with Professor Joseph Stieglitz, Nobel Lauriate Economists.
Speaker 4: He's a professor of economics at Columbia University. He's got
Speaker 4: a new book out, The Road to Freedom, Economics and
Speaker 4: the Good Society. Professor, as I mentioned, you are up
Speaker 4: at Columbia. You've been there for a long time. We've
Speaker 4: been watching everything that's been happening on the campus there,
Speaker 4: as well as campuses including USC Yale, MI T. The
Speaker 4: list continues to go on here in the United States,
Speaker 4: as we've seen pro Palestinian protests and encampments take over
Speaker 4: some of these campuses. Freedom in the academic context, how
Speaker 4: are you looking at the protest protests and the context
Speaker 4: of freedom of speech?
Speaker 3: That's a good question. I mean, first of let me
Speaker 3: comment that up where my office is, which is the
Speaker 3: Manhattanville campus, things are very quiet at the business school.
Speaker 3: At the Business school, quiet there.
Speaker 2: But you've been on campus a long time and you've
Speaker 2: seen different protests over the years, and it seemed to
Speaker 2: be I was there when there were protests, and it
Speaker 2: seems like that's what students are should be doing, exploring
Speaker 2: and pushing back when they don't feel like things are right.
Speaker 2: But what is what is the what is it those
Speaker 2: protests in the context of freedom of speech?
Speaker 3: So I agree with you very strongly. I'm actually happy
Speaker 3: that the students are engaged in the world. You know,
Speaker 3: that's one of the things I try to get them
Speaker 3: to be interested in the world, and also to reason
Speaker 3: about the world, to come to understand it, and to
Speaker 3: debate how could or should things be changed. So that's
Speaker 3: a good thing. And in my own life, protests have
Speaker 3: played a very important role. Back in nineteen sixty three,
Speaker 3: I was down there in the march in Washington with
Speaker 3: Martin Luther King, and you know that speech she gave
Speaker 3: about I have a dream has been a lifelong inspiration
Speaker 3: to me. So even civil disobedience in certain circumstances can
Speaker 3: be an important mechanism for social change. We have a
Speaker 3: special responsibility, of course, to make sure on our campus
Speaker 3: that all views get heard, that we can have civil debates,
Speaker 3: and so on. The one end, academic freedom is really important,
Speaker 3: and I really took offense to Speaker Johnson coming up
Speaker 3: to our campus and calling for the resignation of our president.
Speaker 3: I hadn't seen anything like that, maybe since the HUAC
Speaker 3: hearings the House on American Activities Committee back with McCarthy
Speaker 3: in the fifties. I mean, that kind of direct interference
Speaker 3: in academia is just unheard of. And we know some
Speaker 3: of the Republicans have been trying to undermine universities because
Speaker 3: universities teach children how to our young our youngsters, our
Speaker 3: young men and women how to think, and a lot
Speaker 3: of peopleeople don't like that idea that they should be
Speaker 3: thinking for themselves. But at the same time, we have
Speaker 3: to create on campus a community where all voices are heard,
Speaker 3: and I think we're actually working very much towards that.
Speaker 3: There were only a few people raising problems and I
Speaker 3: think having outside agitators like the speaker is not helpful.
Speaker 2: We're going to leave it on that note. We always
Speaker 2: appreciate hearing you talk about hearing from voices. We always
Speaker 2: appreciate hearing from you. Professor Stieglitz, Thank you so much,
Speaker 2: Nobell Lorid Economist Columbia Professor Joseph Stieglitz here in New
Speaker 2: York City. Check out his book. His latest book, The
Speaker 2: Road to Freedom, Economics and the Good Society really appreciates
Speaker 2: spending some time with you.
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Speaker 2: Intel shares folks, they are down the most in not
Speaker 2: quite four years, but they're still down about nine and
Speaker 2: a half percent. Here. This is after the company gave
Speaker 2: a lot lackluster forecast for the current period and turning
Speaker 2: this giant tim as we find out, you know, they're
Speaker 2: in the midst of a turnaround. It's not turning out
Speaker 2: to be so easy. Yeah.
Speaker 4: In fact, here's Intel CEO Pat Gelsinger on the good
Speaker 4: and the better to come. He joined Bloomberg TV and
Speaker 4: Radio a little earlier today.
Speaker 1: Check it out.
Speaker 5: We delivered a solid Q one, right, we met on revenue,
Speaker 5: we know, beat on earnings a bit tepid in the
Speaker 5: first half, as we said, but we see a lot
Speaker 5: of improvement as we go through the year. And with that,
Speaker 5: obviously the foundry business, as I would say, we're going
Speaker 5: to see progress on the foundry business every quarter from
Speaker 5: now for the end of the decade.
Speaker 4: That's Pat Gelsinger, Intel CEO, earlier on Bloomberg TV and
Speaker 4: Radio with more on the company's business and plan turnaround.
Speaker 4: Back with us as Bloomberg News US Semiconductor and Networking
Speaker 4: reporter in our San Francisco bureau, Ian King, So, Ian
Speaker 4: the quarter, what occupies you the most on the release
Speaker 4: and then after the call with analysts yesterday, because as
Speaker 4: Carol mentioned, the reaction to the report, at least when
Speaker 4: it comes to the stock was really swift.
Speaker 6: Yeah, I think the quote you played from Pat is
Speaker 6: relevant here. I mean, you've got a man who hasn't
Speaker 6: been back at Intel for that long, putting a long
Speaker 6: term plan together, trying to repair the mistakes made over
Speaker 6: a decade. Though that plan won't pay off anytime soon,
Speaker 6: but in the meantime, he's having to give quarterly earnings
Speaker 6: and anything that's kind of lackluster as the forecast was yesterday,
Speaker 6: is going to cause concern and that this long time
Speaker 6: plan isn't going to pay off. So he's he's selling
Speaker 6: a bright future while talking about kind of lightless their
Speaker 6: interim period.
Speaker 2: You know, it makes me think about like, every once
Speaker 2: in a while, I bet a company would just be like,
Speaker 2: can we just go public for a few years and
Speaker 2: kind of clear things out, spend, do the reboot, and
Speaker 2: then we'll come back to the public markets. We've seen
Speaker 2: it before, but I almost feel like, potentially, you know, Ian,
Speaker 2: that's what Intel needs right now.
Speaker 6: Yeah, I mean that's definitely something that's been talked about
Speaker 6: by you know, people who sort of look at Intel
Speaker 6: and where they are and that's you know, that's the
Speaker 6: position they're in. As we've said that, you know, there's
Speaker 6: going to have to be significant changes not just at
Speaker 6: Intel but in this semiconductor industry in general for this
Speaker 6: big plan to pay off. The analysts like the strategy,
Speaker 6: say he's pressing the right buttons, but again, so many variables,
Speaker 6: so many things have to go right for everything to
Speaker 6: pay off and Intel become at the level it used
Speaker 6: to be.
Speaker 2: One thing I want to ask you, I mean the
Speaker 2: foundry business. It's an expensive one, right. I just talked
Speaker 2: with some investment folks. I was planning for a panel
Speaker 2: that I'm going to be doing in a couple of weeks.
Speaker 2: They have lots of money to invest, and one of
Speaker 2: the themes that was top of mind was reshoring and
Speaker 2: the amount of money that they need to invest. The
Speaker 2: capital spend that we were seeing in the likes of
Speaker 2: things like semiconductors and the industrial space as a lot
Speaker 2: of countries, including the United States, are bringing things back home.
Speaker 2: It's real and some of it has to do with
Speaker 2: climate change, and you know, companies trying to kind of
Speaker 2: clean up their supply chains and so closer manufacturers help
Speaker 2: them do this. This foundry focus. Will it pay off
Speaker 2: in the long run or TBD?
Speaker 6: It's very much a TBD. I mean, as you said,
Speaker 6: there's a geographical trend here. Intel is building plants in
Speaker 6: the US. Well, guess what so is some guess what
Speaker 6: so is? TSMC. If you are out in the market
Speaker 6: for somebody to make your chips, who are you going
Speaker 6: to go to right now? We need to remember that
Speaker 6: Intel is giving over thiy percent of its high end
Speaker 6: business to TSMC because its plants aren't good enough right now.
Speaker 6: Obviously they plan to change that. Obviously they plan to
Speaker 6: reverse that, but again that's still at the kind of
Speaker 6: planning implementation phase. So even if you trusted Intel with
Speaker 6: your crown jewels, why would you do that right now?
Speaker 6: And that's the problem.
Speaker 4: And you mentioned that the CEO, Pat Gelsinger hasn't been
Speaker 4: back at Intel for very long you went, but he
Speaker 4: got back there at February of twenty twenty one when
Speaker 4: he embarked on this turnaround. I'm wondering about patients that
Speaker 4: investors have based on the folks you talk to your sources,
Speaker 4: What kind of patients or timeline or runway are they
Speaker 4: giving Gelsinger here?
Speaker 6: Well, I think you just have to look at the
Speaker 6: stock performance. I mean this year they are second worst
Speaker 6: performer on the Philadelphia Semiconductor Index. That's not a good recommendation.
Speaker 6: That's not people excited about his company. And you know,
Speaker 6: all of the reports, all of the note say exactly
Speaker 6: the same thing, which is, why would you choose to
Speaker 6: own Intel right now, and the answer is you probably wouldn't.
Speaker 6: So that's a struggle that he's going to face. How
Speaker 6: that manifests itself, how the board think about that, we
Speaker 6: don't know yet.
Speaker 2: All Right, it's still one hundred and thirty forums one
Speaker 2: hundred and thirty five billion dollar market cap company, nothing
Speaker 2: to sneeze at. So what is the value that is
Speaker 2: Intel at this point?
Speaker 6: Well, the value is there are an incumbent still. If
Speaker 6: you're going to make a standard industry server, you're going
Speaker 6: to use an Intel zon If you're going to make
Speaker 6: a PC, more than likely you're going to use one
Speaker 6: of their core processes. So that you know, there's still
Speaker 6: a lot of value there. If they can get the
Speaker 6: manufacturing back to anything like the level that they used
Speaker 6: to be at, that's a tremendous asset. Very few companies
Speaker 6: in the world can actually do that. So all of
Speaker 6: these things, again, if they manifest themselves in the right direction,
Speaker 6: are valuable. The problem is, you know, he talked yesterday
Speaker 6: day about, oh, we're getting into the accelerated market. We're
Speaker 6: going to have five hundred billion dollars of fresh revenue
Speaker 6: from this new product we've gotten. Again, that's great, but
Speaker 6: then you have to compare it to where you might
Speaker 6: put money. AMD is going to have three and a
Speaker 6: half billion dollars from that exact same market. And guess
Speaker 6: what this year, if analysts are right, in video is
Speaker 6: going to have a ninety six billion dollar market. So
Speaker 6: that's ninety six billions versus five hundred million. Are you
Speaker 6: going to choose?
Speaker 2: Who do you compare Intel against? Last question?
Speaker 6: Sorry said that against?
Speaker 2: Who do you compare Intel against? Like? I just think
Speaker 2: about it, like we always talk with you that there's
Speaker 2: a lot of different names, you know, that make up
Speaker 2: the socks in the chip space, and they're not all
Speaker 2: the same thing. So who do you compare Intel against?
Speaker 2: At this point?
Speaker 3: Is it?
Speaker 2: Is it AMD?
Speaker 1: Is it?
Speaker 6: Like?
Speaker 2: Who is it?
Speaker 6: Well, you'd have to compare them to a combination of
Speaker 6: AMD or in video and TSMC, and by any metric
Speaker 6: they they just don't measure up right now?
Speaker 2: How much more time does Gelsinger have? I lied, I
Speaker 2: had one more question for you. How much more time
Speaker 2: ian do you think Elsinger has? And is he the
Speaker 2: right guy to do it?
Speaker 6: Like I say, everybody who all of the analysts say yes,
Speaker 6: he's got the right plan. Some of them are concerned
Speaker 6: that he was put in place too late, that things
Speaker 6: had gone too far. According to what he's the timeline
Speaker 6: he's setting out, Intel should be back in the lead
Speaker 6: in manufacturing next year. That that is going to be
Speaker 6: the real tipping point, the real point where hey, Intel
Speaker 6: is back and things are going to start to work
Speaker 6: in their favor. So sometime next year he's either going
Speaker 6: to be right or we're going to be looking at
Speaker 6: him and saying, hey, Pat, you told us and you're
Speaker 6: not there. I think that will be a significant point
Speaker 6: for both his tenure and also for Intel's future.
Speaker 2: In a Son of the Times, Intel down almost ten percent.
Speaker 2: I'm looking at the socks. It's actually up, folks, two
Speaker 2: and a half percent today, and a lot of it is.
Speaker 2: And Nvidia it is an outperformer. And this is on
Speaker 2: all the AI excitement again coming off of Alphabet and Microsoft.
Speaker 4: Until down thirty seven percent so far this year. I
Speaker 4: King Bloomberg News US Semiconductor and networking reporter, joining us
Speaker 4: from San Francisco. Check out all his stuff on Intel.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 4: Last year in the US, start was founded exclusively by
Speaker 4: women accounted for only two percent of all funding that
Speaker 4: was invested in BC back startups. This according to the
Speaker 4: World Economic Forum, citing data from Pitchbook. In Europe, Carol,
Speaker 4: the numbers were even worse, only one point eight percent
Speaker 4: of the capital raised went to female founded startups.
Speaker 2: All right, so that's how things look when it comes
Speaker 2: to venture capital. But what about earlier in the fundraising process?
Speaker 2: How are things looking when it comes to angel investing?
Speaker 2: Back with us to talk about it with an update.
Speaker 2: Joe In Corkoran at Corkoran is co chief executive officer
Speaker 2: and managing partner at Golden Seeds. Just a reminder their
Speaker 2: network of angel investors exclusively investing in early stage women
Speaker 2: led companies, and she is joining us from New York City. Joanne,
Speaker 2: Good to have you back with us. It's been a
Speaker 2: little bit of a while, one and a half years.
Speaker 2: A lot can happen. Certainly a lot has happened. I
Speaker 2: feel like in the market environment, the business environment, the
Speaker 2: funding environment. Tell us what's changed since we last talked.
Speaker 7: Okay, so let's talk about the markets overall in the
Speaker 7: US first. So twenty twenty three was a pretty difficult
Speaker 7: funding environment. Venture capital annual volumes were down, you know,
Speaker 7: thirty thirty five percent from the previous year, and that
Speaker 7: was down from the year before that. So but the
Speaker 7: good thing is that last quarter those flows were back
Speaker 7: close to the pace of which they were running for
Speaker 7: a decade, you know, the pace of twenty and seventeen
Speaker 7: eighteen before those crazy run ups. So that's good Angel volumes.
Speaker 7: The angels were also cautious. When you think about it,
Speaker 7: many angel investors already have investments, they already have a portfolio,
Speaker 7: and so many of those people pulled back on investments
Speaker 7: last year because they had to keep their powder dry.
Speaker 7: Because angels are dependent on follow on rounds from venture
Speaker 7: so while ventures clogged, angels have to be cautious. So
Speaker 7: so far in this year, you know, the first quarter
Speaker 7: of this year, we are seeing some signs that things
Speaker 7: are improving, or maybe I should say it this way,
Speaker 7: they're not getting any worse. So of course we have
Speaker 7: to consider all the variables.
Speaker 4: I'm surprised, Yeah, I'm surprised you're not saying that things
Speaker 4: are getting better. We've seen a couple of high profile
Speaker 4: tech IPOs in a recent ways weeks. Why do you
Speaker 4: think things aren't necessarily getting better better from at least
Speaker 4: an angel perspective.
Speaker 7: Well, things just hold here. That's pretty good because for
Speaker 7: the last two years things have been getting worse and worse.
Speaker 7: I don't need for things to get a lot better
Speaker 7: from here. I just need things to stabilize, right, because
Speaker 7: then we could go back to business. If you think
Speaker 7: about it, companies are companies. We're still telling them they
Speaker 7: need a plan A, B and C because they can't
Speaker 7: depend on getting an easy A round or B round
Speaker 7: out of venture Right now. Venture still digesting losses. A
Speaker 7: lot of venture funds are still digesting losses. So I
Speaker 7: don't want to say it's gloomy like it was the
Speaker 7: last couple of years, but we need a few more
Speaker 7: quarters to feel like we're back at at a consistent
Speaker 7: run rate of investment.
Speaker 2: You definitely sound subdued, a little bit like and concerned.
Speaker 3: You know.
Speaker 2: What, what is not happening as a result of the
Speaker 2: environment That maybe concerns you in terms of especially when
Speaker 2: it comes to women led investments at that very very
Speaker 2: early stage.
Speaker 7: Well, you know, some good things have happened for women
Speaker 7: in the angel markets. Okay, I mean the last twenty
Speaker 7: years since Golden Seeds started has been phenomenally good for
Speaker 7: women in the angel markets. You know, twenty years ago
Speaker 7: women got three percent of the capital. Now women founders
Speaker 7: and co founders get about forty percent of the angel capital.
Speaker 7: And the most important thing is that the yield the
Speaker 7: percentage of companies that seek funding that actually get it
Speaker 7: is it's just about operable now for male and female
Speaker 7: entrepreneurs in the angel market. So that's really great progress
Speaker 7: in the angel markets. And you know why did that happen.
Speaker 7: I think a lot of the reason for that is
Speaker 7: that angels in the US, you know, individuals who invest
Speaker 7: in startup companies, about forty percent of those people are
Speaker 7: now women. And that's about I don't know, more than
Speaker 7: ten times since when we started in two thousand and four.
Speaker 7: So that's really great.
Speaker 4: Hey, Joanne, I just want to jump in. We don't
Speaker 4: have a ton of time in it, so I want
Speaker 4: to jump in here. As I mentioned, it's Golden Seed
Speaker 4: is a network of angel investors that exclusively invest in
Speaker 4: early stage women led companies. I would imagine somebody listening
Speaker 4: right now might have the question from a returns perspective,
Speaker 4: if you're trying to maximize returns, why would you restrict
Speaker 4: yourself in any way by the type of companies you
Speaker 4: can invest in.
Speaker 7: Well, there's equity issues are one thing, But there is
Speaker 7: research that say that women are better stewards of capital.
Speaker 7: I mean, there was a big study put together in
Speaker 7: twenty in twenty nineteen by Boston Consulting and Mass Challenge
Speaker 7: that said that, and that's a huge data set. It
Speaker 7: said that women entrepreneurs generate two times the revenue per
Speaker 7: dollar of capital invested. So there is research that say
Speaker 7: that you want to look at diverse founders. And maybe
Speaker 7: I don't know why that is exactly, but maybe necessity
Speaker 7: is the mother of invention. Think about it.
Speaker 2: That one thing I do think about when it comes
Speaker 2: to angel investing, right. You know, you can throw a
Speaker 2: little bit of money at a business, right and it
Speaker 2: really can kind of get going, especially in this environment
Speaker 2: where technology and you know, social and so on and
Speaker 2: so forth, there's so much a part of sometimes a
Speaker 2: business getting going. Having said that how many of the
Speaker 2: angel investments that get made in your world, how many
Speaker 2: of them actually turn into something that either gets sold
Speaker 2: or is fairly profitable.
Speaker 7: So, you know, in the angel business and the venture business,
Speaker 7: we know that about thirty five percent of companies don't
Speaker 7: return all the capital. We know that in venture, I've
Speaker 7: seen studies that said it's you know, half. In our
Speaker 7: twenty years of experience, we've had just about thirty percent
Speaker 7: of companies who haven't returned capital. But the rest of
Speaker 7: our companies, in fact, I looked at it just the
Speaker 7: other day, of all the money that we've invested, one
Speaker 7: hundred percent of it has come back in aggregate to
Speaker 7: our investors, and there's unrealized gains in the in the
Speaker 7: existing operating companies of about another seventy nine percent. And
Speaker 7: on average, our companies are still only a couple of
Speaker 7: years old. So the thing though, is that's across our
Speaker 7: whole investor group. So I can't give you a number
Speaker 7: for any specific investor.
Speaker 4: Unfortunately, Joanne, we're seeing so much energy around AI right now,
Speaker 4: and you've certainly you and the team have made some
Speaker 4: investments in AI focused companies, certainly, but when you look
Speaker 4: around the landscape. What's exciting to you right now?
Speaker 7: Well, companies using machine learning and AI is that's a
Speaker 7: that's big an angel investing, but not the large language
Speaker 7: models that take billions to affect most of the stuff
Speaker 7: that we see and a good you know, ten percent
Speaker 7: of our operating companies are machine learning or AI companies.
Speaker 7: But generally we're looking at companies that are that are
Speaker 7: solving a very specific business problem or improving a specific
Speaker 7: business process, and that's you know, been part of our
Speaker 7: environment for at least five years. I can give you
Speaker 7: a couple of cases. We have companies that do scheduling,
Speaker 7: you know, telephone or text scheduling for real estate companies,
Speaker 7: for healthcare providers. We have companies that do collections. We
Speaker 7: have companies that do image creations specifically to match a brand.
Speaker 3: We have.
Speaker 7: Companies that use machine learning to do antibiotic resistance prediction.
Speaker 7: So but they're they're using the company and the companies clients' data,
Speaker 7: So it's not these things where you need billions and
Speaker 7: billions to get going.
Speaker 4: Joan really appreciate you joining us once again here on
Speaker 4: Bloomberg Business Week. Joined Corcoran co Chief executive Officer and
Speaker 4: managing partner over at Golden Seeds m Marco.
Speaker 3: A journal.
Speaker 2: How about you let me drive?
Speaker 1: Oh no, no, no no, who's going to drive? Honey?
Speaker 3: Please? Gravels.
Speaker 2: I want to drive.
Speaker 8: It's a good question.
Speaker 1: God, this is the drive to the Globes.
Speaker 8: Dot com for me.
Speaker 1: I think we'll buy around on Bloomberg Radio.
Speaker 2: Right, TikTok, everybody, Just about eighteen minutes left in today's
Speaker 2: trading session, getting ready to wrap up the week that
Speaker 2: was and definitely one where we saw a different tone
Speaker 2: compared to what we've seen over the last three weeks. Right,
Speaker 2: I think that we've seen stocks down on a weekly basis,
Speaker 2: but we are on track for the S and P
Speaker 2: to see quite a healthy gain, if you will, in
Speaker 2: the trade, just pulling it up two point eight percent
Speaker 2: to the episode that was after one two, three weeks
Speaker 2: of declines Nasdaq one hundred out pacing even that on
Speaker 2: a weekly basis.
Speaker 4: Did you just set that up very well?
Speaker 6: Thank you?
Speaker 4: I just want to say thank you.
Speaker 2: Are welcome, Okay, Well.
Speaker 4: Katerina Semonetti is senior vice president at Morgan Stanley Private
Speaker 4: Wealth Management. Given everything that Carol just said, Katerine, are
Speaker 4: we we're kind of out of the woods with this
Speaker 4: sell off that we saw in April.
Speaker 8: Well, Tim Carroll, thank you for having me on and
Speaker 8: Happy Friday. And it just goes to tell us that
Speaker 8: market is always looking for a reason to stay optimistic,
Speaker 8: even though you know, of course, when we look at
Speaker 8: the market performance over the last three weeks, you know,
Speaker 8: it gives us the pause at the very least as
Speaker 8: we are entering the second quarter of earnings and as
Speaker 8: we're questioning ourselves whether the earnings are able to sustain
Speaker 8: and support the valuations that are so high. Market had
Speaker 8: a tremendous increase last year, especially towards the end of
Speaker 8: the year, on expectations that we are going to see
Speaker 8: lower rates quite quickly, and seeing inflation not quite at
Speaker 8: the numbers anywhere nowhere really close to the two percent
Speaker 8: part that Federal Reserve was hoping to see. Is putting
Speaker 8: a question whether we're going to see rate cuts, you know,
Speaker 8: as soon as we expected.
Speaker 2: Is it all about ray cuts? I mean, I guess
Speaker 2: it is. We certainly play it's our favorite, as Tom
Speaker 2: Kane likes to say in the morning, it's our favorite
Speaker 2: parlor game, like what's the Fed.
Speaker 1: Going to do?
Speaker 2: What it's not going to do. But having said that,
Speaker 2: as long as we have, I mean, we were kind
Speaker 2: of freaked out, if you will, with a lower growth
Speaker 2: GDP report backward looking higher inflation, get another one today
Speaker 2: That kind of says, yep, you know, it didn't come
Speaker 2: in higher than forecast, but it does remind us that
Speaker 2: high for longer when it comes to inflation. Having said that,
Speaker 2: you know, around these conversations, the economy continues to you know,
Speaker 2: move along and survive, the IMF raising its forecast for
Speaker 2: global growth. I don't know, is there something that says
Speaker 2: maybe the world, certainly the public publicly traded world, is
Speaker 2: getting is figuring out how to kind of operate in
Speaker 2: this higher rate environment, which is still kind of more
Speaker 2: historically in line than what we saw when it was
Speaker 2: a zero rate environment.
Speaker 8: You're absolutely right, and we need to switch the focus
Speaker 8: from this mathematical you know, is FAD going to give
Speaker 8: us one rate cuts or two rate cuts or are
Speaker 8: we going to get five rate cuts? And we have
Speaker 8: to look at what functioning in this higher rate environment
Speaker 8: is going to mean for the profitability of our companies,
Speaker 8: What is it is going to mean for consumer behavior,
Speaker 8: who are going to be change their normal habits, you know,
Speaker 8: normal spending patterns because of the interest rates, and we
Speaker 8: have to look at it from every which way, and
Speaker 8: FED absolutely has a very difficult decision in front of them.
Speaker 8: They've set the expectations and they've said time and time
Speaker 8: again that their next move is going to be a cut.
Speaker 8: But you know, at the same time, you know they
Speaker 8: also pride themselves in that data driven approach. And as
Speaker 8: we look at the earnings, the real focus should be
Speaker 8: whether current earnings and we're seeing them here in the
Speaker 8: second quarter, are going to support the valuations that we
Speaker 8: see inequities and whether our companies are going to be
Speaker 8: able to stay profitable in this potentially higher for longer environment.
Speaker 2: So, Katerina, as the narrative has changed a little bit,
Speaker 2: and we'll get maybe possibly a tweak on that narrative.
Speaker 2: We will see when we get the next FED meeting
Speaker 2: and decision next week. Right, that is certainly a focal point.
Speaker 2: We get a jobs report after the FED meets next Wednesday.
Speaker 2: Having said that, you know, what is are you tweaking
Speaker 2: at all investor portfolios client portfolios? I understand invest for
Speaker 2: the long term, but that doesn't mean you don't do
Speaker 2: some tweaks here and there, So what might they be
Speaker 2: in this environment?
Speaker 8: Well, of course, and tweaks are perfectly normal. You know,
Speaker 8: first and foremost where of the mindset that no quarter
Speaker 8: or no month you know, should ever be you know,
Speaker 8: driving force behind changing the you know, the total large
Speaker 8: picture strategy.
Speaker 1: You know.
Speaker 8: But with that in mind, you know, the tweaks that
Speaker 8: we're doing is focusing to quality, you know, looking at energy, industrials, materials,
Speaker 8: you know, making sure that not no one sector in
Speaker 8: our portfolios is over valued, you know, if there is
Speaker 8: a possibility to rebalance and taque profits because we have
Speaker 8: positions and sectors that have done so well over the
Speaker 8: last eighteen months, and this is a perfect opportunity to
Speaker 8: take some of those games of the table and replace them,
Speaker 8: put them into the areas that have not performed well
Speaker 8: that are positioned to deliver these you know, good results.
Speaker 2: So Energy, by the way, it's your second top or
Speaker 2: best performing major industry group in the S and P
Speaker 2: five hundred this year. There are eleven. Real Estate is
Speaker 2: the only one that's down for the year, and that
Speaker 2: would I would assume to some extent maybe on the
Speaker 2: rate environment, but down about nine percent. Also concerns that continue,
Speaker 2: certainly amongst of the office property area and commercial. But
Speaker 2: energy is up as a group almost fifteen percent. So
Speaker 2: I mean, is that good. That's pretty good for your
Speaker 2: to date. And here we are at the end of April.
Speaker 2: So you said you like energy. Do you continue to
Speaker 2: commit to that space?
Speaker 8: Absolutely? You know, it's one of our highest convictions. We
Speaker 8: think that energy is well positioned, not just due to
Speaker 8: the fact that you know, they were seeing kind current
Speaker 8: oil prices and production levels, but also due to the
Speaker 8: valuations and competitive positioning you know of the energy companies.
Speaker 8: You know, we think that there is you know, some
Speaker 8: additional growth in that sector, you know, and just the dividends.
Speaker 8: If you look at the income generating abilities of the
Speaker 8: energy companies, they play an essential role in the portfolios.
Speaker 4: So where do you not want to be, Katerina?
Speaker 8: When we look at the broad picture, you know, we
Speaker 8: think that brave cuts are coming in general. Historically, you know,
Speaker 8: there is a positive reaction by large caps actually the
Speaker 8: dividend thing stocks, you know, right that immediately following the
Speaker 8: rate cuts and about six months you know, maybe plus
Speaker 8: you know, we also see the rest of the market
Speaker 8: kind of like you know, coming long, you know, so
Speaker 8: we like the shorter term positioning of the large caps,
Speaker 8: and we like longer term positioning of small and mid cap.
Speaker 8: We also tell investors to take advantage of the higher rates,
Speaker 8: take advantage of the higher yields, really focus on their
Speaker 8: fixed income portfolios and make sure that that you know,
Speaker 8: they're well diversifying, that they are taking advantage of the
Speaker 8: high yield of preferreds of municipals. Because rates are high
Speaker 8: right now and we're getting very comfortable with them, but
Speaker 8: they are not going to be here forever. And this
Speaker 8: is a great environment. And over the last couple of
Speaker 8: weeks we also have seen declines in the prices and
Speaker 8: fixed income prices. So not only the yields are attractive,
Speaker 8: but there are also some really you know, interesting buying
Speaker 8: opportunities out there in the fixed income space.
Speaker 2: All right, Katerina, thank you so much. Have a great weekend.
Speaker 2: Katerina Seminetti, Senior vice President, Morgan Stanley Price but Wealth Management,
Speaker 2: joining us there in Philadelphia.
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