WEBVTT - Bloomberg Businessweek Weekend - August 23rd, 2025 0:00:00.280 --> 0:00:10.480 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business 0:00:10.480 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.400 --> 0:00:18.320 stay ahead with insight on the people, companies, and trends 0:00:18.360 --> 0:00:23.360 shaping today's complex economy, plus global business finance and tech 0:00:23.440 --> 0:00:27.320 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.640 --> 0:00:31.720 with Carol Masser and Tim Stenebeck on Bloomberg Radio. 0:00:32.200 --> 0:00:36.080 Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. 0:00:36.479 --> 0:00:39.320 Carol is off this week. Bloomberg News cross asset reporter 0:00:39.360 --> 0:00:42.560 Emily Graffeo joining me for most of our conversations over 0:00:42.600 --> 0:00:45.000 this past week, and it was a week where companies 0:00:45.000 --> 0:00:47.599 were still reporting for the most recent quarter, more than 0:00:47.600 --> 0:00:51.680 a dozen retailers reporting earnings. Geopolitics also front and center, 0:00:51.760 --> 0:00:55.480 as President Donald Trump hosted European leaders on Monday to 0:00:55.560 --> 0:00:58.279 discuss an end to the Russia Ukraine War, and then 0:00:58.280 --> 0:01:01.600 of course, the Kansas City FEDS annual gathering in Jackson 0:01:01.640 --> 0:01:05.520 Hole put monetary policy front and center again for the 0:01:05.600 --> 0:01:08.319 latest head on over to Bloomberg dot com. With the 0:01:08.319 --> 0:01:11.319 backdrop of monetary policy and how the Fed is planning 0:01:11.319 --> 0:01:14.000 to react to this economy, this hour, we take a 0:01:14.000 --> 0:01:18.240 look into consumer spending in this new world of tariffs. Also, 0:01:18.360 --> 0:01:21.640 we'll look into President Donald Trump's new brand of economic 0:01:21.720 --> 0:01:24.920 state craft. Plus the Finance Minister of New Zealand visits 0:01:24.959 --> 0:01:28.720 our studio to discuss US trade, the country's golden visas, 0:01:28.800 --> 0:01:32.360 and its economic outlook. All that to come, We begin 0:01:32.560 --> 0:01:35.279 with the batch of news from retailers this past week. 0:01:35.680 --> 0:01:39.199 Home Depot is raising its prices due to tariffs after 0:01:39.240 --> 0:01:42.800 previously saying it didn't plan to target, named a new 0:01:42.840 --> 0:01:46.360 CEO in hopes of breaking its sales slump, and Walmart 0:01:46.600 --> 0:01:49.600 profit missed expectations for the first time in three years. 0:01:49.840 --> 0:01:53.000 It overshadowed higher sales. It's just a handful of the 0:01:53.040 --> 0:01:56.120 companies that reported this past week. For the roundup of 0:01:56.160 --> 0:01:59.560 all things retail, Bloomberg News Equities reporter Nora Melinda and 0:01:59.600 --> 0:02:03.680 I Lee, Don Jen Bartasha's Bloomberg Intelligence Senior Retail Staples 0:02:03.680 --> 0:02:07.480 and packaged food analysts, and Bloomberg News Consumer reporter Jenet Newman. 0:02:07.720 --> 0:02:11.480 I think overall that the US consumer is actually doing okay. 0:02:12.600 --> 0:02:16.120 I think there's there's a note of caution looking forward 0:02:16.200 --> 0:02:18.640 because a lot of what's been sold in the in 0:02:18.680 --> 0:02:22.160 the last couple of quarters price price increases has not 0:02:22.280 --> 0:02:25.240 hit those goods, and so there's concern about when price 0:02:25.280 --> 0:02:29.240 increases really do start to flow through, what how consumers 0:02:29.280 --> 0:02:32.520 will will react. I mean, Walmart did have a profit 0:02:32.560 --> 0:02:35.519 miss that's very rare, that had to do with some claims, 0:02:35.680 --> 0:02:38.360 but they actually raised their sales guidance for the year 0:02:38.440 --> 0:02:40.480 which was already which was already pretty high. So that 0:02:40.520 --> 0:02:42.880 shows that there they do have some confidence in the 0:02:42.880 --> 0:02:44.440 consumer in the year in the year ahead. 0:02:44.560 --> 0:02:46.640 Hey, Jen, come on in here, because we spoke with 0:02:47.080 --> 0:02:51.360 the CFO of Kava, Trisia Toliver joined us and she 0:02:51.400 --> 0:02:54.640 said there's this fluid macroeconomic environment that these are her words. 0:02:55.080 --> 0:02:57.919 She said, it creates a fog for consumers and during 0:02:57.960 --> 0:03:00.880 those times they tend to step up off the gas. 0:03:01.680 --> 0:03:04.000 Would you say that that's the view you have at 0:03:04.000 --> 0:03:07.120 Bloomberg Intelligence about the consumer, that it's foggy and as 0:03:07.160 --> 0:03:09.959 a result of that fog, consumers are pulling back a 0:03:09.960 --> 0:03:10.360 little bit. 0:03:11.440 --> 0:03:11.639 Yeah. 0:03:11.840 --> 0:03:15.040 I think that's a pretty good insight. You know, when 0:03:15.040 --> 0:03:17.799 we look at the consumer and you look at sort 0:03:17.840 --> 0:03:21.480 of the bigger numbers in terms of the economy, the 0:03:21.520 --> 0:03:24.760 consumer is hanging in there. But the consumer has been 0:03:24.840 --> 0:03:28.200 conservative for a long time. It really started when we 0:03:28.280 --> 0:03:31.640 had high food inflation, and as soon as that started 0:03:31.639 --> 0:03:34.600 to roll back, we had pressure from tariffs, and there's 0:03:34.639 --> 0:03:38.680 just uncertainty. And when that consumer is uncertain, they still 0:03:38.680 --> 0:03:40.600 buy the things that they need to buy. They're still 0:03:40.600 --> 0:03:43.080 going on vacation, but they're just being a little bit 0:03:43.120 --> 0:03:46.040 more prudent. And until we have a little bit more clarity, 0:03:46.080 --> 0:03:47.800 we're not expecting that to really change. 0:03:47.920 --> 0:03:50.920 Jen, what is the bifurcation that you're seeing at Bloomberg 0:03:50.920 --> 0:03:56.240 Intelligence when it comes to consumers those at the higher 0:03:56.320 --> 0:03:58.680 end of the income spectrum versus what those at the 0:03:58.680 --> 0:04:00.480 lower end of the income spectrum are doing. And we've 0:04:00.480 --> 0:04:02.520 talked a lot for years about the K shaped recovery, 0:04:02.560 --> 0:04:04.960 and it kind of sounds like we're still there. Maybe 0:04:04.960 --> 0:04:05.920 it's even more pronounced. 0:04:07.000 --> 0:04:11.080 It's pretty pronounced. You know, lower income consumers continue to 0:04:11.080 --> 0:04:14.680 be pressured. When you look at retailers that really have 0:04:14.840 --> 0:04:16.719 a lot of those customers in their base, and that 0:04:16.760 --> 0:04:18.800 would be the Walmart's of the world, it would be 0:04:18.880 --> 0:04:22.159 Dollar Generals of the world. You know, you see that 0:04:22.680 --> 0:04:25.960 the spending and the average ticket and the traffic into 0:04:26.000 --> 0:04:29.200 those stores in some instances is a little bit pressured. 0:04:29.600 --> 0:04:32.760 At the same time, you know, higher income households are 0:04:32.839 --> 0:04:36.680 almost kind of going along as normal. They're still seeking value, 0:04:36.720 --> 0:04:39.080 but they're taking advantage of all the value that's being 0:04:39.120 --> 0:04:43.239 offered out to the broader economy and they're saving money 0:04:43.279 --> 0:04:46.520 that way. So it's an interesting thing to track and 0:04:46.560 --> 0:04:50.920 how those two different parts of the consumer base are 0:04:50.960 --> 0:04:52.680 really behaving a little bit differently. 0:04:53.240 --> 0:04:56.960 And everybody loves the deal, right and Walmart has actually, 0:04:57.080 --> 0:04:59.960 you know, to what Jen's saying, Walmart has has been 0:05:00.160 --> 0:05:03.160 hitd from everyone loving a deal and is attracting increasingly 0:05:03.200 --> 0:05:06.479 more higher income consumers and that's part of what's helped 0:05:06.520 --> 0:05:09.560 boost its its sales. And that's been a strategy. You 0:05:09.600 --> 0:05:12.200 know a lot of those consumers went to Walmart during 0:05:12.200 --> 0:05:15.080 the pandemic to get groceries and then have increasingly kind 0:05:15.080 --> 0:05:17.480 of bought more and more. Walmart is stepping up, you know, 0:05:17.560 --> 0:05:21.320 it's clothing offering and so that's also you know, that's helping, 0:05:21.320 --> 0:05:22.120 that's helping Walmart. 0:05:22.279 --> 0:05:24.760 Are those consumers sticky with Walmart? 0:05:24.920 --> 0:05:27.200 Yes, they are, They are sticky, and that's been that's 0:05:27.240 --> 0:05:29.839 been part of the that's been part of Walmart's success 0:05:30.120 --> 0:05:31.760 because they go to the grocery, they go in, they 0:05:31.760 --> 0:05:33.640 get the groceries, and then they see, oh, actually, like 0:05:33.680 --> 0:05:36.880 Walmart has great genes. Now Walmart has knows that these consumers. 0:05:37.160 --> 0:05:39.560 That was an American Eagle reference, wasn't it. 0:05:39.960 --> 0:05:40.000 Know. 0:05:40.120 --> 0:05:42.880 We're not gonna definitely, we're not gonna get We're not 0:05:43.000 --> 0:05:45.200 going again talking. 0:05:47.720 --> 0:05:51.960 Okay, not moving on, sorry, go ahead, chapter, next chapter. 0:05:52.120 --> 0:05:54.960 And that that also is you know, Walmart has been 0:05:55.000 --> 0:05:57.320 seizing on that and Target has been missing out. Target 0:05:57.360 --> 0:05:59.320 has not been doing well. They obviously just appointed a 0:05:59.360 --> 0:06:01.200 new seat. He's an insider. 0:06:01.440 --> 0:06:05.119 He was an amazing story. It is an amazing story. 0:06:05.160 --> 0:06:06.119 It is an amazing story. 0:06:06.279 --> 0:06:09.880 But the market's not that impressed though. That's what we're seeing. 0:06:10.240 --> 0:06:12.760 But I mean, you also come for companies like sday Lauder. 0:06:12.800 --> 0:06:14.760 We talked about Walmart. Of course, we know that has 0:06:14.800 --> 0:06:17.720 a lot of those consumers staples opportunities there. But when 0:06:17.760 --> 0:06:19.600 we look at Esta latter and a lot of competitors 0:06:19.600 --> 0:06:22.160 like that on the more luxury end, what are the 0:06:22.160 --> 0:06:25.000 contours of consumer spending in that space? 0:06:25.120 --> 0:06:25.520 Right now? 0:06:25.800 --> 0:06:29.479 You know, Beauty overall is doing okay again, kind of 0:06:29.600 --> 0:06:31.840 still slowing down a little bit, but still writing a 0:06:32.240 --> 0:06:34.840 post pandemic boom when we all got into you know, 0:06:35.880 --> 0:06:38.360 lots of different lots of different beauty beauty products at 0:06:38.360 --> 0:06:41.320 one at one time. But Stay Lauder is not doing 0:06:41.360 --> 0:06:43.320 that well. So that's kind of like even though the 0:06:43.320 --> 0:06:46.000 consumer right now is okay, a little bit conservative, like 0:06:46.000 --> 0:06:48.680 like Jen said, but Walmart is doing overall really well. 0:06:48.800 --> 0:06:51.160 Target is not doing great. That's also because of differences 0:06:51.160 --> 0:06:54.920 with the with the two companies and how they're run. Similarly, Loreal, 0:06:55.560 --> 0:06:58.440 huge beauty company, obviously is actually doing really well. Stay 0:06:58.480 --> 0:07:00.560 Latter No. Their sales in the most recent fiscal year 0:07:00.600 --> 0:07:03.039 that just ended, we're down eight percent, and those are 0:07:03.120 --> 0:07:05.719 kind of internal internal problems that they've been that they've 0:07:05.720 --> 0:07:06.360 been dealing with. 0:07:06.880 --> 0:07:09.640 Jennifer, I want to bring you back into the conversation here. 0:07:10.160 --> 0:07:13.480 Are we seeing any sense of consumer fatigue right now, 0:07:13.560 --> 0:07:15.480 especially when we know inflation is super high and if 0:07:15.520 --> 0:07:17.600 you were to ask the average person, they do think 0:07:17.640 --> 0:07:19.480 that things are kind of tight right now. 0:07:21.120 --> 0:07:23.200 I don't know that we're seeing a lot of fatigue. 0:07:23.240 --> 0:07:25.720 I think people have sort of adjusted to what is 0:07:25.760 --> 0:07:29.080 sort of almost a new normal, and that's a little 0:07:29.080 --> 0:07:32.760 bit post food inflation. They've seen prices come down in 0:07:32.880 --> 0:07:36.120 different ways, especially on the grocery side and some of 0:07:36.160 --> 0:07:40.840 the general merchandise, like entry level fashion, and so I 0:07:40.920 --> 0:07:43.560 think that gives the perception of a little bit of relief. 0:07:43.960 --> 0:07:46.720 So I don't think people are really pulling back anymore, 0:07:46.720 --> 0:07:50.720 but they're not also simultaneously really loosening the purse strings. 0:07:51.000 --> 0:07:53.040 It seems like we've sort of settled into kind of 0:07:53.040 --> 0:07:57.800 this new normal, this new normal range. One other note 0:07:57.840 --> 0:07:59.840 on Walmart that I think is pretty interesting. When you're 0:07:59.840 --> 0:08:05.280 talking about retention, you can't not talk about Walmart Plus, 0:08:06.120 --> 0:08:09.280 which is a huge loyalty program and they're generating a 0:08:09.320 --> 0:08:12.000 lot of incremental revenue off of it, and people who 0:08:12.040 --> 0:08:14.600 get in there, they keep renewing, and it just locks 0:08:14.640 --> 0:08:17.480 in loyalty and locks in spending, and we're seeing that 0:08:17.560 --> 0:08:19.240 across all income cohorts. 0:08:19.440 --> 0:08:21.840 Wait, wait, can you talk a little bit more about that? 0:08:21.880 --> 0:08:24.480 And I think I think what this is not an 0:08:24.480 --> 0:08:26.440 ad for American Express, but I will say if you 0:08:26.440 --> 0:08:28.600 have a certain American Express card, you can get a 0:08:28.640 --> 0:08:30.920 free membership to the program. 0:08:31.200 --> 0:08:32.280 Which one do you want to. 0:08:32.600 --> 0:08:35.760 I think it's the Platinum card. I believe, Yeah, I 0:08:35.840 --> 0:08:39.559 believe that's what it is. Thanks for calling you actually. 0:08:39.240 --> 0:08:43.480 Just completed a survey of one thousand Walmart Plus subscribers, 0:08:44.200 --> 0:08:47.200 and what's really interesting is that eighty three percent of 0:08:47.240 --> 0:08:50.840 Walmart Plus subscribers also have an Amazon Prime membership, but 0:08:50.880 --> 0:08:55.320 that doesn't stop them from maximizing their Walmart Plus value. 0:08:55.920 --> 0:08:58.720 And so I think that it really illustrates how Walmart 0:08:58.720 --> 0:09:03.720 has very uniquely carved out a service and a recurring 0:09:03.760 --> 0:09:07.960 revenue stream that is really pretty remarkable. And that the 0:09:08.000 --> 0:09:09.640 fact that a lot of the people who are in 0:09:09.679 --> 0:09:13.600 that program are making digital orders, that's driving their digital 0:09:13.640 --> 0:09:17.360 revenue for advertising, and it's really adding to just the 0:09:17.400 --> 0:09:21.240 overall flywheel of Walmart. So there's a lot of really 0:09:21.280 --> 0:09:24.800 interesting things happening that are really stemming from some of 0:09:24.880 --> 0:09:27.840 these intelligent decisions they made maybe five years ago to 0:09:27.920 --> 0:09:29.800 introduce that Walmart Plus program. 0:09:30.200 --> 0:09:32.520 That's a fascinating thing to hear because it was always 0:09:32.559 --> 0:09:34.280 sort of an owl also around when it comes to 0:09:34.440 --> 0:09:39.480 Amazon Prime. So it's interesting to hear that. Jen Janette, 0:09:39.480 --> 0:09:40.920 I want to bring you back in here and talk 0:09:40.960 --> 0:09:44.200 a little bit about Target. You mentioned the CEO change 0:09:44.240 --> 0:09:46.000 the news we got earlier this week. You said investors 0:09:46.040 --> 0:09:49.880 didn't love it. A lot of the conversation around Target 0:09:49.880 --> 0:09:51.840 over the last couple of years, well actually really over 0:09:51.880 --> 0:09:54.320 the last year or so, has had to do with 0:09:54.320 --> 0:09:57.800 backlash against DEI efforts. And to what extent in your 0:09:57.880 --> 0:10:01.800 view that actually a affected company sales or the image 0:10:01.800 --> 0:10:03.840 of what that looked like for consumers. What do we 0:10:03.880 --> 0:10:04.360 know about this? 0:10:04.800 --> 0:10:09.040 The company executives at Target have said that the backlash, 0:10:09.160 --> 0:10:12.560 like black black consumers not shopping at Target, has had 0:10:12.559 --> 0:10:15.520 an impact on sales. They have not quantified that, and 0:10:15.559 --> 0:10:19.160 so we don't really know. These kinds of boycotts don't 0:10:19.200 --> 0:10:21.400 often have a huge effect, but they have said that 0:10:21.440 --> 0:10:23.440 it had that it had an effect. And I think 0:10:23.480 --> 0:10:26.360 also more more importantly, even in some of the analyst 0:10:26.480 --> 0:10:30.080 notes and you hear investors talking about the staff at Target, 0:10:30.600 --> 0:10:34.920 we've had some reporting it's nearly sixty percent of staff 0:10:34.960 --> 0:10:38.120 at Target are people of color, and so the staff 0:10:38.160 --> 0:10:41.240 itself has been, you know, upset by everything that's been 0:10:41.280 --> 0:10:45.520 going on with with Target pulling back on DEI, and 0:10:45.559 --> 0:10:48.160 that is that is something that some people think is 0:10:48.240 --> 0:10:51.280 kind of behind some of this tumult with with staff. 0:10:51.400 --> 0:10:54.000 Job in retail is so difficult, and you need especially 0:10:54.000 --> 0:10:56.520 great especially now, and you need great staff, and you 0:10:56.520 --> 0:10:58.040 need people who are going to stick around and they 0:10:58.080 --> 0:11:00.200 know how the stores work, so that has also so 0:11:00.320 --> 0:11:03.600 been a problem, whereas you don't hear those same complaints 0:11:04.040 --> 0:11:07.679 from staff at Walmart, for example. Excuse me. They've also 0:11:07.760 --> 0:11:12.160 been increasing the salaries that they're paying their their top employees, 0:11:12.200 --> 0:11:14.040 so that is also an issue at Target. Is the 0:11:14.040 --> 0:11:15.199 issue with staff. 0:11:15.440 --> 0:11:17.600 Well, we love talking retail and the consumer with both 0:11:17.640 --> 0:11:20.240 of you. Thank you so much for joining us. Jenet Newman, 0:11:20.280 --> 0:11:24.360 Bloomberg News Consumer Reporter, and Jennifer bartashas Bloomberg Intelligence Consumer 0:11:24.440 --> 0:11:27.760 Team Leader and senior Retail Staples and Package of Food analysts. 0:11:28.120 --> 0:11:31.559 Check out Janette's reporting on the Bloomberg Terminal and Jennifer's 0:11:31.679 --> 0:11:35.359 research on the Bloomberg Ternaminal. Also, of course, at Bloomberg 0:11:35.440 --> 0:11:46.360 dot com. 0:11:41.080 --> 0:11:44.960 You're listening to the Bloomberg Business Week Daily podcast. Catch 0:11:45.000 --> 0:11:48.200 us live weekday afternoons from two to five eastering. Listen 0:11:48.240 --> 0:11:51.800 on Applecarplay and Android Atto with the Bloomberg Business app, 0:11:52.000 --> 0:11:53.720 or watch us live on YouTube. 0:11:55.040 --> 0:11:58.400 He didn't campaign on it, it wasn't even broached during 0:11:58.440 --> 0:12:03.280 his first administration. He criticized his predecessor for it, but 0:12:03.400 --> 0:12:06.520 this month President Donald Trump made clear He's willing to 0:12:06.600 --> 0:12:09.840 use the full force of the US government to directly 0:12:09.840 --> 0:12:13.240 intervene in corporate matters to achieve his economic and foreign 0:12:13.240 --> 0:12:17.840 policy goals, so writes Bloomberg Economic Statecraft reporter Joe Doe 0:12:18.080 --> 0:12:20.640 on the Trump administration taking a more active role in 0:12:20.760 --> 0:12:24.160 US companies seeking to collect fifteen percent of the money 0:12:24.200 --> 0:12:27.040 generated from sales of AI chips to China by Nvidia 0:12:27.080 --> 0:12:30.680 and AMD, the US government potentially taking a stake in Intel, 0:12:31.200 --> 0:12:34.959 a golden share in US Steel, and a DoD investment 0:12:35.120 --> 0:12:38.680 in a rare Earth's firm. This has investors, lawmakers, and 0:12:38.720 --> 0:12:43.400 trade experts raising concern and in some cases optimism. Joe 0:12:43.400 --> 0:12:45.520 Doe joined us with more, Yeah. 0:12:45.320 --> 0:12:47.880 You have the President of the United States in his 0:12:48.080 --> 0:12:52.120 entire administration, which by the way, has a number of 0:12:52.160 --> 0:12:55.480 Wall Street pros in it, saying why don't we use 0:12:55.520 --> 0:12:58.360 the full force of the United States federal government to 0:12:58.400 --> 0:13:03.320 take direct involvement in corporations that we deem crucial and 0:13:03.360 --> 0:13:06.840 central to national security? Tim, I mean, I know you 0:13:06.880 --> 0:13:09.600 and I have sat here many times and talked about 0:13:09.600 --> 0:13:12.920 the imp materials deal and where that stands today. I 0:13:12.960 --> 0:13:18.680 mean the AMD Nvidia fifteen percent cut of Chinese AI 0:13:18.880 --> 0:13:21.719 chip sales that goes to the federal government. I mean 0:13:21.720 --> 0:13:23.880 that's massive. And then now the reporting that we've had 0:13:23.920 --> 0:13:27.080 from Bloomberg for the past five days that and now 0:13:27.160 --> 0:13:30.680 confirm by how this administration is looking to take an 0:13:30.720 --> 0:13:34.079 equity stake in Intel. I mean like to say, this 0:13:34.160 --> 0:13:35.560 is off the beaten path. 0:13:35.600 --> 0:13:36.480 I mean under. 0:13:36.240 --> 0:13:39.200 States just how wild this is and how new this 0:13:39.360 --> 0:13:43.320 is even to Washington policy pros and Wall Street pros 0:13:43.600 --> 0:13:45.520 who've been doing these jobs for decades. 0:13:46.040 --> 0:13:48.720 We'll talk to us about that, Joe. What makes these 0:13:48.800 --> 0:13:53.480 actions so unprecedented and so unlike different kinds of you know, 0:13:53.559 --> 0:13:57.160 government intervention in companies that we've seen before in the 0:13:57.280 --> 0:13:58.040 United States. 0:13:58.559 --> 0:14:00.600 I mean, if you think about it, we can look 0:14:00.640 --> 0:14:03.360 back to the financial crisis where we saw the bailouts 0:14:03.400 --> 0:14:08.000 of the banks, of AIG of GM. I mean, these 0:14:08.480 --> 0:14:12.559 were under extraordinary circumstances, right There was real fear in 0:14:12.600 --> 0:14:15.000 the federal government and in the markets that you could 0:14:15.000 --> 0:14:17.960 have a complete collapse of the financial system if the 0:14:18.080 --> 0:14:21.440 US government didn't step in to provide liquidity to the market. 0:14:21.840 --> 0:14:24.920 This is different. This is companies that they're not on 0:14:24.960 --> 0:14:28.680 the verge of bankruptcy that were taking equity stakes in 0:14:29.040 --> 0:14:31.960 and then we're taking cuts of sales supposedly. I mean, 0:14:32.040 --> 0:14:35.040 we'll see how they follow through on it. Typically, what 0:14:35.080 --> 0:14:38.080 we have seen, even with the Trump administration the first 0:14:38.080 --> 0:14:40.720 summer around was well, let's do things through trade, right, 0:14:40.840 --> 0:14:44.080 Let's use three oh one terraffs, which are country level tariffs. 0:14:44.280 --> 0:14:47.320 Let's do two thirty two terraffts, which are sectoral tearfs. 0:14:47.640 --> 0:14:50.240 These were written into US law even though they hadn't 0:14:50.280 --> 0:14:53.400 been used in years or sometimes decades, they were there, 0:14:53.520 --> 0:14:56.080 and they had been used before. I think this is 0:14:56.120 --> 0:14:58.680 starting to push the boundaries of those legal questions. 0:15:00.000 --> 0:15:04.640 So did the word nationalism or nationalizing companies come up 0:15:04.640 --> 0:15:06.960 at all in the reporting here? And in the folks 0:15:06.960 --> 0:15:09.280 you spoke to, You go into some detail about the 0:15:09.320 --> 0:15:12.320 so called Chinese model, but there's also you know, Argentina 0:15:12.400 --> 0:15:15.200 comes to mind with nationalization in the past. 0:15:15.480 --> 0:15:18.560 Yeah, totally, Tim When you talk to people, and again, 0:15:18.640 --> 0:15:20.960 this isn't just like a couple of guys on Wall 0:15:21.000 --> 0:15:24.680 Street or like one guy you know sitting in a 0:15:24.800 --> 0:15:27.440 law firm. This is this is across the spectrum, and 0:15:27.480 --> 0:15:32.400 you hear over and over again uncharted territory, Chinese model, 0:15:32.680 --> 0:15:35.800 and like you said the question of nationalizing companies, like, 0:15:35.840 --> 0:15:38.800 I had one source say, listen, there are ways the 0:15:38.800 --> 0:15:43.120 federal government can step in and direct the actions of companies, 0:15:43.200 --> 0:15:45.560 and you can do that without taking a stake in 0:15:45.600 --> 0:15:48.800 the company. You start doing these things, and it does 0:15:49.160 --> 0:15:53.160 spread worry, right, It spreads worry among investors who say, well, 0:15:53.200 --> 0:15:56.040 wait a minute, if you're going to choose national champions, 0:15:56.080 --> 0:15:57.680 that you're just going to wake up one morning and 0:15:57.720 --> 0:16:00.240 say we're taking a stake in this because we think 0:16:00.240 --> 0:16:05.200 it's critical to US national security. That changes fundamentals of 0:16:05.560 --> 0:16:08.240 making bets on companies, right. I mean, one person mentioned 0:16:08.240 --> 0:16:11.760 to me, you have high valuations already. What happens if 0:16:11.880 --> 0:16:14.040 you have the federal government starting to get involved with 0:16:14.080 --> 0:16:17.840 some of these these high valuation companies. I mean, those 0:16:17.880 --> 0:16:20.800 are the kind of conversations I was having that really 0:16:20.880 --> 0:16:24.720 became the idea behind America Inc. And seeing for the 0:16:24.760 --> 0:16:28.480 first time President of the United States taking direct action 0:16:28.800 --> 0:16:30.000 in corporate America. 0:16:30.680 --> 0:16:34.280 Yeah, what have investors said so far? I mean I'm 0:16:34.320 --> 0:16:38.680 thinking specifically about Intel on like whether this is good 0:16:39.200 --> 0:16:40.520 for the company or not. 0:16:41.200 --> 0:16:44.000 I think when you look at all this, we are 0:16:44.080 --> 0:16:46.000 in what a number of these people told me, which 0:16:46.040 --> 0:16:49.240 is uncharted territory. Is it good? Well, some people would say, 0:16:49.440 --> 0:16:52.480 listen to compete with China, because let's be clear, one 0:16:52.520 --> 0:16:53.840 of the things that the White House said to us 0:16:53.840 --> 0:16:57.040 in our story was, you know, semiconductors rare or steel. 0:16:57.240 --> 0:17:01.120 These are national security issues long have been for the 0:17:01.120 --> 0:17:03.760 President of the United States. Those often also happen to 0:17:03.760 --> 0:17:06.840 be issues that are directly tied to China, something that 0:17:06.880 --> 0:17:11.280 the administration sees itself in direct competition with. Steel has 0:17:11.320 --> 0:17:14.000 been an oversupply for a long time out of China. 0:17:14.000 --> 0:17:16.000 That's one of the reasons the President moved in his 0:17:16.040 --> 0:17:18.880 first term to put up trade barriers on steel. Now, 0:17:18.960 --> 0:17:21.760 this time around, the trade war between the United States 0:17:21.760 --> 0:17:26.919 and China centers around chips and permanent magnets, and the 0:17:26.920 --> 0:17:29.639 permanent magnet story is already told. MP Materials gets a 0:17:29.680 --> 0:17:33.439 four hundred million dollars preferred equity stake from the DoD. 0:17:33.720 --> 0:17:35.520 That's what you really have to start looking at, which 0:17:35.560 --> 0:17:37.280 is like, what else does the President of the United 0:17:37.320 --> 0:17:40.840 States consider central to this national security question? In particular, 0:17:40.880 --> 0:17:41.639 maybe with China. 0:17:41.800 --> 0:17:44.080 That's exactly where I was going to go. So based 0:17:44.119 --> 0:17:48.640 on your reporting, the folks you spoke to what's next here? 0:17:48.480 --> 0:17:51.639 We have US Steel, we have MP materials, right, we 0:17:51.680 --> 0:17:56.760 have Intel, we have news around AMD and Nvidia. What 0:17:56.800 --> 0:17:59.000 do investors need to be prepared for the next shoot 0:17:59.000 --> 0:17:59.440 a drop? 0:18:00.560 --> 0:18:02.600 I don't know, Tim, I don't know. 0:18:03.320 --> 0:18:05.520 Would it be like a do autos going and get 0:18:05.560 --> 0:18:06.360 on your radar at all? 0:18:07.880 --> 0:18:08.560 It's hard to tell. 0:18:08.600 --> 0:18:08.919 Listen. 0:18:09.520 --> 0:18:14.320 Bloomberg has reported, particularly around the MP Materials deal. We've 0:18:14.359 --> 0:18:17.840 reported that IMP Materials looked like something was being lined 0:18:17.920 --> 0:18:20.959 up by the DoD and it wouldn't just be the 0:18:20.960 --> 0:18:21.840 only one. 0:18:22.440 --> 0:18:22.880 Some of the. 0:18:22.800 --> 0:18:26.320 Reporting we've had is that the Intel situation may not 0:18:26.440 --> 0:18:28.720 just be a one off, right, Like the things I 0:18:28.720 --> 0:18:32.080 have heard are this administration is keen on taking home 0:18:32.160 --> 0:18:36.439 run swings and not just on one thing, right. So 0:18:37.160 --> 0:18:39.520 I think at this point the market is looking into 0:18:39.560 --> 0:18:41.719 the question that you're asking, Tim, like what is next? 0:18:41.960 --> 0:18:43.920 I think it's hard to know what's next. I mean, 0:18:44.000 --> 0:18:47.040 so much of this, it's important to say, is so fluid. 0:18:47.240 --> 0:18:49.840 The conversations are just ongoing, and what they might be 0:18:49.880 --> 0:18:52.920 talking about today might completely change in the next twenty 0:18:52.960 --> 0:18:54.000 four hours. 0:18:54.560 --> 0:18:58.320 Joe Doe, we know whatever comes you will be on it. 0:18:58.320 --> 0:19:00.800 It's one of the most read stories on the Blueloomberg terminal. 0:19:01.040 --> 0:19:04.119 President Trump targets America Inc. With a new brand of 0:19:04.320 --> 0:19:08.199 US statecraft. Joe Doe is Economic Statecraft Reporter. 0:19:09.720 --> 0:19:13.880 This is the Bloomberg Business Week Daily Podcast. Listen live 0:19:13.960 --> 0:19:17.199 each weekday starting at two pm Eastern on Applecarplay and 0:19:17.200 --> 0:19:20.240 Android Auto with the Bloomberg Business App. You can also 0:19:20.359 --> 0:19:24.000 listen live on Amazon Alexa from our flagship New York station. 0:19:24.560 --> 0:19:27.480 Just say Alexa, play Bloomberg eleven thirty. 0:19:27.800 --> 0:19:30.000 And we stick with Joe Doe and the race for 0:19:30.119 --> 0:19:33.840 Greenland's riches. We've been hearing a lot about rareth minerals, 0:19:34.080 --> 0:19:36.560 you know, the critical materials used in everything from missile 0:19:36.600 --> 0:19:39.600 defense systems to smartphones, and now they're at the heart 0:19:39.640 --> 0:19:42.320 of renewed US interest in Greenland, where some of the 0:19:42.320 --> 0:19:46.080 world's richest untapped deposits can be found. The Trump administration 0:19:46.119 --> 0:19:49.479 has made no secret of its geopolitical curiosity about the island, 0:19:49.960 --> 0:19:51.840 and the minerals may be a big part of why. 0:19:52.400 --> 0:19:55.280 To break it all down. Bloomberg Cross Asset reporter Isabel 0:19:55.359 --> 0:19:57.840 Lee and I were joined by Joe Doe, Bloomberg News 0:19:57.880 --> 0:20:01.080 Economic Statecraft reporter, who visited the icy island. 0:20:01.640 --> 0:20:04.920 This was really the thesis I wanted to dig into, right. 0:20:04.960 --> 0:20:07.720 I mean, we spent the first three months of the Trump, 0:20:08.640 --> 0:20:13.040 the Trump two point zero administration, focusing on let's buy 0:20:13.080 --> 0:20:15.480 Greenland again, let's take it over. We're not going to 0:20:15.560 --> 0:20:18.880 rule out military force. And you know, I'd been talking 0:20:18.880 --> 0:20:20.960 to people kind of in the background who said, you know, 0:20:21.000 --> 0:20:25.760 what's really being discussed here is the national security and 0:20:25.840 --> 0:20:31.640 the potential for investments within the island. So I met 0:20:31.720 --> 0:20:35.440 up with Drew Horn, who was a former Trump administration official. 0:20:35.480 --> 0:20:38.200 He worked in the DoD Defense Department and the Defense 0:20:38.600 --> 0:20:42.040 excuse me, the DOE, the Energy Department. He was on 0:20:42.160 --> 0:20:45.719 Trump's team in twenty nineteen that was tasked with figuring 0:20:45.760 --> 0:20:48.840 out a way to own Greenland. 0:20:48.359 --> 0:20:48.840 I guess. 0:20:49.280 --> 0:20:51.879 And so where we came down on this was we 0:20:51.920 --> 0:20:54.320 took this trip with Drew to kind of see this 0:20:54.400 --> 0:20:58.240 behind the scenes of like trying to invest in Greenland. 0:20:58.480 --> 0:21:01.959 So take us there, because you went to Greenland. Well, 0:21:02.040 --> 0:21:05.240 first you went to Denmark, I believe, and then you yeah. 0:21:05.119 --> 0:21:06.439 I went to Copenhagen for a day. 0:21:06.520 --> 0:21:08.359 Yeah, well Greenland is I guess. I scouldly Greenland is 0:21:08.359 --> 0:21:11.000 part of Denmark. But first you went to Denmark proper, 0:21:11.160 --> 0:21:14.840 that's right, Hagen to then fly to Greenland. What was 0:21:14.880 --> 0:21:17.000 it like? How'd you get there? Was it all snow? 0:21:17.400 --> 0:21:19.280 Just break it down for us partly? Yeah, I mean 0:21:19.320 --> 0:21:23.639 it was really difficult. People had warned me before I 0:21:23.680 --> 0:21:27.919 went to Greenland, hey, like, actually, my neighbor is a 0:21:27.960 --> 0:21:30.720 flight attendant and said to me, hey, some of my 0:21:31.320 --> 0:21:34.800 flight attendant friends have been stuck for like three. 0:21:34.680 --> 0:21:36.920 Days in Greenland. And this was literally a week before 0:21:36.920 --> 0:21:38.960 I went there, and I said, oh my gosh, okay, 0:21:39.280 --> 0:21:42.159 and other people had warned me, listen, whatever days you 0:21:42.200 --> 0:21:44.320 think you're flying in and out of Greenland, just like, 0:21:45.240 --> 0:21:47.800 assume it's going to be a day or two difference. 0:21:48.600 --> 0:21:50.439 And that turned out to be the case. I mean, 0:21:50.480 --> 0:21:53.080 I flew out of Newark on a Tuesday. I got 0:21:53.119 --> 0:21:57.400 into Copenhagen the next morning, no problem there, and then 0:21:57.720 --> 0:22:00.920 the day after that. So this is third I took 0:22:00.920 --> 0:22:03.280 a flight four and a half hour flight direct to Nook. 0:22:03.800 --> 0:22:07.480 I didn't realize at the time that something like twenty 0:22:07.520 --> 0:22:11.640 percent of the direct flights from Copenhagen to Nook there's 0:22:11.680 --> 0:22:15.000 only one per day, had been canceled or turned around 0:22:15.119 --> 0:22:17.359 or something to that effect. We got in, I thought, 0:22:17.400 --> 0:22:20.320 no problem. A day later, we fly out to Southern Greenland, 0:22:20.320 --> 0:22:22.119 which is where this actual mine was located. 0:22:22.240 --> 0:22:23.560 We flew on a plane, a helicopter. 0:22:23.560 --> 0:22:25.560 We flew on a plane to get down there. It 0:22:25.560 --> 0:22:29.239 was a prop plane, which was kind of cool. We 0:22:29.359 --> 0:22:33.840 landed and within moments of landing, it's like the densest 0:22:33.920 --> 0:22:35.760 fog I've ever seen in my life just started to 0:22:35.800 --> 0:22:37.879 settle in. And we were supposed to be up the 0:22:37.920 --> 0:22:40.600 next day in a helicopter to get to this mine. 0:22:40.680 --> 0:22:43.639 Because getting to the mine from this kind of base 0:22:43.720 --> 0:22:47.600 camp that we had in Southern Greenland, it was either 0:22:47.680 --> 0:22:49.440 like a two and a half hour three hour boat 0:22:49.520 --> 0:22:52.560 ride or a helicopter ride that takes you fifteen minutes. 0:22:52.600 --> 0:22:55.600 There's no driving, there's there's no other options. Those are 0:22:55.600 --> 0:22:58.560 the options. The next day we woke up and it 0:22:58.640 --> 0:23:02.280 was snowing and it was a fog. I mean, I 0:23:02.280 --> 0:23:06.040 feel like the fog ceiling was like twenty feet above us. 0:23:06.400 --> 0:23:09.919 I mean it was straight out of like Harry Potter, 0:23:10.119 --> 0:23:12.119 you know, when he's like at the end of the 0:23:12.119 --> 0:23:14.800 whole movie and he's just in this densely fogged area 0:23:14.800 --> 0:23:16.720 and none of it makes sense. It felt that way 0:23:17.560 --> 0:23:17.879 does it? 0:23:17.960 --> 0:23:19.919 And you know there's a big take podcast that you 0:23:19.920 --> 0:23:22.720 did with David Gura. It'z great. You have some sound 0:23:22.760 --> 0:23:27.480 from the French the helicopter pilot. Yeah, Pierre explaining to you, 0:23:27.480 --> 0:23:29.280 you know, about the percentages that you were going to 0:23:29.280 --> 0:23:30.719 actually get off the ground. I'm not going to give 0:23:30.720 --> 0:23:32.480 the whole thing away, but it made me think when 0:23:32.480 --> 0:23:34.639 I was listening to that and reading your story, the 0:23:34.680 --> 0:23:38.399 actual extraction and processing of this stuff, it's got to 0:23:38.400 --> 0:23:40.439 be pretty challenging in environments such as this. 0:23:40.960 --> 0:23:41.840 Yeah. 0:23:42.440 --> 0:23:44.280 Part of that story was just pointing out how hard 0:23:44.320 --> 0:23:48.280 it was to get to the mine itself. So you 0:23:48.320 --> 0:23:51.520 add that on top of it is in a type 0:23:51.520 --> 0:23:55.639 of rock that has still not been processed at commercial scale. 0:23:56.920 --> 0:24:01.840 It is in a place that currently has no port. 0:24:02.000 --> 0:24:07.159 There's no there's no equipment there right Like, it's not 0:24:07.200 --> 0:24:10.080 like there were roads and early stage equipment. There's not 0:24:10.119 --> 0:24:12.600 even like a small campsite of people on the site. 0:24:12.720 --> 0:24:15.639 It's just a mound of dirt on a mountain. So 0:24:16.119 --> 0:24:19.840 you have to imagine that from that point on, you 0:24:19.920 --> 0:24:22.880 need to somehow get all the equipment in. You somehow 0:24:22.920 --> 0:24:25.760 need to basically build out like a small camp to 0:24:25.840 --> 0:24:31.399 begin digging into the ground and this mine tanbreeze. The 0:24:31.400 --> 0:24:34.159 deposit is well known as being a serious deposit of 0:24:34.240 --> 0:24:38.480 critical minerals, specifically rare earth. And you know, one of 0:24:38.480 --> 0:24:40.000 the things we put out in the story is that 0:24:41.320 --> 0:24:44.840 Chinese officials have been to the property before asking about 0:24:44.880 --> 0:24:47.359 the potential of buying it. We've also heard that Russian 0:24:47.400 --> 0:24:51.439 officials had been there before, so it's known, but to 0:24:51.640 --> 0:24:56.440 get it to work, it is still unclear actually how 0:24:56.480 --> 0:24:57.639 you will get it to work. 0:24:58.400 --> 0:25:00.639 One of the tidbits that I learned from your story, 0:25:00.640 --> 0:25:02.920 among the many, is that rare earths, in spite of 0:25:03.000 --> 0:25:06.000 their name, tend to be abundant as other industrial components. 0:25:06.000 --> 0:25:07.800 But I guess I mean extracting them is a different 0:25:07.800 --> 0:25:08.560 story altogether. 0:25:08.680 --> 0:25:08.960 Yeah. 0:25:09.000 --> 0:25:10.920 So we know that Trump floated by in Greenland in 0:25:10.960 --> 0:25:14.600 twenty nineteen, a move back then which was widely mocked. 0:25:14.640 --> 0:25:20.640 But given the island's rare earth reserve, strategic location shipping potential, 0:25:20.920 --> 0:25:23.560 was Trump actually ahead of his time, ahead of the curve? 0:25:24.240 --> 0:25:27.919 I don't know for sure, Like I think maybe the 0:25:27.920 --> 0:25:31.280 way I kind of phrase it is, you know, it 0:25:31.320 --> 0:25:34.600 seems like the president gets information in front of him, 0:25:35.560 --> 0:25:38.000 and the way he kind of communicates it maybe is 0:25:39.520 --> 0:25:42.040 cut up and spliced as to what the reality is. 0:25:42.560 --> 0:25:46.320 I think people like Drew Horn and others who have 0:25:46.480 --> 0:25:50.040 been around Greenland now for years finally felt like the 0:25:50.080 --> 0:25:53.320 attention by the President of United States on this on 0:25:53.400 --> 0:25:56.920 the rare earth on the island give it a business opportunity. 0:25:57.400 --> 0:25:59.879 Because the sense from Drew Horn, and he said this 0:26:00.000 --> 0:26:02.640 to me on the trip, was like, if investors feel 0:26:02.680 --> 0:26:04.480 like the full faith and credit of the United States 0:26:04.480 --> 0:26:07.840 federal government is behind a project, they will suddenly give 0:26:07.840 --> 0:26:11.639 it a chance and that will be the thing to 0:26:11.640 --> 0:26:13.520 see here. Like one of the things we pointed out 0:26:13.680 --> 0:26:17.919 was so we found Drew Horn finally made it to 0:26:18.000 --> 0:26:20.919 Tanbreeze and he got to see it, and later that 0:26:21.040 --> 0:26:23.520 week he got out of Greenland and went down to 0:26:23.520 --> 0:26:26.000 mar A Lago to talk to Trump Aids about it. 0:26:27.040 --> 0:26:29.880 And then within weeks after that, the Export Import Bank 0:26:29.880 --> 0:26:33.879 in the United States gave a letter of interest of 0:26:33.920 --> 0:26:37.320 a fifteen year loan for the mind. Now, the key 0:26:37.359 --> 0:26:39.760 thing here is that's a letter of interest. It's non binding, 0:26:39.800 --> 0:26:44.120 it technically means nothing, but it does mean that it's 0:26:44.119 --> 0:26:48.679 now on the radar of the US federal government. So 0:26:49.480 --> 0:26:51.639 is that enough to convince investors like this is a 0:26:51.640 --> 0:26:56.280 good bet. I don't know, but it does say to investors, okay, 0:26:56.440 --> 0:27:02.080 so it's probably not a complete no show, Like maybe 0:27:02.119 --> 0:27:04.280 we should at least sniff around it because there's a 0:27:04.320 --> 0:27:08.199 potential that Trump just says, let's throw some money at it. 0:27:09.440 --> 0:27:12.600 But I think that's that's where we get into this 0:27:12.720 --> 0:27:15.760 territory of like, whoa, what are we really doing here? 0:27:17.560 --> 0:27:20.960 I've covered mining for ten years at Bloomberg, and one 0:27:21.000 --> 0:27:22.760 of the things you run into all the time are 0:27:22.800 --> 0:27:26.480 these junior exploration companies or these junior miners, and you 0:27:26.520 --> 0:27:28.879 don't you don't write about them because they're. 0:27:28.680 --> 0:27:30.200 Nothing, because they haven't done anything. 0:27:30.200 --> 0:27:32.960 They haven't done anything, and typically kind of the rule 0:27:32.960 --> 0:27:35.639 of thumb is like they aren't really anything until a 0:27:35.680 --> 0:27:39.240 major miner comes up and buys them, you know, fifty 0:27:39.280 --> 0:27:41.640 percent of them or the entirety of them, and then 0:27:41.960 --> 0:27:44.159 it's like, Okay, this is a real deposit. It's going 0:27:44.200 --> 0:27:47.639 to get developed by serious people with investors and you know, 0:27:47.720 --> 0:27:52.159 the companies with good bonds. But this, this tanbreeze still 0:27:52.200 --> 0:27:56.480 does fall within that junior miner, junior exploration company. 0:27:56.960 --> 0:28:00.639 So then what challenges technical financial or regulatory still stand 0:28:00.640 --> 0:28:01.800 in the way, all of them. 0:28:01.920 --> 0:28:04.920 Of yeah, I mean all of them, all of them 0:28:04.920 --> 0:28:08.720 for sure. One of the things pointed out to me 0:28:08.800 --> 0:28:11.440 in Greenland was like, hey, the thing about Greenlanders is 0:28:11.480 --> 0:28:13.480 they're open for business. They love that idea. 0:28:13.600 --> 0:28:16.640 So locals were open. 0:28:16.720 --> 0:28:21.320 Well, open, but so long as it doesn't hurt the environment. Right, 0:28:21.400 --> 0:28:25.680 So we don't want our fjords polluted. We don't want 0:28:26.080 --> 0:28:29.800 very nice green mountain side with a big hole in 0:28:29.840 --> 0:28:32.320 it suddenly. Right, if you're able to do it responsibly 0:28:32.359 --> 0:28:35.879 and sustainably, the understanding was that would be okay, But 0:28:35.920 --> 0:28:37.840 then it's it's it's still not clear that that would 0:28:38.000 --> 0:28:39.960 necessarily happen with tanbreeze. 0:28:40.000 --> 0:28:41.480 Can that be done? Joe? 0:28:41.680 --> 0:28:41.840 Can? 0:28:42.200 --> 0:28:45.000 Can mining happen? Can mining of rares happen in a 0:28:45.040 --> 0:28:48.480 sustainable way that doesn't scar the earth, that doesn't destroy 0:28:48.760 --> 0:28:50.200 or affect these fjords? 0:28:50.560 --> 0:28:55.080 The Tanbres folks would say yes, they would say, modern mining, 0:28:55.560 --> 0:28:58.480 technical capabilities, we're able to figure it out. We're able 0:28:58.520 --> 0:29:03.880 to make this sustainable and clean. But again, like anything else, 0:29:04.080 --> 0:29:08.040 it is you enter a period of show me. You know, 0:29:08.160 --> 0:29:10.280 investors need to see that you can actually do it. 0:29:10.880 --> 0:29:13.960 Does the US buy Greenland. Does it need to buy Greenland? 0:29:14.600 --> 0:29:17.720 No? No, I mean, let's be honest, it does not 0:29:17.880 --> 0:29:19.960 need to buy Greenland. It's not going to buy Greenland. 0:29:20.000 --> 0:29:23.320 Greenland is still a part of Denmark. One of the 0:29:23.320 --> 0:29:25.440 most interesting parts of the story for me was I 0:29:25.480 --> 0:29:28.640 sat in the home of a local politician who said, listen, 0:29:29.040 --> 0:29:33.840 for me, it's not about being owned by the United States. Like, 0:29:33.960 --> 0:29:36.720 right now we're owned by Denmark. We don't want to 0:29:36.720 --> 0:29:38.680 be owned by Denmark. We don't want to be owned 0:29:38.720 --> 0:29:42.920 by anybody. We want to be ourselves. We want to 0:29:42.920 --> 0:29:45.720 be our own country. We are Inuit, we are Greenlandic. 0:29:45.800 --> 0:29:48.240 There's a real history there. So I think that's another 0:29:48.240 --> 0:29:51.480 important part is it's not a oh, the US would 0:29:51.560 --> 0:29:53.000 be better. It's like, no, we don't want to be 0:29:53.000 --> 0:29:56.760 owned by anybody. And I think that bit has often 0:29:56.440 --> 0:29:59.240 gotten missed in the discussion over Greenland. 0:30:00.320 --> 0:30:04.000 He's the economic Statecraft reporter for Bloomberg News. Check out 0:30:04.040 --> 0:30:06.560 his Big Take It's on the Bloomberg Terminal and at 0:30:06.560 --> 0:30:11.200 bloomberg dot com. Also check out the Big Take podcast 0:30:11.600 --> 0:30:16.280 of him along with David Gura of Bloomberg News. 0:30:20.880 --> 0:30:24.720 You're listening to the Bloomberg Business Week Daily podcast. Catch 0:30:24.800 --> 0:30:27.480 US live weekday afternoons from two to five Easter and 0:30:27.680 --> 0:30:31.600 listen on Applecarplay and Android Auto with the Bloomberg Business app, 0:30:31.760 --> 0:30:34.840 or watch US live on YouTube. 0:30:35.160 --> 0:30:38.200 Earlier this month, the Trump administration increased its tariffs on 0:30:38.240 --> 0:30:41.640 imports from New Zealand from ten percent to fifteen percent, 0:30:41.920 --> 0:30:45.080 a move that has rattled New Zealand farmers, manufacturers, and 0:30:45.160 --> 0:30:48.600 trade officials. It's a move that threatens billions and economic 0:30:48.680 --> 0:30:52.320 ties and raises tough questions about how New Zealand navigates 0:30:52.320 --> 0:30:55.400 a trade relationship with both the US and China. On 0:30:55.480 --> 0:30:57.880 top of that, the Reserve Bank of New Zealand cut 0:30:57.920 --> 0:31:00.240 its policy rate by twenty five basis point. It's to 0:31:00.360 --> 0:31:04.120 a three year low of three percent, flagging ostalled economy 0:31:04.120 --> 0:31:07.320 and warnings of domestic global headwinds for more. Carol and 0:31:07.320 --> 0:31:09.920 I recently caught up with the Finance Minister of New Zealand, 0:31:10.120 --> 0:31:11.720 Nicola willis Well. 0:31:11.720 --> 0:31:14.840 I think that there's considerable uncertainty in weld affairs today. 0:31:15.040 --> 0:31:17.560 Where there were once things that were given and were 0:31:17.640 --> 0:31:21.040 very predictable, we are now seeing more volatility and policy 0:31:21.120 --> 0:31:25.320 decision making, which has implications for investors and for sovereigns 0:31:25.520 --> 0:31:27.400 in terms of the way that we go about things. 0:31:27.400 --> 0:31:30.640 For our part in New Zealand, we tend to want 0:31:30.640 --> 0:31:33.400 to be a beacon of stability amidst all of that, 0:31:33.600 --> 0:31:35.280 to say, you know what, We're going to continue to 0:31:35.320 --> 0:31:38.840 be rules based. We have low, stable inflation, we have 0:31:38.920 --> 0:31:42.480 declining interest rates. We're going for growth. We trade with 0:31:42.800 --> 0:31:45.400 many countries around the world and wish to continue to 0:31:45.440 --> 0:31:50.520 pursue freer trading relationships. We have prospects for growth, and 0:31:50.560 --> 0:31:54.680 so we aim to be stable, predictable. We have secure institutions, 0:31:54.680 --> 0:31:56.800 and we think those things will be at a premium 0:31:57.080 --> 0:31:59.360 in the coming years as there is more volatility. 0:32:00.040 --> 0:32:03.640 Mister Willis, whenever we have officials from other countries visiting 0:32:03.680 --> 0:32:07.600 the US, which is a big part of your job, 0:32:07.760 --> 0:32:10.240 we always ask the question about a particular trip, why 0:32:10.280 --> 0:32:12.280 are you in New York right now? Why are you 0:32:12.360 --> 0:32:13.200 visiting us right now? 0:32:13.280 --> 0:32:16.760 We're here because we value very much both our economic 0:32:16.840 --> 0:32:21.600 and security relationship with the United States, and I'm pursuing 0:32:21.720 --> 0:32:24.959 more economic growth for New Zealand and New Zealanders, and 0:32:25.000 --> 0:32:27.200 we believe it's in the interests of both of our 0:32:27.240 --> 0:32:31.040 countries to forge stronger trade and investment ties in pursuit 0:32:31.080 --> 0:32:31.280 of that. 0:32:31.520 --> 0:32:35.360 So how does that work in an America first environment, 0:32:35.480 --> 0:32:38.280 In an environment from Washington, d C. Where the communication 0:32:38.400 --> 0:32:42.719 has been very strongly This is an administration that is 0:32:42.800 --> 0:32:46.400 looking at the priorities of the US, whether or not 0:32:46.480 --> 0:32:48.800 it affects other countries in a negative way. 0:32:49.320 --> 0:32:52.200 Well, quite simply, our proposition is it's in the United 0:32:52.240 --> 0:32:56.320 States interests to have a strong and growing relationship with 0:32:56.440 --> 0:32:59.720 New Zealand. We're part of the Five Eyes security partnership 0:33:00.240 --> 0:33:04.120 with Canada, the United Kingdom, and Australia, and we continue 0:33:04.120 --> 0:33:07.080 to believe that's very important for the United States. We 0:33:07.120 --> 0:33:11.600 also have a very complementary trade relationship. We export primary 0:33:11.640 --> 0:33:16.400 products tech services which Americans value, and equally, we import 0:33:16.480 --> 0:33:19.960 significant amounts from the United States and will continue to 0:33:20.000 --> 0:33:23.240 do so. We, like many countries, are increasing our investment 0:33:23.320 --> 0:33:26.280 and defense, and it's likely that some of the kit 0:33:26.360 --> 0:33:28.880 that we will be purchasing in future will be manufactured 0:33:28.880 --> 0:33:32.600 in the United States. Similarly, when our national Airline replaces 0:33:32.640 --> 0:33:36.160 its fleet, it's likely that some of those planes will 0:33:36.200 --> 0:33:39.400 be produced in America. We have very strong and longstanding 0:33:39.480 --> 0:33:42.240 people to people ties. Our two countries have gone along 0:33:42.280 --> 0:33:45.680 well for many, many decades, and we think it is 0:33:45.720 --> 0:33:48.920 in the interests of both countries that New Zealand continue 0:33:48.960 --> 0:33:51.840 to be a strong relationship that the United States could 0:33:51.840 --> 0:33:52.760 look to and rely on. 0:33:53.000 --> 0:33:55.680 So is this White House so impacting the relationship, the 0:33:55.720 --> 0:33:58.440 strong relationship that New Zealand has had with the United 0:33:58.440 --> 0:33:59.640 States in any way we. 0:33:59.800 --> 0:34:02.680 Can tinue to view the United States as our friends. Now. 0:34:02.760 --> 0:34:06.280 Of course, we would prefer not to be facing additional tariffs. 0:34:06.720 --> 0:34:08.799 Find me a country that says, yeah, we really like 0:34:08.840 --> 0:34:11.000 additional tariffs. 0:34:10.560 --> 0:34:11.560 And we're not in that. 0:34:11.960 --> 0:34:15.040 We're not in that situation, and we have a history 0:34:15.040 --> 0:34:17.919 of pursuing freer trading agreements. We have very very low 0:34:17.960 --> 0:34:22.200 trade barriers for United States and ports, and we feel 0:34:22.239 --> 0:34:25.480 we've treated American exporters very well, so we would pre 0:34:25.600 --> 0:34:28.200 prefer to be on a lower tariff rate. We've ended 0:34:28.239 --> 0:34:31.320 up at fifteen percent as a base rate, which reflects 0:34:31.320 --> 0:34:33.120 the fact we have a small trade surplus with the 0:34:33.239 --> 0:34:36.080 United States. We're talking very marginal New Zealand dollars five 0:34:36.160 --> 0:34:39.640 hundred million, so it isn't big. We don't really think. 0:34:39.440 --> 0:34:41.960 Disappointing that it wasn't maybe the ten percent that dooks 0:34:42.000 --> 0:34:42.480 for thinking it. 0:34:42.760 --> 0:34:45.359 We would have preferred that we understand the rule that's 0:34:45.400 --> 0:34:48.720 been applied. But it's hard to conceive that New Zealand, 0:34:48.760 --> 0:34:51.000 a country of five million people, is any kind of 0:34:51.040 --> 0:34:54.799 threat to the manufacturing or industrial base of America. 0:34:54.880 --> 0:34:57.160 Does it lead though? And I guess we're trying to 0:34:57.160 --> 0:34:59.759 figure out. We talk a lot about the geopolitical world 0:34:59.800 --> 0:35:03.520 war being changing around. We talked about if the present 0:35:03.560 --> 0:35:07.080 was just asked about maybe closer ties between China and 0:35:07.160 --> 0:35:09.360 Latin America. China already has a presence, we know in 0:35:09.400 --> 0:35:14.080 Latin America, but maybe they are increased as a result 0:35:14.080 --> 0:35:17.680 of what's going on. Are you forging different relationships because 0:35:17.719 --> 0:35:20.879 of some of the strained relationships out of the United 0:35:20.880 --> 0:35:22.480 States or strained relations out of the US. 0:35:22.560 --> 0:35:25.240 I wouldn't characterize it that way. New Zealand has always 0:35:25.280 --> 0:35:28.880 looked to forge relationships around the world and to reinforce 0:35:28.920 --> 0:35:31.719 the rules based system wherever we can, and to work 0:35:31.760 --> 0:35:35.359 through multilateral institutions because we're small and our voice will 0:35:35.360 --> 0:35:38.359 never be the loudest like the United States. We have 0:35:38.840 --> 0:35:42.520 a strong and important economic relationship with China that we've 0:35:42.560 --> 0:35:45.680 been able to maintain while also taking very different points 0:35:45.719 --> 0:35:48.480 of view on many matters, and we've been able to 0:35:48.520 --> 0:35:50.040 balance those two things. 0:35:50.320 --> 0:35:53.840 So not strengthening them with China because of maybe what's going. 0:35:53.680 --> 0:35:56.600 On, No, I would not characterize it that way, but 0:35:56.719 --> 0:36:00.560 continuing to lean into our relationships where we have inst 0:36:00.640 --> 0:36:05.680 So we are members, for example, of the CPTPP trade relationship, 0:36:06.120 --> 0:36:09.680 and we have welcomed the EU's interest in becoming a 0:36:09.719 --> 0:36:13.879 dialogue partner and looking to reinforce that trade arrangement. We've 0:36:13.920 --> 0:36:17.560 recently signed free trade agreements with the United Kingdom, with 0:36:17.719 --> 0:36:21.400 the European Union. They're important with the GCC, the UAE, 0:36:21.520 --> 0:36:25.000 and we're pursuing a trade relationship with India. We think 0:36:25.040 --> 0:36:28.960 it's very important as a small exporting country that we 0:36:29.040 --> 0:36:31.880 have options and who we trade with and wherever possible, 0:36:31.960 --> 0:36:35.120 try and open more doors. We've got a grand history 0:36:35.120 --> 0:36:36.720 of doing that. We were one of the first countries 0:36:36.719 --> 0:36:39.399 in the world to drop subsidies to ensure that we 0:36:39.400 --> 0:36:41.759 were genuinely open to the world. We won't get rich 0:36:41.840 --> 0:36:44.879 selling to ourselves, we're too small for that, so we 0:36:44.920 --> 0:36:47.759 do well when the world welcomes our goods and services. 0:36:48.160 --> 0:36:52.000 Mister Willis, are you meeting with any US officials on 0:36:52.040 --> 0:36:52.480 this trip? 0:36:52.760 --> 0:36:56.120 Not on this trip thirty six hours only. I'm afraid, 0:36:56.160 --> 0:36:58.759 but I look forward to returning to Washington later this 0:36:58.880 --> 0:37:02.200 year for some the annual meetings, and at that point 0:37:02.200 --> 0:37:04.440 I would hope to meet with some people from the administration. 0:37:05.080 --> 0:37:07.680 At that point, do you will part of your job 0:37:07.719 --> 0:37:10.000 be to try to reduce the fifteen percent tariff on 0:37:10.080 --> 0:37:11.240 goods from New Zealand. 0:37:11.640 --> 0:37:14.520 Well, look, we're realistic about the fact that the Trump 0:37:14.600 --> 0:37:17.799 administration have set a clear parameter that countries that have 0:37:17.920 --> 0:37:21.359 surpluses are unlikely to get reductions in their tariffs. But 0:37:21.440 --> 0:37:24.920 we will continue to advance our case, which is that 0:37:25.000 --> 0:37:28.720 we have a very complementary trade relationship with the United States, 0:37:28.760 --> 0:37:32.120 built on a security partnership in a very long history, 0:37:32.520 --> 0:37:34.719 and we will press the case for our exporters that 0:37:34.760 --> 0:37:38.000 we would we think be fairly facing a lower rate. 0:37:38.040 --> 0:37:40.799 And we will continue to share that message with our 0:37:40.840 --> 0:37:42.960 friends in the United States to make sure that if 0:37:43.000 --> 0:37:46.160 there is reconsideration of the current tariff regime in future, 0:37:46.480 --> 0:37:48.879 that we're front of the line for reconsideration. We think 0:37:48.920 --> 0:37:52.319 we should be. We're keyws, we play fair, we play 0:37:52.360 --> 0:37:56.800 by the rules. We sell you Sauvignon blanc tourism experiences 0:37:56.880 --> 0:38:00.160 and lean red meat that Americans love and we would 0:38:00.200 --> 0:38:02.399 like you to be getting it at fair prices into 0:38:02.400 --> 0:38:05.000 the future. And a lower tariff right supports that we 0:38:05.120 --> 0:38:08.600 expect to continue buying huge amounts of American goods into 0:38:08.640 --> 0:38:11.120 the future. So there's nothing to fear from giving New 0:38:11.200 --> 0:38:13.200 Zealand a lower tariff right in the future. 0:38:13.320 --> 0:38:15.319 You're also great sailors. I'm just going to point it 0:38:15.320 --> 0:38:18.560 out we as a fellow sailor myself, we're talking with 0:38:18.600 --> 0:38:21.080 you Alot Willis, she's Minister of Finance of New Zealand 0:38:21.120 --> 0:38:24.240 here in our studio at Bloomberg Headquarters in New York City. 0:38:24.680 --> 0:38:27.799 What are you go doing to encourage foreign direct investment? Yeah, well, 0:38:28.200 --> 0:38:29.560 we're very big on this. 0:38:29.760 --> 0:38:32.080 So we've set up a new entity, Invested New Zealand 0:38:32.160 --> 0:38:36.120 to connect international investors with New Zealand. We're reforming our 0:38:36.239 --> 0:38:40.239 legislation to make it easier for foreign investors to make investments, 0:38:40.239 --> 0:38:43.480 and administratively, we've sped up the process by which they 0:38:43.520 --> 0:38:47.720 can do that. Particular, we've introduced golden visas the Active 0:38:47.840 --> 0:38:52.160 Investor Plus, which means that investors can get residency rights 0:38:52.160 --> 0:38:55.800 in exchange for making investments either actively or passively. In 0:38:55.880 --> 0:38:56.880 New Zealand assets. 0:38:57.160 --> 0:38:57.720 Is it working. 0:38:58.000 --> 0:39:01.480 It is working. We've been delighted by the response, a 0:39:01.480 --> 0:39:05.440 really high degree of interest. Hundreds of people have applied 0:39:05.440 --> 0:39:07.879 for those visas within the first few months, pledging over 0:39:07.920 --> 0:39:11.319 a billion dollars in New Zealand funds. And I think 0:39:11.320 --> 0:39:14.680 that reflects two things. One, New Zealand is a safe, 0:39:14.800 --> 0:39:17.960 secure place in a world that increasingly is less so, 0:39:18.680 --> 0:39:21.799 and people like the idea of having that residency in 0:39:21.800 --> 0:39:25.120 New Zealand. But second, they can see that many of 0:39:25.160 --> 0:39:28.920 our investment opportunities are currently undercapitalized. Investing in New Zealand 0:39:29.000 --> 0:39:29.720 is a good bet. 0:39:30.080 --> 0:39:32.399 Can they buy real estate in New Zealand though if 0:39:32.400 --> 0:39:33.800 we get residency. 0:39:33.560 --> 0:39:37.719 Not currently that is excluded. Our government, which is comprised 0:39:37.760 --> 0:39:42.000 of three parties, has been in discussion about loosening those 0:39:42.120 --> 0:39:45.360 regulations so that those who get an active investor visa 0:39:45.760 --> 0:39:47.920 may in future be able to purchase a proper. 0:39:47.840 --> 0:39:49.759 How far is the future? What are we talking about 0:39:49.760 --> 0:39:50.480 for a timeline here? 0:39:50.680 --> 0:39:53.120 Those talks have been underway and you would expect that 0:39:53.160 --> 0:39:55.960 a decision would be made by our cabinet in the coming. 0:39:55.680 --> 0:40:00.880 Weeks, Okay, in the coming weeks, So Carol, get ready. 0:40:01.560 --> 0:40:03.160 Your little slice of paradise. 0:40:03.400 --> 0:40:06.560 You know, we're surrounded by a big, fat option. I 0:40:06.640 --> 0:40:10.400 know we have huge amounts of land. It's beautiful. I 0:40:10.440 --> 0:40:12.520 think the world should be looking at New Zealand. We 0:40:12.600 --> 0:40:13.600 have great prospects. 0:40:13.800 --> 0:40:17.319 Will the US tariffs impact growth in your nation? 0:40:17.560 --> 0:40:19.480 Well, as I said, we'd always prefer not to be 0:40:19.520 --> 0:40:24.200 facing those tariffs, but as a proportion of our overall trade, 0:40:24.239 --> 0:40:27.560 it is actually quite small. The more significant impact for 0:40:27.680 --> 0:40:29.920 US is the same as it is for many other countries, 0:40:29.960 --> 0:40:33.440 which is a lower rate of global growth resulting from 0:40:33.520 --> 0:40:34.920 tariffs and retaliatory too. 0:40:35.040 --> 0:40:36.799 You're worried about a global recession, then. 0:40:37.280 --> 0:40:40.200 Not a recession, but just a lower rate of potential 0:40:40.239 --> 0:40:42.920 growth would have otherwise been the case, particularly out of 0:40:42.920 --> 0:40:47.000 our trading partners. That then effects prices for our goods 0:40:47.000 --> 0:40:48.160 and demand for our goods. 0:40:49.160 --> 0:40:51.160 It's just enough to feel like a recession. 0:40:51.200 --> 0:40:53.560 Well, it can slow enough to feel like we're not 0:40:53.680 --> 0:40:56.400 meeting the potential that would have otherwise been realized. And 0:40:56.440 --> 0:40:59.720 that's been reflected in our forecast for the New Zealand economy, 0:40:59.719 --> 0:41:03.360 and which we did peer down our growth expectations for 0:41:03.400 --> 0:41:06.840 the future based on what was developing with tariffs. You know, 0:41:06.840 --> 0:41:08.440 obviously there's a lot of water to go into the 0:41:08.440 --> 0:41:10.920 bridge to see how all of this does play out globally, 0:41:10.960 --> 0:41:13.400 how countries are affected, and what it means for New 0:41:13.480 --> 0:41:17.920 Zealand's part. We continue to forecast strong growth, low inflation. 0:41:18.480 --> 0:41:20.879 That will remain the case, but a teriff free world 0:41:20.920 --> 0:41:22.200 is one in which we grow faster. 0:41:22.880 --> 0:41:25.160 Do you think that might come back if there's a 0:41:25.200 --> 0:41:26.319 different president in the. 0:41:26.239 --> 0:41:26.560 Way it is. 0:41:26.640 --> 0:41:29.000 I think countries will always continue to pursue their own 0:41:29.000 --> 0:41:32.160 interests as they should, and that's why I will keep 0:41:32.200 --> 0:41:34.520 singing the song for freer trade, because that is in 0:41:34.600 --> 0:41:35.719 New Zealand's interests. 0:41:36.080 --> 0:41:37.480 So glad to get some time with you. Thank you 0:41:37.560 --> 0:41:39.600 so much. Tom and I both enjoyed it. Nicola well 0:41:39.640 --> 0:41:41.680 as she's Minister of Finance for New Zealand right here 0:41:41.719 --> 0:41:42.360 in our studio. 0:41:43.719 --> 0:41:47.839 This is the Bloomberg Business Week Daily Podcast. Listen live 0:41:47.920 --> 0:41:51.000 each weekday starting at two pm e's during on Applecarplay 0:41:51.040 --> 0:41:53.879 and Android Otto with the Bloomberg Business App. You can 0:41:53.920 --> 0:41:57.399 also listen live on Amazon Alexa from our flagship New 0:41:57.440 --> 0:42:01.520 York season Just Say Alexa play Bloomberg eleven thirty. 0:42:02.160 --> 0:42:04.399 Plenty ahead in our second hour of the weekend edition 0:42:04.560 --> 0:42:09.560 of Bloomberg BusinessWeek. From Subways to Superchargers, more insights from 0:42:09.560 --> 0:42:13.279 the c suite, including the CFO of New York's Metropolitan 0:42:13.360 --> 0:42:17.439 Transportation Authority on addressing fair evasion, keeping the city's public 0:42:17.520 --> 0:42:21.440 transit budgets on track, and the agency's nearly two billion 0:42:21.440 --> 0:42:24.680 dollar investment in a subway line. Plus the founder and 0:42:24.760 --> 0:42:27.840 CEO of spark Charge wants to bring mobile ev charging 0:42:27.960 --> 0:42:31.400 everywhere you go. We discussed the company's plans to accelerate 0:42:31.400 --> 0:42:34.759 ev adoption all across North America. That's coming up later 0:42:34.800 --> 0:42:37.760 this hour, but first. The digital payments company Block formerly 0:42:37.800 --> 0:42:40.600 known as Square, earlier this month raised its full year 0:42:40.600 --> 0:42:43.239 profit guidance. This after second quarter earnings came in well 0:42:43.280 --> 0:42:45.880 ahead of Wall Street expectations. It was fueled by strength 0:42:45.920 --> 0:42:49.640 and its cash app lending business and resilient payment volumes. 0:42:50.160 --> 0:42:52.919 The company now expects to generate ten point one seven 0:42:53.120 --> 0:42:55.359 billion dollars in gross profit this year. That's up from 0:42:55.400 --> 0:42:57.800 a prior forecast of nine point nine to six billion. 0:42:58.360 --> 0:43:01.400 We've got with us am Rita, USA CFO and COLO 0:43:01.520 --> 0:43:03.840 of Block. She joins us from Palo Alto, California, actually 0:43:03.840 --> 0:43:06.400 from Hillsborough California. Excuse me, I'm Rerida is going to 0:43:06.400 --> 0:43:09.200 be featured in an upcoming edition of the Bloomberg CFO 0:43:09.239 --> 0:43:11.720 Briefing newsletter. You can sign up for that at Bloomberg 0:43:11.760 --> 0:43:14.400 dot com slash CFO Briefing. Also with us is a 0:43:14.440 --> 0:43:17.960 Nina Trentman, Bloomberg News Senior editor. She writes the Bloomberg 0:43:18.040 --> 0:43:20.880 CFO Briefing newsletter. She joins us here in the Bloomberg 0:43:20.920 --> 0:43:24.359 Interactive Brokers Studio. Welcome, Welcome, everybody, and Rita, I want 0:43:24.360 --> 0:43:27.680 to start with you. I almost said Square at Block 0:43:28.200 --> 0:43:31.399 you've got a great view of what the consumer's doing 0:43:31.480 --> 0:43:33.879 because of transactions, because of what's happening with. 0:43:33.840 --> 0:43:34.520 The Cash App. 0:43:34.719 --> 0:43:37.200 How would you describe the US consumer right now? 0:43:37.840 --> 0:43:38.080 Yeah? 0:43:38.120 --> 0:43:40.080 Well, first of all, thank you so much for having me. 0:43:40.160 --> 0:43:42.839 It's great to be here. You know, look, we have 0:43:42.960 --> 0:43:46.840 real time data across our two at scale ecosystems, Square 0:43:46.880 --> 0:43:50.480 that serves sellers small businesses, and across that we see 0:43:50.600 --> 0:43:54.600 hundreds of millions of buyer cards consumer cards, and then 0:43:54.920 --> 0:43:58.880 Cash App, which serves individuals fifty seven million monthly active 0:43:59.320 --> 0:44:03.200 accounts and Cash App across the United States. So between 0:44:03.239 --> 0:44:05.920 these two businesses we get to see a lot in 0:44:06.040 --> 0:44:10.239 terms of consumer spending and consumer health patterns. Overall, what 0:44:10.239 --> 0:44:13.560 we've seen is resilience. From a square perspective, we see 0:44:13.600 --> 0:44:16.640 strong retention. This is the growth or seam store growth 0:44:16.760 --> 0:44:20.320 for a small business on our platform remaining steady and strong. 0:44:20.719 --> 0:44:23.800 And we see strong new customer acquisition, which we think 0:44:24.120 --> 0:44:26.680 is a sign of strong small business as well as 0:44:26.719 --> 0:44:29.080 the growth of our platform. And then from a cash 0:44:29.120 --> 0:44:33.520 app perspective, we see continued growth in spending and in 0:44:33.840 --> 0:44:37.360 earned wages on our platform, which again is an indication 0:44:37.440 --> 0:44:40.000 of the engagement of our platform, our ability to command 0:44:40.080 --> 0:44:42.840 share of wallet, as well as the resilience of a consumer. 0:44:43.760 --> 0:44:45.200 Man, Rita, thanks for joining us. 0:44:45.640 --> 0:44:48.920 Just following up there in terms of your business, you 0:44:48.960 --> 0:44:52.520 also have a buy now, pay later component. I'm wondering 0:44:52.600 --> 0:44:56.400 how delinquency rates have evolved in that business and also 0:44:56.400 --> 0:45:00.840 how you're thinking about underwriting in this somewhat uncertain crow environment. 0:45:02.280 --> 0:45:05.480 Well, we think the product attributes of our three lending 0:45:05.560 --> 0:45:09.040 products enable us to be pretty nimble and be able 0:45:09.040 --> 0:45:11.360 to pivot quickly. To the extent we do see a 0:45:11.440 --> 0:45:15.560 turn in repayment rates, which, as you heard on our call, 0:45:15.600 --> 0:45:18.880 we haven't yet heard. We have three primary lending products. 0:45:19.160 --> 0:45:22.560 Square loans that serve small businesses, as you note by 0:45:22.600 --> 0:45:25.200 now pay later, which serves customers at a point of 0:45:25.320 --> 0:45:28.080 checkout when they're buying something and they can pay in 0:45:28.200 --> 0:45:31.680 for that transaction, and then cash that borrow, which enables 0:45:31.680 --> 0:45:34.320 you to get a line of credit that often bridges people. 0:45:34.360 --> 0:45:36.600 We know so many millions are living to effect a 0:45:36.640 --> 0:45:39.680 paycheck and this helps smooth their cash flows. And across 0:45:39.719 --> 0:45:42.960 each of these three lending products, we've seen strong and 0:45:43.040 --> 0:45:46.359 healthy repayment behavior. Now we're ready to the extent that 0:45:46.360 --> 0:45:49.719 that changes. We have the ability to update our underwriting 0:45:49.920 --> 0:45:53.640 machine learning based underwriting models in real time, but we 0:45:53.680 --> 0:45:56.279 also want to be there to support customers as their 0:45:56.360 --> 0:45:58.680 needs arise, and we think that our products can do 0:45:58.719 --> 0:45:59.400 that effectively. 0:46:00.560 --> 0:46:02.960 Just following up in terms of signals that you're looking 0:46:03.040 --> 0:46:07.719 for specifically on performance of the business and whether any 0:46:07.760 --> 0:46:10.600 of the micro uncertainty is feeding through. What are the 0:46:10.640 --> 0:46:13.120 metrics that you're specifically looking for. 0:46:13.840 --> 0:46:16.560 Sure, So from a cash app perspective, we look at 0:46:16.560 --> 0:46:20.480 things like inflows per active that's the amount of money 0:46:20.520 --> 0:46:24.040 that customers bring into cash app, and that held a 0:46:24.080 --> 0:46:26.440 growth rate on inflows proactive in the second quarter for 0:46:26.560 --> 0:46:30.240 US with cash up was at eight percent, showing again 0:46:30.520 --> 0:46:34.160 strong engagement with our platform and resilience of the consumer. 0:46:34.560 --> 0:46:38.200 We also look at things like commerce volumes. Our commerce 0:46:38.280 --> 0:46:41.120 volumes over the last twelve months within cash app grew 0:46:41.239 --> 0:46:43.920 sixteen percent year over that year over year. That's the 0:46:43.960 --> 0:46:47.560 amount of money that people are using our platform to 0:46:47.600 --> 0:46:51.040 conduct commerce, whether it's by now, pay later, cash up card, 0:46:51.120 --> 0:46:54.600 or cash up pay. We also look from a square 0:46:54.640 --> 0:47:00.279 perspective at things like growth on our discretionary verticals, so 0:47:00.320 --> 0:47:03.440 our food and beverage GPV, which you can think of 0:47:03.480 --> 0:47:06.080 as discretionary. We serve a lot of quick service restaurants. 0:47:06.080 --> 0:47:09.440 Full service restaurants grew fifteen percent your rear in the 0:47:09.440 --> 0:47:14.840 second quarter. Retail GPV also oftentimes discretionary vertical for uscrew 0:47:14.880 --> 0:47:19.000 ten percent your reear. Again, these are healthy rates of growth, 0:47:19.120 --> 0:47:21.319 but we're very watchful. We look at this data on 0:47:21.360 --> 0:47:24.240 a daily basis, and we want to be there both 0:47:24.560 --> 0:47:27.239 to protect our business but also more importantly serve our 0:47:27.239 --> 0:47:30.600 customers to the extent that you know, in this dynamic environment, 0:47:30.640 --> 0:47:31.800 anything were to change. 0:47:32.040 --> 0:47:34.720 I want to pivot a little bit to crypto because 0:47:34.760 --> 0:47:39.880 block holds roughly eighty six hundred bitcoins worth almost a 0:47:39.920 --> 0:47:44.080 billion dollars, and crypto treasury companies have been getting a 0:47:44.120 --> 0:47:47.319 lot of attention. You guys own bitcoin. Are there any 0:47:47.360 --> 0:47:51.640 plans to add Ether to the company. What's the journey 0:47:51.640 --> 0:47:54.680 been like on that crypto planet? Yeah, Ether plans at all. 0:47:54.560 --> 0:47:58.000 No plans to add anything beyond Bitcoin from a crypto 0:47:58.000 --> 0:48:02.359 currency perspective to our balance sheet. We believe that if 0:48:02.440 --> 0:48:05.080 the Internet is to have a currency, Bitcoin is the 0:48:05.120 --> 0:48:08.799 most likely contender. It's the longest lived, it's resilient, it's 0:48:08.800 --> 0:48:13.000 an open developer ecosystem. All the rules are understood, and 0:48:13.160 --> 0:48:17.080 it is effectively an open source platform, an open protocol 0:48:17.200 --> 0:48:21.360 for money. We think ultimately, if the Internet does have 0:48:21.400 --> 0:48:23.759 a currency, and that is Bitcoin, that enables us as 0:48:23.760 --> 0:48:26.440 a company to move at the speed of the Internet 0:48:26.520 --> 0:48:29.960 as we think about our business more globally. So a 0:48:30.000 --> 0:48:33.319 world in which Bitcoin succeeds is a world in which 0:48:33.320 --> 0:48:37.320 companies like ours can move more efficiently and more quickly 0:48:37.440 --> 0:48:40.800 to serve our customers. That's the sort of purpose the 0:48:40.840 --> 0:48:43.640 strategic alignment that we have with bitcoin. All sorts of 0:48:43.640 --> 0:48:46.280 different ways that we as a company are learning about 0:48:46.280 --> 0:48:48.680 how to operate in a bitcoin world. One of those 0:48:49.120 --> 0:48:53.040 is by holding it on our own balance sheet as 0:48:53.080 --> 0:48:57.480 a corporate to have bitcoin in our treasuries, and we've 0:48:57.480 --> 0:49:01.319 been doing this for five plus years now, and it's 0:49:01.320 --> 0:49:04.360 something where we get to learn the insurance aspects, the 0:49:04.400 --> 0:49:09.520 buy sell aspects, the custody aspects, the protection around that, 0:49:09.760 --> 0:49:12.239 and how we think about the accounting and the tax 0:49:12.280 --> 0:49:15.279 elements for bitcoin. So we're learning a lot as a 0:49:15.320 --> 0:49:17.799 company as we do that, just as an individual would 0:49:17.840 --> 0:49:21.520 or another institution might, and I think it's something that 0:49:21.560 --> 0:49:23.920 a lot of other corporates will begin to consider more 0:49:23.960 --> 0:49:24.279 and more. 0:49:24.520 --> 0:49:28.000 We're speaking with Amrita, who'sha CFO and COO of Block 0:49:28.320 --> 0:49:32.520 and Rita on the bitcoin question, the buying and selling. 0:49:32.840 --> 0:49:35.399 Do you have plans to buy more bitcoin to add 0:49:35.440 --> 0:49:37.560 to the treasury. 0:49:37.640 --> 0:49:40.520 We have a program in place where we dollar cost 0:49:40.560 --> 0:49:44.280 to average our bitcoin purchases. We have a gross profit 0:49:44.320 --> 0:49:48.120 that we generate from bitcoin and our customer oriented products, 0:49:48.120 --> 0:49:51.200 so we sell bitcoin through cash app. We've sold over 0:49:51.239 --> 0:49:54.120 fifty eight billion dollars worth of bitcoin to our cash 0:49:54.120 --> 0:49:57.400 app customers. We also have a product that we're launching 0:49:57.400 --> 0:49:59.800 in the back half of this year for bitcoin minors 0:50:00.360 --> 0:50:04.719 around the infrastructure, the hardware, and the integrated software for that, 0:50:04.920 --> 0:50:07.600 and we have a self custody product, bitkey. We have 0:50:07.719 --> 0:50:10.240 said that ten percent of all of the gross profit 0:50:10.280 --> 0:50:13.360 that we generate across our bitcoin products, we will invest 0:50:13.440 --> 0:50:15.200 back in the bitcoin. And so we're in the market 0:50:15.239 --> 0:50:18.080 every single day buying that ten percent worth of our 0:50:18.120 --> 0:50:19.480 gross profit back into bitcoin. 0:50:19.760 --> 0:50:22.080 Mam Rita, we are running out of time, just very quickly. 0:50:22.160 --> 0:50:24.680 Just wandering from a CFO perspective, you said, if you've 0:50:24.719 --> 0:50:27.840 held bitcoin on your balance sheet for five years, you've 0:50:28.040 --> 0:50:30.840 seen the fluctuations. That's basically what I'm hearing from CFOs 0:50:30.880 --> 0:50:33.120 as to why they don't want to hold bitcoin. How 0:50:33.200 --> 0:50:36.200 is the company navigating the ups and downs in the price, 0:50:36.400 --> 0:50:39.960 even though most recently we've seen more increase than decrease. 0:50:40.680 --> 0:50:43.680 You know, there's been fluctuations in a number of different assets, 0:50:44.160 --> 0:50:47.960 different asset classes. You have to be transparent with your 0:50:47.960 --> 0:50:53.760 investors as to what's driving various elements. The updated accounting 0:50:53.840 --> 0:50:57.719 standards for bitcoin treat it like any other asset that 0:50:57.760 --> 0:50:59.759 you may own, where you write it up at the 0:50:59.840 --> 0:51:01.560 end of the quarter. If the value goes up and 0:51:01.560 --> 0:51:02.959 you write it down at the end of a quarter, 0:51:03.239 --> 0:51:06.799 if the value goes down. The prior standards which to 0:51:06.840 --> 0:51:09.359 get into some of the accounting wonkiness were as an 0:51:09.360 --> 0:51:12.160 intangible asset. We're very very strict and you can only 0:51:12.200 --> 0:51:14.840 ever write down the value of bitcoin. So now with 0:51:14.920 --> 0:51:19.000 these updated accounting standards that look like any other asset 0:51:19.400 --> 0:51:21.120 you may hold on your balance sheet, we think that 0:51:21.120 --> 0:51:25.239 that has the opportunity to create clarity for investors and 0:51:25.880 --> 0:51:29.080 for companies, and to bring more people into the bitcoin ecosystem. 0:51:29.320 --> 0:51:32.400 I'm Rita, who's a CFO and COO of Block. Please 0:51:32.480 --> 0:51:34.960 do come back and join us soon on a Bloomberg 0:51:35.040 --> 0:51:38.040 Business Weekdaily. Really appreciate your time. Once again. I'm Rita, 0:51:38.120 --> 0:51:41.759 who's just CFO and COO of Block joining us from Hillsboro, California. 0:51:41.800 --> 0:51:44.640 Also with us Nina Trettman, Bloomberg News Senior editor. She 0:51:44.680 --> 0:51:47.360 writes the Bloomberg CFO Briefing newsletter. Sign up for it 0:51:47.400 --> 0:51:50.800 at Bloomberg dot com slash CFO Dash Briefing. 0:51:55.080 --> 0:51:58.959 You're listening to the Bloomberg Business Week Daily podcast. Catch 0:51:59.000 --> 0:52:01.719 us live weekly afternoons from two to five eas during 0:52:01.880 --> 0:52:05.800 Listen on Applecarplay and Android Auto with the Bloomberg Business app, 0:52:06.000 --> 0:52:08.320 or watch us live on YouTube. 0:52:09.440 --> 0:52:12.960 The MTA runs New York City subways, buses, and commuter 0:52:13.040 --> 0:52:16.960 trains that six million people rely on each weekday, and 0:52:17.000 --> 0:52:19.880 on Monday, board members approved close to a two billion 0:52:19.920 --> 0:52:23.239 dollar contract to expand the Second Avenue subway line into 0:52:23.360 --> 0:52:27.399 East Harlem. Jpitzel is the CFO of the MTA. She's 0:52:27.440 --> 0:52:29.279 charged with quite the task, which I think is fair 0:52:29.280 --> 0:52:32.839 to say many would find unenviable, charting a sustainable path 0:52:32.840 --> 0:52:36.279 through one of the agency's most financially trying periods in 0:52:36.320 --> 0:52:38.560 its six decade history. She joins us here in the 0:52:38.560 --> 0:52:41.520 Bloomberg Business Week studio. Jay, Welcome, how are you. 0:52:41.760 --> 0:52:43.839 I'm good, how are you? Tim? Thank you for having me. 0:52:43.920 --> 0:52:45.600 Yeah, thanks so much for joining us. I want to 0:52:45.600 --> 0:52:48.040 start with the numbers and just ridership. 0:52:48.080 --> 0:52:48.279 Here. 0:52:48.520 --> 0:52:51.839 Weekday subway ridership is still twenty five percent below pre 0:52:51.920 --> 0:52:55.120 COVID levels. In your modeling, does that ever come back 0:52:55.160 --> 0:52:55.840 to where it was? 0:52:56.800 --> 0:52:59.120 I you know, we have a financial plan that's a 0:52:59.160 --> 0:53:03.040 five year period, and originally we were projecting that we 0:53:03.040 --> 0:53:06.440 would see our subway ridership up to ninety percent, but 0:53:06.640 --> 0:53:09.239 a couple of years ago we revised that because we 0:53:09.239 --> 0:53:12.000 weren't seeing that. But We're hopeful we see an eighty 0:53:12.080 --> 0:53:17.000 percent by twenty twenty nine ridership recovery for subways, But 0:53:17.080 --> 0:53:20.480 on the railroads, we're seeing that recovery even higher. Today 0:53:20.560 --> 0:53:24.160 we see eighty five percent ridership recovery on our railroads, 0:53:24.360 --> 0:53:27.160 which is amazing, something that we thought was going to 0:53:27.200 --> 0:53:31.239 be slower our railroad customers than our subway customers originally 0:53:31.360 --> 0:53:32.480 coming out of pre pandemic. 0:53:32.600 --> 0:53:36.439 So is there a way to tap into that growth financially, 0:53:36.680 --> 0:53:42.120 perhaps with higher prices for those commuters rather than here 0:53:42.160 --> 0:53:44.680 in the city for subway and bus riders. 0:53:45.040 --> 0:53:48.879 So you know, what we have is very small, predictable 0:53:49.000 --> 0:53:53.319 far increases that help balance the financial plan, and so 0:53:53.440 --> 0:53:55.840 we don't want to burden one rider or over another. 0:53:55.920 --> 0:53:59.239 It's really about distance space and commuters, and so we 0:53:59.360 --> 0:54:01.879 keep that equitable. You know that we do a two 0:54:01.880 --> 0:54:05.240 percent fair increase every other you know, every other year, 0:54:05.680 --> 0:54:07.960 and that keeps our financial plan and balance. 0:54:08.680 --> 0:54:11.200 How do you plan to get that number, I think 0:54:11.200 --> 0:54:14.000 you said eighty percent ridership? How do you bring people 0:54:14.200 --> 0:54:16.160 back into the subways? 0:54:16.760 --> 0:54:21.839 We bring writers back by providing reliable on time performance right, 0:54:21.880 --> 0:54:25.960 our service matters to customers and delivering the service that 0:54:26.000 --> 0:54:29.640 we promise and schedule is something that we strive for, 0:54:29.840 --> 0:54:33.960 but also safety. Our customers need to feel safe safe, 0:54:34.080 --> 0:54:37.480 and our customers feel that right. We've had the lowest 0:54:37.520 --> 0:54:41.200 safety you know numbers or crime numbers in July, and 0:54:41.280 --> 0:54:45.240 so our customers are telling us that by taking the subway, 0:54:45.320 --> 0:54:49.280 but also our customer surveys right tell us that customers 0:54:49.280 --> 0:54:51.640 are satisfied with the service that we're providing. 0:54:52.400 --> 0:54:54.799 The MTA phases that combined one point one billion dollar 0:54:54.840 --> 0:54:57.839 deficit over three years starting in twenty twenty seven, it 0:54:57.880 --> 0:55:00.480 already owes close to fifty billion dollars that needs to 0:55:00.480 --> 0:55:04.080 spend sixty eight billion dollars more for vital improvements. There's 0:55:04.080 --> 0:55:06.359 some federal aid that's up in the air. The Trump 0:55:06.360 --> 0:55:10.400 administration is trying to roll back congestion pricing. What's the 0:55:10.440 --> 0:55:14.799 backup plan if the aid evaporates and the President is 0:55:14.800 --> 0:55:16.720 successful in rolling back congestion pricing. 0:55:17.520 --> 0:55:20.200 You know, Tim, I would be remiss if I didn't 0:55:20.239 --> 0:55:22.680 mention that. Back in twenty twenty three, we were the 0:55:22.719 --> 0:55:25.840 first transit agency to solve our fiscal cliff. Thanks to 0:55:25.880 --> 0:55:29.560 Governor Holcal, chairliber and the legislature, we were able to 0:55:29.560 --> 0:55:33.560 come out of a deficit unlike any other transit agency today. 0:55:33.680 --> 0:55:38.040 You've heard SEPTA's facing deep cuts Chicago, but we were 0:55:38.080 --> 0:55:42.160 the first to say we need state, federal and local aid, 0:55:42.400 --> 0:55:46.239 and we got our state federal funding for us. We 0:55:46.360 --> 0:55:50.439 also as the MTA, contributing to our solving our deficit. Right, 0:55:50.800 --> 0:55:54.759 the MTA contributes five hundred million to operating efficiencies, and 0:55:54.880 --> 0:55:57.600 those deficits that we have in twenty seven and twenty 0:55:57.600 --> 0:56:00.279 eight and twenty nine are very small compared to our 0:56:00.320 --> 0:56:03.680 operating budget, and we are committed to doing our part 0:56:03.920 --> 0:56:07.080 in saving money to help ensure that we can balance 0:56:07.080 --> 0:56:08.440 our budget in the out years. 0:56:09.280 --> 0:56:11.520 We were talking a little bit about the base fares 0:56:11.680 --> 0:56:16.279 of subways increasing regularly. I'm wondering if there is there 0:56:16.320 --> 0:56:20.800 a set area within the MTA that that revenue goes toward. 0:56:20.880 --> 0:56:23.759 Because the base fare for a subway in New York 0:56:23.760 --> 0:56:26.640 City it's expected to increase to three dollars in January. 0:56:26.840 --> 0:56:31.680 Correct, So our fares help our operating budget, right, So 0:56:31.719 --> 0:56:35.600 they seventy percent of MTA's cost our labor and fringe, 0:56:35.719 --> 0:56:39.640 and so that pays for seventy thousand employees, and then 0:56:39.800 --> 0:56:42.680 the small fraction is for the non labor contract, so 0:56:43.239 --> 0:56:46.440 every fair contributes to operating cost. 0:56:47.239 --> 0:56:50.200 On our side, let's talk about fares and fair evasion. 0:56:50.360 --> 0:56:52.240 Usually when we talk fair evasion, I think of people 0:56:52.360 --> 0:56:55.000 jumping over subway turnstiles, and I know there's been some 0:56:55.040 --> 0:56:57.279 mitigation efforts in place. But I took the bus to 0:56:57.320 --> 0:57:00.520 LaGuardia on Thursday. It was a great experien So when 0:57:00.560 --> 0:57:03.839 I got on the SBS and Queens, I got on 0:57:03.920 --> 0:57:06.239 it was like an articulated bus, so you know, it 0:57:06.280 --> 0:57:07.680 was a long when I got off and on in 0:57:07.719 --> 0:57:10.040 the back and out of like more than half a 0:57:10.080 --> 0:57:12.600 dozen people, I think I was the only one who paid, 0:57:12.840 --> 0:57:14.279 And I was thinking to myself, I didn't know it 0:57:14.320 --> 0:57:17.520 was optional to pay to get on the bus. What 0:57:17.520 --> 0:57:18.400 are the numbers there? 0:57:18.720 --> 0:57:21.160 So it's not optional right to pay the fair. We 0:57:21.240 --> 0:57:25.040 are encouraging every customer to pay our pay their fair share. 0:57:25.120 --> 0:57:27.200 To but there's no enforcement on the bus. 0:57:27.360 --> 0:57:29.560 So there's a couple of things that we're doing for 0:57:29.640 --> 0:57:33.320 fair evasion. And our chair has been tackling this first 0:57:33.360 --> 0:57:36.200 when he became chair. So on the subways you've heard 0:57:36.200 --> 0:57:39.960 of us talking about we're doing fins, sleeves, gate guards, 0:57:40.080 --> 0:57:44.160 enforcing the exit gate, which is the fair you know, 0:57:44.200 --> 0:57:47.960 evasion highway. And so we've made great strides on the subways. 0:57:48.000 --> 0:57:52.560 We've reduced fair evasion in over a year by thirty percent. 0:57:52.640 --> 0:57:55.840 We've dropped that rate from a high of fourteen percent 0:57:55.960 --> 0:57:59.120 to nine point eight percent, So we know those efforts 0:57:59.160 --> 0:58:02.160 are working. On the buses, it's a little bit more difficult, 0:58:02.160 --> 0:58:05.960 but we're also working there. We've decreased fair invasion on 0:58:06.000 --> 0:58:08.200 our buses as well in the last year from fifty 0:58:08.200 --> 0:58:11.840 percent to forty four percent because all the tactics the 0:58:11.880 --> 0:58:15.520 President of New York City Transit is employeing. We have 0:58:15.680 --> 0:58:18.120 eagle teams that are looking, you know, on different bus 0:58:18.240 --> 0:58:21.800 routes to make sure that they are enforcing the pay 0:58:21.800 --> 0:58:25.360 your fare right. Our bus operators do their due diligence, 0:58:25.640 --> 0:58:28.840 but really our eagle teams are enforcement out there riding 0:58:28.880 --> 0:58:32.400 different routes and making sure customers fair pay their fare 0:58:32.480 --> 0:58:35.080 or they're getting a summons or they're getting off the bus. 0:58:35.240 --> 0:58:36.400 And that's how we're working. 0:58:36.720 --> 0:58:37.520 How does that work? 0:58:37.560 --> 0:58:40.000 Because I heard of a friend who was on a 0:58:40.000 --> 0:58:43.080 bus and someone had come around and like scanned their 0:58:43.120 --> 0:58:45.680 phone to see if they had paid the fare. Is 0:58:45.680 --> 0:58:46.920 that how it works explain to us. 0:58:47.880 --> 0:58:51.040 So right now what we are doing is if you're 0:58:51.240 --> 0:58:53.440 boarding the bus, you have to pay, because there's two 0:58:53.480 --> 0:58:55.720 different ways you can pay right today is the Metro 0:58:55.800 --> 0:58:58.400 card and the OMNI, And when we go to full 0:58:58.440 --> 0:59:01.360 OMNI next year, there's going to be proof of payment. 0:59:01.520 --> 0:59:04.120 And so what you can do is European style proof 0:59:04.160 --> 0:59:06.920 of payment for customers is you can tap their phones 0:59:07.040 --> 0:59:09.120 or credit cards the method of payment to see if 0:59:09.160 --> 0:59:11.840 they paid their fare and if they didn't pay their fare. 0:59:12.560 --> 0:59:14.600 That's something that we will work with on a summons 0:59:14.760 --> 0:59:16.760 or you know, you need to pay your fare for 0:59:16.880 --> 0:59:19.920 our customer, and so that's something that's coming. We're really 0:59:19.960 --> 0:59:22.760 excited about that for OMNI and proof of payment, but 0:59:22.880 --> 0:59:25.280 right now there's two different methods and so we're working 0:59:25.360 --> 0:59:28.880 on different ways to combat fair evasion. 0:59:28.920 --> 0:59:30.840 I want to talk a little bit about proposals from 0:59:31.080 --> 0:59:34.000 mayoral candidates or in Mumdani. For example, it's proposal to 0:59:34.040 --> 0:59:37.320 make all New York City buses free. What do you 0:59:37.320 --> 0:59:39.120 think of that and does it create a sort of 0:59:39.120 --> 0:59:41.920 a two tiered mass transit system where people who ride 0:59:41.960 --> 0:59:45.080 buses don't pay for it, but then people who ride 0:59:45.080 --> 0:59:48.240 the subway do and then kind of offset like people 0:59:48.280 --> 0:59:51.560 not necessarily taking the right mode of transit for their destination. 0:59:52.200 --> 0:59:56.840 We've heard the mariial candidates proposal for a fair free buses. 0:59:57.480 --> 1:00:00.120 What I'd like to emphasize again is fairbox revie. He 1:00:00.240 --> 1:00:03.160 is important to the operations of the MTA. It's twenty 1:00:03.240 --> 1:00:07.160 six percent of our revenue, and buses is about a 1:00:07.280 --> 1:00:10.320 billion dollars in the out years of revenue for the 1:00:10.400 --> 1:00:14.080 MTA bus for the MTA, excuse me, and that's important 1:00:14.120 --> 1:00:16.760 to us, and so we want to make sure revenues 1:00:17.000 --> 1:00:21.280 equal service. And that is something that's hypothetical right now, 1:00:21.760 --> 1:00:24.960 but we rely on fairbox revenue. 1:00:25.000 --> 1:00:27.360 So you said a billion dollars in revenue is what 1:00:27.360 --> 1:00:29.920 it brings in. Momdanni estimates that's about seven hundred and 1:00:29.960 --> 1:00:32.560 fifty million dollars annually to make buses free. Is that 1:00:32.600 --> 1:00:34.640 an accurate assessment on his part? 1:00:35.240 --> 1:00:38.160 I think there's pieces that he's he's looking at just 1:00:38.200 --> 1:00:40.760 the New York City Transit bus fair We have MTA 1:00:40.840 --> 1:00:43.520 bus that we also a run that the city contributes to, 1:00:43.600 --> 1:00:45.840 and that is also fairbox revenue for buses. 1:00:45.920 --> 1:00:48.200 So what would take away that revenue from the MTA 1:00:48.320 --> 1:00:50.680 due to the authorities finances or would it just be 1:00:50.920 --> 1:00:53.040 I mean, look again, it's a proposal, you said, it's 1:00:53.480 --> 1:00:55.920 something that you know is not a plan yet. But 1:00:56.400 --> 1:00:59.880 to be fair, he is by far the favored candidate, 1:01:00.200 --> 1:01:01.800 and there are a lot of questions about what power 1:01:01.840 --> 1:01:05.240 he has to actually follow through with a campaign promise 1:01:05.280 --> 1:01:07.200 such as this. But this is certainly a central part 1:01:07.200 --> 1:01:08.520 of his campaign, so you got to be looking at 1:01:08.560 --> 1:01:09.000 it closely. 1:01:09.520 --> 1:01:11.640 We are looking at it. But one thing that I 1:01:11.680 --> 1:01:14.480 would like to emphasize right right now in New York City, 1:01:15.280 --> 1:01:18.919 fares are affordable. We make transit and buses the most 1:01:18.920 --> 1:01:22.600 affordable at two dollars and ninety cents, and it's affordable 1:01:22.680 --> 1:01:26.600 with fairfares, reduce fair for our customers. But you know, 1:01:26.640 --> 1:01:28.760 it is something that we will look into as the 1:01:28.840 --> 1:01:31.560 mayoral candidate has proposed. 1:01:32.240 --> 1:01:36.680 What about mitigating climate issues that affect particularly the subway stations. 1:01:36.720 --> 1:01:40.560 You go online, you see videos of flooding in station, 1:01:40.800 --> 1:01:41.120 trying to. 1:01:41.080 --> 1:01:42.920 Get home and on a raading day. 1:01:42.960 --> 1:01:47.000 Right and water in the subway station. Do you guys have, 1:01:47.480 --> 1:01:50.240 at least as part of the upcoming capital plan, a 1:01:50.280 --> 1:01:52.960 plan in place to update the infrastructure. 1:01:53.440 --> 1:01:55.720 A couple of points on that right. A couple of 1:01:55.720 --> 1:01:58.240 the issues that arise in the subway systems are not 1:01:58.320 --> 1:02:02.480 the MTA's fault. New York City contributes to the flooding 1:02:02.520 --> 1:02:05.080 issues that we face in the subways, whether it's through 1:02:05.200 --> 1:02:09.800 dep manholes, the sewage. So that is one aspect of 1:02:10.080 --> 1:02:13.520 the flooding that you see on the New York City Transit. 1:02:13.560 --> 1:02:16.640 But our historic capital plan that sixty eight point four 1:02:16.680 --> 1:02:20.800 billion dollars does have climate resiliency of hardening the system 1:02:20.960 --> 1:02:23.919 in certain stations in proposed And therefore. 1:02:23.760 --> 1:02:27.480 Let's talk a little bit about congestion pricing. Not as 1:02:27.520 --> 1:02:29.400 hot of a topic as it was a few months ago, 1:02:29.480 --> 1:02:32.480 it seems like it's died down a little bit in 1:02:32.520 --> 1:02:33.680 your view. Is it working? 1:02:34.240 --> 1:02:38.480 Congestion pricing is working. It is reducing traffic by eleven percent. 1:02:38.560 --> 1:02:41.920 What does that mean? Seventy thousand cars are off the 1:02:42.000 --> 1:02:44.800 road every single day. What else is it doing. It's 1:02:44.800 --> 1:02:48.800 moving our buses faster, it's moving people faster. We've seen 1:02:48.840 --> 1:02:52.320 a change in ridership, but also we've seen safety increases. 1:02:52.360 --> 1:02:56.680 There's a fourteen percent decline in pedestrian crashes. And on 1:02:56.720 --> 1:02:59.040 top of it all, it is bringing in the revenue 1:02:59.040 --> 1:03:01.160 that we had projected originally. 1:03:01.240 --> 1:03:03.840 It's being watched very closely, not just by proponents and 1:03:03.920 --> 1:03:06.280 opponents of it, but also by other cities that might 1:03:06.320 --> 1:03:08.880 want to put this into practice. Have you or has 1:03:08.960 --> 1:03:12.640 the MTA heard from other cities about congestion pricing, about 1:03:12.640 --> 1:03:15.240 the model and about questions about implementing it in their 1:03:15.280 --> 1:03:15.840 own cities. 1:03:16.240 --> 1:03:19.320 The MTA has heard from other cities and transit properties 1:03:19.360 --> 1:03:22.360 and engaged with them to have conversations about the process 1:03:22.360 --> 1:03:27.440 that New York implemented for the successful congestion pricing program 1:03:27.440 --> 1:03:30.200 that we're having. So they're looking at it at us 1:03:30.440 --> 1:03:31.040 as a model. 1:03:31.320 --> 1:03:34.200 We have to ask about the second Second Avenue subway 1:03:34.400 --> 1:03:37.760 expansion as well. Just walk us through some of the 1:03:37.840 --> 1:03:41.480 plans for and the timeline here, because this has been 1:03:41.840 --> 1:03:44.440 something that's been in the work, something that any New 1:03:44.520 --> 1:03:46.120 Yorker who's lived in New York for the. 1:03:46.120 --> 1:03:48.360 Last ford how many years, forty. 1:03:48.400 --> 1:03:51.960 Decades, fifty yards fifty I think we've talked about that 1:03:52.240 --> 1:03:54.760 at our special board meeting. You know, the contract that 1:03:54.800 --> 1:03:58.280 our board just approved is almost one point nine billion 1:03:58.320 --> 1:04:01.439 dollar contract to start boring, right, what does that mean? 1:04:01.520 --> 1:04:04.680 It's starting the tunneling for the three stations that are 1:04:04.960 --> 1:04:09.080 vital to Second Avenue Subway Phase two, and we are 1:04:09.240 --> 1:04:15.080 committed to expanding Second Avenue Phase two here at the MTA, 1:04:15.240 --> 1:04:17.840 and we think it's going to be a great service 1:04:17.880 --> 1:04:21.680 to our customers. It's going to serve about one hundred 1:04:21.760 --> 1:04:25.480 thousand customers in addition to the two hundred thousand customers 1:04:25.480 --> 1:04:29.120 that's Second Avenue Subway Phase one serves today. 1:04:29.560 --> 1:04:31.960 Do you have a timeline or an expected timeline. 1:04:32.120 --> 1:04:32.720 I think the. 1:04:34.400 --> 1:04:37.240 Twenty thirty two was the service date that we have 1:04:37.640 --> 1:04:39.200 said publicly. 1:04:39.680 --> 1:04:41.440 It's a very like I said at the beginning, it's 1:04:41.760 --> 1:04:44.440 an enviable task that you have ahead of you. Some 1:04:44.440 --> 1:04:47.960 people would argue, I would imagine that you spend quite 1:04:47.960 --> 1:04:50.840 a bit of time studying other transit systems around the world, 1:04:50.880 --> 1:04:54.200 what's worked and what hasn't worked. If you could wave 1:04:54.240 --> 1:04:57.200 a magic wand here in New York City to overcome 1:04:57.280 --> 1:05:00.520 some of the barriers that the MTA has experien whether 1:05:00.560 --> 1:05:04.880 they're financial barriers, whether they're CAPEX barriers, what would those 1:05:04.920 --> 1:05:07.680 be like? What is the biggest obstacle to making the 1:05:07.720 --> 1:05:08.880 service even better here? 1:05:09.520 --> 1:05:11.680 So I think tim one thing that I would say 1:05:11.760 --> 1:05:15.640 is MTAs a leader and being the largest agency in 1:05:15.640 --> 1:05:18.920 North America other agencies look to US. I think I 1:05:19.000 --> 1:05:21.880 said this before we led with the fiscal cliff, we 1:05:22.000 --> 1:05:25.080 lead with our capital program as well. We have started 1:05:25.120 --> 1:05:28.640 to do things differently since Janel Lieber took over for 1:05:28.760 --> 1:05:31.960 cn D and now Jamie Torres Springer. We do design, build, 1:05:32.040 --> 1:05:38.040 We do faster, cheaper and better. But we're employing definitely 1:05:38.200 --> 1:05:42.080 different ways of doing capital programs as well as operating 1:05:43.000 --> 1:05:44.280 for US to be better. 1:05:46.160 --> 1:05:49.720 I want to go back to congestion pricing and some 1:05:49.840 --> 1:05:54.960 financial questions around that, specifically about selling debt off of revenues. 1:05:55.200 --> 1:05:57.960 Do you have plans to sell debt off of revenues 1:05:58.000 --> 1:05:59.000 from congestion pricing? 1:05:59.840 --> 1:06:03.520 As you know, the congestion revenue is dedicated to the 1:06:03.560 --> 1:06:06.440 twenty to twenty four capital program. It is expected to 1:06:06.480 --> 1:06:10.400 generate fifteen billion for that program, and once we see 1:06:10.400 --> 1:06:13.160 a stable market in the revenues coming in, we do 1:06:13.200 --> 1:06:15.840 plan to issue debt. We've talked about it. That's not 1:06:15.960 --> 1:06:18.960 sometime until twenty twenty six for US. Once we see 1:06:19.320 --> 1:06:22.600 a comfortable stream of revenue. We've projected five hundred million 1:06:22.640 --> 1:06:24.880 for the next three years, and we want to make 1:06:24.920 --> 1:06:27.280 sure that we see that revenue and the markets are 1:06:27.320 --> 1:06:29.080 comfortable issuing that debt for us. 1:06:29.240 --> 1:06:34.320 You've talked about fair increases on MTA services, what about 1:06:34.320 --> 1:06:37.280 increases in congestion pricing? And what is the timeline for that? 1:06:37.760 --> 1:06:41.000 So as the governor has said to us, right, it's 1:06:41.280 --> 1:06:44.960 the toll will continue to be nine dollars for three years, 1:06:45.000 --> 1:06:48.360 then it'll increase gradually to the next three years at 1:06:48.360 --> 1:06:50.880 twelve dollars, and then in the final the seventh year, 1:06:50.920 --> 1:06:54.680 it'll be a fifteen dollars use a toll. So we've 1:06:54.680 --> 1:06:58.680 already had that phased in based on the schedule we approved. 1:06:58.800 --> 1:07:01.040 Can you just bring us another litigation around this with 1:07:01.040 --> 1:07:03.040 the federal government and with the state, But can you 1:07:03.120 --> 1:07:07.040 just take us into conversations that you've had with counterparts 1:07:07.120 --> 1:07:10.400 at the Department of Transportation over the last few months 1:07:10.640 --> 1:07:15.040 about making sure that the MTA stays on a sustainable 1:07:15.080 --> 1:07:15.800 financial path. 1:07:16.680 --> 1:07:19.120 So I think you know what I would say is 1:07:19.240 --> 1:07:22.920 the federal government contributes two billion dollars to the MTA, 1:07:23.080 --> 1:07:26.640 and that's a revenue source that we rely on to 1:07:26.720 --> 1:07:28.960 keep the system in the state of good repair, and 1:07:28.960 --> 1:07:32.640 so we would continue to want that funding. You know, 1:07:32.920 --> 1:07:37.120 MTA moves forty percent of riders across North America, but 1:07:37.200 --> 1:07:41.120 receives only a fraction of federal dollars from Washington, and 1:07:41.160 --> 1:07:43.480 so we continue to rely on the federal dollars that 1:07:43.520 --> 1:07:45.200 we get and it's important for us. 1:07:45.320 --> 1:07:48.040 But what's the backup plan if that evaporates? 1:07:48.360 --> 1:07:53.200 Yeah, we're confident, right that the MTA and the federal government, 1:07:53.880 --> 1:07:57.040 the federal judge that is designed right, we're confident that 1:07:57.080 --> 1:08:00.480 we would win that lawsuit. You know, Judge Lineman issued 1:08:00.520 --> 1:08:03.880 a positive finding for the MTA just a few months ago. 1:08:03.960 --> 1:08:07.600 And congestion pricing is, you know, continuing to operate and 1:08:07.680 --> 1:08:09.040 we're generating the funding. 1:08:09.640 --> 1:08:11.440 JA, thanks so much. Oh go ahead, Well, I was 1:08:11.520 --> 1:08:12.720 just going to ask one more question. 1:08:13.280 --> 1:08:16.080 Just I mean, I imagine you know, you get a lot 1:08:16.080 --> 1:08:19.640 of people who hear these numbers. Congestion pricing is on 1:08:19.720 --> 1:08:22.519 tractories five hundred million. They say, wow, that sounds like 1:08:22.560 --> 1:08:26.559 a lot of money. Why are you know, why are 1:08:26.600 --> 1:08:32.120 the subways still the way that they are? Delays, crime 1:08:32.640 --> 1:08:35.760 on cleanliness? Help us just understand. I know that you 1:08:35.800 --> 1:08:38.760 said that a lot of those fares go towards paying workers, 1:08:39.080 --> 1:08:42.000 But a number like this, a number like five hundred million, 1:08:42.280 --> 1:08:44.439 what does it mean in the context for the broader 1:08:44.560 --> 1:08:48.160 MTA organization is that a lot of money. 1:08:48.280 --> 1:08:52.200 So I'll give you context. Our operating budget every every 1:08:52.280 --> 1:08:55.280 year is about twenty billion dollars, right, That is to 1:08:55.400 --> 1:08:59.800 run subways, buses, commuter rails and the services for six 1:09:00.160 --> 1:09:03.080 million commuters every day. But in order for us to 1:09:03.160 --> 1:09:06.040 keep that system running, you have to maintain it, right, 1:09:06.120 --> 1:09:09.559 and so sixty eight point four billion dollars a good 1:09:10.000 --> 1:09:11.920 majority of that funding is to keep it in a 1:09:11.920 --> 1:09:16.120 state of good repair. That means new railcars, new buses, 1:09:16.600 --> 1:09:21.320 new signal upgrades, track maintenance, and everything else that goes 1:09:21.360 --> 1:09:25.599 with operating a system that's so vast in size. So 1:09:25.680 --> 1:09:28.679 five hundred million dollars is just one stream of revenue 1:09:28.720 --> 1:09:32.120 that generates when we leverage it fifteen billion dollars to 1:09:32.240 --> 1:09:35.880 continue with the capital side of the world, but the 1:09:35.920 --> 1:09:40.479 operating side has different funding sources. But we're confident that we, 1:09:40.800 --> 1:09:43.960 you know, move six million customers every single day, and 1:09:44.000 --> 1:09:45.679 we're happy to do that safely. 1:09:46.120 --> 1:09:50.320 Jpittel, CFO of the Metropolitan Transit Authority, joining us here 1:09:50.439 --> 1:09:52.120 in the Bloomberg Business Week Studio. 1:09:52.640 --> 1:09:56.519 You're listening to the Bloomberg Business Week Daily podcast. Catch 1:09:56.560 --> 1:09:59.240 us live weekday afternoons from two to five these during 1:09:59.240 --> 1:10:02.680 this listen on Applecarplay and Android Auto with the Bloomberg 1:10:02.720 --> 1:10:06.960 Business app, or watch us live on YouTube. 1:10:07.080 --> 1:10:09.439 Some big news in the EV space this past month. 1:10:09.600 --> 1:10:12.439 Bloomberg reporting that Ford is unveiling plants for a new 1:10:12.479 --> 1:10:16.280 line of budget universal evs and a five billion dollar 1:10:16.400 --> 1:10:19.799 bid to achieve mass appeal. And then the US Department 1:10:19.840 --> 1:10:23.519 of Transportation revived the five billion dollar National Electric Vehicle 1:10:23.520 --> 1:10:27.719 Infrastructure Program, which was suspended back in February. So while 1:10:27.760 --> 1:10:30.639 Ford and the Department of Transportation poor billions into EV 1:10:30.800 --> 1:10:34.880 manufacturing and charging infrastructure, one company is providing an alternative 1:10:34.920 --> 1:10:39.280 to EV charging. Spark Charge provides off grid scalable charging 1:10:39.320 --> 1:10:43.040 solutions where they bring the charging power to you. The 1:10:43.120 --> 1:10:46.040 company recently raised over thirty million dollars in capital to 1:10:46.080 --> 1:10:49.919 accelerate mobile EV charging adoption. For more. Carol and Bloomberg 1:10:49.960 --> 1:10:52.000 TV anchor Matt Miller caught up with the founder and 1:10:52.040 --> 1:10:55.439 CEO of spark Charge, Josh Avive. Matt is widely known 1:10:55.479 --> 1:10:59.920 at Bloomberg as a major car enthusiast, always driving something new. 1:11:00.280 --> 1:11:02.479 He kicks off the interview by explaining whether he is 1:11:02.520 --> 1:11:04.960 ready to make the transition to a full EV. 1:11:05.160 --> 1:11:07.360 No, because I'm a gearhead. I like to work on 1:11:07.400 --> 1:11:10.320 my cars myself. I like old American muscle. I like 1:11:10.400 --> 1:11:14.360 cars to be loud and smell like gasoline and vibrate 1:11:14.400 --> 1:11:17.840 a lot. But but lately I've been driving a ton 1:11:18.000 --> 1:11:19.960 of evs. I drive a new car every week for 1:11:20.080 --> 1:11:23.240 my podcast it's called Hot Pursuit with Hannah Elliott, and 1:11:24.040 --> 1:11:27.719 the acceleration, the handling has gotten so much better. There's 1:11:27.760 --> 1:11:30.280 so many more to choose from that. It's not just 1:11:30.439 --> 1:11:35.000 boring looking Tesla's with spartan interiors that it's It's become 1:11:35.200 --> 1:11:38.639 almost a preferred motor transportation for me. The one problem 1:11:38.680 --> 1:11:42.439 I have still charging the charging network is so bad. 1:11:42.760 --> 1:11:44.519 Yeah, so we have a guest just got a front 1:11:44.560 --> 1:11:46.160 row seat to it, so let's bring him in. Josh 1:11:46.200 --> 1:11:49.400 Aviv is founder in CEO of Spark Charge. He's out 1:11:49.439 --> 1:11:52.639 there in Massachusetts. Josh, good to have you here with Matt. 1:11:53.000 --> 1:11:56.200 Get ready for a grilling, because it is Matt Miller. 1:11:57.240 --> 1:11:58.280 We're ready, We're ready. 1:11:58.400 --> 1:11:58.679 Listen. 1:11:58.800 --> 1:12:02.000 Your company reminds us that it is the world's largest 1:12:02.040 --> 1:12:05.559 EV fleet charging network. Lay it out for us where 1:12:05.600 --> 1:12:08.479 it is how many who's using it give us some 1:12:08.520 --> 1:12:09.440 size and scope. 1:12:09.600 --> 1:12:12.400 Absolutely, so, spark Charge is the world's largest off grade 1:12:12.400 --> 1:12:15.519 evy fleet charging network. We have operations across all fifty 1:12:15.560 --> 1:12:19.360 states and recently just launched in Canada and Mexico. What 1:12:19.439 --> 1:12:21.400 makes us special is that we bring the power to 1:12:21.439 --> 1:12:23.920 the fleet. So we show up with our off grid 1:12:24.040 --> 1:12:27.000 mobile battery chargers and mobile power hubs. We can get 1:12:27.040 --> 1:12:29.759 going without any grid connection, which means we get fleets 1:12:29.840 --> 1:12:32.360 up and running and charging and as little as three 1:12:32.360 --> 1:12:35.200 to seven days versus them having to wait as much 1:12:35.240 --> 1:12:37.559 as two to three years for infrastructure to catch up. 1:12:38.240 --> 1:12:41.439 So you're the biggest off grid ev charging network. 1:12:42.200 --> 1:12:43.400 What does that mean mean? 1:12:44.040 --> 1:12:49.960 Meaning you're not the consumer chargers that are build up 1:12:49.960 --> 1:12:53.240 in malls or next to a Starbucks. You're you're working 1:12:53.320 --> 1:12:58.160 with like Ford pro kind of customers to charge their 1:12:58.600 --> 1:13:02.000 trucks exactly. So you're wringing with construction fleets, with plumbers, 1:13:02.000 --> 1:13:06.439 with electricians, with anybody, with anybody who's Amazon fleet. 1:13:06.479 --> 1:13:08.680 Yeah, Amazon fleets. 1:13:08.200 --> 1:13:13.280 Like Amazon last mile delivery rideshare fleets as well construction fleets, 1:13:13.320 --> 1:13:17.400 rental car fleets, school bus fleets. Think about the problem 1:13:17.479 --> 1:13:19.439 that consumers have where they're like, hey, I need to 1:13:19.439 --> 1:13:20.000 figure out how. 1:13:19.960 --> 1:13:20.760 To charge one car. 1:13:21.080 --> 1:13:23.320 Fleets have the issue of how do I charge twenty 1:13:23.320 --> 1:13:25.160 cars one hundred cars, and how do I do that 1:13:25.200 --> 1:13:28.160 every day to keep my business going? And we step 1:13:28.200 --> 1:13:30.599 in and we basically get them up and running quicker 1:13:30.600 --> 1:13:33.640 than any other electrification option on planet. Or if we 1:13:33.640 --> 1:13:35.200 can get a full fleet up and running in as 1:13:35.240 --> 1:13:38.120 little as three days fully electrified, and those cars out 1:13:38.160 --> 1:13:38.839 on the road. 1:13:38.760 --> 1:13:43.519 Dude, that is such a great business. How did you 1:13:43.840 --> 1:13:44.280 start this? 1:13:45.720 --> 1:13:48.320 Yeah, so we started it when we realized that a 1:13:48.320 --> 1:13:51.479 lot of fleets were waiting anywhere from two to five 1:13:51.600 --> 1:13:54.080 years before the grid would catch up and allow them 1:13:54.120 --> 1:13:57.280 to electrify. And we said, well, how what happens if 1:13:57.280 --> 1:13:59.679 we bring the energy to you, or if we get 1:13:59.680 --> 1:14:02.400 power set up to where we can use our batteries 1:14:02.680 --> 1:14:06.120 to get you charging almost immediately. What we realize is 1:14:06.160 --> 1:14:10.240 that fleets still incorporate fifty cars. They'll incorporate twenty cars, 1:14:10.600 --> 1:14:12.559 but then they'll have the issue of going to the 1:14:12.560 --> 1:14:15.520 grid and saying, hey, we want to get these cars electrified, 1:14:15.560 --> 1:14:16.280 but the grid. 1:14:16.080 --> 1:14:18.200 Can't handle the demand of all these vehicles. 1:14:18.600 --> 1:14:20.559 And so we show up, We get them up and 1:14:20.560 --> 1:14:23.080 go out with from mobile battery chargers, which means they're 1:14:23.120 --> 1:14:26.559 charging from a giant battery connected to charging stations and 1:14:26.600 --> 1:14:28.879 then they're able to get up and running a lot quicker, 1:14:28.960 --> 1:14:30.679 and then they also have a smoother service. 1:14:30.800 --> 1:14:32.400 Right there's no such thing as. 1:14:32.240 --> 1:14:36.160 Grid delays or power outages, especially when it's being battery backed. 1:14:36.200 --> 1:14:37.320 All the energy is there. 1:14:37.880 --> 1:14:40.760 Wait, so you just kind of bring a massive battery 1:14:40.880 --> 1:14:42.519 to places and that's how you do it? 1:14:42.720 --> 1:14:44.600 Is it on eighteen wheels? How do you transport that? 1:14:45.640 --> 1:14:45.920 Yeah? 1:14:45.960 --> 1:14:48.639 So some of them are trailer based, some of them 1:14:48.760 --> 1:14:52.360 are container based, but basically we can get that fleet 1:14:52.400 --> 1:14:55.240 set up operating off that battery and then they can 1:14:55.280 --> 1:14:58.640 begin charging from those charging stations immediately. We also have 1:14:58.760 --> 1:15:02.720 power hubs that use basically clean energy like hydrogen and 1:15:02.760 --> 1:15:05.040 things like that. They can also get a fleet up 1:15:05.040 --> 1:15:06.200 and run in and quickly as well. 1:15:06.439 --> 1:15:07.720 That's what I was going to do. So how do 1:15:07.800 --> 1:15:10.000 you charge your battery? That's what I'm curious, Like, where 1:15:09.880 --> 1:15:11.320 are you getting the power and how do you make 1:15:11.360 --> 1:15:14.040 sure it's cost efficient, especially when there's such a power 1:15:14.080 --> 1:15:15.800 grab right now with all the AI going on. 1:15:16.760 --> 1:15:20.360 Absolutely, so we're pretty much energy agnostic. So that means 1:15:20.360 --> 1:15:22.920 that we can grab energy from solar, which a lot 1:15:22.920 --> 1:15:25.320 of times, that's what we'll do. We'll swap the battery out, 1:15:25.360 --> 1:15:28.679 so we'll basically have a battery recharging from a solar partner. 1:15:28.760 --> 1:15:30.840 We'll bring it in, we'll swap it out with a 1:15:30.840 --> 1:15:33.479 fresh battery, and then keep that fleet going twenty four 1:15:33.560 --> 1:15:36.280 seven three sixty five. To the fleet, it looks like 1:15:36.320 --> 1:15:38.960 limitless energy and we're managing all the power on the 1:15:39.000 --> 1:15:41.040 back end, which means they never have to worry about 1:15:41.040 --> 1:15:45.439 downtime or any operational efficiencies. We're constantly swapping that battery 1:15:45.439 --> 1:15:47.679 out or hooking it up to solar to keep them going. 1:15:48.479 --> 1:15:51.400 I'm normally pretty skeptical, but I was like, Wow, what 1:15:51.439 --> 1:15:53.360 a cool company with a great idea. 1:15:53.439 --> 1:15:56.599 And now it realized what he's just a great pitch man. 1:15:56.680 --> 1:16:00.160 Also, right, I didn't see until now that you got 1:16:00.200 --> 1:16:02.679 a million dollar investment from Mark Cuban and Lorie Grinder 1:16:02.760 --> 1:16:05.800 on Shark Tank. You won various awards too, So you're 1:16:05.840 --> 1:16:08.799 great at selling these businesses, Josh, what's. 1:16:08.560 --> 1:16:10.360 Your There has to be demand otherwise you don't have 1:16:10.360 --> 1:16:11.200 a bill for sure. 1:16:11.320 --> 1:16:13.720 No, it's huge, and I mean, look at how well 1:16:13.800 --> 1:16:16.280 Ford Pro has done with that unit. It's just unbelievable 1:16:16.320 --> 1:16:19.719 to growth. But what's your exit? I mean, are you 1:16:19.800 --> 1:16:24.080 looking at IPO this company? Will you sell it to 1:16:24.160 --> 1:16:26.759 a bigger company? How do you how do you get 1:16:27.360 --> 1:16:28.519 Mark Cuban is money out? 1:16:28.720 --> 1:16:28.920 Yeah? 1:16:29.080 --> 1:16:31.440 I mean right now we're really just focused on execution. 1:16:31.680 --> 1:16:35.360 We're having an amazing year, thank god, and we're really 1:16:35.400 --> 1:16:37.760 seeing fleets come to us and say, hey, we want 1:16:37.800 --> 1:16:39.800 to get going a lot quicker. We don't want to wait, 1:16:39.840 --> 1:16:42.559 and so we're having an amazing year. I think for us, 1:16:42.600 --> 1:16:45.160 the right exit will present itself, but right now we're 1:16:45.200 --> 1:16:47.919 focused on scale. We're focused on making sure our customers 1:16:47.920 --> 1:16:50.599 are happy and making sure that we're onboarding a new fleet. 1:16:50.920 --> 1:16:53.559 Keep in mind, because we're not waiting on the grid 1:16:53.640 --> 1:16:56.160 to catch up because we're able to service these fleets. 1:16:56.360 --> 1:16:59.519 We're almost onboarding a new fleet every week. So you know, 1:16:59.560 --> 1:17:01.040 while we don't don't come out there and say it, 1:17:01.080 --> 1:17:03.799 we're probably one of the fastest growing ev charging networks 1:17:03.800 --> 1:17:04.479 out there as well. 1:17:04.840 --> 1:17:08.240 Wait execution, no offense. It's a pet pee for me. 1:17:08.320 --> 1:17:12.000 When an executive says execution, I don't know what that means. 1:17:12.000 --> 1:17:14.200 It's like everybody dumps things into that. 1:17:14.080 --> 1:17:16.000 One want to grow their business, you know, and they 1:17:16.000 --> 1:17:17.439 don't want to tell you what their exit is. 1:17:17.560 --> 1:17:19.960 So tell us, I mean, what does that mean? What 1:17:20.000 --> 1:17:21.680 do you need to do? What do you need to 1:17:21.760 --> 1:17:25.360 hit what targets in order to really be successful and 1:17:25.400 --> 1:17:27.240 sustainable longer term? 1:17:27.840 --> 1:17:31.439 Absolutely, so for us, success is making sure that when 1:17:31.479 --> 1:17:34.280 we get a fleet operational, we're getting them operational to 1:17:34.280 --> 1:17:36.519 where they can actually grow their fleet. A lot of 1:17:36.560 --> 1:17:38.400 times fleets will come to us and they'll say, hey, 1:17:38.439 --> 1:17:40.840 I'm starting out with ten cars, but my goal is 1:17:40.880 --> 1:17:42.960 to get to one hundred cars and the grid can't 1:17:43.040 --> 1:17:45.679 keep up with that growth. Plus the time to install 1:17:45.800 --> 1:17:47.680 is going to take me three to five years at 1:17:47.680 --> 1:17:50.800 that number of vehicles. So for us, execution means, hey, 1:17:50.840 --> 1:17:53.240 get this fleet up and running in three to seven days, 1:17:53.520 --> 1:17:56.439 get them fully electrified. And then now that they're fully 1:17:56.479 --> 1:17:59.360 electrified and they want to grow their fleet, let's grow 1:17:59.439 --> 1:18:02.080 with them. Let's allow them to go from ten vehicles 1:18:02.080 --> 1:18:04.360 to twenty twenty to fifty to fifty to one hundred 1:18:04.520 --> 1:18:07.240 and see long term growth with that fleet partner over 1:18:07.280 --> 1:18:10.320 a number of years as they continue to grow and operate. 1:18:10.640 --> 1:18:13.120 And because we're getting them up and running quicker, we 1:18:13.200 --> 1:18:15.360 want them to see a better ROI than if they 1:18:15.360 --> 1:18:17.240 had to wait on infrastructure to catch up. 1:18:18.040 --> 1:18:20.439 All right, So we're speaking right now with Josh Aviv. 1:18:20.479 --> 1:18:23.360 He's the founder and CEO of Spark Charge. I know 1:18:23.400 --> 1:18:28.640 that you're focused on the pro unit, the commercial fleets, 1:18:28.760 --> 1:18:31.559 but you must also love cars. I've been in a 1:18:31.600 --> 1:18:35.280 ton of evs lately. I was in a Chevy Blazer EVSs. 1:18:35.560 --> 1:18:40.760 I was in a Dodge Charger daytona scat Pack, which 1:18:40.800 --> 1:18:42.960 I loved. Right now I'm in a Cadillac Vistic, which 1:18:42.960 --> 1:18:46.800 I'm also just really positively surprised by. What do you drive? 1:18:46.840 --> 1:18:48.440 What's your d d Josh? 1:18:49.200 --> 1:18:51.479 I drive a twenty twenty six Cadillac Vistic. 1:18:51.960 --> 1:18:54.559 The Vistic is pretty sick, isn't it. I was truly 1:18:54.760 --> 1:18:56.519 impressed by this vehicle. 1:18:56.560 --> 1:18:56.840 Love it. 1:18:57.120 --> 1:19:00.320 I didn't love the Escalade IQ as much, which is 1:19:00.320 --> 1:19:03.400 the bigger EV. It's massive, it's a it's a giant, 1:19:03.479 --> 1:19:06.640 It's like a giant house one. But the Vistick is 1:19:07.360 --> 1:19:11.120 relatively snappy for a car that can still hold like 1:19:11.240 --> 1:19:14.679 seven people. What do you do for your for your 1:19:15.200 --> 1:19:17.839 charging when you're on the road, when you're going around, 1:19:18.800 --> 1:19:21.519 you know, to make work trips and you can't just 1:19:21.600 --> 1:19:24.559 be charging at home every night. What's your experience been 1:19:24.600 --> 1:19:26.960 with the US consumer charging network. 1:19:27.960 --> 1:19:30.080 Yeah, so I'd say, you know, when it comes to 1:19:30.160 --> 1:19:31.800 road trips and things like that, one of the things 1:19:31.800 --> 1:19:33.920 that I love about the Vistick it's got I think, 1:19:33.960 --> 1:19:36.400 you know, real world mile is roughly around three hundred 1:19:36.439 --> 1:19:39.320 and thirty miles of range, and so I've been able 1:19:39.320 --> 1:19:43.720 to go from basically Boston down to New Jersey and 1:19:43.800 --> 1:19:46.080 almost all the way back on a single charge. I'm 1:19:46.080 --> 1:19:48.760 about having to stop and I love it. I love it. 1:19:48.800 --> 1:19:51.160 I love the super crews on it. 1:19:51.160 --> 1:19:53.479 It's it's a it's probably, in my opinion, one of 1:19:53.520 --> 1:19:56.519 the best evs I've driven, and I I've owned I 1:19:56.560 --> 1:19:58.600 think close to ten evs in my lifetime. 1:19:59.200 --> 1:20:01.759 So love that car. I think when it comes. 1:20:01.640 --> 1:20:04.720 To you know, travel charging, you know, I've typically used 1:20:04.760 --> 1:20:07.880 the Tesla Supercharger network or Electrify America, any of your 1:20:07.920 --> 1:20:09.600 standard EV charging networks. 1:20:10.000 --> 1:20:11.560 So what what do you make of the state of 1:20:11.600 --> 1:20:15.320 kind of evs in America under this administration which seems 1:20:15.360 --> 1:20:16.400 to have been pulling. 1:20:16.120 --> 1:20:18.439 Back There's a lot of backlash. It seems like YEP 1:20:19.000 --> 1:20:21.639 flows down. But what do you, is there any doubt 1:20:21.680 --> 1:20:24.280 in your mind, Josh, that we're all driving EV's in 1:20:24.320 --> 1:20:24.880 ten years. 1:20:26.120 --> 1:20:27.599 There's no doubt in my mind. 1:20:27.680 --> 1:20:29.320 I think, Look, I think what it's going to come 1:20:29.360 --> 1:20:32.800 down to is the economics of owning an EV Right. 1:20:33.240 --> 1:20:35.000 I think that's really and I think that probably should 1:20:35.000 --> 1:20:36.639 have been the focal point from day one. 1:20:36.760 --> 1:20:36.960 Right. 1:20:37.040 --> 1:20:39.120 Look how much money you're going to save when you're 1:20:39.240 --> 1:20:40.120 charging at home. 1:20:40.280 --> 1:20:40.479 Right. 1:20:40.720 --> 1:20:42.680 Look at the time save not having to go to 1:20:42.720 --> 1:20:43.400 the gas station. 1:20:43.560 --> 1:20:43.720 Right. 1:20:43.760 --> 1:20:45.599 Look at the experience of just. 1:20:45.560 --> 1:20:47.680 Being able to plug in when you pull in to 1:20:47.800 --> 1:20:48.479 your driveway. 1:20:48.600 --> 1:20:48.760 Right. 1:20:48.800 --> 1:20:50.680 I think that is really going to come down to it. 1:20:50.720 --> 1:20:53.280 And if you think about it, the low cost of maintenance. 1:20:53.360 --> 1:20:53.559 Right. 1:20:54.000 --> 1:20:56.080 I can't remember the last time I went to a 1:20:56.120 --> 1:20:58.360 mechanic for an oil change. I can't remember the last 1:20:58.360 --> 1:21:00.519 time I went to a mechanic because the engine what 1:21:00.640 --> 1:21:01.000 came on. 1:21:01.160 --> 1:21:02.840 I didn't know what that meant. Right. 1:21:02.920 --> 1:21:05.960 The low cost of ownership for an electric vehicle is 1:21:06.040 --> 1:21:09.559 ultimately going to push more people to own electric vehicles. 1:21:09.760 --> 1:21:11.680 And I think that is why in the next ten 1:21:11.760 --> 1:21:14.040 years we're all going to be driving evs, is because 1:21:14.040 --> 1:21:16.120 they're going to save so much money to the consumer. 1:21:16.280 --> 1:21:19.000 Carol will switch when they drive themselves. She wants her 1:21:19.040 --> 1:21:21.200 own personal Weymo at her house in Jersey City. 1:21:21.240 --> 1:21:23.800 I do love WEIMO, but I do like you. I 1:21:23.840 --> 1:21:25.920 do like the idea of EV's. I don't want to, 1:21:26.080 --> 1:21:29.639 you know, I'm concerned about the environment. Hey, Josh, stay 1:21:29.680 --> 1:21:32.200 in touch. Josh a ve founder in CEF Spark Charge, 1:21:32.240 --> 1:21:33.400 joining us from Massachuset. 1:21:33.400 --> 1:21:35.160 You got to get him on my podcast now, Hot 1:21:35.200 --> 1:21:36.599 Pursuit with Hannah Elliott. 1:21:36.720 --> 1:21:38.920 No, yes you could. Yeah, we'll share, We'll share. 1:21:39.400 --> 1:21:44.840 This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, 1:21:45.000 --> 1:21:49.080 and anywhere else you get your podcasts. Listen live weekday 1:21:49.080 --> 1:21:53.280 afternoons from two to five pm Eastern on Bloomberg dot com, 1:21:53.400 --> 1:21:57.200 the iHeartRadio app, tune In, and the Bloomberg Business App. 1:21:57.400 --> 1:22:00.000 You can also watch us live every weekday on YouTube 1:22:00.000 --> 1:22:02.679 Tube and always on the Bloomberg terminal 1:22:09.880 --> 1:22:10.160 MHM