WEBVTT - Bloomberg Businessweek Weekend - September 1st, 2023 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business. Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:18.640 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:19.840 --> 0:00:22.240 Hi, everyone, Welcome to the Bloomberg Business Week Labor Day 0:00:22.280 --> 0:00:26.480 Weekend podcast. Well another week packed with economic and geopolitical 0:00:26.480 --> 0:00:29.720 headlines out of Beijing and coming up this hour, we 0:00:29.960 --> 0:00:33.199 lean into the complicated and vital relationship of China to 0:00:33.280 --> 0:00:36.040 the US and the world with help from two very 0:00:36.080 --> 0:00:37.040 familiar voices. 0:00:37.440 --> 0:00:41.080 Stephan Seelig is a former Undersecretary of Commerce for International 0:00:41.080 --> 0:00:43.840 Trade at the US Department of Commerce, and Andy Brown, 0:00:44.040 --> 0:00:47.760 a seasoned journalist turned consultant who spent three decades in Asia, 0:00:47.800 --> 0:00:48.960 including in Beijing. 0:00:49.280 --> 0:00:52.080 We'll also talk earnings outlook and the corporate I spending 0:00:52.120 --> 0:00:55.400 environment with Splunks President and CEO Gary Steele, and our 0:00:55.400 --> 0:00:58.480 BusinessWeek team tells us why deep fakes could usher in 0:00:58.560 --> 0:01:01.080 the next wave of cyber crime. This is going to 0:01:01.080 --> 0:01:03.560 freak you out. Also dive into the New City's issue 0:01:03.600 --> 0:01:04.600 of the magazine. 0:01:04.720 --> 0:01:07.080 All of that to come. We begin with actual signs 0:01:07.080 --> 0:01:10.600 of progress atop the global hierarchy. This is US Commerce 0:01:10.640 --> 0:01:13.720 Secretary Gina Ramando was wrapping up her trip to China 0:01:14.080 --> 0:01:17.640 and as UK Foreign Secretary James cleverly arrived for the 0:01:17.640 --> 0:01:20.240 most senior British diplomatic visit in five years. 0:01:20.280 --> 0:01:22.959 To help us understand the diplomatic developments along with the 0:01:23.000 --> 0:01:26.199 market and business outlook related to China, return once again 0:01:26.240 --> 0:01:29.760 to Andy Brown, former editorial director at Bloomberg New Economy 0:01:30.000 --> 0:01:32.880 and former China editor for The Wall Street Journal. Today, 0:01:33.000 --> 0:01:35.640 Andy leads the China Hub as a partner at Brunswick Group, 0:01:35.840 --> 0:01:38.920 a critical issues advisory firm. We asked him about the 0:01:38.959 --> 0:01:41.279 significance of the Commerce Secretary's trip. 0:01:41.880 --> 0:01:46.240 The Chinese take Gina Ramando very seriously. They trust her, 0:01:47.160 --> 0:01:49.760 They seem to have a good relationship with her. They 0:01:49.800 --> 0:01:54.640 find her pragmatic, relatively non ideological. And this is really 0:01:54.680 --> 0:01:58.800 quite remarkable given that Gina Raymondo is at the shop 0:01:58.960 --> 0:02:03.360 end of US economic engagement with China, right She's the 0:02:03.360 --> 0:02:09.320 one that presides over this proliferating regime of sanctions and 0:02:09.400 --> 0:02:13.359 export controls and tariffs, which of course this administration inherited 0:02:13.440 --> 0:02:19.679 from the last one, and the Chinese finders deeply threatening. Nonetheless, 0:02:19.880 --> 0:02:23.639 she had a pretty good visit, and her main message 0:02:23.680 --> 0:02:26.840 was no, no, no, we're not here to kill you. 0:02:27.000 --> 0:02:29.440 We don't want to put you out of business. This 0:02:29.600 --> 0:02:33.200 is not decoupling, this is de risking, and that's a 0:02:33.320 --> 0:02:34.119 very different thing. 0:02:34.240 --> 0:02:36.280 Well, what did you make of her comment that she 0:02:36.440 --> 0:02:39.440 argued that China is driving away American companies by making 0:02:39.480 --> 0:02:42.880 investments in the world's second biggest economy increasingly hazardous. She 0:02:42.960 --> 0:02:44.920 said that, Okay, here's the quote, Andy, I know, you 0:02:45.000 --> 0:02:46.840 know it. We talked a little bit about it yesterday. 0:02:47.200 --> 0:02:50.880 Increasingly I hear from businesses China is uninvestable because it's 0:02:50.880 --> 0:02:54.000 become too risky. This is what Gina Ramando told reporters 0:02:54.040 --> 0:02:56.400 Tuesday when she was aboard a high speed train for 0:02:56.480 --> 0:02:58.280 Beijing to Shanghai. What do you investment. 0:02:57.960 --> 0:03:00.760 Flows have been flowing out from foreign investment stairs. 0:03:01.800 --> 0:03:04.799 Which, she said, the right thing. And that's what they 0:03:04.800 --> 0:03:09.120 need to hear because quite often in China, the CEOs 0:03:09.160 --> 0:03:12.400 of the companies that are investing there don't dare speak 0:03:12.440 --> 0:03:15.120 that kind of truth to power. And so you know, 0:03:15.160 --> 0:03:18.520 it takes a genie Raymondo to go over there and 0:03:18.520 --> 0:03:21.040 and say, look, we have a we have a problem, 0:03:21.120 --> 0:03:24.680 and businesses certainly do have a problem now in China. 0:03:25.560 --> 0:03:28.040 It's still I think it's significant though the second part 0:03:28.080 --> 0:03:31.760 of your commentary, she went on a high speed train. 0:03:32.240 --> 0:03:34.840 You know, that's that's interesting, right, That's that's kind of 0:03:34.880 --> 0:03:37.160 a common touch. She hopped the train to go down 0:03:37.480 --> 0:03:40.160 to Shanghai. The Chinese would have liked that. They showcased, 0:03:40.760 --> 0:03:43.800 you know, really unbelievably efficient two hundred mile an hour 0:03:43.800 --> 0:03:48.040 of four and a half hours from from Beijing, which 0:03:48.080 --> 0:03:49.920 is like unbelievable. 0:03:49.960 --> 0:03:51.920 We don't have that here in the US. 0:03:52.160 --> 0:03:54.680 What is it about her that resonates so well with 0:03:54.800 --> 0:03:57.600 Chinese officials, Well, they. 0:03:57.600 --> 0:04:00.480 I think they feel that they can talk to her 0:04:00.520 --> 0:04:03.360 and they're going to get a straight answer. And that 0:04:03.440 --> 0:04:07.320 really was you know, and she she also you know, 0:04:07.400 --> 0:04:12.400 she she's she's constructive, right, so I thought, actually, she 0:04:12.400 --> 0:04:14.880 she handled it in a really smart way. She said, look, 0:04:15.280 --> 0:04:19.760 let let's start by with confidence building matches. So one 0:04:19.760 --> 0:04:22.200 of the things that she's agreed on is that the 0:04:22.279 --> 0:04:26.600 United States and China are going to promote travel right tourism. 0:04:27.080 --> 0:04:30.960 So who can disagree that it would be a good 0:04:31.040 --> 0:04:34.320 thing if more Americans went to China and more Chinese 0:04:34.360 --> 0:04:38.000 people came to the United States. Right, it builds trust, 0:04:38.279 --> 0:04:41.960 builds understanding people to people relations. You know, these countries 0:04:42.000 --> 0:04:45.680 have been separated now for three years under under lockdown. 0:04:46.160 --> 0:04:48.200 Very few flights. Now, I was in Beijing a couple 0:04:48.200 --> 0:04:50.719 of months ago. I was actually staying in four seasons hotel. 0:04:50.760 --> 0:04:53.400 I was the only foreigner in the in the whole hotel. Right, 0:04:53.440 --> 0:04:57.200 I mean the airport is half empty. We need more 0:04:57.240 --> 0:05:00.559 interaction and it's just a great place as smart place 0:05:00.680 --> 0:05:01.120 to stop. 0:05:01.240 --> 0:05:03.719 Well, Andy, talk more about that and give us some 0:05:03.760 --> 0:05:05.960 anecdotes from your recent trip there, because you've spent so 0:05:06.040 --> 0:05:09.040 much time in the country. I know this is post pandemic. 0:05:09.120 --> 0:05:12.640 You went there kind of during the pandemic too, when 0:05:12.640 --> 0:05:15.359 you were helping with you know, with the Olympics for NBC. 0:05:15.960 --> 0:05:18.080 But but just give us the differences that you see 0:05:18.120 --> 0:05:19.880 now based on your recent trip. 0:05:21.240 --> 0:05:23.680 Yeah, well it I mean you've got to go. I 0:05:23.680 --> 0:05:28.000 mean you have to go there to feel this. Oh, 0:05:28.440 --> 0:05:31.760 the sense you get by talking to people on the street, 0:05:31.880 --> 0:05:36.280 my friends, people in the business community, people are kind 0:05:36.279 --> 0:05:38.880 of in shock, you know, I mean I understand this, 0:05:39.520 --> 0:05:44.560 you know, the the the you know, the consumer confidence 0:05:45.040 --> 0:05:48.320 has really been shattered. I mean, people I think feel 0:05:49.360 --> 0:05:53.480 really kind of discombobulated, this disoriented. I mean, what just happened. 0:05:53.520 --> 0:05:57.159 You know, we went through a three a three year lockdown, 0:05:57.279 --> 0:05:58.960 and it was quite painful. I mean, you talk to 0:05:58.960 --> 0:06:01.800 people in Shanghai, they're suffering from something like post traumatic 0:06:01.839 --> 0:06:05.240 stress disorder. Right. These are these are you know, middle class, 0:06:05.279 --> 0:06:08.880 upper middle class families that didn't know if they were 0:06:08.880 --> 0:06:11.560 going to spend that night in bed in their own 0:06:11.600 --> 0:06:14.680 homes or be carted away to some isolation center, or 0:06:14.720 --> 0:06:16.960 if their kids would be taken from them, or if 0:06:17.000 --> 0:06:19.840 guys in white hazmat suits were going to burst through 0:06:19.880 --> 0:06:22.160 the front door, you know, and drag them out or 0:06:22.360 --> 0:06:24.680 put a lock on the outside of the door. They 0:06:24.680 --> 0:06:27.720 didn't know sometimes if they could even feed their families, right, 0:06:28.080 --> 0:06:30.560 And they've been so used to a government that looks 0:06:30.600 --> 0:06:34.320 after all this, that you know, is focused on growth, 0:06:34.720 --> 0:06:39.479 focused on on you know, on development, and it just 0:06:39.560 --> 0:06:45.200 seems like, you know, they're lurching from one blunder to another. 0:06:45.440 --> 0:06:49.280 And you know, the business business confidence obviously is has 0:06:49.440 --> 0:06:51.960 has yet to recover, and the and the confidence of 0:06:52.000 --> 0:06:55.000 foreign investors. And that's what Gina Raymondo was was speaking to. 0:06:55.360 --> 0:06:57.320 You know, people got so used to the idea that 0:06:57.400 --> 0:07:00.000 Chinese supply chains were secure, right, and you could put 0:07:00.000 --> 0:07:03.000 them all in China. That's what Apple did, the whole lot. 0:07:03.240 --> 0:07:05.520 And look what Apple's doing now. You know, it's starting 0:07:05.520 --> 0:07:08.599 at the margins, pulling it out, you know, putting it 0:07:08.600 --> 0:07:13.480 in places like Vietnam, India. It's all about now D risking. 0:07:13.880 --> 0:07:17.200 My question, Andy, is if China is doing so poorly 0:07:17.320 --> 0:07:20.480 in its attempted recovery from three years of lockdowns, if 0:07:20.520 --> 0:07:23.360 the consumer is so weak, if the concerns about shadow 0:07:23.400 --> 0:07:27.120 banks crumbling and not paying people back, do American companies 0:07:27.200 --> 0:07:30.800 really want to invest in China? 0:07:30.920 --> 0:07:34.200 You know, Tim, I think it's so important to put 0:07:34.200 --> 0:07:41.040 this into perspective. China is not collapsing, okay. China is 0:07:41.080 --> 0:07:44.520 suffering from what some people call the four d's. You've 0:07:44.520 --> 0:07:47.720 got a demographic crisis, you have a debt crisis, you 0:07:47.760 --> 0:07:52.520 have a decoupling problem, you have a deflation problem. The 0:07:52.560 --> 0:07:57.239 headlines look terrible, and it is extraordinary. The Chinese economy 0:07:57.280 --> 0:08:00.480 is barely growing right now, and the US economy is 0:08:00.520 --> 0:08:04.400 steaming ahead. I think it's growing what six percent? A 0:08:04.560 --> 0:08:10.120 complete role reversal, right, But China is the world's second 0:08:10.200 --> 0:08:13.280 largest economy, and it's going to be the second or 0:08:13.360 --> 0:08:17.720 third largest economy for decades to come. Right, it's not 0:08:18.200 --> 0:08:22.360 going away. I think what we can expect big picture 0:08:23.000 --> 0:08:29.760 a starting now, a period of slow relative decline. Businesses 0:08:30.000 --> 0:08:34.920 still must be in China, right, They can't ignore China, 0:08:35.840 --> 0:08:38.599 and particularly the businesses that are reliant on China for 0:08:38.640 --> 0:08:43.600 future growth, luxury, chemicals, auto and so on. In those 0:08:43.640 --> 0:08:47.200 industries they're pouring investment in. They have to. I mean, 0:08:47.440 --> 0:08:49.800 you can't be half hearted in China. You've got to 0:08:49.880 --> 0:08:52.480 be all in because the competition there is really good. 0:08:52.760 --> 0:08:55.679 So if you're there and you're dependent on growth, you 0:08:55.760 --> 0:08:58.480 have to invest to keep up with the market. You 0:08:58.520 --> 0:09:01.439 have to invest in technology so that you're able to compete. 0:09:02.160 --> 0:09:04.760 And in fact, some of these companies have an aggressive 0:09:05.120 --> 0:09:09.040 strategy of investment. It's called in China for China, right, 0:09:09.160 --> 0:09:13.600 So they're buying local companies, they're investing in technology. If 0:09:13.640 --> 0:09:16.520 you don't have to be in China right now, you 0:09:16.520 --> 0:09:18.559 don't want to be in China. If you've never been 0:09:18.600 --> 0:09:20.280 in China, you're certainly not going to go there for 0:09:20.320 --> 0:09:23.720 the first time now. And if you are in China, 0:09:24.240 --> 0:09:27.640 money investment that you might have put into China over 0:09:27.679 --> 0:09:32.520 and above the need to fuel and fund your footprint there. 0:09:32.760 --> 0:09:34.960 You're now looking at that money and say where else 0:09:35.040 --> 0:09:37.400 could I put it? Should I put it in Vietnam, 0:09:37.679 --> 0:09:41.040 or in India, or in Mexico, or I might say 0:09:41.280 --> 0:09:43.080 here in the United States, which is one of the 0:09:43.120 --> 0:09:46.040 hardest investment destinations in the world right now. I think 0:09:46.040 --> 0:09:47.800 the way to think about it is that you know, 0:09:47.960 --> 0:09:51.959 China is a giant, right It is an economic giant. 0:09:52.160 --> 0:09:55.280 It's manufacturing sector is bigger than the United States and 0:09:55.320 --> 0:09:58.079 Europe combined. Okay, And this year it's going to it's 0:09:58.080 --> 0:10:01.240 going to leap ahead of Japan become the world's largest 0:10:01.280 --> 0:10:05.360 auto export. It's gobbling up the world's evy markets. It's 0:10:05.400 --> 0:10:09.120 a giant, but it's a giant with a weak hot Okay, 0:10:09.400 --> 0:10:13.240 and that's going to make it less mobile, it's going 0:10:13.320 --> 0:10:17.520 to make it more prone to crisis. But it's still 0:10:17.520 --> 0:10:18.000 a giant. 0:10:18.360 --> 0:10:20.240 That was Andy Brown. He leads the China Hub as 0:10:20.240 --> 0:10:22.599 a partner at Brunswick Group. More from Andy available on 0:10:22.640 --> 0:10:25.560 our podcast feed, including his take on Russian President Vladimir 0:10:25.559 --> 0:10:27.439 Putin's plans to visit China next month. 0:10:27.559 --> 0:10:29.840 Coming up more in the US China relationship. From a 0:10:29.880 --> 0:10:32.160 person who once had a front row seat to their 0:10:32.160 --> 0:10:35.840 political power struggle while serving in the executive branch. 0:10:35.640 --> 0:10:39.800 The number of issues that we're competing on are growing, 0:10:40.040 --> 0:10:41.800 but also the number of issues that we need to 0:10:41.840 --> 0:10:43.840 cooperate on are also growing. 0:10:43.920 --> 0:10:47.280 Stefan Seelig, former Undersecretary of Commerce for International Trade at 0:10:47.280 --> 0:10:49.360 the US Department of Commerce, joins us. 0:10:49.240 --> 0:10:52.920 Next, you're listening to Bloomberg BusinessWeek. This is Bloomberg. 0:10:53.720 --> 0:10:57.280 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:57.320 --> 0:11:00.679 live weekday afternoons from three to six Eastern Listen on 0:11:00.720 --> 0:11:04.760 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, 0:11:05.040 --> 0:11:06.720 or wants us live on YouTube. 0:11:07.559 --> 0:11:10.920 There's no negotiation, there is no room to negotiate when 0:11:10.960 --> 0:11:17.760 it comes to protecting Americans national security, including protecting emerging technology. 0:11:18.400 --> 0:11:20.880 But at the same time, there's business we can do 0:11:21.040 --> 0:11:22.640 and there's business to be done. 0:11:22.840 --> 0:11:26.000 Those words from US Commerce Secretary Gina Ramando this past 0:11:26.000 --> 0:11:29.720 week during her multi day trip to Beijing and Shanghai. Now, 0:11:29.760 --> 0:11:32.560 in our last segment, Andy Brown explained the importance of 0:11:32.600 --> 0:11:35.360 her stressing the need for improved ties between the world's 0:11:35.400 --> 0:11:36.559 top two economies. 0:11:36.960 --> 0:11:39.520 We're now pleased to welcome in Stefan Sea League, managing 0:11:39.559 --> 0:11:42.440 partner at Bridge Park Advisors. Before that, he served as 0:11:42.480 --> 0:11:45.240 the Undersecretary of Commerce for International Trade at the US 0:11:45.320 --> 0:11:48.640 Department of Commerce. That was during the Obama administration, and 0:11:48.679 --> 0:11:50.839 we got his perspective on the current state of US 0:11:50.960 --> 0:11:55.480 China relations and the intersection between geopolitics, policy, and markets. 0:11:55.720 --> 0:11:58.360 When I was under Secretary, I spend more time in 0:11:58.440 --> 0:12:01.160 China than any country by far, and I work to 0:12:01.720 --> 0:12:04.800 foster the relationship with my counterpart at the Ministry of 0:12:04.840 --> 0:12:07.240 Commerce to reflect that reality. 0:12:07.960 --> 0:12:12.199 But did they rank this relationship as important and do 0:12:12.240 --> 0:12:13.680 they still? You think today? 0:12:15.080 --> 0:12:18.080 For sure, And in many respects, I think they view 0:12:18.120 --> 0:12:21.000 it as more important because the number of issues that 0:12:21.040 --> 0:12:24.719 we're competing on are growing, but also the number of 0:12:24.800 --> 0:12:27.680 issues that we need to cooperate on are also growing. 0:12:27.800 --> 0:12:30.400 So as their economy grows and as they look to 0:12:30.520 --> 0:12:36.079 establish themselves as a major player both in political, economic 0:12:36.120 --> 0:12:41.199 and commercial spheres, you know, their ability to work effectively 0:12:41.240 --> 0:12:45.120 with the United States becomes only more important. And I 0:12:45.120 --> 0:12:49.600 think that's exacerbated right now, Carol, because frankly, you know 0:12:49.720 --> 0:12:52.920 their economy is slowing, and they're facing a set of 0:12:52.960 --> 0:12:55.760 economic issues that we haven't seen or they haven't seen 0:12:56.120 --> 0:13:02.160 in decades. Clearly, China has different interests politically and economically 0:13:02.240 --> 0:13:05.400 and commercially than we do. And you know what I've 0:13:05.440 --> 0:13:08.080 always said is, you know, hitting China over the head 0:13:08.080 --> 0:13:10.560 with a cudgel is not going to be an effective 0:13:10.600 --> 0:13:13.440 way to actually make progress. And what we need to 0:13:13.440 --> 0:13:16.679 do is to look for win win outcomes where there 0:13:16.720 --> 0:13:20.319 are things that advance our interests and advance their interests, 0:13:20.400 --> 0:13:21.120 and they're a whole. 0:13:20.960 --> 0:13:23.679 Host of those se fun If I may, I'd love 0:13:23.679 --> 0:13:25.520 to talk to you a little bit about politics, because 0:13:25.559 --> 0:13:27.280 we were just talking a lot about the importance of 0:13:27.320 --> 0:13:32.600 that relationship between US and China. The Republican presidential hopefuls 0:13:32.640 --> 0:13:35.240 the debate last week talked a lot about China. There 0:13:35.280 --> 0:13:39.240 was a lot of pushback. Is that cause for concern 0:13:39.280 --> 0:13:41.559 when you see that? I know some of it is 0:13:41.600 --> 0:13:44.720 all just grandstanding and performance, but some of it is not. 0:13:46.160 --> 0:13:49.040 Yeah, I guess, Carol, you know it's really not just 0:13:49.120 --> 0:13:51.280 the Republicans. In fact, the only thing I can think 0:13:51.320 --> 0:13:54.640 of where the Republicans and Democrats seem to be agreeing 0:13:54.920 --> 0:13:57.880 is getting tough with China, and I think there's a 0:13:57.880 --> 0:14:00.280 little bit of a contest between them as who can 0:14:00.440 --> 0:14:04.600 appear to be tougher with China. And I don't think 0:14:04.720 --> 0:14:09.960 being tough is necessarily always being smart, and so, you know, frankly, 0:14:10.040 --> 0:14:12.760 I think the conversation that should be about what should 0:14:12.760 --> 0:14:16.000 we be doing to advance our interests as opposed to 0:14:16.600 --> 0:14:19.040 what should we be doing just to punish China? 0:14:19.200 --> 0:14:21.640 Is that a cause for concern at all? 0:14:22.600 --> 0:14:25.440 Well, for sure, especially just as I mentioned, you know, 0:14:25.520 --> 0:14:28.960 with China's economy being under pressure, I think the last 0:14:28.960 --> 0:14:31.120 thing we want to do is push them so hard 0:14:31.160 --> 0:14:35.840 that they lash out and take actions that would be 0:14:35.960 --> 0:14:38.000 adverse to us, and we get into this, you know, 0:14:38.120 --> 0:14:40.760 tit for tat because you know, as you've said, you know, 0:14:40.800 --> 0:14:43.080 these are the two biggest economies in the world, and 0:14:43.120 --> 0:14:45.720 we can punish each other plenty, and that doesn't really 0:14:45.720 --> 0:14:46.160 help us. 0:14:46.240 --> 0:14:47.760 Would you want to be back in the White House 0:14:47.840 --> 0:14:50.080 advising well. 0:14:49.960 --> 0:14:51.320 You know, look, I think it was it was an 0:14:51.320 --> 0:14:53.280 honor for you to, you know, do that during the 0:14:53.320 --> 0:14:56.200 Obama administration, and I think you know, to the extent 0:14:56.280 --> 0:14:58.640 that you know you are called to do that, I 0:14:58.640 --> 0:15:00.640 think it's a really hard thing to turn down for 0:15:01.080 --> 0:15:02.880 any of us that care about our country. 0:15:03.040 --> 0:15:05.960 When you're looking at some of the Republican candidates, who 0:15:06.040 --> 0:15:08.080 kind of stands out in your mind that when you're 0:15:08.120 --> 0:15:10.880 thinking about the US and China relations as far as 0:15:10.960 --> 0:15:13.360 what could be a potential viable candidate in that sort 0:15:13.400 --> 0:15:13.880 of realm. 0:15:14.640 --> 0:15:19.840 Well, I'm not sure that that's an easy answer, Chess, 0:15:20.280 --> 0:15:22.160 because as I've said, I think there's just a lot 0:15:22.200 --> 0:15:26.120 of a lot of piling on. And I also would say, 0:15:26.200 --> 0:15:28.600 is you know, what people say on the stage in 0:15:28.680 --> 0:15:32.960 the you know, primary season is probably not necessarily going 0:15:33.000 --> 0:15:36.240 to directly inform their policies. You know, if they get 0:15:36.280 --> 0:15:37.920 into the they get into the oval. 0:15:38.840 --> 0:15:39.040 You know. 0:15:39.120 --> 0:15:41.880 That being said, you know, I think this has to 0:15:41.920 --> 0:15:45.520 be you know, on the radar screen for whoever is 0:15:45.560 --> 0:15:49.360 sitting in the Oval office because of the importance not 0:15:49.400 --> 0:15:53.920 only you know, geopolitically, but commercially and economically for you know, 0:15:54.040 --> 0:15:57.400 employment in our country, the success of our economy and 0:15:57.440 --> 0:15:58.840 our consumer Well, and. 0:15:58.800 --> 0:16:03.400 I'm curious to stuff on about your clients and those 0:16:03.400 --> 0:16:06.240 CEOs that you are talking about, you know, is US 0:16:06.360 --> 0:16:08.840 China typically top of mind for them? Or I'm curious 0:16:08.880 --> 0:16:10.160 what is if it's not. 0:16:10.240 --> 0:16:13.800 That you know, there's a lot of trepidation about going 0:16:13.840 --> 0:16:17.480 into China, and I think especially and that really, I 0:16:17.520 --> 0:16:20.960 think is the purpose of the Secretary's trip, which is 0:16:21.000 --> 0:16:24.400 to really re establish a dialogue so people can begin 0:16:25.040 --> 0:16:30.440 to plan, because if the relationship is so uncertain and 0:16:30.520 --> 0:16:33.800 so voluable, it's very difficult for companies to you know, 0:16:33.880 --> 0:16:36.800 effectively plan. And if you can't plan, you can't make investments. 0:16:37.160 --> 0:16:41.040 And so I think, you know that is is just critical. 0:16:41.320 --> 0:16:44.840 And especially when you're talking about companies, the curbs that 0:16:44.880 --> 0:16:47.120 are being put on chip makers, how much of that 0:16:47.240 --> 0:16:50.600 do you think when you're especially this is companies that 0:16:50.600 --> 0:16:53.560 have performed very well in the stock market this year. 0:16:53.880 --> 0:16:56.040 But I mean, when it comes to those types of companies, 0:16:56.080 --> 0:16:57.680 what do you think that would really mean for them? 0:16:57.920 --> 0:17:01.040 And when it comes to doing deals with China, well. 0:17:00.960 --> 0:17:03.680 Look, it's it's a very big market and we've seen 0:17:03.720 --> 0:17:07.840 them take actions including blocking you know, Intel's acquisition of 0:17:07.880 --> 0:17:11.080 an Israeli chip company, which is really adverse to the 0:17:11.119 --> 0:17:15.320 interests of a of a US of a US company. Uh, 0:17:15.600 --> 0:17:18.040 And so that that really is the point about you know, 0:17:18.119 --> 0:17:21.800 they have the ability to respond in kind I would say, 0:17:21.920 --> 0:17:23.840 or I will say, some of the things we have done, 0:17:23.840 --> 0:17:26.960 I scratch my head a little bit, like the bump, 0:17:27.119 --> 0:17:31.760 the like the recent executive order that that is limiting 0:17:32.119 --> 0:17:35.720 private equity and venture capital investment in you know, advanced 0:17:35.800 --> 0:17:39.840 chip making and other sectors. It strikes me that, you know, 0:17:39.880 --> 0:17:42.439 the one thing that China you know, doesn't lack for 0:17:42.640 --> 0:17:46.200 is capital. And so the notion that somehow we are 0:17:46.240 --> 0:17:50.280 going to constrain their development by not having US investors 0:17:50.720 --> 0:17:53.720 invest in certain sectors and their economy is not just 0:17:53.760 --> 0:17:56.240 something that I can easily follow the logical. 0:17:56.840 --> 0:17:59.560 So in terms of you know, going back to some 0:17:59.640 --> 0:18:01.760 of the things, is that the folks that you work with, 0:18:01.800 --> 0:18:04.600 your clients and CEOs on their top of mind, what 0:18:04.760 --> 0:18:07.560 else you know, in a day where we talk constantly 0:18:07.560 --> 0:18:11.919 about FED policy, higher inflation, are persistent and sticky inflation, 0:18:11.960 --> 0:18:13.600 even though it's down a lot in the past year, 0:18:13.880 --> 0:18:15.919 what else is kind of top of mind? 0:18:16.640 --> 0:18:18.840 I would say, there are really two things. One is, 0:18:19.000 --> 0:18:23.199 you know, is inflation going to be tamed? And what 0:18:23.320 --> 0:18:25.200 is the FED going to have to do in terms 0:18:25.200 --> 0:18:27.400 of raising interest rates in the future to make sure 0:18:28.440 --> 0:18:31.119 you know that happens? You know, are we going and 0:18:31.200 --> 0:18:34.040 if you look at historical data, you know, you really 0:18:34.080 --> 0:18:37.280 do have a you know, short window four or five 0:18:37.400 --> 0:18:39.760 months to really have a good view about what the 0:18:39.800 --> 0:18:42.440 economy is going to do. And I think you know, 0:18:42.480 --> 0:18:44.520 over the next four or five months, folks are not 0:18:44.600 --> 0:18:49.600 worried about dipping dipping into a recessionary period, but forecasting 0:18:49.680 --> 0:18:52.200 for a period that is longer than that is exceedingly 0:18:52.240 --> 0:18:54.240 hard to do. And the question is going to be 0:18:54.320 --> 0:18:56.640 if they have to raise interest rates, you know, once 0:18:56.680 --> 0:18:59.040 twice or three more times, which I think you know 0:18:59.200 --> 0:19:02.000 is not out side of the realm of possibility. To 0:19:02.080 --> 0:19:04.560 what degree does that have a dampening impact on growth 0:19:04.560 --> 0:19:05.320 in our country? 0:19:05.640 --> 0:19:10.320 How much does China's disinflation actually help the US? 0:19:11.320 --> 0:19:14.960 Well, it certainly doesn't help their consumer and it doesn't 0:19:14.960 --> 0:19:17.760 help you know, their economic engine, which is we've talked 0:19:17.800 --> 0:19:21.760 about Jess is so important for us in terms of 0:19:22.560 --> 0:19:27.480 being a buyer of US goods and services. 0:19:27.840 --> 0:19:30.000 That was Stefan sea League. He's managing partner at Bridge 0:19:30.000 --> 0:19:32.399 Park Advisors and a former Commerce Department official. 0:19:32.520 --> 0:19:35.200 Still ahead on Bloomberg Business Week, we go from national 0:19:35.240 --> 0:19:39.640 security to cybersecurity, which affects both the public and private sectors. 0:19:39.800 --> 0:19:42.879 Splunk CEO Gary Steele breaks down the IT spending boom 0:19:42.920 --> 0:19:46.639 that helps spur his company's big earning speed. This is Bloomberg. 0:19:47.520 --> 0:19:51.080 You're listening to the Bloomberg Business Week podcast. Catch us 0:19:51.119 --> 0:19:55.119 live weekday afternoons from three to six Eastern on Bloomberg Radio, 0:19:55.320 --> 0:19:58.600 the Bloomberg Business App, and YouTube. You can also listen 0:19:58.720 --> 0:20:01.800 live on Amazon elect from our flagship New York station 0:20:02.240 --> 0:20:05.040 Just Say Alexa playing Bloomberg eleven thirty. 0:20:06.600 --> 0:20:09.160 So, Tim, I don't know if you've noticed quite rally 0:20:09.160 --> 0:20:13.040 in shares of the infrastructure software company Splunk. Have you seen? 0:20:13.400 --> 0:20:14.160 I mean now, I have. 0:20:15.200 --> 0:20:17.879 Up roughly forty percent year to date, trading at a 0:20:17.880 --> 0:20:20.560 fifty two week high this past week and soaring on 0:20:20.600 --> 0:20:22.840 its recent quarterly update, which came out a little more 0:20:22.880 --> 0:20:23.640 than one week ago. 0:20:23.840 --> 0:20:26.960 Splunk reported second quarter revenue that beat estimates and raised 0:20:27.000 --> 0:20:30.800 its full year forecast beyond expectations. Analysts called the results 0:20:30.840 --> 0:20:34.520 solid overall, noting the better annual recurring revenue as well 0:20:34.520 --> 0:20:37.240 as the upgraded forecast. Let's get more from the man 0:20:37.280 --> 0:20:40.679 at the helm, Splunk President and CEO Gary Steele. You 0:20:40.720 --> 0:20:44.280 know we've been hearing a lot about when we hear 0:20:44.320 --> 0:20:46.880 from companies. We like to hear how you know their 0:20:46.880 --> 0:20:49.399 customers are doing, because it gives us an idea of 0:20:49.400 --> 0:20:51.359 the economy. How are your customers doing? 0:20:52.600 --> 0:20:55.960 Yeah, it was interesting. In our second quarter we saw 0:20:56.160 --> 0:20:58.560 very much the same macro conditions that we'd seen in 0:20:58.600 --> 0:21:02.199 prior quarters, and so where it impacted US is we 0:21:02.200 --> 0:21:05.680 saw some hesitation in cloud migrations because these represent new 0:21:05.760 --> 0:21:09.000 projects that have to be funded and while the ROI 0:21:09.040 --> 0:21:11.719 and getting to the cloud is amazing, you still have 0:21:11.760 --> 0:21:14.960 to fund the actual migration effort. And then we saw 0:21:15.080 --> 0:21:19.960 continued deal scrutiny, so deals elongating or requiring additional signatures. 0:21:20.359 --> 0:21:22.520 I think the one positive thing for US is I 0:21:22.520 --> 0:21:24.520 think we understand it now and I think our team 0:21:24.560 --> 0:21:28.440 did just a phenomenal job executing within that environment and 0:21:28.960 --> 0:21:31.640 understanding that, yes, there will be more reviews and more 0:21:31.640 --> 0:21:34.560 scrutiny on deals, but we executed quite well, really part 0:21:34.560 --> 0:21:34.960