Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Speaker 1: Week inside from the reporters and editors who bring you
Speaker 1: America's most trusted business magazine, plus global business, finance and
Speaker 1: tech news. The Bloomberg Business Week Podcast with Carol Messer
Speaker 1: and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Okay, everybody, The good news for consumers wanting to transition
Speaker 2: to an electric vehicle EV prices are falling fast in
Speaker 2: the United States. The not so great news is the
Speaker 2: cheapest models remain far more costly than what other countries
Speaker 2: have to offer.
Speaker 3: Tim, So, where is America's twenty five thousand dollars EV
Speaker 3: and why can't we get there? With more on this
Speaker 3: story on the Bloomberg Today. Back with us is Bloomberg
Speaker 3: News auto reporter Keith Nonton, who joins us from Detroit. Keith, first, up,
Speaker 3: the good news. EV prices around the world and around
Speaker 3: the US they're falling right.
Speaker 4: Yeah, and you know there's no place where they're falling
Speaker 4: farther than China, where BYD sells an V for under
Speaker 4: ten thousand dollars. So that competitive threat is really getting
Speaker 4: the attention of the automakers in America. Who are hustling.
Speaker 5: To try and come up with a twenty.
Speaker 4: Five thousand dollars VS. That's the new bogie.
Speaker 5: Can we come out with a twenty five thousand dollars EV?
Speaker 2: So wait, can they make money on a twenty five
Speaker 2: thousand dollars EV?
Speaker 4: Well, so a couple of things, Carol, They think they can.
Speaker 4: And here's why. One is it's going to be a
Speaker 4: smaller vehicle, so we'll require less battery, and the battery
Speaker 4: is the most expensive.
Speaker 5: Component by far of an EV.
Speaker 4: And because it's priced so low, you would get higher volume.
Speaker 4: So they think the combination.
Speaker 5: Of higher volume and lower battery.
Speaker 4: Costs will lead to profitability.
Speaker 5: In fact, Ford's.
Speaker 4: CEO Jim Farley has said the twenty five thousand dollars
Speaker 4: EV they're.
Speaker 5: Developing that will.
Speaker 4: Come in late twenty twenty six, needs to be profitable
Speaker 4: in its first year.
Speaker 3: So why can BYD do a ten thousand dollars EV.
Speaker 3: Other Chinese automakers do a ten thousand dollars EV. But
Speaker 3: it's such a struggle and such a challenge for US
Speaker 3: automakers to do it. Is it all just because of
Speaker 3: labor costs?
Speaker 1: No?
Speaker 4: No, there's also the government of China that provides absolutely
Speaker 4: free money to those automakers, so government support, full government
Speaker 4: support that would not be legal in the United States
Speaker 4: or other Western countries. There's a lot of what gives
Speaker 4: China the competitive advantage they have, but yeah, they do
Speaker 4: have the lowest labor costs pretty much in the world.
Speaker 4: They're lower than the labor costs in Mexico, and that
Speaker 4: also gives them a big lag up.
Speaker 2: Hey, Keith, one thing I do wonder does it make
Speaker 2: sense that we're it's taken longer to get the cheaper
Speaker 2: EV or the less expensive EV if you will, because
Speaker 2: you know, so many of the automakers came out with,
Speaker 2: you know, some really interesting models that folks like, but
Speaker 2: they were super expensed. Is that logical as we kind
Speaker 2: of transition from you know, or transition, if you will,
Speaker 2: to more evs, that it's it makes sense that they
Speaker 2: were more expensive to begin with, and now we can
Speaker 2: start to think about how we make them less expensive.
Speaker 5: Yeah.
Speaker 4: I think the idea, Carol was, you know, like with
Speaker 4: any new technology, you start at the luxury end and
Speaker 4: then hopefully it trickles down.
Speaker 5: But I think what the automaker's.
Speaker 4: Discovered was coming straight out of the gate with seventy
Speaker 4: eighty one hundred thousand dollars evs really narrowed your market.
Speaker 4: There's only so many people who can afford those sorts
Speaker 4: of vehicles. Maybe they should have been more middle market.
Speaker 4: GM now has an equinox that is EV that is
Speaker 4: more middle markets, a medium sized SUV that will come
Speaker 4: down by the end of this year. Supposedly they're going
Speaker 4: to have a base model that with the government incentive,
Speaker 4: would put it at twenty eight thousand dollars. So you know,
Speaker 4: and as we know, Elon is developing a twenty five
Speaker 4: one thousand dollars EV as well.
Speaker 2: So he says, or so he says, not giving you
Speaker 2: a hard time, but it does seem like he says
Speaker 2: we will publicly. Right, we've all been kind of waiting
Speaker 2: for this mass market Tesla and then reporting and so
Speaker 2: on and so forth. As he's saying something else behind
Speaker 2: closed doors, then.
Speaker 5: That will actually happen.
Speaker 4: Is the robotaxi that he's now talking about, because he
Speaker 4: really wants everybody to view Tesla as.
Speaker 5: An AI company and not an auto company.
Speaker 4: It's the same platform, it's the same vehicle as the
Speaker 4: twenty five thousand dollars Tesla, So it seems to me
Speaker 4: they will produce a twenty five thousand dollars car, some
Speaker 4: of them will have steering wheels, and some of them won't.
Speaker 3: All right, hold your breath for August eighth, is what
Speaker 3: Elon Musk would say, because that's when the unveil is
Speaker 3: supposedly happening.
Speaker 6: Keith, we can't talk to you and not.
Speaker 3: Talk about historical parallels when it comes to what's going
Speaker 3: on with evs in China, because you've been covering the
Speaker 3: auto industry for so many years, and I'm wondering, even
Speaker 3: though we don't see these gpvs coming from China to
Speaker 3: the US and increasingly not looking like Europe either, is
Speaker 3: there still any sort of historical parallel we can look
Speaker 3: at when US automakers have had to react quickly to
Speaker 3: a foreign automaker, maybe Japan in the nineteen eighties nineteen nineties.
Speaker 4: Yes, absolutely, this is the nineteen eighties all over again,
Speaker 4: except on steroids, because while certainly the government of Japan
Speaker 4: supported their automakers, nothing like the government of China supports
Speaker 4: its automakers. So you have this competitive threat coming. And sure,
Speaker 4: Joe Biden's one hundred percent tariffs on Chinese evs can
Speaker 4: keep them out for a while, but ultimately they'll be here,
Speaker 4: just like the Japanese came and the Koreans came. I
Speaker 4: mean before that, the Germans came. Ultimately they will be
Speaker 4: in this market. And that's why the American automakers and
Speaker 4: the European automakers are rushing to catch up. You know
Speaker 4: that Jeep now is owned by Stilantis, which is based
Speaker 4: in Europe.
Speaker 5: They are going to come with this twenty.
Speaker 4: Five thousand dollars Jeep colors Tavaris. Their CEO just sat
Speaker 4: a couple weeks ago. So you know, everyone is rushing
Speaker 4: to be prepared for when the Chinese come into the
Speaker 4: Western markets.
Speaker 2: Hey, you know, Keith, for someone who's watched the auto
Speaker 2: market for a long time and understands it and understands competition,
Speaker 2: does the US market need to be protected a little bit,
Speaker 2: especially when it comes to an EV mass market before
Speaker 2: opening the floodgates, if you will, to foreign competition, Because
Speaker 2: sometimes I wonder if competition gets people to move a
Speaker 2: little quicker in terms of development or so I'm curious
Speaker 2: how you see it understanding development cycles and the markets.
Speaker 4: Absolutely, and tariffs, let's be very clear tariffs are inflationary.
Speaker 4: Ask any economists, they are inflationary. They don't protect the consumer,
Speaker 4: they protect the industry while it gets us act together.
Speaker 4: And that's what's going on here. Detroit made bets on
Speaker 4: big expensive vs. One hundred thousand dollars Hummer evs and
Speaker 4: the F one fifty lightning when you get it all
Speaker 4: tricked out, is way up there. So you know, they
Speaker 4: made bets on big electric vehicles that require big batteries
Speaker 4: to power them, and that turns out to be the
Speaker 4: wrong bet.
Speaker 7: So they need a little.
Speaker 4: Time to scramble to go back to the drawing board
Speaker 4: literally and go down to the low end of the
Speaker 4: market and address the primary concern from mainstream buyers. I
Speaker 4: know we talk a lot about charging infrastructure, and that's
Speaker 4: a legitimate thing. But price, price, price, that's the impediment
Speaker 4: to ev adoption.
Speaker 3: Keith, who's in the US is closest to pulling this
Speaker 3: off right now? Is it Ford?
Speaker 8: Is?
Speaker 3: I know I can't really call Stilantis to US company,
Speaker 3: but they certainly own some US companies.
Speaker 6: Is it GM? Is it Stalantis? Who is it?
Speaker 4: I think it might be GM? I mean Ford's twenty
Speaker 4: five thousand dollars. EV isn't coming until late twenty twenty six.
Speaker 4: GM says they'll have their revived and revised Chevy Bolt
Speaker 4: out next year, and that already was the most the
Speaker 4: cheapest EV on the American market before GM stopped building
Speaker 4: it in December. But they're coming back with the new
Speaker 4: and improved one next year. And as I said, they
Speaker 4: have this Equinix that's out there, so you know, they
Speaker 4: may be the first ones to be out there with
Speaker 4: an EV that starts in the twenties, but everyone is
Speaker 4: going to catch up real quickly. Javares wasn't specific when
Speaker 4: he was talking about the Electric Chief. He just said
Speaker 4: it will come to the US very soon. So you know,
Speaker 4: within the next two years, we're going to see a
Speaker 4: whole bunch of more affordable evs from the US makers.
Speaker 3: Okay, they're not US makers, but I'm wondering where the
Speaker 3: Korean companies and are are with all of these, like
Speaker 3: the Hyundais and the kias well.
Speaker 4: Hundai and Kia have some really nice evs that have
Speaker 4: been popular with consumers and so.
Speaker 5: And you know they don't qualify it, particularly.
Speaker 4: The ones that are made in Korea. For the seventy
Speaker 4: five hundred dollars tax credits. So Hyundai and Kia, which
Speaker 4: is the same company, are just biting the bullet and
Speaker 4: still giving that discount to their to their buyers and
Speaker 4: just taking it out of their high So you know,
Speaker 4: they are being very aggressive and competitive. Hyundai feels like
Speaker 4: they can completely reset their and become an eed maker
Speaker 4: in America.
Speaker 2: Let's just hope the charging systems are ready for this
Speaker 2: mass adoption of Gprev's fingers crossed. I see it at
Speaker 2: the highway stop centers. There's not a lot of places
Speaker 2: necessarily to charge up. Keith Notton always appreciated Bloomberg News
Speaker 2: auto reporter Keith not and jutting us from Detroit. All right,
Speaker 2: we're going to stay with kind of alt energy renewables
Speaker 2: to one of the richest individuals in the world who's
Speaker 2: getting supercharged over nuclear energy.
Speaker 3: On that it's one of our most read stories on
Speaker 3: the Bloomberg terminal about the world's sixth richest person who
Speaker 3: says he's ready to invest billions in nuclear power.
Speaker 2: We are talking about Bill Gates, who made the media
Speaker 2: rounds this past week and talking about his investments in
Speaker 2: nuclear power and got into the political momentum behind Nuclear
Speaker 2: on CBS faced the nation this past weekend.
Speaker 8: Of all the climate related work I'm doing, I'd say
Speaker 8: the one that has the most bipartisan energy clind that
Speaker 8: it's actually this nuclear work. If we unleash the innovation
Speaker 8: power of this country, we tend to lead. And I
Speaker 8: feel great about the support we're getting from the federal
Speaker 8: government in this nuclear space.
Speaker 2: All right, with more on what Bill Gates is up to,
Speaker 2: the political will behind the nuclear power and the rebirth
Speaker 2: of what it seems like nuclear return again to Will Wade.
Speaker 2: He's Bluemberg News Power and Renewables Energy editor right back
Speaker 2: in our studio. So well, good to have you back.
Speaker 2: It feels like this is becoming a weekly thing when
Speaker 2: it comes to nuclear. Bill Gates investing in next generation
Speaker 2: nuclear power a plant project in Wyoming. What do we
Speaker 2: know about it? And why is it next gen?
Speaker 9: Okay, So Bill Gates is invested in this company called
Speaker 9: Terra Power and they're investing or they're developing a new
Speaker 9: kind of nuclear reactors. So traditional reactors use water. The
Speaker 9: fission reaction heats up the water, the water makes steam,
Speaker 9: steam makes electricity. He uses liquid sodium, so it's not water.
Speaker 9: It stays liquid at a much higher temperature, so that
Speaker 9: allows it to use more of the heat from the
Speaker 9: fission reaction, so it's a more efficient type of reaction.
Speaker 9: So it sounds really cool and if it works, it
Speaker 9: will be cool. But what's different if it works, Well,
Speaker 9: he hasn't built it yet, no one. He hasn't built
Speaker 9: it yet. No one's built one yet. But the theory
Speaker 9: is very solid. There's a lot more energy there. It's
Speaker 9: years away from completions, so there's obviously a lot of
Speaker 9: risk between you know. Now, they just broke ground on
Speaker 9: it last week. They don't even have permission from the
Speaker 9: NRC to actually build the reactor part. So yeah, there's
Speaker 9: a lot that still needs to happen. But it's a
Speaker 9: new technology. That's why they call it advanced to nuclear.
Speaker 6: Any other countries doing this right now?
Speaker 9: Oh, there's a lot of companies working countries. There's a
Speaker 9: lot of countries working on advanced nuclear designs. There's a
Speaker 9: lot of companies there's.
Speaker 6: But has anyone pulled it off yet?
Speaker 10: Oh?
Speaker 6: No, No, that's what I'm talking about. No, we're like,
Speaker 6: the thing.
Speaker 2: About nuclear is that it goes for skeptical a little bit.
Speaker 9: Oh, don't be that's okay, or.
Speaker 2: Should we not be that?
Speaker 1: You should be?
Speaker 9: No, you should be. The thing about nuclear is that
Speaker 9: it just goes really slowly. So you can have me
Speaker 9: in here every week, but not lot's going to change
Speaker 9: between them.
Speaker 6: Build a preview from will wait, right.
Speaker 2: But you remind us that some of it has to
Speaker 2: go slowly to make sure that it is safe. It
Speaker 2: is secure.
Speaker 9: Yeah, they nuclear has some risks. This is real, which
Speaker 9: is why they are very careful about how they take
Speaker 9: every step. But all of these things are new designs
Speaker 9: that have to be perfected. I mean, we were just
Speaker 9: talking about all the new evs that they've been around
Speaker 9: for a long long time and they're just getting perfected.
Speaker 3: Why will are people betting on this smaller new type
Speaker 3: as the way to move forward with nuclear rather than
Speaker 3: the proven tech that yes, is expensive, yes, takes years,
Speaker 3: but we know works.
Speaker 9: So the model that people want to get to is
Speaker 9: they call it an SMR, a small modular reactor where
Speaker 9: you can build the pieces in a central factory and
Speaker 9: they're small enough that you can put them in a
Speaker 9: shipping container and deliver them on site and it just
Speaker 9: bolt them together. So once we get the technology perfected,
Speaker 9: which may be is a mid twenty thirties type of thing.
Speaker 9: But if that happens, you just have them turning off
Speaker 9: the assembly line and being delivered.
Speaker 2: Tim's shaking his head. I mean, the timeline and all
Speaker 2: of this, Like I understand we have to be safe
Speaker 2: and careful and secure, but it is it's kind of
Speaker 2: mind blowing when we think about we're watching climate We're
Speaker 2: talking about a killer heat wave which we're going to
Speaker 2: talk about later this hour here in New York, but
Speaker 2: across like six for sixty million Americans this week, and
Speaker 2: we just see the effects of climate change rapidly changing
Speaker 2: our environment.
Speaker 3: And will you got to forgive me being so skeptical
Speaker 3: when it comes to timelines. Here, you're just back from
Speaker 3: Georgia and Vocal four. Sure, and you know, remind us
Speaker 3: about the timeline there for something that had proven technology.
Speaker 9: Yes, the Vocal three and four project, it was just
Speaker 9: completed and the fourth one went online just a couple
Speaker 9: months ago. It was seven years behind schedule. It was
Speaker 9: one hundred and fifty percent over budget. I just did
Speaker 9: the math earlier. It came in about thirty five billion
Speaker 9: something dollars to build these two big reactors. It was
Speaker 9: a painful process, but people are happy that they've got
Speaker 9: it done. They're happy they got it across the finish line.
Speaker 9: Whether it is something that is a motivator to get
Speaker 9: people to do another one, or if it's going to
Speaker 9: scare people away is still the question.
Speaker 2: What do you see? I thought it was interesting Bill
Speaker 2: Gates saying that the country, I feel great about the
Speaker 2: support we're getting from the federal government in this nuclear space.
Speaker 2: What have we seen in terms of the political opinion,
Speaker 2: if you will, on this? I mean, people's opinion is
Speaker 2: certainly one thing. But what we are seeing in terms
Speaker 2: of politics, and we're politicians, and also the federal government,
Speaker 2: how they are weighing in.
Speaker 5: Oh.
Speaker 9: I literally twenty minutes ago, I was watching Jennifer Grohnholm
Speaker 9: at the Energy Secretary do a presentation out in Vegas
Speaker 9: at the Big Conference. She was talking up all of
Speaker 9: the things that the Biden administration done has done. They
Speaker 9: are very supportive of the nuclear industry. They've got the
Speaker 9: production tax credit they came in as part of the
Speaker 9: Inflation Reduction Act. They've got the loan Program's offices trying
Speaker 9: to throw billion and billions of dollars of companies to
Speaker 9: try and develop nuclear power. I've talked to Jiggershaw, the
Speaker 9: guy in charge of the LPO office. He's like literally
Speaker 9: begging people to submit application so he can throw money
Speaker 9: at them.
Speaker 3: Will remind us in terms of the overall power that's
Speaker 3: used by the US when we are on this path
Speaker 3: to net zero, what portion of that will be powered
Speaker 3: by nuclear energy?
Speaker 9: Well, hopefully a lot more. Right now, it's nineteen percent
Speaker 9: that's of the US energy mix.
Speaker 2: This surprises me because I think I thought it just
Speaker 2: had gone away.
Speaker 9: But that's just my Actually, if you look at the
Speaker 9: charts of where nuclear fit, it's been rock steady. It
Speaker 9: it has hardly changed. But their goal is to triple
Speaker 9: it by twenty fifty, which is just a lot. It's
Speaker 9: an enormous amount.
Speaker 6: And we're also using more energy too.
Speaker 9: We're using that's the thing. We are going to start
Speaker 9: using a lot more energy. Like get energy demand in
Speaker 9: the US has been more or less flat for the
Speaker 9: last twenty years, but we're seeing projections to go way
Speaker 9: up in the next.
Speaker 2: Couple of administration. Bill Gate says he's ready to invest
Speaker 2: billions more so, he's ready certainly to do his part.
Speaker 2: Great stuff. Thank you appreciate being able to check in
Speaker 2: once again with Will Wade, He's Bloomberg News Power and
Speaker 2: Renewable Energy editor.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: Sometimes technology innovation and disruption actually involves a company doing
Speaker 2: just that to itself. Enter Google, home to two elite
Speaker 2: AI teams, Google Brain and DeepMind, and disrupting that tim
Speaker 2: by combining it into one AI superunit that it calls
Speaker 2: Google deep Mind.
Speaker 3: Let's get to this Bloomberg BusinessWeek story. You can read
Speaker 3: it on the Bloomberg and at Bloomberg dot com. Slash
Speaker 3: BusinessWeek with more with us in the Bloomberg studio is
Speaker 3: BusinessWeek Technology editor Joshua Brustein, who joins us in New York. So,
Speaker 3: Joshua remind us what these two labs were doing separately
Speaker 3: and why Alphabet, the parent company of Google, decided to
Speaker 3: bring them together.
Speaker 11: Yeah. So Google has for about a decade been pursuing
Speaker 11: AI in various ways, and it has a history of
Speaker 11: kind of doing things very far away from trying to
Speaker 11: make a product out of it and also actually as
Speaker 11: a history of having two competing departments trying to do
Speaker 11: the same thing. So they had a homegrown unit called
Speaker 11: Google Brain, which came out of Google X, which is
Speaker 11: its Moonshot lab, and they spun that out of X
Speaker 11: and started working on some AI products that we're making
Speaker 11: into that we're actually ending up in some of the
Speaker 11: commercial products. And then I believe in twenty fourteen it
Speaker 11: acquired a UK based AI shop called DeepMind, which was
Speaker 11: working on using AI to beat video games, and this
Speaker 11: was seen as sort of a foundation for much more
Speaker 11: ambitious AI projects.
Speaker 3: Maybe years ago people would have heard of deep Mind
Speaker 3: because it was able to beat a human at Go,
Speaker 3: which I think a lot of people when that happened
Speaker 3: they were like, let's go because it's not very popular game.
Speaker 6: In the US my reaction to it.
Speaker 11: But that was also a really seminal moment exact eye
Speaker 11: development like this was seen as like groundbreaking and sort
Speaker 11: of scary for a lot of people at the time,
Speaker 11: like if I can do this, what's next.
Speaker 2: Well, speaking of seminal moments or important moments, open AI's
Speaker 2: own work a paper that they were talking about GPT
Speaker 2: three that was back in twenty twenty a bit of
Speaker 2: a wake up call for Alphabet and Google in terms
Speaker 2: of their own work on AI.
Speaker 6: Yeah.
Speaker 11: Absolutely, So what happened was Google had built some of
Speaker 11: actual the foundational technologies that went into GPT three. They
Speaker 11: built a type of technology called a transformer, which we
Speaker 11: don't have to go into, but you just it is
Speaker 11: the basis.
Speaker 2: So many questions always go ahead by the basis of.
Speaker 11: A lot of the modern large language models. And Google
Speaker 11: read what open ai was doing in twenty twenty and realized, oh, man,
Speaker 11: we are building the science here, but someone else is
Speaker 11: building the products, and that is not where we want
Speaker 11: to be. And so that kind of kicked off a
Speaker 11: you know, a sort of self examination to figure out, like,
Speaker 11: why aren't we doing the things that are actually going
Speaker 11: to make AI work with consumers out.
Speaker 12: In the world.
Speaker 3: So bring us up to speed on where we are today,
Speaker 3: because I think a lot of people probably saw a
Speaker 3: few weeks ago when those viral Google search results went
Speaker 3: around that suggested that people were okay if they were
Speaker 3: to eat rocks, for example. Yeah, because doctors said.
Speaker 11: That was fine, exactly exactly.
Speaker 6: Exclain what happened here.
Speaker 11: So about a year ago, Google ended up combining those
Speaker 11: two labs that we mentioned in an attempt to have
Speaker 11: a more open AI like process to get stuff out
Speaker 11: to you know, really start putting things in front of
Speaker 11: Google customers. The event you're referring to was from a
Speaker 11: particular product that would sort of summarize search results in
Speaker 11: using large language.
Speaker 3: Models, which everybody who's Googled recently has seen this. Yeah,
Speaker 3: this was like, it's the first thing that shows up
Speaker 3: on the page when you search for something, and it
Speaker 3: says this is a lab result. It's experimental, but nonetheless
Speaker 3: oftentimes it's right.
Speaker 11: Yeah, absolutely, they wanted to have some of this. It
Speaker 11: started showing up a lot of people think that, you know,
Speaker 11: chatbots will eventually replace the way that we do Google search,
Speaker 11: and Google's very word about that, obviously, because that's where
Speaker 11: a lot of their revenue comes from. But like all,
Speaker 11: like all large language model based products, it the Google
Speaker 11: product had a tendency to hallucinate, which basically just meets
Speaker 11: make stuff up. They started summarizing the web by taking
Speaker 11: things that were in fact on the Internet, but we're
Speaker 11: not great ideas. I believe one of them was to
Speaker 11: eat rocks. Another one was to put.
Speaker 6: Glue on your pizza. Okay, do not be fair.
Speaker 3: Sometimes they were using the onion as.
Speaker 2: You do not put glue on your pizza.
Speaker 3: Do not eat although, but what if the cheese is
Speaker 3: falling off?
Speaker 1: Carol?
Speaker 2: Do not put glue on your pizza. Okay, just you know,
Speaker 2: use your brain here. Everybody combining the labs. So what
Speaker 2: does Google alphabet? I never know which one to choose.
Speaker 2: But what are they gained by doing that? What might
Speaker 2: they lose? Because sometimes folks say internally they like to
Speaker 2: have different units because they kind of compete against each
Speaker 2: other and everybody gains or everybody smarter because of it.
Speaker 2: So what are they gained by doing this? What might
Speaker 2: they lose?
Speaker 5: Yeah?
Speaker 11: So the thing they were hoping to gain was to
Speaker 11: put everyone who was working on advanced AI within Google
Speaker 11: and get them pulling in the same direction. And that
Speaker 11: direction was to not only be pursuing AI projects that
Speaker 11: might be interesting, but to actually have AI projects that
Speaker 11: would be products sooner than later.
Speaker 2: Yeah.
Speaker 11: So that's what they would gain. And you know, they
Speaker 11: have been releasing products. There have been some pickups, as
Speaker 11: we've talked about. That is par for the course.
Speaker 6: In AI.
Speaker 11: Frankly, the thing that they could lose is that Google
Speaker 11: really has done a lot of the foundational research with AI,
Speaker 11: and they did that by giving by giving researchers a
Speaker 11: lot of freedom to kind of pursue what they wanted.
Speaker 11: They worked on small projects they didn't weren't given you
Speaker 11: commands from on high and.
Speaker 2: You get to more today, right and think about, well,
Speaker 2: really like that free time right to kind of figure
Speaker 2: out what could we maybe.
Speaker 11: Do exactly like the classic Google like twenty percent time
Speaker 11: is you know, it's that's always been part of Google's
Speaker 11: culture to kind of experiment and do things that we
Speaker 11: trust will pay off eventually.
Speaker 3: Search and advertising fundamental to Google's business. I mean, make
Speaker 3: no mistake, this is an advertising company that makes its
Speaker 3: money from advertising.
Speaker 6: But if we think.
Speaker 3: Beyond what alphabet is trying to do when it comes
Speaker 3: to AI, what are the quote unquote moonshots for lack
Speaker 3: of a better term, like, like, yes, we understand that
Speaker 3: it wants to protect its search business, Joshua, but what
Speaker 3: else does it want to do beyond that?
Speaker 11: In a you mean, yeah, I think at this point
Speaker 11: there's a little bit of lack of clarity throughout the
Speaker 11: industry of exactly what the AI business is. It's been
Speaker 11: coming up on two years since the release of chat GPT.
Speaker 11: We've spent a lot of time talking about chatbots. They
Speaker 11: are out there in the world. They are being used
Speaker 11: in various ways, maybe to replace Google Search. I think
Speaker 11: that Google also has some other products and projects that
Speaker 11: we think about as AI that are not kind of
Speaker 11: in the discussion about, you know, like CHATCHYBT. I mean
Speaker 11: Waymo for instance, an enormous AI project. Those things are
Speaker 11: driving around the streets of San Francisco. The Deep Mind
Speaker 11: Lab is working on Alpha Fold, which does a lot
Speaker 11: of work that could be really important healthcare work. But
Speaker 11: right now, like looking for the Google Search sized AI
Speaker 11: business is.
Speaker 6: Not that is not emerged yet. It's not clear.
Speaker 11: This is where we're going, and we just need to.
Speaker 2: Get there, you know, you talk about that. You know,
Speaker 2: ultimately alphabets want wants products that are going to pay
Speaker 2: off for the company, right, that makes sense. They want
Speaker 2: all of this work to kind of have a payoff,
Speaker 2: whether it's in like I said, offerings. Having said that,
Speaker 2: when they were allowing the two labs, right, they were
Speaker 2: kind of you know, offering up certain you know, computing power.
Speaker 2: AI takes a lot of computing power, right, and so
Speaker 2: they kind of had to allocate it too among labs
Speaker 2: and researchers, right, So there was a little bit It
Speaker 2: sounds like almost a competition internally, Like I wonder if
Speaker 2: that was how that played into it, just the practicality
Speaker 2: of hey, guys, this is a lot of computing power.
Speaker 2: So where do we kind of focus our efforts to
Speaker 2: you know, get that payoff.
Speaker 11: Yeah, that's a good point. I think that this is
Speaker 11: actually part of getting at Google to all pull in the.
Speaker 2: Center grown up a Google a little bit.
Speaker 11: Yeah, like you had not only do you have researchers,
Speaker 11: like three researchers doing this, eight researchers doing this, you
Speaker 11: have all of this computing power, and to build a
Speaker 11: model along along the scale of a GPT four or
Speaker 11: Gemini that's Google's model, you need to be using most
Speaker 11: of your computing power, or at least a whole lot
Speaker 11: of it on one thing. And that means having a
Speaker 11: top down structure where you say, this is the one
Speaker 11: thing we want to do. And that's really new compared
Speaker 11: to how Google had been doing things up until a
Speaker 11: year ago.
Speaker 3: So combining these two Labs, Josh, I know that Mark
Speaker 3: Bergen and Julia Love, who wrote the story you edited it,
Speaker 3: spoke to a lot of folks out there about whether
Speaker 3: or not it has been successful thus far.
Speaker 6: What's your read on it.
Speaker 11: I think that Google is one of the leading AI companies.
Speaker 11: They are clearly doing things that keep them in the running,
Speaker 11: and there are things that the market's very unsettled. The
Speaker 11: tech is very unsettled.
Speaker 6: I think.
Speaker 11: An interesting thing actually that's come up with the last
Speaker 11: year under this is up until around that time, people
Speaker 11: inside Google were unsatisfied because it wasn't commercializing things quickly enough.
Speaker 11: There were a lot of researchers who left, even ones
Speaker 11: who did some of the core technology for Google, saying
Speaker 11: I want to go to a startup where we actually
Speaker 11: get a ship product. Now Google shipping product. And there
Speaker 11: are people withinside Google saying why are we doing this?
Speaker 11: It was more fun when we could just work on
Speaker 11: whatever we wanted. So there is a tension here between
Speaker 11: within Google about like what is it you want to do?
Speaker 11: And you're always going to think, well, the grass is greener?
Speaker 2: Interesting, right, like yeah, the payoff? Yeah, I was curious
Speaker 2: about kind of what the mood was internally, So it
Speaker 2: sounds like it's a bit of a mixed bag.
Speaker 11: Yeah, it seems like it all right.
Speaker 2: Great stuff as always in this story by our Bloomberg
Speaker 2: Business Week team, Joshua, thank you so much, really appreciate
Speaker 2: Joshah Brustin, his technology editor at Bloomberg BusinessWeek. You can
Speaker 2: find this story on the Bloomberg and also at Bloomberg
Speaker 2: dot com.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 3: Now to sort of the economic outlook. After a big
Speaker 3: week last week where we heard from the Fed, we
Speaker 3: also have this week, Carol, a half dozen FED speakers
Speaker 3: between tomorrow and Friday, we got retail sales, industrial production.
Speaker 3: Let's bring in Francis Donald, global chief economist at Manual
Speaker 3: Life Investment Management, joining us this afternoon from Montreal. I
Speaker 3: mentioned some of the stuff going on this week. The
Speaker 3: big news next week is PCE. But before we get there,
Speaker 3: just give us an idea for how you're looking at
Speaker 3: the economic environment right now post FED.
Speaker 12: Well, we are looking at it very closely. We're actually
Speaker 12: in the middle of our quarterly forecast revisions. And when
Speaker 12: we look at the Fed's forecast, it's almost like they
Speaker 12: didn't see how much better that inflation print was on Wednesday,
Speaker 12: and it's almost as if the Fed's outlook feels stale.
Speaker 12: Thirstday we got another indication that inflation is progressing to
Speaker 12: lose use the Fed's language, and then on Friday we
Speaker 12: had inbore prices which demonstrated again that there's disinflationary pressure
Speaker 12: in the economy. That's good news, and we expect that
Speaker 12: combined with unfortunately deterioration ahead by September, the Fed we'll
Speaker 12: have what it needs to cut.
Speaker 2: Is there something smart though in maybe waiting for PCE
Speaker 2: and just really kind of getting some more certainty, if
Speaker 2: you will, Francis when it comes to the inflation print,
Speaker 2: I mean and making sure. I mean the FED doesn't
Speaker 2: want to be behind the curb, but it also we know,
Speaker 2: doesn't want to do things too early. I know some
Speaker 2: would say it's already behind the curve, but something to
Speaker 2: making sure that, okay, CPI PPI check check, but just
Speaker 2: to really kind of wait maybe for next week, and
Speaker 2: just I don't know if the reports that they get
Speaker 2: before July, I mean, I don't know. It's interesting we
Speaker 2: had a guess before that. Charlie Pellett was talking about
Speaker 2: that maybe you could go away for the summer. Nothing's
Speaker 2: gonna really come to life for the fedal September.
Speaker 12: Yeah, that's exactly how we're looking at it. We're not
Speaker 12: talking about does the FED have enough to cut in July.
Speaker 12: We're just talking about, you know, were we really in
Speaker 12: an inflation scare for the first quarter when those numbers
Speaker 12: were too hot? Was not a trend that was going
Speaker 12: to persist through year end? And what we've seen in
Speaker 12: the last month is some evidence that actually, know tightening
Speaker 12: does work. It does help bring down that year over
Speaker 12: year number. We're not just gonna wait for the PCEE.
Speaker 12: We have three more inflation prints, three more job prints,
Speaker 12: three more retail sprints, actually maybe even four by September.
Speaker 12: And that's why just about everyone is agreed the FED
Speaker 12: is in a holding period until that September number comes.
Speaker 12: But here's a little trick. Actually, we don't really need
Speaker 12: to wait for pcee to come through because we can
Speaker 12: map CPI, PPI and import prices really closely. That's why
Speaker 12: PCE numbers are not really market movers, because they don't
Speaker 12: tend to surprise to the upside or the downside. We
Speaker 12: have the calculation we're going to see the PCE continues
Speaker 12: to decline in the right direction. But you're right, we've
Speaker 12: just gone through the largest price level shop in most
Speaker 12: people's lives. The FED is going to want to be
Speaker 12: absolutely sure, and I think they're going to have to
Speaker 12: see some deterioration in the job market. It's just that
Speaker 12: our forecast includes this deterioration in the job market. That's
Speaker 12: why we feel comfortable with a base case for September.
Speaker 6: Francis.
Speaker 3: How close to two percent are we going to get
Speaker 3: on PCE by the end of the.
Speaker 12: Year's probably not as close as the FED wan. So
Speaker 12: we're kind of believers that we're not going to get
Speaker 12: back to two percent for the next several years, that
Speaker 12: we're going to float between two and two and a
Speaker 12: half percent on a structural basis. One of the reasons
Speaker 12: is that inflation is just not as intrate sensitive as
Speaker 12: it has been for many of our careers certainly for
Speaker 12: the past several decades. The Fed's going to have to
Speaker 12: contend with that. We call it a critical concession. Already
Speaker 12: we're seeing this globally. We've had the Bank of Canada,
Speaker 12: We've had the ECB, we' have likely some more central
Speaker 12: banks this week that we'll cut with inflation above two percent.
Speaker 12: That's not atypical. Central banks tend to cut on the
Speaker 12: way down towards two, not waiting until they arrive. But
Speaker 12: it's an indication as well that they don't want to
Speaker 12: sacrifice jobs, that don't want to create a recession us
Speaker 12: to reach it two percent, which might not be reachable.
Speaker 2: I'm glad to use our word. I mean, can we
Speaker 2: assume that we don't hit a recession anytime soon? I mean,
Speaker 2: it's kind of remarkable where we are and maneuvering that
Speaker 2: we've seen by the US Central Bank that we still
Speaker 2: have a strong job market, although some might debate that
Speaker 2: as well. But are you in your modeling and anticipating
Speaker 2: a recession anywhere in the next six to twelve months.
Speaker 12: We do have two quarters of negative GDP in our outlook.
Speaker 12: We didn't impose that we're not trying to make a
Speaker 12: big opinion that a recession is coming for the US,
Speaker 12: but we can just slow down in the consumer driven
Speaker 12: by its simple econ one on one higher interest rates. Remember,
Speaker 12: it takes two years for that first rate HiPE to
Speaker 12: work its way through the economy completely, and we're just
Speaker 12: two years and a little bit past that first rate hike.
Speaker 12: So we believe that the impact of rate cuts isn't
Speaker 12: behind us, it's in front of us, and so recession
Speaker 12: risk is being underappreciated by markets. At the same time,
Speaker 12: they're two shallow negative GDP prints. If we were disagreeing
Speaker 12: between one and one point five, no one would really
Speaker 12: make a fuss of that. It's just that when you
Speaker 12: talk about two negative GDP prints, suddenly it makes it
Speaker 12: like there's this huge binary outcome recession versus non recession.
Speaker 12: We're just talking about a slow down and growth, which
Speaker 12: the Fed wants.
Speaker 2: Francis, I can't tell what your dog wants. They want
Speaker 2: to slow down or I'm just kidding.
Speaker 12: Uh yeah, so, uh exactly. I think he has strong
Speaker 12: opinions in a really big fan of Bloomberg Radio.
Speaker 2: You know what, he can come on or she can
Speaker 2: come on anytime.
Speaker 3: I mean, Carol bringing back memories of you working from
Speaker 3: home during the pandemics. When Scott would show a little bit.
Speaker 2: Scott was very loud on the show. It's really interesting, Francis.
Speaker 2: I mean, you know, I keep wondering. There's still a
Speaker 2: lot of liquidity out there in the market, so I
Speaker 2: do wonder are we still kind of working? I mean,
Speaker 2: I think we are still working right that liquidity through
Speaker 2: the system, and so we're not really still quite sure
Speaker 2: what the true picture is of our economy post pandemic.
Speaker 2: Is that fair?
Speaker 12: Oh, it's completely fair. And that's one of the big
Speaker 12: challenges with forecasting right now is we're still grappling with
Speaker 12: that pro cyclical government spending and what's the path for
Speaker 12: that ahead. We're still grappling with what exactly are consumer
Speaker 12: is going to spend on and pull back in. We
Speaker 12: know that their consumption basket has changed. We're grappling with
Speaker 12: are their excess savings left? We really have a good
Speaker 12: measurement for that. We know that wealthy individuals have more.
Speaker 12: We know there's less now than a year ago. But
Speaker 12: the entire profession I'm actually writing my midyear outlook right
Speaker 12: now is grappling with how forecasting has changed, how what's
Speaker 12: happened in the past few years to change our biases.
Speaker 12: For example, should we cut later and allow more disinflation
Speaker 12: in the economy. There is no such thing as no
Speaker 12: such thing as a sure thing, even as the Fed's
Speaker 12: Tarker today, I saw the quotes across Bloomberg. It could
Speaker 12: be one cut, he said, or could be zero war two,
Speaker 12: and I thought, well, it's pretty honest and exactly how
Speaker 12: the rest of us are thinking right now.
Speaker 10: Thanks.
Speaker 3: It's data dependent, Carol, We're hear it over and over again.
Speaker 3: Francis thirty seconds. Speaking of the data, Just give us
Speaker 3: your view on the job market right now, at least
Speaker 3: here in the US, because we're we are getting some
Speaker 3: confusing signs that, yes, things are slowing down. But then
Speaker 3: we had, you know, the May payrolls report just blow
Speaker 3: everything out of the water.
Speaker 12: The payrolls did, but the household employment, if you ask households,
Speaker 12: is actually much worse. Consumer confidence is doing really poorly.
Speaker 12: All the big question has been when is everyone going
Speaker 12: to stop talking about normalizing and start talking about weakening
Speaker 12: of the labor market. And I think we're actually on
Speaker 12: that cusp right now. Just about every labor market indicator
Speaker 12: is back to just about before COVID, back to what
Speaker 12: they would call normal levels. But economies don't come halfway
Speaker 12: down the hill and then stop. They have momentum behind them.
Speaker 12: So right now, in level terms, we're doing just fine.
Speaker 12: It's not a labor market to be afraid of. But
Speaker 12: if we continue to see this deterioration in job openings,
Speaker 12: quit levels, hiring rates, it's going to flow into non
Speaker 12: farm payrolls and we're not going to be talking about
Speaker 12: normalizing of the job market. We're going to be talking
Speaker 12: about a softening of the job market that's more concervable.
Speaker 2: Well, that's how I ask you ten seconds. You got
Speaker 2: to be quick. So when we do start to see
Speaker 2: things turn differently for the job market, is it a
Speaker 2: slow turn or is it happen rapidly, very quickly if
Speaker 2: you could.
Speaker 12: It's never slow. Parallogic's exponential. We can only hope that
Speaker 12: it doesn't go to levels as we've seen in the past.
Speaker 2: All right, such, good staff. What's your dog's names?
Speaker 5: Love Louis?
Speaker 2: All right? Listen, great to have both of you with us.
Speaker 2: Presis Donald as Global chief Economist at Manulife Investment Manager,
Speaker 2: joining us from Montrealistic.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: Live weekday afternoons from two to five pm Eastern Listen
Speaker 1: on Apple CarPlay and then brout Auto with a Bloomberg
Speaker 1: Business Act or want us Live on YouTube Carol.
Speaker 3: We chatted about it a bit earlier with Will Wade.
Speaker 3: How Bill Gates has said he's prepared to plow billions
Speaker 3: of dollars into a next gen nuclear power plant project
Speaker 3: in Wyoming that's to meet growing US electricity needs. Carbon
Speaker 3: free nuclear power increasingly seen as a key part of
Speaker 3: fighting climate change, and more companies are promoting smaller reactors.
Speaker 10: Yeah.
Speaker 2: Absolutely, and so it's interesting and it really got us
Speaker 2: thinking a little bit more about what we need in
Speaker 2: terms of the labor market to support it. And so
Speaker 2: that kind of gets us to our next guest, who
Speaker 2: says there's a skills gap when it comes to driving
Speaker 2: the transition to net zero with us.
Speaker 3: Is Sudukes, president of Global Public Policy and Economic Graph
Speaker 3: at LinkedIn.
Speaker 6: She joins us from Dublin Ireland Tonight.
Speaker 3: LinkedIn's members generate about five million updates each second, according
Speaker 3: to the company, and the Economic Graph draws insights from
Speaker 3: those updates.
Speaker 6: Su Good to have you with us. How are you.
Speaker 10: I'm good, It's great to be here. Thank you for
Speaker 10: having me.
Speaker 6: Yeah, thanks for joining us.
Speaker 3: Hey, we're going to get to green jobs in just
Speaker 3: a second. But because you're at LinkedIn and you have
Speaker 3: all this data, we got to ask you about the
Speaker 3: greater jobs market, especially here in the United States. What
Speaker 3: is your data tell you about how the job market
Speaker 3: is here in the US right now?
Speaker 10: We have, as you know, over the past couple of years,
Speaker 10: seen a slowdown in hiring. Of course, a lot of sectors.
Speaker 10: That slowdown was coming off the back of the hiring
Speaker 10: frenzy that we saw over the course of the pandemic.
Speaker 10: But over the past couple of months, we have started
Speaker 10: to see some improvements in that slowdown, particularly in some
Speaker 10: key sectors like retail and real estate.
Speaker 3: Interesting, okay, are there certain sectors that you're seeing right
Speaker 3: now that are particularly strong.
Speaker 10: Sectors like that we are seeing some improvement in. And
Speaker 10: a key area where we're seeing high demand is when
Speaker 10: it comes to these green skills and these green jobs.
Speaker 10: There we see hiring in this space outpacing general hiring
Speaker 10: by up to forty four percent. So this is an
Speaker 10: area of real strength. Across the board in the US well.
Speaker 2: So you know, it was interesting on our planning call
Speaker 2: with our producer and team one of the things like
Speaker 2: we started talking what is a green job, What exactly
Speaker 2: is a green job and what are the particular skills
Speaker 2: that are needed for a green job? Love for you
Speaker 2: to kind of digg a little bit deeper into that.
Speaker 10: Yeah, it's a great question. A green job is a
Speaker 10: job whose core focus is combat and climate change. So
Speaker 10: think of jobs like energy engineer, solar panel installer, wind
Speaker 10: turbine technician, and of course to do one of these
Speaker 10: green jobs, you need lots of green skills, their skills
Speaker 10: that are either preserving natural resources or taking pollution out
Speaker 10: of environment. And what's really interesting is that we see
Speaker 10: these green skills of course showing up empowering those green jobs,
Speaker 10: but they're also showing up in a whole range of
Speaker 10: traditional jobs like data scientists, fleet manager, healthcare worker, jobs
Speaker 10: that aren't traditionally thought of green jobs per se, but
Speaker 10: jobs that are going green all the time.
Speaker 3: You argue that there is a skills gap between what
Speaker 3: is needed and what's available right now, What do the
Speaker 3: data tell you about what people don't have in terms
Speaker 3: of qualifications for these jobs.
Speaker 2: That's right.
Speaker 10: What today's research and LinkedIn shows very clearly is that
Speaker 10: Gen Z, a generation that's most concerned about climate change,
Speaker 10: is the generation that's least prepared to fight climate change
Speaker 10: in their careers. Today, only one in twenty Gen Z
Speaker 10: has a green skill, and that means that they are
Speaker 10: not set up to take advantage of the opportunities that
Speaker 10: this transition presents and and work in these roles, both
Speaker 10: those green roles and those roles that are starting to
Speaker 10: go green all the time.
Speaker 2: You know, it's interesting. I always think about go back
Speaker 2: a few years when a lot of the big tech
Speaker 2: companies were worried about coders and not having the right job,
Speaker 2: you know, right workers for what they were going to need,
Speaker 2: and so they were tapping not just colleges, but high
Speaker 2: schools to make sure that they had a pipeline of
Speaker 2: workers for what they needed. Where we seeing kind of
Speaker 2: private public sector or what kind of collaborations are we
Speaker 2: seeing within the green industry to make sure that they've
Speaker 2: got the workers they need.
Speaker 10: We're not seeing enough training, We're not seeing enough collaboration,
Speaker 10: We're not seeing enough of those partnerships. Fully, four in
Speaker 10: five of these gen Z workers are telling us I
Speaker 10: would love to get a job in this space, but
Speaker 10: I don't know where to go to get that training
Speaker 10: and break into those roles. And you're exactly right as
Speaker 10: exactly those kind of partnerships across government and across the
Speaker 10: private sector that we need to see scaled much more
Speaker 10: rolled out at a much faster rate than what we're
Speaker 10: seeing right now, if we're going to get to grips
Speaker 10: with this skills mismatch that we see across the board.
Speaker 2: You know, I'm going back to like what you said
Speaker 2: earlier about a solar panel installer. And you know, we
Speaker 2: have talked here at Bloomberg about people within the construction
Speaker 2: industry or home market, if you will, whether it's a plumber, electrician,
Speaker 2: like they're just not enough out there in terms of
Speaker 2: meeting demand. And I do also wonder that there's kind
Speaker 2: of a view of a lot of the younger generation.
Speaker 2: You're like, I don't want to do that, you know,
Speaker 2: That's not what I want to do. And I do
Speaker 2: also wonder in these green jobs, how many maybe are
Speaker 2: wanting to do something to protect the climate, but they
Speaker 2: don't necessarily want a lot of these jobs.
Speaker 10: What our research is telling us loud and clear, is
Speaker 10: that these young workers they want these jobs, they want
Speaker 10: to get into these worlds. But currently there is this
Speaker 10: skills mismatch, and there is this awareness mismatch, which means
Speaker 10: they're struggling to break into them and their role quite
Speaker 10: right across the board, including the roles that you're talking
Speaker 10: about there, And one of the key things that we
Speaker 10: need to focus on is that for some of these roles,
Speaker 10: for example, to get from being a general installer to
Speaker 10: a solar panel installer, as you say, often that's a
Speaker 10: handful of skills photovoltaics, energy efficiency. And we can get
Speaker 10: these workers this targeted training and get them into these
Speaker 10: roles and accessing these opportunities that are out there today.
Speaker 10: And we know our only grow are going to grow
Speaker 10: tomorrow to.
Speaker 3: What extent or what portion of these jobs that you
Speaker 3: define our quote unquote trades versus quote unquote professional jobs,
Speaker 3: because we're at a trade skills gap here in the
Speaker 3: US right now. I mean, we can't find enough plumbers
Speaker 3: or electricians at this point, So how do we get enough.
Speaker 10: Solar pa There's no yeah, there's no question, but there
Speaker 10: is a huge demand for those kind of workers, right Now,
Speaker 10: there's two key areas. When we look at the fastest
Speaker 10: growing and most in demand green skills in the US,
Speaker 10: there's two categories that jump out at you very quickly.
Speaker 10: The first is in that energy space, including an energy infrastructure.
Speaker 10: So some of the fastest growing in demand skills are
Speaker 10: energy efficiency, solar energy, wind power, energy efficiency. Huge demand there.
Speaker 10: And the second category that we see growing all the time,
Speaker 10: again showing up in the top ten most in demand
Speaker 10: green skills in the US, skills related to the regulation
Speaker 10: and oversight of carbon emissions, so energy audits, carbon credits,
Speaker 10: those kind of skills surging in demand all the time.
Speaker 10: And as you say, in both areas, we are seeing
Speaker 10: this mismatch and this lack of talent coming through despite
Speaker 10: the fact that we know the appetitus there, we know
Speaker 10: the commitment and the passion it's there from these young people.
Speaker 10: We need to tap into that and harness that so
Speaker 10: that we can get to grips with this mismatch.
Speaker 2: So I am wondering, you know, I'm thinking about folks
Speaker 2: who are listening, whether they've got kids, are in college,
Speaker 2: or think about colle how should we be guiding kind
Speaker 2: of the next generation here.
Speaker 10: For three things for these young workers to think about
Speaker 10: us they think about getting these opportunities and open the
Speaker 10: door to these kind of jobs. The first is think
Speaker 10: about your next role. What is that first job that
Speaker 10: you want and how do you use it to activate
Speaker 10: your role in the green economy. Secondly, skills, what are
Speaker 10: the specific skills that you need to get into that role.
Speaker 10: There are a ton of resources out there, including on LinkedIn,
Speaker 10: that can help you gain those skills. And thirdly, think
Speaker 10: about your network. There is a big, vibrant, active community
Speaker 10: out there in LinkedIn that can give you advice, help
Speaker 10: you figure out what skills you need, and help open
Speaker 10: up those doors to you as you think about your
Speaker 10: role in this space.
Speaker 2: Hey, just real quickly twenty seconds. I mean, how many
Speaker 2: of the jobs that are on LinkedIn, how many of
Speaker 2: them are actually green jobs that are out there and open.
Speaker 10: When we lock across the board at the jobs that
Speaker 10: are out there beyond green jobs, it's jobs looking for
Speaker 10: green skills, and that is a very significant and growing
Speaker 10: demand all the time. For example, in the UK today,
Speaker 10: every one in three jobs on our platform is looking
Speaker 10: for a green scale and so that really gives you
Speaker 10: a sense of the scale and extent of the demand
Speaker 10: that's out there.
Speaker 2: All right, that actually is helpful information. All right, Sue Duke,
Speaker 2: thank you so much. Sue is vice president of Global
Speaker 2: public Policy and Economic graph at LinkedIn, joining us from Dublin, Ireland.
Speaker 1: Marco Journal.
Speaker 13: Now about you, let me drive?
Speaker 3: No, no, no, no, who's gone to drive?
Speaker 8: Honey?
Speaker 1: Please out of the riding gravels.
Speaker 7: Let's mate, I want to try it.
Speaker 12: It's a question.
Speaker 1: This is the drive to the globe. We'll bring on Bloomberg.
Speaker 2: All right, everybody, Just about eighteen minutes left in the
Speaker 2: trading session. Charlie Pella just breaking down the trade for you.
Speaker 2: We're pretty much hovering near our best levels of the session.
Speaker 2: It does look like we're going to get what the
Speaker 2: thirtieth record this year on the S and P five
Speaker 2: who's counting? We are, That's what we do. We love
Speaker 2: data points. Let's get to it because we are seeing
Speaker 2: us doc Bulls getting even bolder, Goldman boosting it's year
Speaker 2: end target for the S and P to fifty six hundred.
Speaker 2: That's nothing compared to Evercore. We talked about this with Abigail,
Speaker 2: which updates called a six thousand city meantime, upgraded US
Speaker 2: equities to overweight, so you know, like it's a big
Speaker 2: poker game all in on the US. That's what it
Speaker 2: feels like.
Speaker 3: Let's get into it with Paul Christopher, head of Global
Speaker 3: Investment Strategy over at the Wells Fargo Investment Institute. Paul,
Speaker 3: good to have you with us this afternoon.
Speaker 6: How are you?
Speaker 5: Yeah?
Speaker 7: Good, I'm happy you have to be on the drive home.
Speaker 3: Depending on where you're going, you could be driving to
Speaker 3: lunch too, if you're out there in California.
Speaker 1: True.
Speaker 3: Hey, I'm wondering what you're all in on at the
Speaker 3: Wells Fargo Investment Institute. It certainly seems like investors here
Speaker 3: in the US or around the world are all in
Speaker 3: on US equities. But how are you thinking about things?
Speaker 13: Yeah, we like US equities better than international. We like
Speaker 13: US equities large caps better than mid caps and small caps.
Speaker 13: So we'll play along up to that point, but we'll
Speaker 13: also note things like, you know what, last June, we
Speaker 13: also had a very narrow leadership like we're having this June.
Speaker 13: That the top stocks in the index top ten up
Speaker 13: to about two and a half, and you know, the
Speaker 13: bottom three hundred and fifty down about two and a half.
Speaker 7: So We're going to be a little bit selective.
Speaker 2: Here, So explain that. Carry that one out. What does
Speaker 2: being selective mean in this environment?
Speaker 7: Yeah, I was.
Speaker 13: Hoping you'd asked for the follow So we like things
Speaker 13: that have sectors that have a good long term prospects
Speaker 13: based on what we're seeing in the economy, and that
Speaker 13: really haven't necessarily participated to the same extent as the
Speaker 13: Magnificent seven or ten or five or however many you
Speaker 13: want to count it any on any given day.
Speaker 7: We like industrials.
Speaker 13: Right we're seeing lots of billild out in factories, We're
Speaker 13: seeing build out in data centers. We're expecting a lot
Speaker 13: more building around electric utilities as we get into green energy.
Speaker 13: We like materials as well. You're going to need materials
Speaker 13: for all that building. We like healthcare. We think healthcare
Speaker 13: really the pandemic exposed what we might call a lack
Speaker 13: of capacity. We have another pandemic or even a significant
Speaker 13: health emergency, we're still going to need to be able
Speaker 13: to treat broken knees and append appendice operations.
Speaker 7: So we like health care and we like energy.
Speaker 13: We think probably the green energy future is on its way,
Speaker 13: but not quite here yet, and we're gonna need more
Speaker 13: fossil fuels going forward. So those four really appealed to us,
Speaker 13: especially from a valuation standpoint, but long term investors really
Speaker 13: should pay attention, we think, to the sectors like those,
Speaker 13: and that's that's how we're trying to be selected here.
Speaker 3: Well, I didn't hear from you anything about commercial, about
Speaker 3: technology and communication services just now.
Speaker 13: Yeah, we're neutral those sectors. We like them going forward,
Speaker 13: but in fact, we were overweight them until last June
Speaker 13: and then they really just took off, and we just
Speaker 13: don't like these valuations here. You know, we tend to
Speaker 13: follow that old saying on Wall Street that disruptive technology
Speaker 13: tends to be overestimated in the short run and underestimated
Speaker 13: and appreciated in the long run.
Speaker 7: So we've got reports out there. We like artificial intelligence.
Speaker 13: We just don't think that the companies that are being
Speaker 13: bought right now are necessarily going to be the winners.
Speaker 13: One of my favorite questions to ask clients is do
Speaker 13: you remember what the maker was of the first PC
Speaker 13: you ever owned? I can tell you that the maker
Speaker 13: of mine no longer exists, and that was just a
Speaker 13: few decades ago.
Speaker 6: I think ours was Gateway. Do you remember yours.
Speaker 7: That sounds familiar.
Speaker 2: I don't remember what our first one was.
Speaker 3: You know what's interesting, though, is I believe I'm trying
Speaker 3: to think if it was AMD or Pentium or AMD
Speaker 3: or Intel.
Speaker 2: I mean, I'm sure it was like intell.
Speaker 6: I'm just trying to think of like the internals got me.
Speaker 6: But there is thinking.
Speaker 2: But there is something about well, so what is that
Speaker 2: kind of a warning sign to those who are all
Speaker 2: plowing into Nvidia?
Speaker 7: Well?
Speaker 13: Yes, and and you know, and maybe there's there's a
Speaker 13: certain extent to which even some of these high flying
Speaker 13: tech stocks have become defensives if you think about the
Speaker 13: upcoming elections. If you think about the economy slowing down, Gee,
Speaker 13: should I buy staples or should I buy discretionary ad?
Speaker 7: To heck with it?
Speaker 13: I'm just going to buy something reliable, and I'm going
Speaker 13: to go to tech. I think that's the mindset of
Speaker 13: some investors today.
Speaker 7: Also interesting.
Speaker 3: Okay, I want to think about this from the perspective
Speaker 3: of the Federal Reserve because that's something we watch closely here,
Speaker 3: of course, and I know all certainly investors do. How
Speaker 3: are you thinking about the rate environment right now? Because
Speaker 3: there obviously is a big connection between rates and what
Speaker 3: you're seeing with equities.
Speaker 13: Yeah, Well, the FED has the sort of on the
Speaker 13: one hand, on the other hand, the way good economists
Speaker 13: always do. On the one hand, they've got an economy
Speaker 13: it's slowing nicely for them.
Speaker 7: The whole thing isn't falling into a ditch.
Speaker 13: You've got manufacturing, construction that's strong, a home building is
Speaker 13: still strong. But you've got maybe mortgage rates that are
Speaker 13: too high, and the consumer is under a lot of stress.
Speaker 13: And the longer you keep these rates up here, the
Speaker 13: longer the consumer stays under stress. So you've got good
Speaker 13: things going on, you got bad things going on, And
Speaker 13: probably from the FEDCE perspective, that means that the balance
Speaker 13: between those two means you can afford to wait a
Speaker 13: little longer, and you don't have to feel like you're
Speaker 13: going to drive the economy into a ditch and then
Speaker 13: need five or six rate cuts.
Speaker 7: In a real big hurry. They're going to be able
Speaker 7: to take their time here.
Speaker 13: September is potentially still on the table if we get.
Speaker 7: A weaker inflation readings over the rest of the summer.
Speaker 13: If not, then November and December probably we think there's
Speaker 13: a couple of rate cuts coming this year and then
Speaker 13: potentially more next year. So the problem for the FED
Speaker 13: is that the longer they are patient and the longer
Speaker 13: they leave these rates rates in place, the more pressure
Speaker 13: they put on consumers.
Speaker 7: And that's where it gets a little bit dicey.
Speaker 13: Does the consumer just sort of slowed down and post
Speaker 13: pony expenditures. We've heard stories about people, for example, maybe
Speaker 13: they're not buying the summer where in April. Maybe they're
Speaker 13: waiting until June or July right before they go on
Speaker 13: the trip. Hey, maybe they're getting a little bit more
Speaker 13: selective about where they shop and so forth.
Speaker 7: So that's that's the risk for the FED.
Speaker 2: We are seeing it not even maybe we definitely are
Speaker 2: seeing like some choices being made. Paul having said that,
Speaker 2: you know, I feel like for a while the narrative was, Hey,
Speaker 2: there's all this money sitting on the on the sidelines,
Speaker 2: that's in you know, cash or cash like investments that's
Speaker 2: getting you know, four to five percent right now, and
Speaker 2: wait till that comes into the stock market, you know.
Speaker 2: Our story buyer Alexandra Semenova saying some stock market optimists
Speaker 2: have speculated that that swath of the roughly six trillion
Speaker 2: sitting in money market. You know, maybe we'll not actually
Speaker 2: come in to the market. So it's kind of interesting.
Speaker 2: Is your upbeat out look if you know, in terms
Speaker 2: of the equity play, is it based on more money
Speaker 2: that's been on the sidelines coming in or no.
Speaker 13: We're still seeing more money come in from the sidelines,
Speaker 13: but we're also watching for the potential for liquidity to
Speaker 13: really go away. If we got a nice pullback in stocks,
Speaker 13: that would help do it. The Treasury has a lot
Speaker 13: to say about that in terms of how they raise
Speaker 13: money and how they spend money. April was a down
Speaker 13: month for the treasury, a lot of tax money, a
Speaker 13: lot of I mean spending, a lot of tax money
Speaker 13: coming in. So liquidity goes out of the market and
Speaker 13: the market falters a little bit.
Speaker 1: May.
Speaker 7: In May, the Treasury starts spending again.
Speaker 13: Liquidity comes right back into the economy, and tech stocks
Speaker 13: are flying high again. So we're watching liquidity here very carefully.
Speaker 13: And I don't think that six trillion, to your point,
Speaker 13: does find its way into the equity market. We've been
Speaker 13: watching clients hold lots of cash on the sidelines since
Speaker 13: two thousand and eight, two thousand.
Speaker 2: And nine, all right, good to leave it there, Hy Paul,
Speaker 2: Thank you so much for Christopher, head of Global Investment
Speaker 2: Strategy at West Pargo Investment Institute, joining us from Saint Louis.
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