Speaker 1: This is Bloomberg business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Hi, everyone, Welcome to the weekend edition of Bloomberg Business Week.
Speaker 2: This past week we saw the Federal Reserve hold rates
Speaker 2: in place for a third straight time, with Chairman Jerome
Speaker 2: Powell indicating that policy easing is at least on the
Speaker 2: table as we head into twenty twenty four, with US
Speaker 2: inflation slowly creeping downward. We're going to take a look
Speaker 2: at the health of the American consumer from a few
Speaker 2: different angles, including with PNC's annual Christmas Price Index, mobile
Speaker 2: sports betting, with the CEO of fandual parent flutter, and
Speaker 2: expectations for the newest hotel addition to the Las Vegas Strip.
Speaker 2: All of that to come. We begin with someone who
Speaker 2: loves to gamble on himself, the one and only Elon Musk,
Speaker 2: the world's richest man, and his various companies making news
Speaker 2: on not one, not two, but three fronts this week.
Speaker 2: That includes the biggest ever recall for electric vehicle giant Tesla.
Speaker 2: The National Highway Traffic Safety Administration determined that the driver
Speaker 2: assistance system autopilot that comes standard in Tesla's vehicles doesn't
Speaker 2: do enough to guard against misuse. That prompted a recall
Speaker 2: of more than two million cars. Bloomberg Market Senior editor
Speaker 2: Mike Reagan and I cut up with the Bloomberg Technology
Speaker 2: co host ed Ludlow to find out more.
Speaker 3: It is a recall as a technicality or in the
Speaker 3: technical sense to recall in name only. But what Nitzer found,
Speaker 3: which is the main kind of highway safety regulator, is
Speaker 3: that there aren't enough kind of visual prompts on the
Speaker 3: display screen of a Tesla, on the dash screen as
Speaker 3: well as the main monitor to remind the driver to
Speaker 3: keep their hands on the wheel and their eyes on
Speaker 3: the road. That might seem obvious to you, But it's
Speaker 3: not a hard recall, like Tesla doesn't have to take
Speaker 3: back any of the cars. It has to address Knitz's
Speaker 3: concerns with the with an over the air update, which
Speaker 3: is doing voluntarily with objection based on what nits are
Speaker 3: told it. And it's so important to be absolutely clear
Speaker 3: here we're talking about autopilot which has been standard on
Speaker 3: all Tesla cars since twenty fifteen. We are not talking
Speaker 3: about full self driving beta, which is kind of the
Speaker 3: next level up, something nearer to autonomous driving technology.
Speaker 4: Well, I do wonder, you know when they do a
Speaker 4: recall like this, and it's a great point. I think
Speaker 4: that we're not talking about having the supply parts and labor.
Speaker 4: Really it's some software code update. Does this still cost
Speaker 4: Tesla anything material you know to do this or is
Speaker 4: it just tweak a few lines of code and they're
Speaker 4: done with it.
Speaker 3: Can you assign a value to the pr behind it? Yeah,
Speaker 3: I mean you know that it is a recall on
Speaker 3: a technical basis. And today the headlines where two million
Speaker 3: vehicles recall the biggest US recall recall for Tesla. Ever,
Speaker 3: there are only two million Teslas on the road anyway,
Speaker 3: so it's basically all of them. And as Tim pointed
Speaker 3: out before the start of the segment, the stock did recover,
Speaker 3: but at a session low. I think we were down
Speaker 3: three percent, and so there's that impact. But in terms
Speaker 3: of the cost of addressing or fixing the issue, it's negligible.
Speaker 3: That said, the experience of lots of Tesla owners that
Speaker 3: I've spoken to today hasn't been that smooth. It is
Speaker 3: supposed to be as simple as pressing the touchscreen running
Speaker 3: the update, but sometimes that can be problematic for a
Speaker 3: small part of the customer base.
Speaker 2: And there are a few certain things in life that
Speaker 2: we just can count on each and every lifetime, or
Speaker 2: each and every year. One of them is death fed meetings,
Speaker 2: fed meetings, taxes, and that full self driving is going
Speaker 2: to come this year. Right, That's something that Elon Musk
Speaker 2: says every single year, and he's been saying it every
Speaker 2: single year. And here we are, right in twenty twenty
Speaker 2: three years after he first said it without a fleet
Speaker 2: of rubber taxis when as I walk out in seven
Speaker 2: thirty one Mixington Aft this evening, right, how does this
Speaker 2: play into the idea that, you know, the world that
Speaker 2: Elon Musk wants is one where we're not actually behind
Speaker 2: the wheel in the sense of driving a tesla.
Speaker 3: I apologize profusely for interrupting, because your credit it's just
Speaker 3: spot on that every year, every month, Elon Musk makes
Speaker 3: prediction that that often does come true, just not on
Speaker 3: the timeline that he sets out. So the recall today
Speaker 3: was not to do with full self driving Beta. It
Speaker 3: was to do with the most basic driver assistance tool,
Speaker 3: But we do care about full self driving Beta, which
Speaker 3: is a software suite that allows the car to drive
Speaker 3: itself to all intents and purposes. But legally speaking, if
Speaker 3: you read the small print on Tesla's website, it says
Speaker 3: the car is not capable of driving itself. It still
Speaker 3: requires the driver to have their hands on the wheel
Speaker 3: and their eyes on the road, because those are the
Speaker 3: laws of the land, at least in this nation and
Speaker 3: in many other jurisdictions. The future is one where Tesla
Speaker 3: plans to sell a much lower price point, mass market
Speaker 3: vehicle to build up the number of Teslas around the
Speaker 3: world in that time based on the Tesla vehicles on
Speaker 3: the roads today and that future model which will grow
Speaker 3: the volume of Teslas out there. They're using the software
Speaker 3: to gather data to train the neural nets behind their
Speaker 3: autonomous technology, with the end goal being and everyone forgets this,
Speaker 3: but MUSC has spoken about it so many times. The
Speaker 3: end goal is where Tesla operates a fleet of vehicles
Speaker 3: that drive themselves right and takes back ownership of those
Speaker 3: models in the future. But that what I just outlined
Speaker 3: is the arc of what Tesla plans to do to
Speaker 3: get there. The problem is that that is real world
Speaker 3: testing on roads with other traffic and other road users,
Speaker 3: and that is the risk that the regulators are concerned about.
Speaker 4: And it's very early days for the cyber truck. But
Speaker 4: I wonder what you're hearing, is is it going well
Speaker 4: or is it being received well by the first batch
Speaker 4: of customers to receive one?
Speaker 5: Yeah you know, yeah, yeah.
Speaker 3: I mean from the customers that received one that I
Speaker 3: was spoking to, they're absolutely delighted. But those customers are
Speaker 3: part of a very clear demographic of high network individuals
Speaker 3: who have very high spec versions, and we're talking just
Speaker 3: a handful at this stage. The big shock was that
Speaker 3: when they did the big unveil last week or the
Speaker 3: week before, the lowest price point cyber truck was sixty
Speaker 3: one thousand dollars twenty thousand dollars more expensive than when
Speaker 3: they first announced it in twenty nineteen, and that lowest
Speaker 3: cost variant is not going to be available until twenty
Speaker 3: twenty five. So it's very much targeting the early adopter
Speaker 3: or first adopter market right now. It's an incredibly expensive product,
Speaker 3: and we expect the ramp of their output to be
Speaker 3: really slow.
Speaker 2: And I said, there's a few stuff that a few
Speaker 2: things that I want to get to. We got a
Speaker 2: couple more. One is this story that crossed by Sophie
Speaker 2: Alexander and Dana Hall about Ewon Musk planning and new
Speaker 2: university in Austin with one hundred million dollar gifts. So
Speaker 2: he's got Neuralink, he's got x, he's got x dot AI,
Speaker 2: he's got the Boring Company, he's got Tesla, he's got
Speaker 2: space X and now he's got a university too.
Speaker 3: Yes, and this is a philanthropic effort, so it's different
Speaker 3: from his business lines. Dana Hole and Sophie Alexander reported
Speaker 3: this because they got hold of the irs application that
Speaker 3: Musk had made for tax exemption. So he plans to
Speaker 3: make a one hundred million dollar gift to set up
Speaker 3: a university in Austin in competition to all the other
Speaker 3: universities that are popping up in Austin right now, initially
Speaker 3: focused on STEM subjects, but then broadening it out. And
Speaker 3: you know, Elon Musk does regularly conduct philanthropic donations and exercises.
Speaker 3: He has previously set up a school which in the
Speaker 3: first instance many years ago was for his children. It
Speaker 3: kind of k through whatever level, and now he wants
Speaker 3: to focus on academia and the highest level of education.
Speaker 3: It's a fantastic report by my colleagues.
Speaker 4: You know, ed, I feel like whenever the name Elon
Speaker 4: Musk comes up, there's about twelve different stories floating around.
Speaker 4: He's moving in so many different directions. But obviously the
Speaker 4: other big one lately is SpaceX and this opportunity for
Speaker 4: insiders to sell some of their equity in the company.
Speaker 4: Talk us through how that's going, what we know about it.
Speaker 3: Yes, the latest that I reported last night with my
Speaker 3: colleagues Katie Ruth and Lauren Graush is that there was
Speaker 3: so much demand to buy shares in this tender that
Speaker 3: they actually up the price a little bit. So when
Speaker 3: we reported it last week, it was ninety five dollars
Speaker 3: a share. These are employees selling their shares to outside investors,
Speaker 3: and the price has now been uped by just two
Speaker 3: dollars to ninety seven dollars per share. But based on
Speaker 3: the volume of shares they pan to sell around five
Speaker 3: hundred to seven hundred and fifty million dollars. That would
Speaker 3: give SpaceX evaluation of about one hundred and eighty billion.
Speaker 3: The last round that it did in the summer valued
Speaker 3: it at one hundred and fifty billion, So this is
Speaker 3: a big jump. You know, SpaceX is the clear most
Speaker 3: valuable US startup. It's the second most valuable private company
Speaker 3: globally behind byte Dance. And these are big numbers for
Speaker 3: a company that I've reported is on track for revenues
Speaker 3: of between nine and ten billion dollars this year, maybe
Speaker 3: fifteen billion dollars next year. But the valuations I watering
Speaker 3: and investors are just clamoring to find a way to
Speaker 3: invest in SpaceX.
Speaker 2: And give us the details said about a potential IPO,
Speaker 2: not just of SpaceX as a whole, but potentially spinning
Speaker 2: off Starlink as an IPO in the last minute that
Speaker 2: we have with you.
Speaker 3: Yeah, this is part of the logic, right, So it's important.
Speaker 3: These are employees selling shares. They work there a long time,
Speaker 3: they want some liquidity for the reward of working free
Speaker 3: long musk. But the opportunity for investors is to get
Speaker 3: in before it's too late. Because we've reported at the
Speaker 3: end of twenty twenty four, beginning of twenty twenty five,
Speaker 3: must says more like twenty twenty six, they could spin
Speaker 3: off Starlink in an IPO, which would be a big
Speaker 3: market and investor event. And if you're already sitting on
Speaker 3: the cat table, then you're well positioned for that big moment,
Speaker 3: if and when it comes.
Speaker 2: So make a prediction what happens first, full self driving
Speaker 2: or a SPACEXIPO.
Speaker 3: I am not in the market of predictions, but based
Speaker 3: on what Elon Musk has said slash what we've reported,
Speaker 3: I think a Starling spinoffs more likely.
Speaker 2: That was Bloomberg Technology co host at Ludlow, Mike Reagan.
Speaker 2: We'll be back with us later this hour and for
Speaker 2: more on the latest goings on with Elon Musk, check
Speaker 2: out our newest Bloomberg podcast series, Elon Inc. Coming up,
Speaker 2: our magazine team explains why one of Sam Bankman Freed's
Speaker 2: high profile lawyers says the jailed cryptomogul was the worst
Speaker 2: witness he's ever put on the stand, a key element
Speaker 2: you may have missed from the FTX trial. Next, you're
Speaker 2: listening to Bloomberg BusinessWeek. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 6: On Bloomberg dot com, the iHeartRadio app.
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Speaker 2: The fallen crypto mogul Sam Bankman Fried right now is
Speaker 2: in Brooklyn's Metropolitan Attention Center, where he's awaiting sentencing this
Speaker 2: coming March. This after a jury last month found him
Speaker 2: guilty of stealing billions of dollars from FTX customers. Much
Speaker 2: of the coverage of his trial focused on the main characters, SBF,
Speaker 2: of course, and then three powerful prosecution witnesses, Alameda CEO
Speaker 2: Caroline Ellison, FTX co founder Gary Wong, and FTX engineering
Speaker 2: chief Nishad Singh Reminder. All three testified that bankmin Freed
Speaker 2: directed them to commit fraud. But what about SBF's lawyers, who,
Speaker 2: behind the scenes worked to represent him even if he
Speaker 2: wasn't exactly a model defendant. One of those lawyers is
Speaker 2: Stanford Law professor David Mills. He led the defense as
Speaker 2: a favor to SBF's parents, who are fellow professors at
Speaker 2: Stanford Law and at one time close friends of Mills.
Speaker 2: Bloomberg News legal reporter Ava Benny Morrison writes about the
Speaker 2: defense attorney and the finance section of the new issue
Speaker 2: of Bloomberg Business Week. It's on newstands now, online at
Speaker 2: Bloomberg dot com, slash BusinessWeek, and of course on the
Speaker 2: Bloomberg terminal. And to help us understand the fallout of
Speaker 2: a highly successful and wealthy lawyer taking on a case
Speaker 2: that he deemed unwinnable, Bloomberg News cross ass at reporter
Speaker 2: Emily GRIFFEO and I welcome Eva along with Bloomberg BusinessWeek
Speaker 2: editor Joel Weber.
Speaker 5: David Mills was not a name that I was familiar with,
Speaker 5: never heard of it. We worked, you know, all over
Speaker 5: this trial. We all of us were glued to it,
Speaker 5: trying to you know, understand every turn of the screw.
Speaker 5: Mark Cohen, Christian Everdeale. Those were the two people who
Speaker 5: were basically on the stand defending SBF. So when the
Speaker 5: legal team reached out and said, hey, Ava's got this
Speaker 5: story about David Mills, who actually led the sort of
Speaker 5: the strategy for defending SBF, I was like, who tell
Speaker 5: me everything? And it turned out she had a lot
Speaker 5: to say. How did this story find you? Ava?
Speaker 7: The similar questions were being asked in the courtroom. To
Speaker 7: be honest, during his trial, David Mills would sort of
Speaker 7: come into the back of the room and sit down
Speaker 7: with the family and not next to SBF, not next
Speaker 7: to SBN. No, he's next to parents, yes exactly, And
Speaker 7: reporters would point at him and say, who is that guy?
Speaker 7: What is he doing? He's talking to the parents all
Speaker 7: the time. He's sort of sauntering up to the trial attorneys.
Speaker 7: So I was interested in getting to know a bit
Speaker 7: more about him, And turns out he has had a
Speaker 7: very full and colorful life. He has been a white
Speaker 7: collar lawyer for a very long time decades. He's represented
Speaker 7: some really big characters on Wall Street and in Silicon Valley.
Speaker 7: But he's also a very successful investor. He works as
Speaker 7: a managing director at Fortress a bunch of other things,
Speaker 7: and you can tell from his interview he's also very
Speaker 7: very candid, which is unusual for a lawyer.
Speaker 2: He's got a plan, he does. Yes, that was I
Speaker 2: was like, oh, just fly your own jet to the
Speaker 2: Bahamas to see SPF, which he.
Speaker 7: Did right, yes, exactly when he went down there and
Speaker 7: agreed to represent him. And he wasn't willing to put
Speaker 7: a dollar figure on how much he's worth. But I
Speaker 7: think the jet, for example, gives you a little bit
Speaker 7: of an indication of what.
Speaker 5: He is worth. So there's this photograph of him with
Speaker 5: a baseball hat. Three four hundred and nineteen is on
Speaker 5: the hat. What is that?
Speaker 7: That is the number of people he has helped get
Speaker 7: out of prison. So he was instrumental in changing the
Speaker 7: three strikes law in California, which is quite controversial, had
Speaker 7: people doing life sentences on their third conviction, no matter
Speaker 7: how small the last conviction was. And he was really
Speaker 7: instrumental in being helping change that and getting a lot
Speaker 7: of people out of prison.
Speaker 5: Emily, do you know how many Tima has on his
Speaker 5: baseball hat.
Speaker 8: He's got a humble ten.
Speaker 5: Okay, So awa like this did not go down probably
Speaker 5: as mister Mills would have wanted. I guess, like I mean,
Speaker 5: if he's so good at getting people up, this is
Speaker 5: one guy who did not get off. What does he
Speaker 5: have to say about the client?
Speaker 7: He said he was very difficult and a very challenging client,
Speaker 7: and we could sort of tell that he would be
Speaker 7: like that. After his indictment. He was speaking really publicly
Speaker 7: about the case after the bankruptcy, which any lawyer would
Speaker 7: tell his client not to do. He said that bankman
Speaker 7: Fred went off script essentially when he got on the
Speaker 7: witness stand, and it was Mills's idea to have this
Speaker 7: strategy where he would get up and say, yes, I
Speaker 7: said all these things that the prosecution is saying that
Speaker 7: I did, but I didn't mean to do anything wrong.
Speaker 7: And I was trying to save people's money and I
Speaker 7: was looking out for clients. But he certainly didn't do that.
Speaker 8: I thought it was interesting that when SBR first reached
Speaker 8: out to Mills, it actually wasn't for legal advice. Can
Speaker 8: you talk a little bit about that phone call. Yes.
Speaker 7: So, Mills and Sam's father, Joe Bankman, who's also a
Speaker 7: Stanford law professor, are very good mates. And when there
Speaker 7: was trouble for FTX and Alameda Research the Associated Crypto
Speaker 7: Fund in early November last year, Joe called him and said,
Speaker 7: we're having a run on the bank. You know what
Speaker 7: can I do? And Mills gave him a list of
Speaker 7: potential people who could call to try and fundraise to
Speaker 7: try and get FTX and Alimeter out of this hole.
Speaker 5: Okay, so the parents were the ones that went to
Speaker 5: Mills and recruited his services in the first place. Where
Speaker 5: does that relationship stand now? On the other side of
Speaker 5: the trial, which obviously ended with FBF fairly discreceed.
Speaker 7: Mills was pretty open in saying that there is a
Speaker 7: bit of tension there between him and his longtime friends
Speaker 7: Joe and Barbara. He said that he's concerned parents who
Speaker 7: don't believe that their child is guilty will look for
Speaker 7: someone to blame after a guilty verdict, and he is
Speaker 7: in their direct line of sight. We went to Joe
Speaker 7: and Barbara actually and asked them what they thought of
Speaker 7: this characterization, and they said, we love David Mills. We're
Speaker 7: so grateful for what he's done for us as well.
Speaker 2: That really struck me that statement that you got from
Speaker 2: his parents, because it ran kind of counter to his
Speaker 2: own feelings. It was almost like, you know, he was
Speaker 2: concerned about the worst case scenario, and they kind of
Speaker 2: came out looking like, we understand that he, you know,
Speaker 2: did his best, and he was kind of dealt the
Speaker 2: cards that he was dealt with our son exactly.
Speaker 7: I think I think Mills came across to me as
Speaker 7: a very open and honest person. And when I asked him,
Speaker 7: you know, do you feel like Barbara and Joe blame
Speaker 7: you for the outcome of this given you were steering
Speaker 7: the legal strategy. He did say, like, I don't know
Speaker 7: if our friendship will survive this, and it would be
Speaker 7: an incredible stressful experience for any friendship to go through.
Speaker 5: Okay, so what's next for him back to the private jet, Well, he.
Speaker 7: Has said that he doesn't want to do a criminal
Speaker 7: law anymore. After Sam bankman Fried's.
Speaker 5: Is permanently stuck at three four hundred and eighteen.
Speaker 7: Well that was the last count from last year, he
Speaker 7: tells me on the anniversary of the project. But I
Speaker 7: think he's still pretty focused on the nonprofit side of things,
Speaker 7: and he also works with Johnny Ive, the Apple chief designer,
Speaker 7: at his new design firm.
Speaker 2: It's a really remarkable story. Again, Joel, a person whose
Speaker 2: name had not at all been on my radar, even
Speaker 2: though I followed the.
Speaker 5: Case, and not exactly like a typical way that you
Speaker 5: hear an attorney, you know, kind of say like what
Speaker 5: he was dealing with, right, and it's like, you know,
Speaker 5: usually this is just like stoneface. But I think it's
Speaker 5: an interesting and look, it's an interesting tell. And look
Speaker 5: like you watched that trail, you knew this was a
Speaker 5: complicated defendant. And boy, there was some drummer there.
Speaker 2: That was Bloomberg News Legal reporter Ava Benny Morrison. Joe
Speaker 2: Weber is sticking around for our next segment, and Emily
Speaker 2: Grafeo was going to rejoin us in the next hour.
Speaker 2: Still ahead on Bloomberg Business Week, it's a clash of
Speaker 2: the ETF titans, as global leader Black rocks slowly but
Speaker 2: surely losing ground to its less flat she competitor.
Speaker 9: Vanguard enjoys a very very loyal investor base. You think
Speaker 9: about who they appeal to. It's financial advisors, it's retail investors,
Speaker 9: not yolo retail investors, but actual mom and pop as
Speaker 9: bogel Head, Yes, exactly, and those are very sticky assets,
Speaker 9: and that type of investor base, it tends to shovel
Speaker 9: in money to these funds in almost every market cycle.
Speaker 5: Actually, when things get worse, they pile in exactly, Oh,
Speaker 5: great buying opportunity.
Speaker 2: We're in Wi FI conscious advisors and retail investors are
Speaker 2: poised to crown in new ETF king. That story is next.
Speaker 2: This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: Back to the finance section of the magazine, we go
Speaker 2: for a headline that it may surprise you, the reign
Speaker 2: of Blackrock is coming to an end, at least when
Speaker 2: it comes to the seven point eight trillion dollar market
Speaker 2: for US ETFs, which Blackrock has dominated for decades. To
Speaker 2: help us understand it, this surprising turn of events, and
Speaker 2: which rival is poised to unseat the world's largest dasset
Speaker 2: manager in the ETF arena, Mike Reagan and I spoke
Speaker 2: with Bloomberg News senior markets reporter Katie Greifeld and once
Speaker 2: again editor of Bloomberg Business Week, Joel Weber.
Speaker 5: If you look at the trend line of how Vanguard
Speaker 5: has slowly, slowly, slowly risen and how Blackrock has slowly,
Speaker 5: slowly fallen, there will be an infection moment not too
Speaker 5: far away, right, Katie. We don't know when, we.
Speaker 6: Don't know what.
Speaker 5: It will probably happen, probably.
Speaker 9: In the next eighteen to twenty four months. There are
Speaker 9: some nuances there which I'm sure we'll get into. But
Speaker 9: I mean, like Joel said, this is something that the
Speaker 9: industry has been watching and waiting for for probably a
Speaker 9: decade at this point. If you take a look at
Speaker 9: the chart of a lot of popcorn, a lot of popcorn,
Speaker 9: of popcorn, Yeah, we've been waiting for this one. But
Speaker 9: Vanguard has been increasing its share of the US ETF
Speaker 9: market for twenty one straight years. Just amazing growth coming
Speaker 9: out of Valley Forge, Pennsylvania and Blackrock sleepy there, sleepy Yeah,
Speaker 9: a lot of trees, but Blackrock, I mean, Blackrock is
Speaker 9: still enormous. Let's just put that out there. Two point
Speaker 9: five trillion dollars in US ETF assets. But their share
Speaker 9: has been dropping and dropping. Right now, it's at the
Speaker 9: lowest in at least twenty years, thirty two point five percent,
Speaker 9: Vanguard at twenty nine point five percent. That is the
Speaker 9: slimmest margin between these two.
Speaker 5: What's up with that?
Speaker 9: What's up with that? So there's a few things going
Speaker 9: on right now. Vanguard enjoys a very very loyal investor base.
Speaker 9: You think about who they appeal to, it's financial advisors,
Speaker 9: it's retail investors, not yolo, retail investors. But actual mom
Speaker 9: and pop bogal head, yes, exactly, and those are very
Speaker 9: sticky assets and that type of investor base. It tends
Speaker 9: to shovel in money to these funds in almost every
Speaker 9: market cycle.
Speaker 5: Actually, when things get worse, they pile in exactly. Oh,
Speaker 5: great buying opportunity, we're in exactly.
Speaker 9: So that's what they're going, that's what they're enjoying. They
Speaker 9: have a very loyal, sticky asset base. Whereas you think
Speaker 9: about these black rock funds, they're enormous, they're very liquid,
Speaker 9: and they're trading tools. I mean Wall Street uses these
Speaker 9: and Wall Street those flows are more volatile.
Speaker 4: Well, I wanted to ask you about that, Katie. I too,
Speaker 4: hail from not far from Valley Forge, from Sleepy myself,
Speaker 4: so I can relate it. Always always been fascinated with
Speaker 4: Vanguard because the other reason is notoriously a cheapskate.
Speaker 2: You know, I do not want to spend.
Speaker 5: More on something right, right, you can tell.
Speaker 4: But so I look at okay, the flagshipt ETFs of
Speaker 4: both companies, you know, and Vanguard point zero three.
Speaker 9: Percent, three basis points, three.
Speaker 4: Basis points for those following at home that speak on
Speaker 4: street language. So to me, it's amazing this hasn't Why
Speaker 4: has it taken so long? Like what makes the Blackrock
Speaker 4: funds competitive at a higher management fee than Vanguard.
Speaker 9: Well, the thing is, I will say that Blackrock has
Speaker 9: been forced to sort of follow Vanguard's lead here. They've
Speaker 9: had to cut fees as well introduce their own very
Speaker 9: low fee products. You take a look at their S
Speaker 9: and P five hundred funds, the I shares one ticker
Speaker 9: IVV that also charges three basis points to match Vanguard's fee.
Speaker 9: But in terms of why, I mean, Blackrock has enjoyed
Speaker 9: this position at the top of the league table for
Speaker 9: so long, since two thousand and six. They were an
Speaker 9: early mover here, and that's really powerful in the ETF market.
Speaker 9: That first to market advantage. You see it both on
Speaker 9: the issuer side and also when new products sets are introduced,
Speaker 9: when a new category is introduced, So that is in
Speaker 9: BlackRock's favor. Also, you think about some of their funds,
Speaker 9: I mean TLT, that is their long dated treasury ETF.
Speaker 2: And you love TL. You love talking about TL.
Speaker 9: I'm talking about TLT so much because it has been insane.
Speaker 9: The volume and the fund this year has been incredible.
Speaker 9: People are shoveling so much money into this ETF this year,
Speaker 9: even though.
Speaker 2: I stock is TLT.
Speaker 9: Kind of it kind of is like these these funds
Speaker 9: that are norm memes DOC, these funds that Blackrock have
Speaker 9: a lot of them, are just capital market instruments, and
Speaker 9: that's really powerful. That's why spy which charges nine basis
Speaker 9: points UH, which is the S and P five hundred
Speaker 9: tracking fund UH introduced by State Street. It's the oldest,
Speaker 9: it's the biggest, it's relatively expensive, but it's just been
Speaker 9: around for so long that's what people use.
Speaker 5: One thing that Blackrock has that Vanguard does not have,
Speaker 5: tell me, is a filing for a bitcoin ETF.
Speaker 9: I was wondering we would get that.
Speaker 5: Well, we're here now. Everyone's favorite thing to talk about in.
Speaker 2: The people's favorite thing to talk about it in this room.
Speaker 5: So if you haven't been following closely, they're there is
Speaker 5: no spot bitcoin ETF. But there's something like what thirteen
Speaker 5: filings something like that, something I lost track. Vanguard is
Speaker 5: not one of them. So what's gonna happen if Blackrock
Speaker 5: has a moment here where they get to have a
Speaker 5: bitcoin ETF and Vanguard doesn't have one.
Speaker 9: This is so fun. I'm so glad we're talking about
Speaker 9: this because it sort of gets into the spiritual differences
Speaker 9: between Blackrock and Vanguard. Blackrock has over four hundred ETFs.
Speaker 9: That is a lot of ETFs and virtually every single asset.
Speaker 5: More than anybody else pretty much.
Speaker 9: You take a look at Vanguard, even though there's only
Speaker 9: two hundred three hundred billion dollars that separates them in AUM,
Speaker 9: Vanguard only has eighty three funds. Vanguard is not They
Speaker 9: don't even have a commodities ETF. So they're very plain vanilla.
Speaker 5: By plain vanilla. It's like hold the vanilla bean, just
Speaker 5: like straight vanella.
Speaker 9: Yeah, exactly, exactly. And I asked Vanguard, will you ever
Speaker 9: file for a spot bitcoin ETF? And usually it's hard
Speaker 9: to get Vanguard to say anything too fired up. They
Speaker 9: said absolutely, they have no intent to do this. The
Speaker 9: case for cryptocurrency is very weak, high volatility, et cetera.
Speaker 9: Whereas black Rock they are leading the charge.
Speaker 10: Here.
Speaker 9: A lot of people watching January to see if that
Speaker 9: spot bitcoin ETF gets approved, and if it does, that
Speaker 9: can give them a leg up.
Speaker 4: Joel used to send me down to Vanguard to interview
Speaker 4: Jack Bogel what so probably ten years ago at this point. Yeah,
Speaker 4: Bogel never wanted to have an ETF in the first place.
Speaker 3: You know.
Speaker 4: You you'd ask them about ETFs and the the argument was, well,
Speaker 4: you can trade it all day, and he'd be like,
Speaker 4: why the heck would you want to do that? So exactly,
Speaker 4: So I wonder is it sort of the ghost of
Speaker 4: Bogel that's influencing Vanguard or is it more to do
Speaker 4: with just the structure. You know, black Rock is a
Speaker 4: for profit company. It has its own stock, it has
Speaker 4: its own shareholders to answer to. Vanguard's a completely different
Speaker 4: business model. So when you talk to us about that,
Speaker 4: and does that play a role in their decisions on
Speaker 4: things like this.
Speaker 9: Is partly the Bogel effect here to name check a
Speaker 9: book by Ye.
Speaker 5: I don't know if you know him. We host the
Speaker 5: podcast together.
Speaker 2: He's actually he's not quoted in this story though, Eric,
Speaker 2: I mean that would be.
Speaker 3: Too do that.
Speaker 9: But yeah, I mean you think about again Bogel's choice words.
Speaker 9: He to your point, Vanguard doesn't say anything too uh,
Speaker 9: it's hard to rile them up. Bogel definitely was more outspoken,
Speaker 9: but yeah, he didn't have a lot of love for commodities.
Speaker 9: It makes sense that Vanguard doesn't have a lot of
Speaker 9: love for crypto. Again, to go back to the quote
Speaker 9: that they gave me, they say that most crypto assets
Speaker 9: they lack intrinsic economic value. They generate no cash flows.
Speaker 9: That is a biggie for Vanguard. It's the same thing
Speaker 9: with commodities not generating any cash flows. Just it's totally
Speaker 9: out of their profile that they would even venture into crypto.
Speaker 5: It seems like Blackrock might be worried about this, like
Speaker 5: you've seen this lead continue to sort of slip away.
Speaker 5: It goes back to obviously Blackrock acquired Eye Shares and
Speaker 5: that was like this amazing acquisition. Do you get a
Speaker 5: sense that BlackRock's nervous about this, about the moment that
Speaker 5: they become sort of like the number two in the
Speaker 5: ETF game.
Speaker 9: I will say that Blackrock is pretty competitive in spirit,
Speaker 9: and I think it's also to point out here, even
Speaker 9: though their share is slipping, it's a case of the
Speaker 9: pie is just getting bigger.
Speaker 5: The pie is getting much bigger, right, Yeah, much bigger.
Speaker 5: Hece the podcast named Trillions Trillion, It grows a lot.
Speaker 9: Yeah, we're up to seven point eight trillion dollars in
Speaker 9: US ETF assets about ten trillion dollars globally. You take
Speaker 9: a look at Blackrocks US ETF assets, They're at two
Speaker 9: point five trillion dollars. That's an all time high. So
Speaker 9: it's not like Blackrock is shrinking here. It's just that
Speaker 9: you have this just very formidable challenger in Vanguard, and
Speaker 9: also you have all of the others. I mean, you
Speaker 9: take a look at the percent of flows that are
Speaker 9: going to people outside of Blackrock, out side of Van Garden,
Speaker 9: it's at a record high.
Speaker 2: Our thanks to Bloomberg News Senior markets reporter Katie Greifeld,
Speaker 2: BusinessWeek editor Joe Weber, and our own Mike Reagan, find
Speaker 2: Katie's story on Vanguard's rise in the latest issue of
Speaker 2: the magazine. It's on newsstands now, on the Bloomberg terminal
Speaker 2: and online at Bloomberg dot com slash BusinessWeek. You're listening
Speaker 2: to Bloomberg BusinessWeek. Up next, researchers have found yet another
Speaker 2: potential benefit in weight loss drugs like we Go VI.
Speaker 2: We're gonna tell you what it is and why drug
Speaker 2: makers are reluctant to actually lend support when we come back.
Speaker 2: This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen.
Speaker 6: On Bloomberg dot com, the iHeartRadio app, and the Bloomberg
Speaker 6: Business app, or watch us live on YouTube.
Speaker 2: Unless you've been living under a rock, then you're familiar
Speaker 2: with the so called the weight loss drugs we go,
Speaker 2: vio zempic zep Bound, and monjuro. The weight loss benefits
Speaker 2: have been well documented, but now researchers are pushing this
Speaker 2: class drugs that became famous for helping people lose weight
Speaker 2: and testing the shots across a spectrum of disorders from
Speaker 2: Alzheimer's disease to sleep apnea. We've talked about this. They're
Speaker 2: also testing it out on alcoholism. However, in the case
Speaker 2: of alcoholism, Novo Nordisk, which is the Danish drug maker
Speaker 2: behind we goviy, isn't even involved. Though one study is
Speaker 2: happening in its hometown. It didn't even agree to supply
Speaker 2: scientists with the medicines. Melaomi Kresky and Madison Muller write
Speaker 2: about the alcoholics who are seeking a cure from these drugs,
Speaker 2: but without Big Farmer's help. Madison Mueller is health reporter
Speaker 2: for Bloomberg News and she joins us here in the
Speaker 2: Bloomberg studio. It's so rare to see an example of
Speaker 2: a study that's not actually supported in some way by
Speaker 2: the manufacturer of a specific drug, especially one that's so lucrative.
Speaker 5: What's going on here exactly?
Speaker 11: I mean, you'd think that these companies want to study
Speaker 11: the drugs in as many indications as they can because
Speaker 11: for them, you know, that helps expand it to more patients,
Speaker 11: and you know, it's a clear business opportunity. But in
Speaker 11: this case, we're not seeing that. And you know, one
Speaker 11: of the reasons that the experts and the scientists that
Speaker 11: we talked to for this story gave for that is
Speaker 11: that utilization of alcohol disorder drugs in the US is
Speaker 11: so low that the drug makers just don't see this
Speaker 11: as a good business opportunity.
Speaker 2: Why has the utilization been low? I mean, couldn't there
Speaker 2: be a whole host of reasons? I mean, why maybe
Speaker 2: they haven't been effective?
Speaker 11: Right in the process of reporting this story, I didn't
Speaker 11: even realize that there were three or four alcohol use
Speaker 11: on the market. I was like, oh, I thought there
Speaker 11: was one, or you know, and it didn't work or something.
Speaker 11: And these drugs do work, they're effective, but they're not
Speaker 11: there's side effects, and not every doctor, even like some
Speaker 11: addiction doctors, are not really well educated in how to
Speaker 11: prescribe these drugs to patients, how to sort of oversee
Speaker 11: that process. There usually is a lengthy prior authorization, you know,
Speaker 11: process to actually even write a prescription, which doctors are
Speaker 11: busy and they don't even have time for resource is
Speaker 11: to do. And so there's a lot of barriers to
Speaker 11: get people on these drugs currently, you know. And that's
Speaker 11: not even getting into the stigma of all of this
Speaker 11: and the fact that people just sometimes don't believe that
Speaker 11: you should be using drugs to treat alcohol use disorders.
Speaker 2: So is that a part of this story too.
Speaker 11: Yeah, I mean, the stigma definitely is a huge thing,
Speaker 11: and that's something in the conversations with these scientists, every
Speaker 11: single one of them brought that up. Aside from the
Speaker 11: business case the fact that these companies, you know, maybe
Speaker 11: don't see potential here, the stigma is still such a
Speaker 11: big issue, and that's an issue that you know, is
Speaker 11: there regardless of whether or not Novo Nordisk and Eli
Speaker 11: Lilly are supporting these studies. It's just a continuous problem
Speaker 11: for this field.
Speaker 2: Is it being used off label for this right now.
Speaker 2: I've seen anecdotal tweets about this. I've seen anecdotal tweets
Speaker 2: that have said not by people who have alcohol use disorder,
Speaker 2: but they say basically, hey, I went on this and
Speaker 2: it stopped me from eating a lot. It stopped me
Speaker 2: from drinking a lot.
Speaker 11: Right, So yeah, and that I mean, that's the reason
Speaker 11: why some of the some of these Interestingly, some of
Speaker 11: these studies happened and started or the researchers were at
Speaker 11: least in the process of getting these studies going long
Speaker 11: before sort of the hype around these weight laws strugs
Speaker 11: really took off this last year. I mean, they had
Speaker 11: been looking at, you know, anecdotal reports from ozempic because ozempic,
Speaker 11: remember was approved several years ago, so they've sort of
Speaker 11: been hearing about this now for a few years from
Speaker 11: you know, psychologists, friends, psychiatrists that have been talking about
Speaker 11: this sort of in their inner circles. And then there's
Speaker 11: there was also some pre clinical studies done and some
Speaker 11: early studies done in patients. So some of these researchers
Speaker 11: have been looking at this for a while. The other
Speaker 11: ones heard about this just sort of within the last
Speaker 11: year from you know, anecdotally from people on Twitter being like,
Speaker 11: I had no desire to drink after going on ozempic
Speaker 11: and they were like, this is super exciting. We have
Speaker 11: to see what's going on here, and so they launched
Speaker 11: Studies sort of as a result of that.
Speaker 2: That was Madison Mueller. She's a health reporter for Bloomberg News.
Speaker 2: And that wraps up the first hour of the weekend
Speaker 2: edition of Bloomberg Business Week from Bloomberg Radio. Ahead in
Speaker 2: our next hour, find out which bank is looking to
Speaker 2: gain market share by following the path of another lender
Speaker 2: who just went out of business, and the Las Vegas
Speaker 2: Strip adds a new destination after nearly twenty years in
Speaker 2: the making. This is Bloomberg Business Week. I'm Tim Steneveex.
Speaker 2: Stay with us. Today's top stories and global business headlines
Speaker 2: are coming up. Right now.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Easter on Bloomberg Radio,
Speaker 1: the Bloomberg Business app, and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
Speaker 2: Plenty ahead. In our second hour of the weekend edition
Speaker 2: of Bloomberg Business Week, we're going to tell you just
Speaker 2: how expensive buying gifts for your loved ones might get
Speaker 2: this holiday season. This as we dive into the fortieth
Speaker 2: installment of PNC's Christmas Price Index. Peter Jackson is the
Speaker 2: CEO of Flutter. It's the publicly traded owner of mobile
Speaker 2: betting platform FanDuel. Peter stops by to break down how
Speaker 2: his company has become one of the dominant players in
Speaker 2: the space, its plans for a dual listing in the US,
Speaker 2: and how much room is left to grow in the
Speaker 2: world of sports gambling. And speaking of gambling, after nearly
Speaker 2: two decades of waiting, the Las Vegas fontin Blue is
Speaker 2: finally open for business. You'll hear from the CEO of
Speaker 2: the Project real Estate mogul, Jeffrey Sofer. First up this
Speaker 2: hour look at the financial sector and Citizens Financial Group.
Speaker 2: The Wall Street Journal reporting recently that the company behind
Speaker 2: the regional lender Citizens Bank has opened a new private
Speaker 2: bank for wealthy customers, and for that, it's taking a
Speaker 2: page from the book a first Republic bank. That's right,
Speaker 2: it's the bank that failed back in May. It was
Speaker 2: known for high end customer service and those low, low
Speaker 2: mortgage rates. Emily GRIFFEO and I wanted to know more.
Speaker 2: We've got a lot to get to with Brendan Kaflin,
Speaker 2: a vice chairman and head of consumer Banking at Citizens
Speaker 2: Financial Group. He joins us here in the Bloomberg Interaction
Speaker 2: Brokers Studio. Brandon, good to have you with us.
Speaker 1: How long?
Speaker 5: Thanks for having me. I'm doing great. Thanks.
Speaker 2: So when I saw that story, I thought this is
Speaker 2: great because that means we're all going to get low
Speaker 2: mortgage rates again, just like First Republic did for so long.
Speaker 2: But that's not necessarily the case with kind of what
Speaker 2: you guys are doing over at Citizens, Right, it's not okay,
Speaker 2: too bad, it's too bad. Mortgage rates are here to stay.
Speaker 12: We are on a journey as an organization to really
Speaker 12: build out a world class franchise. We went public back
Speaker 12: in twenty fourteen, and we viewed this as the next
Speaker 12: natural step.
Speaker 2: And what you're doing is actually hiring a lot of
Speaker 2: people who were at First Republic.
Speaker 12: We are We've hired about two hundred people so far,
Speaker 12: and with the bank failures in March, it became very
Speaker 12: clear to us that while those firms would no longer exist,
Speaker 12: there was a lot of talent in play, and there
Speaker 12: was white space open in the private banking sector in
Speaker 12: the United States for a service led firm to come in,
Speaker 12: and so we brought on a lot of folks. We're
Speaker 12: building a high end private bank here at Citizens. We've
Speaker 12: made no secret about it that we aspire to build
Speaker 12: a great health management platform, and what we aspire to
Speaker 12: do is really take the best of some of the
Speaker 12: firms that are not around anymore.
Speaker 5: You point around.
Speaker 12: The service culture is really distinctive and unique, but we
Speaker 12: are making business model corrections. We're going to be highly
Speaker 12: competitive on lending, but we will be market competitive. We
Speaker 12: will not undercut the market. We're going to have really
Speaker 12: great credit quality and we're going to grow at the
Speaker 12: pace of raising quality deposits. So we build a really
Speaker 12: durable strategy, but it will be all grounded in high end,
Speaker 12: intense service that's uncommon in financial services for that client base.
Speaker 8: What do you currently make of the state of the consumer,
Speaker 8: Because we read a lot about how inflation actually hurts
Speaker 8: the lower end of the consumer the most, and these
Speaker 8: higher income and individuals are perhaps more shielded from the
Speaker 8: macro environment and higher inflation. Was that at all part
Speaker 8: of the decision to cater towards this client.
Speaker 12: Well, the economy is not being felt the same way
Speaker 12: across all demographics, the bottom you know, two or three
Speaker 12: death stylos the economies back to paycheck to paycheck. The
Speaker 12: average consumer is still buoyed by all the posts, all
Speaker 12: the COVID stimulus. We still see consumers with ten to
Speaker 12: fifteen percent more in their deposit account than prior to COVID,
Speaker 12: and they're underlying, going.
Speaker 2: Going, still.
Speaker 12: It's starting to burn down, it is, and it's slowly
Speaker 12: and slowly but surely burning down. But spending remains high,
Speaker 12: but excess deposits are still out there in the banking system,
Speaker 12: and delinquency rates, while they're almost back to normal, they're
Speaker 12: still lower. So when I look at the overall healthy
Speaker 12: the economy, and I heard you mentioned potentially a soft landing.
Speaker 12: If you make that case, I think you can support
Speaker 12: it by the health of the consumer really booing the
Speaker 12: economy because they are in a position of real strength.
Speaker 12: Even though the economy is not felt the same all
Speaker 12: the way through every segment, but it is it is
Speaker 12: true that the higher end of the market has significant
Speaker 12: strength and a lot of resilience right now. And I
Speaker 12: think with the disruption in the space with First Republican
Speaker 12: SVB exiting the market, we do believe there's a lot
Speaker 12: of white space in for innovation and banks to step
Speaker 12: up and reprovide that service level for really part of
Speaker 12: the economy that is still very very strong.
Speaker 2: What do you envision being that service level? Because there's
Speaker 2: no shortage of folks who want to manage money out there.
Speaker 2: Trust me, we have them on our program every single day.
Speaker 2: We never run out of them. And so like where
Speaker 2: you seeing, where are you seeing the white space?
Speaker 5: The beauty the beauty.
Speaker 12: Of the market, of the of the business model is
Speaker 12: actually quite simple. It's two bigger banks that tend to
Speaker 12: have great capabilities and very sophisticated capabilities. Also are very
Speaker 12: big and they're siloed, and so the beauty of those
Speaker 12: models is that it broke down all the silos and
Speaker 12: you had a single point of contact that really brought
Speaker 12: the full breadth of the bank, and they valued your
Speaker 12: full relationship when if you were doing a multi family
Speaker 12: commercial real estate deal, or if you're bringing your wealth
Speaker 12: management or you're doing deposit banking, or if you're part
Speaker 12: of the private equity and venture community, all of those
Speaker 12: parts of your relationship were integrated together as one and
Speaker 12: the appropriate service was delivered back, you know, in spades
Speaker 12: to the client. So that's what we aim to replicate,
Speaker 12: and we've got tremendous feedback. The clients so far have
Speaker 12: been saying, Hey, look are the brand that we're voting
Speaker 12: with is the brand our banker? You now employ our banker.
Speaker 12: We're all in because we know what that person has
Speaker 12: been able to deliver.
Speaker 2: So those individuals you were hiring from First Republic are
Speaker 2: actually bringing over clients.
Speaker 12: The clients are are are are calling us and they're saying,
Speaker 12: you know, we're we want to recreate that magic that
Speaker 12: we felt in the service intensity that existed there.
Speaker 2: Is explain the relationship with JP Morgan and how you know,
Speaker 2: can people jump or they get higher if they didn't
Speaker 2: get laid off during the acquisition that you know, JP
Speaker 2: Morgan took over the assets of course, then can they
Speaker 2: just leave? Like how does it work?
Speaker 12: You know, employee, We're not intentionally calling anybody at JP Morgan,
Speaker 12: but you know, employees get to choose where they work
Speaker 12: for every morning, and we're building out a world class
Speaker 12: private bank. And we've hired folks from a lot of
Speaker 12: different places, but where we have open positions and there
Speaker 12: are folks that want to change brands, we're up for
Speaker 12: interviewing them, and we're open for business and in an
Speaker 12: economy and and you know, banks are obviously playing a
Speaker 12: lot of defense right now, making sure the deposit book
Speaker 12: is clean, the commercial real estate business is clean. This
Speaker 12: is one space where we're playing a lot of offense.
Speaker 12: We're going to hire, We're trying to reposition the company,
Speaker 12: and we think there's white space out there. And so
Speaker 12: some of the best bankers in the United States thus
Speaker 12: far have voted with their feet and selected.
Speaker 1: A new jersey.
Speaker 8: Is the current regulatory environment helping you guys play offense
Speaker 8: or is it a bit of a hurdle.
Speaker 12: Yeah, I think the regulatory environment, obviously, coming off the
Speaker 12: heels of a crisis like the bank failures, can tend
Speaker 12: to react pretty strongly. And that's what I think we're
Speaker 12: all predicting. And my worry is the unintended consequences and
Speaker 12: the cumulative impact of the regulatory action. So you've got
Speaker 12: the FED taking a lot of money out of the
Speaker 12: banking system that triggers banks to be less confident lending.
Speaker 12: You've got potential liquidity regulation coming to value deposits in
Speaker 12: different ways that potentially triggers less lending. And you have
Speaker 12: Basel three endgame to make banks hold more capital against
Speaker 12: particular parts of lending that triggers less lending. So I
Speaker 12: am worried about the cumulative impact of this that banks
Speaker 12: may be less willing to pook more capital in the market,
Speaker 12: and it could actually uh be a negative force around
Speaker 12: US soft landing.
Speaker 5: So we'll see.
Speaker 12: Time will tell, but but certainly there's a lot of
Speaker 12: regulatory activity going on now.
Speaker 2: Oh go ahead, Yeah, exactly.
Speaker 8: We say that word all the time.
Speaker 2: I mean, that's like that's your world over and over again, Emily, exactly. Brendan,
Speaker 2: how do you think about the physical branch in this
Speaker 2: day and age? I mean you, you guys are relatively
Speaker 2: limited with your geographical footprint because you're only in eleven
Speaker 2: states right now, but you do have a thousand branches,
Speaker 2: so it's a it's a big footprint in eleven states.
Speaker 2: Are you thinking about how are you thinking about changing
Speaker 2: geographically as you do this?
Speaker 12: Yeah, there's been a conversation in the market for two
Speaker 12: decades about the death, the death of the retail branch.
Speaker 12: And uh, you know, look, if you can get through
Speaker 12: a global pandemic where people were not willing to leave
Speaker 12: their house, uh, to do much of anything, let alone
Speaker 12: walk into a branch, and you re emerge an economy
Speaker 12: that people still value retail banking.
Speaker 13: Uh.
Speaker 5: I would I would.
Speaker 12: Say the US consumers voting with their feet that branch
Speaker 12: banking is still much, very valued part of how they
Speaker 12: think about financial services. Now, if you look at gen Z,
Speaker 12: they'll tell you they have no interest to go to
Speaker 12: a bank branch, but they actually won't open an account
Speaker 12: unless there's a physical location in your MSA. So it's
Speaker 12: viewed as a safety net and they don't actually want
Speaker 12: to go there, but they need the capacity.
Speaker 2: Does that mean you're growing beyond the eleven states they're
Speaker 2: in right now?
Speaker 5: We are.
Speaker 12: We're a national bank.
Speaker 1: Now.
Speaker 12: We just bought HSBC's US franchise. We bought Investors Bank.
Speaker 12: That put us in New York City, It put us
Speaker 12: in northern New Jersey, put us in Washington, d C.
Speaker 12: It put us in southern Florida. So we're now up
Speaker 12: to about fifteen states. In retail banking, we're open for
Speaker 12: business nationally with a national digital bank called Citizens Access.
Speaker 12: You know, so digital is pervasive through service in retail banking.
Speaker 12: It's the combination of digital and physical banking that really
Speaker 12: consumers value.
Speaker 2: That was Brendan Coughlin, vice Chairman and head of Consumer
Speaker 2: Banking at Citizens Financial Group, with me and Bloomberg News
Speaker 2: Cross Asset reporter Emily Graffeo. Emily will be back with
Speaker 2: us a little later this hour. Up next, we go
Speaker 2: from serving Americans at the bank to ringing them up
Speaker 2: at the cash register. A look at the consumers purchasing
Speaker 2: power this holiday season through the lens of p and
Speaker 2: c Asset Management Group's annual Christmas Price Index.
Speaker 14: The big thing for us is really trying to get
Speaker 14: a sense of the health of the consumer. So what
Speaker 14: is the consumer facing in any given holiday season, Where
Speaker 14: is the supply and demand sort of disconnect or perhaps
Speaker 14: alignment in any given year, and what does it ultimately
Speaker 14: mean for the path forward for markets and the economy.
Speaker 14: You know, consumption is such a huge component of growth
Speaker 14: over time, and so we got to make sure we
Speaker 14: understand what the consumer trends look like and so this
Speaker 14: is an important piece of analysis.
Speaker 2: You're listening to Bloomberg Business Week. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: Live weekday afternoons from three to six Eastern Listen on.
Speaker 6: Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app.
Speaker 1: I want to us Live on YouTube.
Speaker 2: You know what, Carol, what there are kind of like
Speaker 2: a few I don't know, things that are just staples
Speaker 2: of the holiday season. But think about this for a
Speaker 2: second eggnog, the Rockefeller Center Christmas tree, Carol's famous holiday cookies,
Speaker 2: which I'm told include homemade short bread and peppermint bark Uh.
Speaker 2: Yet I've never actually eaten, but I've told that you
Speaker 2: do this every year. I've known you at this point
Speaker 2: for almost four years, and I still have never tried these.
Speaker 2: But it's a holiday tradition.
Speaker 10: It is a holiday tradition. I'm trying to get back
Speaker 10: to the tradition. There's reasons why it's been on hold,
Speaker 10: but I know I owe you and a lot of
Speaker 10: people some cookies, so we'll work on it. I'd love
Speaker 10: to unreada balls. They're really good, all right, But in
Speaker 10: terms of traditions. One of the things we always look
Speaker 10: forward to is PNC Asset Management Groups Christmas Price Index.
Speaker 10: This index, or CPI, calculates the true cost of all
Speaker 10: twelve days of Christmas, so all the gifts, all of
Speaker 10: the calling birds, gold rings, swimming swans, milking maids, and
Speaker 10: pear trees.
Speaker 2: Amida Gotti is the chief investment Officer at PNC Asset
Speaker 2: Management Group. She joins us on Zoom from Philadelphia. Amanda,
Speaker 2: good to have you back with us. You know, I've
Speaker 2: been waiting eleven months for that much fun. We love
Speaker 2: doing this each and every year. I got to tell you,
Speaker 2: the headline number here is quite a bit different than
Speaker 2: last year, and kind of makes sense when it comes
Speaker 2: to the you know, I'm not going to say declared. Yeah,
Speaker 2: the slowdown that we've gotten in the economy and the
Speaker 2: prices that have not risen as fast as they did
Speaker 2: last year, it's not as shocking to buy that par
Speaker 2: tree this year.
Speaker 14: It's not quite as shocking. In general. I'm so delighted
Speaker 14: to be back with both of you. This is so fun,
Speaker 14: such a fun annual project. I cannot believe we've been
Speaker 14: doing this well, not you and me, p and Z's
Speaker 14: been doing this for forty years. So it's the fortieth anniversary.
Speaker 14: I'm not going to age or date myself anywhere near.
Speaker 10: Wait, so what did it cross?
Speaker 5: Wait?
Speaker 6: So?
Speaker 10: Nineteen eighties?
Speaker 1: First time?
Speaker 14: Eighty three, nineteen eighty four.
Speaker 10: Do you remember what it cost?
Speaker 2: Oh?
Speaker 10: My god, I believe I'm not going to do that.
Speaker 5: I'm not going to do that to you.
Speaker 10: Okay, all right, so talk to us about today's today's tally.
Speaker 14: So last year, just to tee this up a little bit,
Speaker 14: last year, the increase on a year over year basis
Speaker 14: was a whopping ten and a half percent. Right, we
Speaker 14: were right in the thick of a really hot inflationary environment.
Speaker 14: This year, I'm happy to report that we're gaining on
Speaker 14: it and getting this inflationary battle under control. And so
Speaker 14: as per the Christmas Price Index, we're only up about
Speaker 14: two point seven percent year over year, and so that
Speaker 14: equates to a little over forty six thousand dollars in
Speaker 14: total to buy all twelve days worth of the gifts.
Speaker 2: The long and variable lag is hitting the twelve days
Speaker 2: of Christmas.
Speaker 13: I mean about that.
Speaker 2: I will tell you though, Jay Powell would be happy
Speaker 2: to have inflation at two point seven percent. You guys
Speaker 2: are are you doing this?
Speaker 5: This is a.
Speaker 14: Key data point that the FED and the FMC is
Speaker 14: very much focused on, naturally, right, Well, you.
Speaker 10: Know what's interesting, what do you guys find when you
Speaker 10: do this index? How much it really does kind of
Speaker 10: tell you about where we are in the inflation cycle.
Speaker 10: And I went back to nineteen eighty four courtesy of
Speaker 10: you guys, it was twenty thousand and sixty nine dollars
Speaker 10: and fifty eight cents.
Speaker 14: Yeah, many moons ago, right, Yeah, perspective, I think the
Speaker 14: big thing for us is really trying to get a
Speaker 14: sense of the health of the consumer. So what is
Speaker 14: the concer facing in any given holiday season, Where is
Speaker 14: the supply and demand sort of disconnect or perhaps alignment
Speaker 14: in any given year, and what does it ultimately mean
Speaker 14: for the path forward for markets and the economy. You know,
Speaker 14: consumption is such a huge component of growth over time,
Speaker 14: and so we got to make sure we understand what
Speaker 14: the consumer trends look like. And so this is an
Speaker 14: important piece of analysis. Though lighthearted, it is an important
Speaker 14: piece of analysis.
Speaker 10: Is it really like, do you really like you like? Okay,
Speaker 10: this shows you know, food costs or something like, it
Speaker 10: really does track with what's going on in the real economy.
Speaker 8: I think it does.
Speaker 14: You know, it's obviously a specialty gift basket of goods
Speaker 14: and services, and so it definitely is an indication of
Speaker 14: maybe the higher end consumer discretionary oriented trends that the
Speaker 14: economy and consumers in general might be facing. But it
Speaker 14: is interesting to watch the trends from year to year.
Speaker 14: It does track pretty nicely.
Speaker 2: Okay, well, let's get to some of these individual arts,
Speaker 2: because I want to make sure we get to all this, Amanda.
Speaker 2: There was actually no deflation in this, so there were
Speaker 2: certain items that don't cost any more than they did
Speaker 2: last year, but nothing actually went down in price. What
Speaker 2: sticks out to you?
Speaker 14: That sounds about right? Yeah, So five of the gifts
Speaker 14: in the index, four calling birds, five gold rings, naturally
Speaker 14: my favorite gift, seven swansa swimming, the eight Maids, and
Speaker 14: the nine Ladies were all flat on a year over
Speaker 14: year basis. So if you're looking for a gift this
Speaker 14: holiday season, maybe those five gold rings are kind of
Speaker 14: a deal on a relative basis here.
Speaker 10: Yeah, but don't try to buy lords a leap in right.
Speaker 14: No, we certainly saw an increase there, and I think
Speaker 14: This is an important tie into what we're seeing in
Speaker 14: the services side of the economy. Try as the FED
Speaker 14: might to get this inflationary backdrop under control. Services inflation
Speaker 14: tend to be pretty sticky. The lords certainly fall into
Speaker 14: the live performances or services category. When we break it
Speaker 14: down between services and goods, the services component of this
Speaker 14: index is up almost two times what the good side is.
Speaker 14: So pretty notable there in terms of that dynamic.
Speaker 10: Like the Taylor Swift effect, Yeah, exactly.
Speaker 2: Although the turtle doves very pricey this year compared to
Speaker 2: last year, five percent higher. Why why our turtle doves
Speaker 2: so much more expensive this year last year?
Speaker 14: So I think, well, on the one hand, it's a
Speaker 14: fairly limited supply in terms of the breeders that we
Speaker 14: talked to.
Speaker 2: It's the Bitcoin of the dove world.
Speaker 14: You're saying, yeah, you could, you could equate it to that,
Speaker 14: but very limited supply. But I also think demand in
Speaker 14: this environment for specialty doves is perhaps a little bit less.
Speaker 14: I don't know the consumers are backing up the truck
Speaker 14: for specialty doves this holiday season.
Speaker 10: It's just kind of I.
Speaker 2: Love it is that on your list, Carol, specialty doves
Speaker 2: this holiday.
Speaker 10: Season, absolutely top partridge.
Speaker 2: What about a part like well, that's going to be
Speaker 2: more expensive because the price of memusicians has gone up.
Speaker 14: That's right, That's exactly right.
Speaker 10: Did any think surprise you in this year's reading.
Speaker 14: I think two things probably surprise me the most. The
Speaker 14: one is that when we look at the core version
Speaker 14: of the index, so we try to mirror the BLS's
Speaker 14: methodology and we back out the most volatile component in
Speaker 14: the Christmas Price Index, it's food and energy for the BLS.
Speaker 14: For us, it's the swans. And this year, the swans
Speaker 14: did not move at all, and so I think that's
Speaker 14: pretty notable. It's the single biggest line item and it
Speaker 14: didn't move at all, And so we sort of think
Speaker 14: about that as perhaps investors have been bracing for black
Speaker 14: Swan sightings all year, given recessionary concerns lingering that have
Speaker 14: failed to materialize. And then the other component is that
Speaker 14: the cost to shop online are up significantly. You're not
Speaker 14: going to get a deal this year and the Christmas
Speaker 14: Price Index by shopping online. So the convenience component of
Speaker 14: shopping online may allow us to slay our gift list
Speaker 14: all day, but it's definitely going to cost you.
Speaker 10: Why are the Swans so expensive? Oh, they're not expensive?
Speaker 10: Why are they not?
Speaker 14: The Swans are expensive. They're the single biggest line item
Speaker 14: in general, and they tend to move around a lot
Speaker 14: year to year. But yeah, not this year.
Speaker 2: That was Amanda Gatti, the chief investment officer at PNC
Speaker 2: Asset Management Group, joining us from Philadelphia. Still to come,
Speaker 2: on Bloomberg Business Week, The sports betting industry is booming
Speaker 2: here in the US and around the globe, and as
Speaker 2: one of the most widely used platforms prepares for its
Speaker 2: next move, you'll learn how exactly it operates as users
Speaker 2: watching wager on games in real time. Flutter Entertainment CEO
Speaker 2: Peter Jackson joins us on the other side. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern on Bloomberg Radio,
Speaker 1: the Bloomberg Business app, and YouTube. You can also listen
Speaker 1: live on Amazon and Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: Hey sports Betting, Carol. It's exploded in the US since
Speaker 2: twenty eighteen. That was when the Supreme Court allowed such
Speaker 2: gambling to expand beyond Nevada. Some three dozen states now
Speaker 2: allow sports betting, with the business generating more than ten
Speaker 2: billion dollars in revenue just over the last twelve months.
Speaker 2: That's according to the market researcher Vixio.
Speaker 10: Well, we've got with us the head of the parent
Speaker 10: company of one of the dominant players in US sports betting.
Speaker 10: Peter Jackson is a CEO Flutter, It's a publicly traded
Speaker 10: owner of fan Duel. He joins us on Zoom from
Speaker 10: the UK. Peter, So nice to have you here with
Speaker 10: Tim and myself. Let's get right to it. First of all,
Speaker 10: later this year, I think early next year, you're going
Speaker 10: to be doing a duelisting in the US, so you'll
Speaker 10: be traded on the New York Stock EUSTRECT and the
Speaker 10: London Stock Exchange. Everything moving ahead as planned.
Speaker 13: Yes, Look we're very excited about it. So the plan
Speaker 13: is that in quarter one next year we will list
Speaker 13: our shares on the New York Stock Exchange. Can investors
Speaker 13: will be able to buy into Flutter that stage on
Speaker 13: their own exchange.
Speaker 2: So is what was the decision behind that?
Speaker 13: Look, it's something that we've considered for some time, and
Speaker 13: it's not straightforward, but we're very excited about it. You know,
Speaker 13: I think it's going to be a great opportunity for
Speaker 13: American investors to invest in Flutter. It will give us
Speaker 13: access to that US capital market, the deepest liquidity pool
Speaker 13: in the world.
Speaker 5: We know that.
Speaker 13: You know, actually having a US listed asset will help
Speaker 13: us from a retention attraction of talent in America. That's
Speaker 13: important for us as a business. And look, we are
Speaker 13: the world's leading gaming business and being listed on the
Speaker 13: neuro Stock Exchange feels like the right thing to do
Speaker 13: for us.
Speaker 10: How do you see yourself kind of holding a high
Speaker 10: market share in the US sports gaming market, You're going
Speaker 10: to have some competition. It's pretty competitive marketplace and some
Speaker 10: big players already.
Speaker 13: It's never been easy from the day we started. But
Speaker 13: you know, we delivered the best product to our customers
Speaker 13: and we believe that's what sets us apart.
Speaker 2: So are you how concerned are you about the competition
Speaker 2: that you have? You know, with draft kings right now,
Speaker 2: roughly thirty percent thirty one percent of the market at least,
Speaker 2: depending on you know which analysts you speak to. How
Speaker 2: does that rivalry work? Talk to us a little bit
Speaker 2: about that.
Speaker 13: Look, Draft Kings and Fangil were the leading businesses originally
Speaker 13: in daily fantasy, and we've both managed to take that
Speaker 13: leadership position into sports.
Speaker 2: And you guys were going to merge at one point, Well.
Speaker 13: There was talk of that a very long time ago,
Speaker 13: in twenty seventeen. Yeah, but look, we were able to
Speaker 13: take some of the product advantages we have globally and
Speaker 13: bring them to the US audience. So the parala product,
Speaker 13: which we've become very famous for, is something we'd invented
Speaker 13: in Australia, we've perfected in the UK, and we brought
Speaker 13: to the US audience and that's what's given us a
Speaker 13: real leg forward.
Speaker 2: Can you explain that for people who are not, you know, gamblers, Yeah, gamblers,
Speaker 2: I mean this is confusing stuff.
Speaker 13: Yeah, Look, it's a it's a relatively straightforward concept and
Speaker 13: that you know, if you're watching a game, So you know,
Speaker 13: if you're watching the forty nine ers playing over the weekend,
Speaker 13: you may wanted to have a bet on the outcome.
Speaker 13: You may have thought the forty nine ers were going
Speaker 13: to win, but there may also be a couple of
Speaker 13: players who you wanted to highlight in the game, who
Speaker 13: were going to score some touchdowns. There may be some
Speaker 13: passing yards you wanted to capture as well in your bet,
Speaker 13: and you can combine all of those outcomes into one
Speaker 13: parlay and put ten dollars on it and have fun
Speaker 13: watching the matches if it comes in.
Speaker 10: So it gives you kind of multiple plays or multiple
Speaker 10: bets if you will in one.
Speaker 13: Yeah, exactly. You know you have to hit each of
Speaker 13: the legs, but if you do, you get much longer
Speaker 13: odds and then you win more money.
Speaker 10: So what's Peter, what's the kind of what's the growth
Speaker 10: that you've seen in that on your platform?
Speaker 13: We've seen some very extensive take up in it. You know,
Speaker 13: if I look at something like the basketball season this year,
Speaker 13: you know around you know, eighty percent of our customers
Speaker 13: have played a parlay bet already in this basketball season.
Speaker 13: It's something that you know, has really caught the attention
Speaker 13: of our betters across the US. They enjoy it and
Speaker 13: it brings real excitement to them when they're watching a game.
Speaker 2: There must be regulatory challenges here, given that you know,
Speaker 2: gambling like this is only legal in about three dozen
Speaker 2: states in the US, and then you have the whole
Speaker 2: European element here talk to us about tighter regulation specifically
Speaker 2: in Europe. It seems like it's moving the other way
Speaker 2: in the US, but you know, tighter REGs in Europe,
Speaker 2: what's going on there.
Speaker 13: We operate globally, so you know, there's many different environments
Speaker 13: we participate in. In the UK, there's been some regulatory reviews
Speaker 13: of the gambling sector. We changed our position in the
Speaker 13: market at the beginning of last year and it stood
Speaker 13: us in really good stead getting ahead of the regulatory changes.
Speaker 13: So we're now taking market share very significantly in the
Speaker 13: in the UK market, but around the world, all of
Speaker 13: our brands, whether it's Fangil or Paddy Pan, the UK
Speaker 13: Sports Bed in Australia, we tend to have the leading
Speaker 13: positions in the market and we're very focused on recreational customers.
Speaker 13: You know, people who are spending ten pounds a week
Speaker 13: betting in the UK. So this is small steak stuff
Speaker 13: and we take safer gambling very seriously. You know, we
Speaker 13: want to lead the race at the top and make
Speaker 13: sure we provide all of our customers with the very
Speaker 13: safe experience.
Speaker 10: Peter, you know, I feel like we've been talking about
Speaker 10: online gaming for a long time, you know, in the
Speaker 10: lead up to the Supreme Court decision, which ultimately came
Speaker 10: down in twenty eighteen, and then since then, what would
Speaker 10: surprise you think the Bloomberg audience about what's going on
Speaker 10: in this industry? Is it the growth? And if so,
Speaker 10: give us some numbers. What is it that would maybe
Speaker 10: surprise our investing audience.
Speaker 13: I think there are several things that people always shopped
Speaker 13: at when I talk to them about you know what
Speaker 13: we do. I mean, think about that that match, right,
Speaker 13: you know, when the forty nine ers played their conference rivals,
Speaker 13: the Eagles in Philly. You know, we have to sit
Speaker 13: there and calculate all the odds of all the different
Speaker 13: actions at the players can be undertaking real time. We're
Speaker 13: taking tens of thousands of bets and customers and we
Speaker 13: have to assess how the probabilities are changing. Take those odds,
Speaker 13: match them, and you know, when customers decide to take
Speaker 13: their money, you know, pay them out quickly. So it's
Speaker 13: a very complex set of challenges that we have from
Speaker 13: a data perspective. You know, if you look at it
Speaker 13: that game, there will have been a trillion different combinations
Speaker 13: of things that people could bet on. So that it's
Speaker 13: an incredibly complicated set of circumstances and simplifying that for
Speaker 13: customers so they can easily find that what they want
Speaker 13: to bet on is something that's not straightforward. So if
Speaker 13: you look at the external references, we've been assessed to
Speaker 13: be the best operator in our space. You know, Aliston
Speaker 13: Cridcheck would rate us number one, and we have been
Speaker 13: for two years. And having that leading product is really
Speaker 13: important to make sure that customers can cut through all
Speaker 13: of that complexity find they'll want to bet on and
Speaker 13: have some fun when they're watching the game.
Speaker 2: Peter, what's the connection or the core relation with a
Speaker 2: strong consumer and strengthen the economy when it comes to
Speaker 2: usage of your product? What do you see out there.
Speaker 13: We've been operating for a very long time, as you
Speaker 13: were saying, in some of our European markets, and if
Speaker 13: we look at their sort of history from a macro perspective,
Speaker 13: whilst ever the's strong levels of employment, we see strong
Speaker 13: performance in our business. So you know, around the world
Speaker 13: at the moment, we haven't seen any signals that any
Speaker 13: of the impact that we're seeing from us a fiscal
Speaker 13: and macro perspective is impacting our business.
Speaker 1: At all.
Speaker 2: What about the weakness that you're reporting in Australia, what's
Speaker 2: behind that weakness.
Speaker 13: Look, you're right, we have identifiable mean outside Q three
Speaker 13: is we've seen some weakness in Australia. They had a
Speaker 13: very significant lockdown in COVID in Australia. I'm not sure
Speaker 13: how much your listeners followed it, you know, I mean
Speaker 13: there were police on the streets making sure people can
Speaker 13: leave their houses. It was a very difficult situation. So
Speaker 13: there's been a big COVID reversion in Australia. They're also
Speaker 13: pushing through some tax changes and there's also some regular
Speaker 13: to me regularty impacts. But you know, Sports bet, which
Speaker 13: is our brand in Australia. We are the you know,
Speaker 13: we're the biggest business with a market leader for recreational customers.
Speaker 13: We just had the Melbourne Cup, you know, which was
Speaker 13: you know, it's the race that stops the nation. So
Speaker 13: you know, I'm proud of what the seam are doing
Speaker 13: and the business are gone to grow in the future
Speaker 13: for us.
Speaker 2: Then our thanks to Peter Jackson, he's the CEO of
Speaker 2: Flutter it's the publicly traded owner of fan Duel. We'll
Speaker 2: be on the lookout for that US listing early in
Speaker 2: the new year. You're listening to Bloomberg business Week coming up.
Speaker 2: We'll stick with gaming and turn towards Sin City, which
Speaker 2: has just added a long awaited hotel to its world
Speaker 2: famous strip, even though the project was conceived all the
Speaker 2: way back in two thousand and five. Font and Blue
Speaker 2: Development Chairman and chief executive Officer Jeffrey Sofer explains his
Speaker 2: vision for the newest luxury experience in Las Vegas. This
Speaker 2: is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on.
Speaker 6: Bloomberg dot com, the iHeartRadio app, and the.
Speaker 1: Bloomberg Business app, or watch us live on YouTube.
Speaker 2: Las Vegas, Nevada is in the midst of a cultural
Speaker 2: and tourism renaissance, posting the highest tourism occupancy since twenty twenty,
Speaker 2: not to mention an immersive sphere that has plastered all
Speaker 2: over social media. Well now, a historic staple of Miami,
Speaker 2: Florida has made its way to Sin City, as the
Speaker 2: Fonts and Blue Las Vegas officially opened its doors this
Speaker 2: past Wednesday. The luxury resort company aims to be the
Speaker 2: pre eminent leader in country clubs, golf courses, high end retail,
Speaker 2: gaming and entertainment, resorts and hospitality, yachting, aviation, and luxury
Speaker 2: residential and our next guest, Jeffrey Sofer, has been at
Speaker 2: the helm of Fun and Blue Development since the nineteen nineties.
Speaker 2: He joined me and Emily Graffeo ahead of the grand opening.
Speaker 15: It really was just something that sort of just you know,
Speaker 15: came upon me and it was offered to us, and
Speaker 15: you know, obviously it just made sense. It was a
Speaker 15: natural move for us. And you know, obviously I knew
Speaker 15: the value, I knew what I was buying, so I
Speaker 15: kind of stood the asset. And it was just it
Speaker 15: was a big empty steel building, you know, and concrete building.
Speaker 15: It wasn't you know, there wasn't things that were finished
Speaker 15: in here.
Speaker 8: So what can guess expect at the newest luxury resort
Speaker 8: to open on.
Speaker 15: The story, I think they can expect an ultra luxury
Speaker 15: resort that's design orientated. It's got seventy years of history
Speaker 15: this brand, it was obviously the Found Blue when it
Speaker 15: was built in nineteen fifty four. Open has a tremendous
Speaker 15: amount of history with big resorts. It was the first
Speaker 15: world mega resort in beach in the United States when
Speaker 15: it opened in fifty four, and obviously a lot of
Speaker 15: celebrities and dignitaries from all over the world that have
Speaker 15: been through there. It has a massive history, and we
Speaker 15: took a lot of the design elements from that and
Speaker 15: put it inside here. And really it's just, you know,
Speaker 15: it's a luxurious hotel that's built around design. It's not
Speaker 15: you know, we've got a lot of different food and
Speaker 15: restaurant outlets and types of places to eat, and of
Speaker 15: course entertainment venues and everything you would see in the
Speaker 15: Las Vegas venue, But it's really designed around, you know,
Speaker 15: a design orientated hotel.
Speaker 8: I have to admit I've been to the Miami Resort
Speaker 8: a few times for the ETF Exchange conference.
Speaker 2: Is that where they do it?
Speaker 8: Yes, I write about ETF and so I know the
Speaker 8: Fountain Blue because of that conference. Jeffryan, I'm wondering, like,
Speaker 8: what's the outlook here for business travel?
Speaker 2: Are you asking if the ETF conference is going to
Speaker 2: be the Las Vegas ones?
Speaker 8: You would love to go to Las Vegas, That's what
Speaker 8: she's asking. But also, I mean if business travels slowing
Speaker 8: down in the macro environment. Does that impact the resort
Speaker 8: or is this really more geared towards people on vacation.
Speaker 15: This is a resort. So obviously we you know, we
Speaker 15: have a lot of you know, business corporation, business, corporate,
Speaker 15: business association, business during the week. Obviously, Las Vegas has
Speaker 15: major citywide conventions, and our hotel happens to be right
Speaker 15: next to the convention center, which we think will be
Speaker 15: a strategic advantage for us because you can actually walk
Speaker 15: out the door and walk over there and not have
Speaker 15: to wait in line for a cab or an uber
Speaker 15: or whatever.
Speaker 5: In the past, it can be little hectic here. It's
Speaker 5: it's a it's a big resort.
Speaker 15: I mean obviously we've got you know, sixty thousand foot
Speaker 15: spa and you know, massive gyms and obviously restaurants, and
Speaker 15: we'll have all different kinds of components. But yes, I
Speaker 15: mean we'll have you know, business travelers in the sense
Speaker 15: that people are coming here for meetings, and we'll definitely
Speaker 15: have a big rope component group component. We have you know,
Speaker 15: five hundred and fifty thousand feet of meeting space here,
Speaker 15: so which is a significant amount. So and it has
Speaker 15: we have a lot of different varieties types of meeting space,
Speaker 15: so we can hold can accommodate a lot of different
Speaker 15: types of customers that want that space.
Speaker 2: That was Jeffrey Sofer, Chairman and CEO of funt and
Speaker 2: Blue Development, And that wraps up the weekend edition of
Speaker 2: Bloomberg Business Week from Bloomberg Radio. Thank you so much
Speaker 2: for joining us, and a big thank you to Emily
Speaker 2: Graffeo and Mike Reagan for sharing some of the co
Speaker 2: hosting duties this past week as Carol has been on vacation.
Speaker 2: Be sure to tune into Bloomberg Business Week Monday through
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Speaker 2: Carol Master, I'm Tim stanoveex Stay with us. Today's top
Speaker 2: stories and global business headlines are coming up right now.
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