WEBVTT - Powell Faces Balancing Act Between Markets and Wait-and-See Mode 0:00:02.520 --> 0:00:10.280 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.280 --> 0:00:13.440 Week Insight from the reporters and editors that bring you 0:00:13.480 --> 0:00:18.400 America's most trusted business magazine, plus global business, finance and 0:00:18.480 --> 0:00:22.880 tech news. The Bloomberg Business Week Podcast with Carol Masser 0:00:23.079 --> 0:00:25.880 and Tim Stenebeck on Bloomberg Radio. 0:00:26.840 --> 0:00:30.440 Disappointing retail sales last month, adding to a concern of 0:00:30.480 --> 0:00:33.120 a pullback in consumer spending in the US, while a 0:00:33.159 --> 0:00:37.520 pair of business surveys suggested a growing caution, retail sales 0:00:37.600 --> 0:00:40.040 rising by less than forecast in February, and the prior 0:00:40.080 --> 0:00:42.279 month was revised down to mark the biggest drop going 0:00:42.320 --> 0:00:44.560 all the way back to July of twenty twenty one. 0:00:44.800 --> 0:00:47.000 Combined with separate data on Monday, had show to drop 0:00:47.040 --> 0:00:49.320 off in New York state manufacturing activity and a weaker 0:00:49.400 --> 0:00:52.680 home builder sentiment. The reports are consistent with expectations for 0:00:52.760 --> 0:00:56.400 slower economic growth. We got with us Michael McKees, Bloomberg 0:00:56.400 --> 0:00:58.760 News Economics and Policy correspondent. He joins us in the 0:00:58.760 --> 0:01:02.800 Bloomberg BusinessWeek Studio Mike week. Spending on goods is what 0:01:02.840 --> 0:01:05.360 we got today? Is it seasonal? Is it more than seasonal? 0:01:06.000 --> 0:01:08.399 It's a little bit of all of it. The seasonal 0:01:08.920 --> 0:01:13.080 of factors for February this year, we're very very generous, 0:01:13.600 --> 0:01:16.960 and so we were expecting a rise in maybe a 0:01:17.000 --> 0:01:20.080 better than expected rise in the core component, which is 0:01:20.080 --> 0:01:23.040 what we got. But it really only netted out with 0:01:23.160 --> 0:01:27.440 a negative one percent to revise down a figure for January. 0:01:27.520 --> 0:01:29.640 So for the first two months of the year it 0:01:29.720 --> 0:01:32.440 was flat. Of course, the headline numbers were not very 0:01:32.440 --> 0:01:35.160 good at all, which may have something to do with 0:01:35.240 --> 0:01:37.840 the weather. We just don't know at this point, but 0:01:37.920 --> 0:01:41.040 we'll keep an eye on that going into March. And 0:01:41.360 --> 0:01:43.880 Emily and I were talking about how we know you're 0:01:43.920 --> 0:01:46.480 going to go over to Gharadelli and bring us back 0:01:46.600 --> 0:01:47.840 some nice chocolate. 0:01:47.920 --> 0:01:49.480 Do your shot for you, Mike? 0:01:49.720 --> 0:01:54.120 Yeah, yes, What about e commerce activity? That's obviously something 0:01:54.160 --> 0:01:55.680 you can't buy the Gearedelli factory. 0:01:55.840 --> 0:01:57.680 Yeah no, well I bet you could. 0:01:57.800 --> 0:02:02.840 But that was the one good spot of two point 0:02:02.880 --> 0:02:06.440 four percent during the month. And what that may be 0:02:06.640 --> 0:02:09.320 related to is the weather, the flu, the fact that 0:02:09.840 --> 0:02:16.000 people were inside more than usual, and we did see 0:02:16.040 --> 0:02:20.359 a decline in food and drinking places down one point 0:02:20.440 --> 0:02:23.520 five percent, and that's that's the most discretionary of things, 0:02:24.320 --> 0:02:27.440 So it tells you maybe that people were holding back, 0:02:27.520 --> 0:02:29.920 but also, do you want to go out when it's 0:02:30.080 --> 0:02:31.280 four degrees. 0:02:31.800 --> 0:02:34.400 I Mike, yeah, I mean I don't that sometimes you 0:02:34.480 --> 0:02:36.200 have to, but you don't necessarily have to go buy 0:02:36.200 --> 0:02:38.240 a new car and look at cars on the lot 0:02:38.400 --> 0:02:40.919 when it's you know, four degrees. I think the big 0:02:41.000 --> 0:02:43.320 question a lot of people have is we continue to 0:02:43.320 --> 0:02:45.880 get more and more data that is kind of pointing 0:02:45.919 --> 0:02:48.440 to at least a pullback or maybe a slow down 0:02:48.800 --> 0:02:51.200 when it comes to the consumer and your view, how 0:02:51.320 --> 0:02:53.760 is the consumer doing? Is the consumer doing much different 0:02:54.360 --> 0:02:56.239 than we were doing just six months ago. 0:02:56.800 --> 0:02:59.320 Well, it's pretty obvious that the consumer is not in 0:02:59.400 --> 0:03:02.520 a good move. But this is the first hard data 0:03:02.600 --> 0:03:06.239 we've had on it, and it does suggest that maybe 0:03:06.320 --> 0:03:09.400 people pulled back some, but it's not enough to really 0:03:09.400 --> 0:03:12.720 give us a firm feeling on it because of the 0:03:12.760 --> 0:03:17.240 strength of the internet purchases during the month. So we've 0:03:17.240 --> 0:03:20.840 got to get some more data on that. I can 0:03:20.919 --> 0:03:25.240 tell you. The Atlanta Fed updated their GDP NOW numbers 0:03:25.240 --> 0:03:28.080 for the first time since that negative two point four 0:03:28.919 --> 0:03:31.720 earlier this month. That got everybody all excited, and they 0:03:31.760 --> 0:03:33.839 came up with negative two point one. 0:03:34.200 --> 0:03:35.760 Now they admit. 0:03:35.720 --> 0:03:40.360 This is distorted by all the gold shipment into the 0:03:40.480 --> 0:03:43.320 United States, and they ran a model on that two 0:03:43.400 --> 0:03:46.640 point four number and came up with the fact that 0:03:46.680 --> 0:03:51.480 it would be a zero point four percent gain for GDP, 0:03:51.600 --> 0:03:55.480 so essentially zero during the month if today was the 0:03:55.560 --> 0:03:59.560 end of the quarter. And Chris Low of FHN Financial 0:03:59.720 --> 0:04:02.720 ran the same model today and said, what you did 0:04:02.840 --> 0:04:06.520 up with is negative one tenth of a percent. So 0:04:07.440 --> 0:04:09.440 any way you look at it, the numbers we've had 0:04:09.600 --> 0:04:13.400 up to this point are not good. But we've got 0:04:13.880 --> 0:04:16.320 another month, two months of data to go. 0:04:16.400 --> 0:04:19.200 Really well, remind everybody what goes in we're gonna talk 0:04:19.200 --> 0:04:21.159 about the Federal Minute, but remind everybody that goes into 0:04:21.200 --> 0:04:23.400 that GDP now forecast and how it is this sort 0:04:23.440 --> 0:04:24.479 of snapshot in time. 0:04:25.000 --> 0:04:28.120 Well, they just incorporate the data as it comes out. 0:04:28.279 --> 0:04:32.360 So what we've got is January data, and now we've 0:04:32.360 --> 0:04:36.720 got February data up through the retail sales report, but 0:04:36.720 --> 0:04:41.920 there's still new home sales, existing home sales, and other 0:04:42.400 --> 0:04:46.360 things like that to come yet. So we've got also 0:04:46.400 --> 0:04:49.120 the PCE spending numbers, so there's a lot of data 0:04:49.360 --> 0:04:51.840 for February still out there, and then we got to 0:04:51.839 --> 0:04:54.960 get March data before they can give you a number 0:04:54.960 --> 0:04:59.840 that actually will resemble anything like what the GDP number is. 0:05:00.200 --> 0:05:03.440 But it doesn't suggest that the first two months of 0:05:03.480 --> 0:05:05.120 the quarter have started off well. 0:05:05.640 --> 0:05:08.840 So, Mike, in light of all of that, what are 0:05:08.880 --> 0:05:11.919 we going to get from the Fed this week? Is 0:05:11.960 --> 0:05:14.800 this going to be another one of those meetings where 0:05:14.839 --> 0:05:17.720 Powell says we're still in weight and see mode, we 0:05:17.839 --> 0:05:19.640 have to wait for that data to come in. 0:05:19.920 --> 0:05:21.839 Or is there going to be a little bit more action? 0:05:22.480 --> 0:05:25.000 You nailed it, that's what we're going to get. It's 0:05:25.000 --> 0:05:26.960 not going to be any action this time in the 0:05:27.000 --> 0:05:31.520 sense of guidance on for future rate moves. We will 0:05:31.560 --> 0:05:33.840 get a new dot plot, and my guess is it 0:05:33.880 --> 0:05:37.960 will still have two dots on there. Two rate moves 0:05:38.000 --> 0:05:40.960 this year, simply because they don't have evidence one way 0:05:41.040 --> 0:05:44.120 or another to change that. Not enough that the economy 0:05:44.240 --> 0:05:48.840 is failing to add, and not enough that inflation's coming 0:05:48.880 --> 0:05:53.920 down to subtract. So at this point, status quo is 0:05:53.960 --> 0:05:55.800 going to be the word. It'll be interesting to see 0:05:56.560 --> 0:05:58.920 what kind of economic projections they make in the Summary 0:05:59.000 --> 0:06:03.000 of Economic Projections, because last time was December, and we've 0:06:03.160 --> 0:06:06.480 obviously seen a big change in at least consumer attitude 0:06:06.520 --> 0:06:10.560 since then, but there doesn't seem to be a collapse 0:06:10.560 --> 0:06:13.080 in the labor market. So do they change unemployment, do 0:06:13.160 --> 0:06:16.880 they change GDP? And where do they think inflation is? 0:06:17.839 --> 0:06:19.840 My guess is this will be a meeting where we 0:06:19.880 --> 0:06:23.360 see very little change in almost anything they do, and 0:06:23.680 --> 0:06:26.560 they'll just go home and wait for the next one. 0:06:26.760 --> 0:06:29.679 But it does sound like it's the easiest job around. 0:06:29.720 --> 0:06:32.159 As the President said when he was running, you know, 0:06:32.200 --> 0:06:33.880 you just flip a coin and decide whether to move 0:06:33.920 --> 0:06:34.839 rates higher or lower. 0:06:35.120 --> 0:06:36.560 I'm not going to have you weigh in on that, Mic, 0:06:36.640 --> 0:06:37.400 but I do want to know. 0:06:37.800 --> 0:06:40.840 I do want to know about what the FED is 0:06:40.880 --> 0:06:42.680 dealing with now versus what they dealt with at their 0:06:42.760 --> 0:06:46.000 last meeting. Their dual mandate is certainly, you know, maximum 0:06:46.040 --> 0:06:49.240 employment and stable prices. Which would you say that they're 0:06:49.240 --> 0:06:52.000 more focused on one now than the other. 0:06:52.760 --> 0:06:54.880 They're more focused on inflation, but that's been true for 0:06:54.920 --> 0:06:57.280 a couple of meetings because the labor market has been 0:06:57.320 --> 0:07:01.000 so stable. They want to make sure that inflation continues 0:07:01.040 --> 0:07:02.839 to go down, and we're getting mixed readings on that. 0:07:03.040 --> 0:07:07.800 CPI went down, PPI went up a little bit, and 0:07:07.839 --> 0:07:12.239 then some of the all of the inputs into PCE 0:07:12.600 --> 0:07:14.840 that we have gotten from those two indicators suggests the 0:07:14.880 --> 0:07:17.840 PCE is going to go up. So you've got mixed 0:07:17.880 --> 0:07:21.800 news on what's happening with inflation. None of it suggesting 0:07:21.840 --> 0:07:24.640 that inflation is going one way or the other very quickly, 0:07:25.080 --> 0:07:26.840 but it's something they have to keep an eye on, 0:07:26.880 --> 0:07:30.880 so they'll operate as if inflation were just sticky, staying 0:07:30.920 --> 0:07:34.239 where it was, and that makes for a good reason 0:07:34.400 --> 0:07:36.400 to just leave rates unchanged. 0:07:37.960 --> 0:07:38.280 All right. 0:07:38.280 --> 0:07:40.880 Perhaps that's a perfect segue to move on to a 0:07:40.920 --> 0:07:43.239 bigger discussion about the fat or Thanks to Michael McKee, 0:07:43.240 --> 0:07:46.920 Bloomberg News International Economics and Policy correspondent, Mike, I've got 0:07:46.920 --> 0:07:49.200 plenty of time to go to the Jaredelli store and 0:07:49.360 --> 0:07:51.440 get you some chocolate on the way back from San Francisco, 0:07:51.560 --> 0:07:54.720 so we'll see what you get for Saint Patrick's Day. 0:07:54.720 --> 0:07:55.680 Appreciate you joining us. 0:07:55.640 --> 0:07:58.440 Hey, speaking to the FED drum, Powell does face that 0:07:58.520 --> 0:08:01.200 tricky task this week of both the shuring investors and 0:08:01.760 --> 0:08:04.920 the economy that remains on solid footing. Will also conveying 0:08:04.920 --> 0:08:08.960 policymakers and stand ready to step in if necessary. On that, 0:08:09.080 --> 0:08:11.960 Treasury Secretary Scott Besson was asked on Meet the Press 0:08:12.000 --> 0:08:15.320 on NBC on Sunday whether he can guarantee the American 0:08:15.360 --> 0:08:18.280 people are there that there would be no recession on 0:08:18.320 --> 0:08:19.320 President Trump's watch. 0:08:19.360 --> 0:08:20.280 Here's what he had to say. 0:08:21.520 --> 0:08:24.560 You know that there are no guarantees who would have 0:08:24.600 --> 0:08:29.120 predicted COVID, right, so I can predict that we are 0:08:29.160 --> 0:08:33.400 putting in robust policies that will be durable and could 0:08:33.440 --> 0:08:36.440 there be an adjustment because I tell you that this 0:08:36.640 --> 0:08:40.439 massive government spending that we'd had, that if that had 0:08:40.520 --> 0:08:43.800 kept going, we have to wean our country all of that. 0:08:44.040 --> 0:08:46.800 And on the other side, we are going to invigorate 0:08:46.800 --> 0:08:47.640 the private sector. 0:08:49.040 --> 0:08:51.520 That was Treasury Secretary Scott Besson on Meet the Press 0:08:51.559 --> 0:08:55.200 on Sunday. Liz McCormick is Bloomberg News Chief correspondent for 0:08:55.200 --> 0:08:58.440 Global macro Markets, and she and Jenelle Marte write about 0:08:58.520 --> 0:09:00.679 Powell's balancing act. She joins us in the Bloomberg A 0:09:00.720 --> 0:09:03.680 Business Week A studio. Liz, what is the message that 0:09:03.720 --> 0:09:05.560 Powell needs to get across this week? 0:09:06.120 --> 0:09:06.360 Yeah? 0:09:06.520 --> 0:09:08.800 First, can I say I think Mike McKee set me 0:09:08.880 --> 0:09:11.280 up for a long Day Wednesday, because every time we 0:09:11.360 --> 0:09:15.280 say nothing's going to happen, something happens. But now I 0:09:15.400 --> 0:09:19.200 never questioned his judgment, but I think, yeah, from the markets, 0:09:19.280 --> 0:09:22.079 I mean, everyone in the markets knows Chairman Pal is 0:09:22.120 --> 0:09:24.679 going to be very cautious. He's got a balancing act. 0:09:24.840 --> 0:09:26.840 He's not going to say, oh, I'm worried about the 0:09:26.880 --> 0:09:27.600 stock market. 0:09:27.600 --> 0:09:29.040 But you know, they want. 0:09:28.880 --> 0:09:31.400 To see if he will because like Mike said, of 0:09:31.400 --> 0:09:34.480 course no one expects any rate change, but the consensus 0:09:34.520 --> 0:09:37.400 seems to be that they keep that dot plot which 0:09:37.480 --> 0:09:40.920 shows two cuts as far as the last quarterly update 0:09:40.920 --> 0:09:44.079 in December for this year, that it probably stays the same, 0:09:44.440 --> 0:09:47.280 but that people in markets are thinking maybe in the 0:09:47.320 --> 0:09:49.920 press or he could give just kind of a stronger 0:09:50.040 --> 0:09:52.559 nod to something he's been saying, but just kind of 0:09:52.600 --> 0:09:56.400 more forcefully somehow that like, if things worsen, if the 0:09:56.480 --> 0:10:01.160 economy starts to show more signs of trouble, we stand 0:10:01.200 --> 0:10:03.640 ready to do whatever we need to do, meaning if. 0:10:03.480 --> 0:10:05.080 They have to cut rates a lot, they will. 0:10:06.040 --> 0:10:08.000 Of course he's said that before, but I think some 0:10:08.080 --> 0:10:11.120 in markets are saying, you know, with the ten percent 0:10:11.160 --> 0:10:14.280 correction and we're bond yield to fallen from their peaks 0:10:14.320 --> 0:10:16.840 this year, kind of that fear of recession, and some 0:10:16.960 --> 0:10:19.520 like Mike laid out at least the soft data has 0:10:19.559 --> 0:10:22.080 been a bit troublesome, especially with the survey data. 0:10:23.360 --> 0:10:25.000 That could Shairman Pal at least. 0:10:24.840 --> 0:10:27.280 Give a little bit more of a nod to, you know, 0:10:27.320 --> 0:10:28.480 don't worry, We've got this. 0:10:28.679 --> 0:10:30.280 You know, we'll take care of it if they need to. 0:10:30.559 --> 0:10:33.600 Well, well, Liz, you mentioned what's happening in the bond market, 0:10:33.679 --> 0:10:35.520 or what has happened in the bond market, but also 0:10:35.840 --> 0:10:38.880 what's happened in the equity market last time I checked. 0:10:39.400 --> 0:10:41.880 Taking you know, paying attention to a sell off in 0:10:41.880 --> 0:10:44.160 the equity market is not necessarily part of that dual 0:10:44.200 --> 0:10:47.400 mandate when it comes to inflation and stable prices. What 0:10:47.559 --> 0:10:49.360 is your view on this and to what extent the 0:10:49.400 --> 0:10:51.640 Fed actually cares about what happens in the equity market. 0:10:51.880 --> 0:10:53.280 Yeah, absolutely correct. 0:10:53.600 --> 0:10:57.959 It's that it's just financial conditions, you know, And I've seen. 0:10:57.800 --> 0:10:58.640 Some good stories. 0:10:58.679 --> 0:11:00.880 I forget all the writers they're Fromberg who wrote them 0:11:00.920 --> 0:11:05.560 about how these financial conditions bleed into they could into 0:11:05.600 --> 0:11:09.400 the real economy. When people look at, you know, their 0:11:10.280 --> 0:11:12.760 investment assets and they're going down. You could kind of 0:11:12.800 --> 0:11:15.360 stomach that for a while, but do you feel like, oh, 0:11:15.440 --> 0:11:17.280 I better keep it a little closer to the vest, 0:11:17.400 --> 0:11:19.640 you know, let me spend a little less because the 0:11:19.679 --> 0:11:22.440 money I had is you know, a fifth of what 0:11:22.559 --> 0:11:25.480 it was, you know, or went down by a fifth. 0:11:25.520 --> 0:11:28.920 Let's say that maybe people start to spend less or 0:11:28.920 --> 0:11:31.600 a little more concerned. Does it kind of bleed into 0:11:31.679 --> 0:11:34.679 because one thing about expectations, like the FED taught has 0:11:34.760 --> 0:11:37.440 laid out very clearly about like let's talk about inflation 0:11:37.559 --> 0:11:41.720 expectations that they feel like expectations can bleed into like, oh, 0:11:41.960 --> 0:11:42.960 you think inflation is. 0:11:42.960 --> 0:11:44.880 Going to get worse, so you change your behavior. So 0:11:44.920 --> 0:11:45.319 you're right. 0:11:45.360 --> 0:11:47.800 They're not gauging the stock market. That's not part of 0:11:47.840 --> 0:11:50.480 their thing. But I think someone is probably gonna ask them, 0:11:50.520 --> 0:11:53.479 like markets seem to be pricing more risk of recession? 0:11:53.600 --> 0:11:57.160 Is that a concern? But so I think that's why 0:11:57.200 --> 0:12:00.680 it has to be like a clever dance around showing 0:12:00.760 --> 0:12:03.520 of course we're watching, we're aware, we look. 0:12:03.400 --> 0:12:04.559 At financial conditions. 0:12:05.840 --> 0:12:08.760 But you know, right now our dual midate the inflation 0:12:08.880 --> 0:12:11.040 is not where they want it. They do not see 0:12:11.080 --> 0:12:13.839 a major problem in the economy the labor market. Like 0:12:13.880 --> 0:12:17.240 the Jolts data, the recent jobs data wasn't bad. They 0:12:17.280 --> 0:12:19.520 really don't have the data, like Mike was saying, to 0:12:19.600 --> 0:12:21.960 really kind of do anything, you know. 0:12:22.040 --> 0:12:23.200 Anna Wong reached out. 0:12:23.080 --> 0:12:25.600 To me on that story to say, hey, listen, Liz, 0:12:25.600 --> 0:12:27.320 I don't think the Fed's going to do that, you know, 0:12:27.440 --> 0:12:30.160 So I never kind of cross her. So she's saying 0:12:30.200 --> 0:12:32.440 she doesn't think Pal's going to sound any different. So 0:12:32.760 --> 0:12:36.160 we'll watch Anna, You're probably right, but we'll say, you know. 0:12:36.320 --> 0:12:38.680 Well, Liz, do you think that Powell does have a 0:12:38.720 --> 0:12:42.680 more difficult job this week trying to convey that balancing 0:12:42.720 --> 0:12:43.880 act just because of. 0:12:43.880 --> 0:12:45.280 What's happened in markets. 0:12:45.520 --> 0:12:48.160 Yeah. I think it's gotten a little bit worse in markets, right, 0:12:48.240 --> 0:12:51.280 So he knows because people get concerned, and I think 0:12:51.280 --> 0:12:53.640 he always wants to talk to main street, right, you know, 0:12:53.800 --> 0:12:56.120 not just he doesn't care about investors and how they're 0:12:56.120 --> 0:12:58.960 doing in positions and losses. But it's main street if 0:12:58.960 --> 0:13:02.040 they're worried about oh, you know, it's the economy going 0:13:02.080 --> 0:13:02.680 to get worse. 0:13:02.800 --> 0:13:03.000 You know. 0:13:03.520 --> 0:13:05.920 We hear of all these job cuts from DOGE and 0:13:06.080 --> 0:13:09.480 companies saying they're kind of you know, hiring less and 0:13:09.640 --> 0:13:11.960 they start to worry and their spending habits change. So 0:13:12.000 --> 0:13:14.480 I think he's always trying to like maybe he'll show 0:13:14.520 --> 0:13:15.600 up on sixty minutes one. 0:13:15.520 --> 0:13:17.120 Of these days. It's usually when he's. 0:13:16.920 --> 0:13:19.679 Talking to main Street, but to say, like, you know, 0:13:19.760 --> 0:13:23.600 you know, inflation is top of mind. Inflation hurts everyone, 0:13:23.640 --> 0:13:25.880 he always says, but that you know, he's aware. And 0:13:25.960 --> 0:13:28.559 if it's you know, starts to bleed into the real economy, 0:13:28.600 --> 0:13:31.240 there's a lot they can do right now, you know, 0:13:31.360 --> 0:13:34.079 just standing pat is the best policy. He doesn't want 0:13:34.120 --> 0:13:36.680 to weed into politics, right so he said, you know, 0:13:37.040 --> 0:13:38.560 you know, we're looking at these policies. 0:13:38.600 --> 0:13:40.440 They don't know exactly like the market. 0:13:40.880 --> 0:13:43.560 Some of the tariffs have been laid out, others haven't, 0:13:43.640 --> 0:13:46.120 so they don't exactly know what you know, how long 0:13:46.240 --> 0:13:47.199 the degree. 0:13:46.960 --> 0:13:48.800 And so they're starting to try to model that. 0:13:48.880 --> 0:13:50.800 But you kind of can't until you you know, we 0:13:50.840 --> 0:13:53.600 have April second coming with President Trump laying out a 0:13:53.640 --> 0:13:54.200 new round. 0:13:54.320 --> 0:13:56.040 So I think, like Neil. 0:13:55.840 --> 0:13:58.240 Judas says, they don't want to be the story this week, 0:13:58.280 --> 0:14:01.000 that doesn't want to be the story. So I think 0:14:01.120 --> 0:14:03.120 Chairman Powell will have a lot of notes and he's 0:14:03.120 --> 0:14:04.720 going to have a lot of scripts that he's. 0:14:04.559 --> 0:14:05.520 Going to try to stick to. 0:14:06.360 --> 0:14:08.240 But yeah, I think it's gotten a little harder since 0:14:08.280 --> 0:14:11.120 he talked last. Because you know, you're you're an equity 0:14:11.160 --> 0:14:14.280 wizard over me. The market is a little bit worrisome. 0:14:14.440 --> 0:14:17.120 Yeah, we've seen, you know, a significant drop since the 0:14:17.200 --> 0:14:20.120 last bed meeting. You know, you mentioned inflation. That's something 0:14:20.160 --> 0:14:23.320 that obviously Main Street cares a lot about. But from 0:14:23.360 --> 0:14:26.120 your angle, you're watching the bond market. What is the 0:14:26.120 --> 0:14:29.160 bond market telling us about expectations for inflation. 0:14:29.320 --> 0:14:32.520 Yeah, so bond market break even inflation levels. If you 0:14:32.600 --> 0:14:34.800 look at them, they're not really out of bounds. I 0:14:35.320 --> 0:14:37.440 keep looking to at like the Fed likes the long 0:14:37.520 --> 0:14:40.040 run ones that smooth things out. If you look at 0:14:40.040 --> 0:14:42.520 the so called five year five year forward, it's going 0:14:42.560 --> 0:14:45.800 to like five year inflation five years from now. That 0:14:45.960 --> 0:14:49.360 is not at a troublesome level, so I think. But 0:14:49.480 --> 0:14:51.960 the University of Michigan, which was a survey of course 0:14:52.200 --> 0:14:55.680 that was really the long run ones, really really jolted higher. 0:14:55.760 --> 0:14:56.680 They don't like to see that. 0:14:56.720 --> 0:14:59.080 But I don't think the bond market is screaming inflation 0:14:59.200 --> 0:15:02.600 concern either, So you know, they do have some room 0:15:02.640 --> 0:15:06.560 to wait and we know when if they need to move, 0:15:06.600 --> 0:15:07.440 they can go fast. 0:15:07.600 --> 0:15:09.560 Right, So I think he feels like, hey, we can 0:15:09.600 --> 0:15:09.880 do this. 0:15:10.440 --> 0:15:12.840 But I don't think the bomb market screaming, especially because 0:15:12.880 --> 0:15:15.359 yields are coming down, kind of leaning on the growth concerns. 0:15:16.120 --> 0:15:19.440 All right, well, Liz McCormick, Bloomberg News, Chief correspondent for 0:15:19.520 --> 0:15:20.680 Global macro. 0:15:20.520 --> 0:15:21.840 Markets, thank you so much. 0:15:21.840 --> 0:15:23.960 As always, we'll be waiting for that FED meeting coming 0:15:24.000 --> 0:15:24.360 up soon. 0:15:25.160 --> 0:15:28.840 You're listening to the Bloomberg Business Week podcast. Catch us 0:15:28.920 --> 0:15:31.920 live weekday afternoons from two to five these during Listen 0:15:31.960 --> 0:15:35.520 on Applecarplay and Android Auto with the Bloomberg Business app, 0:15:35.680 --> 0:15:37.040 or watch us live on. 0:15:37.000 --> 0:15:39.200 YouTube and videos. 0:15:39.280 --> 0:15:41.400 Jensen Wong looks like he's on top of the world. 0:15:41.720 --> 0:15:44.760 He's held babies, He's signed countless autographs. He's thrown out 0:15:44.760 --> 0:15:47.920 first pitches at MLB games. He's led tech conference crowds 0:15:47.920 --> 0:15:50.520 in chance. He's appeared on stage with CEOs from the 0:15:50.560 --> 0:15:54.120 likes of Goldman, Sachs, Meta Platform, Salesforce, and more. He's 0:15:54.160 --> 0:15:57.120 also chatted privately at the White House with President Donald Trump. 0:15:57.360 --> 0:15:59.720 Oh yeah, he's also one of the wealthiest people in 0:15:59.840 --> 0:16:03.400 the world. Yet he's well aware that corporate fortunes can change, 0:16:03.640 --> 0:16:05.520 and he's watched them do with brutal speed in the 0:16:05.520 --> 0:16:08.440 semiconductor industry. Here's a history of booms and bus for 0:16:08.480 --> 0:16:12.320 tech infrastructure companies because their products tend to become commoditized, 0:16:12.800 --> 0:16:15.720 so right. Joshua Brustine and Ian King for Bloomberg Business Week. 0:16:15.800 --> 0:16:19.320 Joshua is a Bloomberg BusinessWeek Technology editor. Indian King is 0:16:19.320 --> 0:16:22.240 Bloomberg News at US Semiconductor and networking reporter. Check out 0:16:22.240 --> 0:16:24.960 their story on the Bloomberg Terminal and at Bloomberg dot 0:16:24.960 --> 0:16:28.560 com slash at BusinessWeek. Joshua joins our program this afternoon 0:16:28.880 --> 0:16:31.520 in New York. Ian is here in our San Francisco bureau. 0:16:32.000 --> 0:16:34.560 Ian King, I want to start with you. What do 0:16:34.560 --> 0:16:36.200 you think keeps Jensen Wong up at night? 0:16:36.240 --> 0:16:36.640 Right now? 0:16:38.080 --> 0:16:39.560 What's always kept him up at night? 0:16:39.640 --> 0:16:39.800 Right? 0:16:39.840 --> 0:16:42.040 I mean? He you know, he tries to run this 0:16:42.120 --> 0:16:45.200 company like all of the cliches are worth thirty days 0:16:45.240 --> 0:16:48.200 away from going out of business. But that really really 0:16:48.280 --> 0:16:50.560 drives him. What everybody thinks is, oh, he's the top 0:16:50.560 --> 0:16:52.400 of the world. But you've got to remember this company 0:16:52.640 --> 0:16:55.600 spent most of its career, it's thirty years in existence. 0:16:55.880 --> 0:16:59.840 Under the shadow of intel, under this permanent threat that 0:17:00.040 --> 0:17:02.280 what it does is going to be taken away. And 0:17:02.320 --> 0:17:04.919 that's really his mentality. Yes, this is great, this is 0:17:04.960 --> 0:17:08.719 the moment, but he's already looking for the next thing. 0:17:08.760 --> 0:17:11.000 He's already looking to extend that run. And he's always 0:17:11.200 --> 0:17:14.119 already looking at what might go wrong. That's who he 0:17:14.280 --> 0:17:15.480 is and that's how he does things. 0:17:16.440 --> 0:17:20.800 Joshua, describe what drives the Nvidia CEO, because you guys 0:17:20.800 --> 0:17:24.320 have this great line in the BusinessWeek story. Wong's tendency, 0:17:24.680 --> 0:17:27.560 even when he's away from the office and noticeably tipsy, 0:17:27.920 --> 0:17:29.520 is to always be closing. 0:17:29.880 --> 0:17:30.680 Talk about that more. 0:17:31.680 --> 0:17:35.439 Yeah, Jensen Wong is always referred to as Jensen is 0:17:35.480 --> 0:17:38.239 a real sort of force of nature personality. He's very 0:17:38.240 --> 0:17:43.800 intense and he's always sort of evangelizing for right now, 0:17:43.800 --> 0:17:46.040 it's for artificial intelligence and the things that you'd really 0:17:46.119 --> 0:17:48.200 need a lot of invidio chips for. And so you'll 0:17:48.240 --> 0:17:51.680 see him constantly telling you why the future is going 0:17:51.720 --> 0:17:55.680 to revolve around these enormous data centers full of invidio chips. 0:17:56.840 --> 0:18:00.080 And Ian talk a little bit more about just the 0:18:00.160 --> 0:18:04.640 expansion here. What is the next phase of growth? Ian 0:18:04.840 --> 0:18:06.000 for this company. 0:18:07.040 --> 0:18:11.159 Well, the expansion is AI has to be everywhere for 0:18:11.200 --> 0:18:14.240 this to work. Right now, you have a very small 0:18:14.280 --> 0:18:17.200 group of companies, whether it's Microsoft or a as, that 0:18:17.280 --> 0:18:19.920 are buying the majority of the gear, putting the majority 0:18:19.960 --> 0:18:24.240 of these capabilities in place. What really needs to happen 0:18:24.480 --> 0:18:26.080 is that it has to get out there in the wild. 0:18:26.119 --> 0:18:28.240 It has to get out there in the economy. Companies 0:18:28.320 --> 0:18:31.000 have to use it, consumers have to use it. It has 0:18:31.040 --> 0:18:32.880 to be part of factories, It has to be part 0:18:32.880 --> 0:18:34.840 of vehicles, It has to be part of everything to 0:18:35.119 --> 0:18:38.200 justify that massive spend that we've seen and to keep 0:18:38.240 --> 0:18:39.359 that massive spend going. 0:18:39.880 --> 0:18:43.760 Is it still, though ian about AI inference and training 0:18:43.800 --> 0:18:46.520 AI models or is it about something bigger for in 0:18:46.640 --> 0:18:49.800 video moving forward? Is it about the driverless cars? Is 0:18:49.840 --> 0:18:52.840 it about humanoid robots? Is it about that next gen 0:18:52.920 --> 0:18:55.720 thing that Jensen's watching that we don't know about yet. 0:18:56.000 --> 0:19:00.760 Well, you refer to training and inference. Some experts will 0:19:00.800 --> 0:19:03.560 tell you that the training, the actual creation of the 0:19:04.000 --> 0:19:07.439 core of AI has kind of happened or is close 0:19:07.480 --> 0:19:10.400 to being sort of complete. What we need now are 0:19:10.520 --> 0:19:14.239 models that are more specific and tightly focused, models that 0:19:14.320 --> 0:19:17.120 can drive your car models that can tell you factory 0:19:17.200 --> 0:19:19.240 robots where to go and not to bang into each other, 0:19:19.600 --> 0:19:21.520 and to do things in the most efficient way. That 0:19:22.040 --> 0:19:24.600 what we need, and that is where inference comes in, 0:19:24.640 --> 0:19:27.880 because then you have these more specific models that say, 0:19:28.119 --> 0:19:29.959 find the way around a factory. They have to know 0:19:30.359 --> 0:19:33.000 then and infer in the moment, Hey there's something coming 0:19:33.040 --> 0:19:35.240 towards me, I need to stop, or hey there's a 0:19:35.280 --> 0:19:37.439 human being there coming around the corner, I need to 0:19:37.440 --> 0:19:41.160 not run them over. That's what we'll get into now. 0:19:41.359 --> 0:19:43.320 Right now, a lot of AI out in the wild 0:19:43.400 --> 0:19:46.360 is kind of the chatbots. It's reacting to a very 0:19:46.560 --> 0:19:51.199 limited set of stimulus text or voice. And what we 0:19:51.240 --> 0:19:54.520 need is AI to be inferring more meaning from the 0:19:54.520 --> 0:19:56.880 world around it, and that's still a work in progress. 0:19:58.240 --> 0:20:03.560 Joshua, what is physical AI and how is Nvidia expanding 0:20:03.640 --> 0:20:05.800 into it, because you guys mentioned that a number of 0:20:05.840 --> 0:20:07.080 times in your article. 0:20:07.880 --> 0:20:12.240 Sure, physical AI is basically, instead of chatbots, AI that's 0:20:12.240 --> 0:20:14.520 operating in the real world. The most obvious example of 0:20:14.560 --> 0:20:17.920 it right now is autonomous vehicles, something that in Vidia 0:20:18.000 --> 0:20:21.200 has been working on for a decade and has actually 0:20:21.240 --> 0:20:24.240 said would be solved many years ago, but it's also 0:20:24.400 --> 0:20:30.000 looking at robots, automated factories, basically anything where the AI 0:20:30.119 --> 0:20:33.760 is moving something around the world and in video. Is 0:20:33.840 --> 0:20:37.840 very bullish on this because it needs as many applications 0:20:37.840 --> 0:20:40.480 as possible, and if it can unlock factories and cars 0:20:40.480 --> 0:20:42.880 and everything, that's a lot bigger than just doing something 0:20:42.920 --> 0:20:43.480 on the internet. 0:20:44.840 --> 0:20:47.280 Joshua, You've been covering technology for years, and I'm just 0:20:47.320 --> 0:20:52.520 curious contextually for you to describe this moment to us 0:20:52.600 --> 0:20:56.760 as a technology editor. Is this a bigger deal than 0:20:56.800 --> 0:20:59.199 the rise of the browser in the nineties, Is it 0:20:59.200 --> 0:21:02.200 bigger than the rise of social media in the early 0:21:02.240 --> 0:21:04.760 two thousands, Is it on par with the rise of mobile? 0:21:04.840 --> 0:21:04.919 Like? 0:21:04.960 --> 0:21:07.040 Where is this in your view as a tech editor. 0:21:08.280 --> 0:21:10.320 I think what we're looking at right now is that 0:21:10.480 --> 0:21:14.080 we've seen the sort of laying the groundwork phase of 0:21:14.119 --> 0:21:19.240 the artificial intelligence intelligence era, and now we're waiting to 0:21:19.359 --> 0:21:21.560 see that this is going to be the size of 0:21:21.600 --> 0:21:23.360 social media, that this is going to be the size 0:21:23.400 --> 0:21:26.679 of the browser, that the vision that in Nvidia and 0:21:26.720 --> 0:21:29.159 other AI companies have laid out is actually going to 0:21:29.240 --> 0:21:32.600 sweep the economy with the force that they say it's 0:21:32.640 --> 0:21:34.600 going to, or if it's going to be something more modest, 0:21:34.920 --> 0:21:38.159 and as Ian said, considering how valuable in Vidia is, 0:21:38.200 --> 0:21:40.760 this can't just be a pretty big deal. It has 0:21:40.800 --> 0:21:44.000 to be an enormous deal for Nvidia to justify the 0:21:44.040 --> 0:21:44.920 amount of money it's worth. 0:21:45.000 --> 0:21:48.480 Right now, Ian, I imagine that you know, while you 0:21:48.560 --> 0:21:52.960 were writing this, the idea of deep Seek and other 0:21:53.040 --> 0:21:57.560 competitors came up in your reporting process. Can you talk 0:21:57.600 --> 0:22:02.000 a little bit more about just how in Vidia is 0:22:02.320 --> 0:22:08.080 reacting to the competition and these companies that are saying 0:22:08.080 --> 0:22:10.000 that they can do AI cheaper. 0:22:11.119 --> 0:22:13.720 Yeah, I mean, it's important to note that for the 0:22:13.800 --> 0:22:16.520 fundamentals of what's going on, in Video really doesn't have 0:22:16.560 --> 0:22:19.119 any competition right now. If you want to train a 0:22:19.200 --> 0:22:21.520 large language model, you're going to do it on in 0:22:21.640 --> 0:22:25.040 Video's gear. At the same time, the enormous expense of 0:22:25.240 --> 0:22:29.120 doing that, and then the expense or the possible expense 0:22:29.119 --> 0:22:31.400 of deploying that in the real world has got everybody 0:22:31.400 --> 0:22:33.480 thinking is there a better way to do this? Is 0:22:33.480 --> 0:22:35.560 there a faster way to do this? And Deep Seek 0:22:35.680 --> 0:22:39.600 is arguably the most poignant example so far that raises 0:22:39.680 --> 0:22:42.200 the question, perhaps we can do this more cheaply, or 0:22:42.200 --> 0:22:45.000 perhaps we can sort of diffuse a little bit of 0:22:45.440 --> 0:22:47.639 what we've already done, and you snap that off and 0:22:47.760 --> 0:22:50.760 use that in a cheaper way. So there's so much energy, 0:22:50.760 --> 0:22:53.800 there's so much at stake here, and I think is 0:22:53.840 --> 0:22:57.119 really an example of that. And in Video's reaction was great, 0:22:57.280 --> 0:22:59.000 this makes it cheaper. This means it's going to be 0:22:59.000 --> 0:23:01.119 everywhere at all, too good for us. And that's a 0:23:01.160 --> 0:23:05.640 typical Jensen response. You know, don't deny reality, don't look back, 0:23:05.720 --> 0:23:06.320 look forward. 0:23:06.800 --> 0:23:09.080 Yeah, as you right, and as you and Joshua right. 0:23:09.119 --> 0:23:11.600 There's this history of booms and boss for the tech yeah, 0:23:11.680 --> 0:23:14.840 infrastructure companies because their products tend to become commoditized in 0:23:15.400 --> 0:23:17.240 that's not happening yet within video. 0:23:18.080 --> 0:23:21.840 Yeah, and yet is is a very powerful word in 0:23:21.880 --> 0:23:25.480 this sentence. Everybody is reacting like, oh, in videos the 0:23:25.560 --> 0:23:27.880 king of the world, and they've been, you know, at 0:23:27.880 --> 0:23:30.439 this for years they kind of have. But look at 0:23:30.480 --> 0:23:34.760 the numbers, right, only like three years ago, gaming graphics 0:23:34.840 --> 0:23:36.960 chips were the biggest part of their revenue. This has 0:23:36.960 --> 0:23:40.119 happened really really quickly and very dramatically. There's been a 0:23:40.160 --> 0:23:43.320 massive transfer of wealth. The key question is can that 0:23:43.359 --> 0:23:47.240 transfer of wealth become self sustaining and that's what they're 0:23:47.280 --> 0:23:50.359 working on right This This isn't an Intel that's been 0:23:50.359 --> 0:23:53.320 around for decades and in this dominant position. This is 0:23:53.600 --> 0:23:57.040 something that's happened really quickly and is a very quickly 0:23:57.080 --> 0:23:58.080 evolving situation. 0:23:58.840 --> 0:24:03.359 Joshua and Videous stock is down ten percent year today. 0:24:04.160 --> 0:24:07.439 It's obviously up a ton in the last few years. 0:24:07.480 --> 0:24:10.560 But what do you think Jensen thinks about the recent 0:24:10.640 --> 0:24:12.080 moves in this company or. 0:24:12.080 --> 0:24:13.920 Does he not think about that stock price at all. 0:24:15.000 --> 0:24:17.560 I'm sure he thinks about the stock price, because everyone 0:24:17.600 --> 0:24:19.440 in the world seems to think about the video stock price. 0:24:19.560 --> 0:24:21.920 You know, there's a lot of headwinds that Jensen Wong 0:24:21.960 --> 0:24:24.560 has been well aware of for quite some time, and 0:24:24.600 --> 0:24:27.640 they're all coming to a head, you see, with tariffs 0:24:27.640 --> 0:24:32.160 and other barriers on international trade, including a US China 0:24:32.200 --> 0:24:34.880 trade war that could have national security implications that will 0:24:34.880 --> 0:24:39.080 restrict chips specifically. I think the rise of deep Seek, 0:24:39.119 --> 0:24:41.719 while he will say that's a great thing, also shows 0:24:41.760 --> 0:24:45.280 that maybe some of the assumptions about how many chips 0:24:45.280 --> 0:24:47.960 are going to be needed for each subsequent step in 0:24:48.000 --> 0:24:50.639 the AI development. You know, maybe those assumptions aren't as 0:24:50.680 --> 0:24:53.160 ironclad as they thought, and That is why you see 0:24:53.200 --> 0:24:55.960 him sprinting ahead and trying to get to the next phase, 0:24:56.280 --> 0:24:59.000 to have these applications start to bear fruit and to 0:24:59.080 --> 0:25:01.920 have a new story to tell, to keep to keep 0:25:01.960 --> 0:25:03.560 that moving, that momentum moving. 0:25:05.119 --> 0:25:09.360 And to what Josh said there, if Jensen has a genius, 0:25:09.480 --> 0:25:12.960 it's it's his ability to never sit still, to always 0:25:12.960 --> 0:25:15.359 be absorbing all of the inputs. So you mentioned the 0:25:15.359 --> 0:25:20.119 stock price, whatever is bugging investors, he hears it, and 0:25:20.160 --> 0:25:22.840 then when you go into the next investor presentation, when 0:25:22.880 --> 0:25:25.480 you go into the next earnings, he's already moved beyond it. 0:25:25.520 --> 0:25:28.320 In the conversation, he integrates a bit of the concern 0:25:28.400 --> 0:25:31.520 such as deepseek, into his presentation, into what he's saying, 0:25:31.560 --> 0:25:33.800 into the points he makes over and over again. And 0:25:34.119 --> 0:25:36.640 that's true. Whether it's regarding the stock price, so that's true, 0:25:36.640 --> 0:25:41.240 whether it's regarding the technology that he's always absorbing that information. 0:25:41.960 --> 0:25:44.919 That's where his genius lies. Whether he's ultimately right or not, 0:25:44.920 --> 0:25:46.919 whether it plays out like he says it's going to, 0:25:47.160 --> 0:25:50.119 that's another thing. But what we wanted to convey in 0:25:50.160 --> 0:25:52.359 this story as much as anything else, is the level 0:25:52.400 --> 0:25:56.000 of intensity being brought by somebody who isn't doing a 0:25:56.080 --> 0:25:56.760 victory lap. 0:25:57.359 --> 0:25:59.719 So Joshua, how does he think it's going to play out? 0:25:59.760 --> 0:26:01.520 How does Jensen think this is going to play out? 0:26:02.800 --> 0:26:05.760 He thinks, Hey, it's going to be everywhere He's you know, 0:26:05.840 --> 0:26:07.600 he will tell you that the robots are going to 0:26:07.600 --> 0:26:09.760 be here. We've been saying that it's going to take 0:26:10.080 --> 0:26:12.399 however long, but that this is the year that the 0:26:12.840 --> 0:26:15.840 that the car problem is solved, and soon you'll see 0:26:16.280 --> 0:26:19.680 so many autonomous cars on the streets that healthcare will 0:26:19.680 --> 0:26:22.720 be over overhauled. You know, he's there giving you the 0:26:22.720 --> 0:26:25.080 bulls case if you listen, and you know whether he 0:26:25.359 --> 0:26:27.280 believes that deep in his soul, like, we don't know, 0:26:27.359 --> 0:26:29.760 but he will make the most convincing case possible. 0:26:31.080 --> 0:26:32.800 Ian, I just want to let you wrap it up 0:26:33.040 --> 0:26:36.840 on this what we have you changing subjects very briefly. 0:26:37.200 --> 0:26:38.520 Intel has just been on a tear. 0:26:38.800 --> 0:26:40.600 We can't let you go without just giving us thirty 0:26:40.640 --> 0:26:42.639 seconds on Intel and it's new CEO. 0:26:43.200 --> 0:26:45.240 Yeah, we have a new CEO. But we don't know 0:26:45.280 --> 0:26:47.120 what he's going to do. We don't know whether he's 0:26:47.200 --> 0:26:49.840 the breakup guy who's going to preside over the end 0:26:49.880 --> 0:26:53.200 of Intels exists or whether he's the guy who's going 0:26:53.240 --> 0:26:55.800 to take the existing plan and just make it into 0:26:55.880 --> 0:26:59.080 a better plan or better execute it. Until we know that, 0:26:59.119 --> 0:27:00.359 we don't know which way they go. 0:27:00.640 --> 0:27:03.240 Well, investors are should be bet big on him, because 0:27:03.520 --> 0:27:05.159 the shares of that company have just been on a 0:27:05.200 --> 0:27:07.560 tear since that was announced. A really great story, and 0:27:07.560 --> 0:27:10.640 really appreciate you both of you joining us. Joshua Brustein 0:27:10.840 --> 0:27:14.680 and Ian King writing for Bloomberg A BusinessWeek about Nvidia 0:27:14.760 --> 0:27:17.200 and Jensen Wong. Of course, a big event in Nvidia 0:27:17.320 --> 0:27:20.760 GtC happening this week in northern California'd be sure to 0:27:20.840 --> 0:27:22.520 check out our coverage. You can do that at Bloomberg 0:27:22.520 --> 0:27:27.280 dot com and of course on the Bloomberg terminal as well. 0:27:27.440 --> 0:27:31.120 This is the Bloomberg Business Week Podcast. Listen live each 0:27:31.119 --> 0:27:34.560 weekday starting at two pm Eastern on Applecarplay and Android 0:27:34.560 --> 0:27:37.600 Auto with the Bloomberg Business app. You can also listen 0:27:37.680 --> 0:27:40.960 live on Amazon Alexa from our flagship New York station, 0:27:41.520 --> 0:27:44.160 Just say Alexa Play Bloomberg eleven thirty. 0:27:45.160 --> 0:27:45.320 Well. 0:27:45.359 --> 0:27:48.200 A cyber attack last week on x of course elon 0:27:48.280 --> 0:27:52.440 Musk social media platform. It was reportedly caused by insufficiently 0:27:52.440 --> 0:27:55.439 protected servers that were targeted by a distributed denial of 0:27:55.480 --> 0:28:00.200 service attack, in other words DDoS attack. Cybersecurity analysts say 0:28:00.200 --> 0:28:03.199 the attack was possible because X's origin servers were not 0:28:03.240 --> 0:28:06.359 shielded behind tech that blocks do DOOS attacks, making them 0:28:06.440 --> 0:28:11.159 vulnerable to attack. Now pro Palestinian activist group called Darkstorm 0:28:11.200 --> 0:28:15.520 Team took responsibility responsibility for the attack without providing any evidence. 0:28:15.720 --> 0:28:18.560 Bloomberg News wasn't able to independently verify the group's claims, 0:28:18.560 --> 0:28:21.160 and representatives from X did not respond to a request 0:28:21.160 --> 0:28:25.400 for comment. It does show, though, that even the company 0:28:25.440 --> 0:28:28.679 owned by the wealthiest person in the world is vulnerable 0:28:29.119 --> 0:28:31.119 in this day and age. For more, we bring in 0:28:31.240 --> 0:28:34.720 Wendy Whitmore, senior vice president at Palo Alto Networks, where 0:28:34.760 --> 0:28:37.439 she works with businesses to defend them from cyber threats 0:28:37.480 --> 0:28:41.480 think ransomware, state sponsored espionage, and more. Wendy joins us 0:28:41.480 --> 0:28:43.880 from the Bloomberg at BusinessWeek Studio. Wendy, good to have 0:28:43.920 --> 0:28:47.360 you back with us. Give us a big picture here 0:28:47.040 --> 0:28:51.400 where you are, where we are versus the bad actors. 0:28:51.720 --> 0:28:55.040 Are we still at least one step ahead of them. 0:28:55.520 --> 0:28:57.880 Well, so, I think the story you presented is a 0:28:57.920 --> 0:29:00.600 great example of what we're seeing, which at high level 0:29:01.080 --> 0:29:05.680 is the increase in speed, scale, and sophistication from attackers worldwide. 0:29:06.200 --> 0:29:09.120 There's nation state activity which we've continued to see a 0:29:09.160 --> 0:29:12.920 massive increase in. And then on the cyber criminal side, 0:29:13.040 --> 0:29:16.400 what we're seeing is largely what you mentioned, so focus 0:29:16.520 --> 0:29:21.440 on disruption, right, attackers intentionally wanting to disrupt business operations, 0:29:21.680 --> 0:29:24.080 to do it in a way that's very visible that 0:29:24.560 --> 0:29:29.000 you know causes disruption to an end consumer. And oftentimes 0:29:29.000 --> 0:29:30.840 they want to do this because they have a higher 0:29:30.920 --> 0:29:34.280 likelihood of commanding some sort of payment in return. Clearly 0:29:34.320 --> 0:29:37.760 wasn't happened in your story last week, but that certainly 0:29:37.840 --> 0:29:40.600 is often the intent and very consistent with what we're seeing. 0:29:41.680 --> 0:29:41.840 Wen. 0:29:41.880 --> 0:29:45.560 Do you work specifically with businesses to defend them against 0:29:45.680 --> 0:29:50.840 these cyber threats? What do the cyber attackers really want. 0:29:50.640 --> 0:29:53.080 Out of businesses? Do you see a pattern. 0:29:52.760 --> 0:29:55.440 In terms of, like, I guess, the biggest trend in 0:29:55.520 --> 0:29:57.760 terms of these what these hackers actually want. 0:29:58.320 --> 0:30:01.800 The biggest trend is unfortunately still that focus on commanding 0:30:01.840 --> 0:30:04.640 a return of payment. So oftentimes, you know, if it's 0:30:04.640 --> 0:30:07.280 a cyber criminal, they're looking to how can I generate 0:30:07.320 --> 0:30:10.800 the light the highest payment in return for the attack 0:30:10.840 --> 0:30:13.800 that I've provoked. So they're going to take every avenue 0:30:13.840 --> 0:30:16.360 to do that, whether it's extorting the company, it's causing 0:30:16.400 --> 0:30:21.000 reputational damage, causing actual operational disruptions. We've seen that in 0:30:21.040 --> 0:30:24.920 the hospitality industry and healthcare, in technology as well, and 0:30:25.000 --> 0:30:26.720 now you just saw that, you know, in social media 0:30:26.920 --> 0:30:28.240 companies last week. 0:30:29.280 --> 0:30:30.240 When they hew vulnerable. 0:30:30.400 --> 0:30:33.080 You know, we often talk about companies in the context 0:30:33.120 --> 0:30:38.280 of being vulnerable to hackers or toward malicious actors. How 0:30:38.360 --> 0:30:41.000 vulnerable though, is the US government in your view? 0:30:42.560 --> 0:30:45.200 Well, you know, I think you're hitting on a fundamental 0:30:45.560 --> 0:30:49.520 premise here, which is cybersecurity really is national security today. 0:30:49.760 --> 0:30:52.600 So I think as a country, we're certainly well positioned. 0:30:52.600 --> 0:30:56.080 We've got a lot of money in proactive defense and 0:30:56.160 --> 0:30:59.760 certainly in the ability to detect quickly when something is amiss. 0:31:00.160 --> 0:31:04.000 We're seeing more and more organizations, certainly including the federal government, 0:31:04.640 --> 0:31:08.520 move towards more proactive investment in security. So looking to 0:31:08.640 --> 0:31:11.480 invest on the front end, whether than waiting until something 0:31:11.520 --> 0:31:16.080 occurs on the back end, and really having that visibility 0:31:16.120 --> 0:31:18.680 to one central location is critical to be able to 0:31:18.680 --> 0:31:22.280 make decisions quickly, analyze what's going on and then get answers. 0:31:22.880 --> 0:31:27.640 What does investment in cybersecurity look like from a business angle? 0:31:27.920 --> 0:31:33.239 Is it companies training employees about safe digital practices or 0:31:33.240 --> 0:31:35.560 are there actual pieces of infrastructure and. 0:31:35.520 --> 0:31:37.320 Software that these companies are investing in. 0:31:37.680 --> 0:31:40.160 Yeah, it really is both, right. So one of the 0:31:40.280 --> 0:31:43.000 areas we specialize in at Palaoto Networks is just the 0:31:43.040 --> 0:31:46.680 ability to have a platform that enables that central visibility. 0:31:46.720 --> 0:31:49.520 So that's investment in technology where you can get answers 0:31:49.560 --> 0:31:53.880 and cloud endpoint and the network. But the employment, the 0:31:53.920 --> 0:31:56.600 training employees piece is so critical because all of these 0:31:56.600 --> 0:32:01.960 attacks are successful because employees are successfully you know, taken 0:32:02.000 --> 0:32:04.440 advantage of. So either their credentials are stolen, maybe it's 0:32:04.480 --> 0:32:07.520 a help desk that's targeted. With the onset of AI. Now, 0:32:08.120 --> 0:32:11.680 with generative AI in particular, that human piece has become 0:32:11.800 --> 0:32:14.840 so real and so tangible, and the barriers that used 0:32:14.880 --> 0:32:18.000 to exist, like challenges in language for example, that doesn't 0:32:18.000 --> 0:32:20.400 exist now because these attackers are able to use jen 0:32:20.440 --> 0:32:23.800 AI to facilitate and automate so many of those attacks 0:32:23.800 --> 0:32:25.240 and do them in a realistic way. 0:32:26.040 --> 0:32:28.479 Okay, So that's what really concerns me, and we've all 0:32:28.520 --> 0:32:33.840 seen the stories of people being misrepresented, or you know, 0:32:33.880 --> 0:32:37.160 you have a family member that's called and they say 0:32:37.080 --> 0:32:39.920 they're being told that one of their loved ones is 0:32:39.960 --> 0:32:42.640 in jail and needs money or something like that. For years, 0:32:42.640 --> 0:32:45.640 it was pretty easy to identify that that wasn't real. 0:32:46.360 --> 0:32:48.360 But I think those days are behind us. 0:32:49.920 --> 0:32:54.080 Agreed, It's very concerning. So from a business standpoint, the 0:32:54.160 --> 0:32:57.000 reality is we have to fight AI with AI. So 0:32:57.120 --> 0:33:00.440 while attackers have leveraged AI to accelerate their tax, to 0:33:00.480 --> 0:33:04.440 automate them to make them faster at scale, the also 0:33:04.480 --> 0:33:07.520 the reality as businesses have invested in AI, and if 0:33:07.560 --> 0:33:09.920 you haven't, then you need to in the lens that 0:33:10.000 --> 0:33:12.080 you have to automate your defenses. You've got to be 0:33:12.080 --> 0:33:15.080 able to detect very quickly and rapidly so that you 0:33:15.080 --> 0:33:18.240 can make decisions to contain the spread of an attack 0:33:18.280 --> 0:33:19.040 in your environment. 0:33:19.680 --> 0:33:21.720 Well, okay, so how does that? How does that work? 0:33:21.760 --> 0:33:22.000 Though? 0:33:22.480 --> 0:33:25.280 If you're an individual and you're not a business, how 0:33:25.280 --> 0:33:27.960 does that work? If you know, how can my parents 0:33:27.960 --> 0:33:31.880 protect themselves or somebody's relatives, or how can we protect ourselves? 0:33:32.480 --> 0:33:36.000 I have those same concerns. Right, My parents are certainly aging, 0:33:36.080 --> 0:33:39.760 and that's it They're a target demographic for fraudsters, for 0:33:39.800 --> 0:33:43.320 criminals who are looking to take advantage of citizens. So 0:33:43.360 --> 0:33:45.479 I think the more awareness we can have, the better 0:33:46.000 --> 0:33:49.760 in terms of making sure that people are aware that there, 0:33:50.360 --> 0:33:53.280 you know, is this threat and a potential risk with AI. 0:33:53.360 --> 0:33:56.480 They need to validate sources if something seems too good 0:33:56.520 --> 0:33:59.360 to be true, or if you are you receive a 0:33:59.400 --> 0:34:01.520 phone call for sample or an email and there's a 0:34:01.560 --> 0:34:04.320 sense of urgency like, hey, this has to happen immediately, 0:34:04.360 --> 0:34:07.000 I need an account information. Now I need you to 0:34:07.000 --> 0:34:09.320 make a phone call. Those should all be red flags 0:34:09.320 --> 0:34:10.919 and triggers at the consumer level. 0:34:11.400 --> 0:34:12.760 We don't have a ton of time left. 0:34:12.920 --> 0:34:17.799 But I'm wondering just how optimistic you are that just 0:34:17.840 --> 0:34:21.160 as these attackers get more advanced in using AI to 0:34:21.239 --> 0:34:27.040 commit cyber attacks, companies can leverage AI to respond. 0:34:28.200 --> 0:34:31.239 I love that we're potentially ending on a more optimistic note. 0:34:31.280 --> 0:34:33.960 I'm highly bullish as it relates to AI. 0:34:34.280 --> 0:34:34.799 I see the. 0:34:34.760 --> 0:34:37.600 Investments we're making, not only in the research to understand 0:34:37.600 --> 0:34:41.520 how attackers are using AI, but the investments in accelerating 0:34:41.560 --> 0:34:46.360 our workflows, our processes, having copilots for tasks, tasks that 0:34:46.480 --> 0:34:49.640 used to take days now take minutes and in sometimes seconds. 0:34:49.920 --> 0:34:53.240 So the reality is we can leverage our really smart 0:34:53.239 --> 0:34:56.920 people towards even more challenging tasks. And that's really exciting 0:34:56.960 --> 0:34:59.120 and motivating, and I think it's going to be a 0:34:59.200 --> 0:35:00.680 key to success moving forward. 0:35:01.880 --> 0:35:04.800 Hey, Wendy, thirty seconds before you let you go. Given 0:35:04.840 --> 0:35:07.040 the growth of AI and the way that companies are 0:35:07.080 --> 0:35:09.480 spending around AI, do you think companies are still spending 0:35:09.480 --> 0:35:11.759 sufficiently when it comes to protecting themselves. 0:35:12.880 --> 0:35:14.840 You know, what we're seeing is companies spending more of 0:35:14.880 --> 0:35:18.560 their budget on proactive security than on reactive security. And 0:35:18.640 --> 0:35:21.280 I think that's great news and it's going to continue 0:35:21.320 --> 0:35:23.759 to ship the ball forward in terms of making it 0:35:23.800 --> 0:35:27.200 harder for the attackers to be successful and encouraging that 0:35:27.280 --> 0:35:30.759 the organizations who are providing defense are going to win. 0:35:31.080 --> 0:35:34.240 Wendy went More, Senior vice president at Palo Alto Networks, 0:35:34.280 --> 0:35:37.600 Joining us from our Bloomberg BusinessWeek studio in New York. 0:35:38.280 --> 0:35:41.960 You're listening to the Bloomberg Business Week Podcast. Catch us 0:35:42.040 --> 0:35:45.040 live weekday afternoons from two to five these during listen 0:35:45.080 --> 0:35:48.640 on Applecarplay and Android Auto with the Bloomberg Business app, 0:35:48.840 --> 0:35:51.200 or watch us live on YouTube. 0:35:51.840 --> 0:35:55.279 The by American movement has been periodically invoked since the 0:35:55.280 --> 0:35:59.319 Boston Tea Party. The goal has been promoting economic nationalism 0:36:00.000 --> 0:36:03.799 strengthening the US economy. Yeah, despite its compelling logic, there 0:36:03.920 --> 0:36:06.520 is little evidence that buy American campaigns actually work in 0:36:06.560 --> 0:36:11.280 reversing consumption trends or preserving manufacturing jobs, and their success 0:36:11.320 --> 0:36:13.839 is often tied to broader economic conditions. 0:36:14.280 --> 0:36:16.200 Amanda Mole is a senior reporter. 0:36:15.960 --> 0:36:18.800 For Bloomberg Business Seek, and she writes about why Trump's 0:36:18.840 --> 0:36:21.680 Buy American campaign will not improve the US economy. She 0:36:21.719 --> 0:36:24.600 joins us in the Bloomberg BusinessWeek Studio. Check out her 0:36:24.640 --> 0:36:27.000 story and more on the Bloomberg terminal at Bloomberg dot 0:36:27.000 --> 0:36:32.080 com slash BusinessWeek. Amanda, why doesn't this tend to work? 0:36:33.239 --> 0:36:33.479 Well? 0:36:33.520 --> 0:36:37.800 It depends on what you mean by work. Buy American 0:36:37.840 --> 0:36:40.560 campaigns are you know, sort of on their face, designed 0:36:40.600 --> 0:36:46.160 to increase consumption of American made products. Often that doesn't 0:36:46.160 --> 0:36:49.759 work because they do not meaningfully change the number of 0:36:50.120 --> 0:36:54.680 American made products available. So people generally buy what is 0:36:55.320 --> 0:36:57.279 you know, in front of them, what is easy to get, 0:36:57.320 --> 0:37:00.759 what is financially feasible for them to buy? And buy 0:37:00.840 --> 0:37:03.600 American campaigns aren't really designed to change that in any 0:37:03.640 --> 0:37:07.239 meaningful way, even over a long period of time. But 0:37:07.360 --> 0:37:09.080 I would argue, and I argue in the piece, that 0:37:09.080 --> 0:37:11.520 they're not really meant to do that, even though that's 0:37:11.600 --> 0:37:15.640 how they are presented to the public. They work quite 0:37:15.719 --> 0:37:23.520 well at stoking xenophobic sentiment, stoking anti immigrant sentiment, and 0:37:24.360 --> 0:37:28.160 aligning workers with the interest of their bosses, which I 0:37:28.160 --> 0:37:30.719 think historically that is what they're designed to do, and 0:37:30.719 --> 0:37:31.719 in that way they do work. 0:37:32.719 --> 0:37:35.880 Talk a little bit more about how these buy America 0:37:35.920 --> 0:37:40.120 campaigns impact the job market specifically, and what the data 0:37:40.640 --> 0:37:43.440 is showing us about whether these campaigns in history have 0:37:43.440 --> 0:37:45.520 actually brought jobs on shore. 0:37:46.760 --> 0:37:51.200 Historically, they don't move the job market that much industry 0:37:51.239 --> 0:37:56.239 by industry. Sometimes they can tweak short term circumstances a 0:37:56.320 --> 0:38:00.720 little bit, but what really matters is how much investment 0:38:00.840 --> 0:38:05.319 public investment there is in particular industries. Tariffs, if they're 0:38:05.360 --> 0:38:08.279 like really well designed to target particular industries, and if 0:38:08.280 --> 0:38:12.920 they're combined with broad scale investment in those industries to 0:38:13.040 --> 0:38:17.040 build them at home. All of that sometimes gets like 0:38:17.080 --> 0:38:19.400 bundled up with a buy American movement, and all of 0:38:19.440 --> 0:38:24.400 that together can like impact the future of a particular industry, 0:38:24.719 --> 0:38:27.040 but just telling people to buy American in general doesn't 0:38:27.040 --> 0:38:30.800 really have any mechanism by which it would increase employment. 0:38:32.320 --> 0:38:35.680 But Amanda, if the way that the Trump administration is 0:38:36.080 --> 0:38:38.400 thinking about this is a bit different than in the past, 0:38:38.520 --> 0:38:43.040 like let's say it's I don't know, instead of encouraging 0:38:43.040 --> 0:38:45.560 people to buy American, they're making it so it's really 0:38:45.560 --> 0:38:49.440 difficult not to buy American. So that product that is 0:38:49.480 --> 0:38:54.279 in front of you is less is actually the least 0:38:54.280 --> 0:38:58.480 expensive one because there is not a cheap import available. 0:38:58.800 --> 0:39:00.040 Does it work then? 0:39:01.880 --> 0:39:04.440 I think that we're sort of about to see if 0:39:04.480 --> 0:39:07.919 it works then. But there's reason to believe that even 0:39:08.000 --> 0:39:12.239 under these circumstances, even when the alternatives are really onerous, 0:39:12.480 --> 0:39:15.480 it wouldn't work in a lot of situations, because what 0:39:15.520 --> 0:39:19.320 does it mean to buy American in an economy where 0:39:19.440 --> 0:39:23.880 the supply chains are globalized, Different components come in from 0:39:23.920 --> 0:39:26.120 all kinds of different places, and then are you know, 0:39:26.200 --> 0:39:28.600 in the end assembled in America. A lot of things 0:39:28.640 --> 0:39:32.960 that are labeled as American goods contain foreign components or 0:39:33.040 --> 0:39:36.160 need raw materials from overseas that are then going to 0:39:36.239 --> 0:39:39.200 also be more expensive. And then there's just a lot 0:39:39.239 --> 0:39:41.359 of things that Americans want to buy that are not 0:39:41.440 --> 0:39:45.400 produced in any meaningful quantity in the United States, and 0:39:45.440 --> 0:39:49.960 there's really no way for them to be produced in 0:39:50.000 --> 0:39:53.799 the US, like take coffee, avocados, Like you can't satisfy 0:39:54.320 --> 0:39:58.680 American current American demand for these things with the American 0:39:58.800 --> 0:40:03.440 capacity to produce them ourselves. So you have this this 0:40:03.520 --> 0:40:07.400 situation where buying American has become sort of like a 0:40:07.680 --> 0:40:12.080 meaningless slogan because like what is an American product? I 0:40:12.280 --> 0:40:13.719 get into it in the story a little bit, but 0:40:13.719 --> 0:40:15.640 it's really hard to say, like what that even is. 0:40:16.400 --> 0:40:18.799 Yeah, this is a really detailed story, and I love 0:40:18.840 --> 0:40:22.680 that it starts with some American history and an homage 0:40:22.719 --> 0:40:25.920 back to the Boston Tea Party, which I didn't realize 0:40:25.920 --> 0:40:27.680 that you could trace the roots of that campaign all 0:40:27.680 --> 0:40:30.680 the way back to the beginning of the country. Maybe 0:40:30.680 --> 0:40:34.400 we could just end on where you see at least 0:40:34.480 --> 0:40:39.320 trumps buy America campaign going, and how we'll judge the 0:40:39.360 --> 0:40:41.160 efficacy of it, you know. 0:40:41.200 --> 0:40:42.359 Within four years from now. 0:40:42.920 --> 0:40:45.360 You know, it sort of depends where tariffs go because 0:40:45.520 --> 0:40:48.360 something that we see historically over the course of you know, 0:40:48.440 --> 0:40:52.080 a number of sort of like large buy American campaigns. 0:40:53.160 --> 0:40:58.000 What the you know, the volume of imports and the 0:40:58.360 --> 0:41:01.160 tendency to buy American goods really depends on is the 0:41:01.160 --> 0:41:05.239 overall economic situation. So if if we end up in 0:41:05.239 --> 0:41:08.560 a recession, it is likely that fewer imported goods are 0:41:08.600 --> 0:41:11.319 going to come into the country. But historically, once that 0:41:11.360 --> 0:41:17.680 recession ends, the trend fine on imported goods returns directly 0:41:17.719 --> 0:41:20.240 to whatever it would have been before the recession happens. 0:41:20.320 --> 0:41:23.840 So without like a like a robust plan for public 0:41:23.840 --> 0:41:28.520 investment in particular industries in the US, without more there there, 0:41:30.520 --> 0:41:32.399 I really don't see how this is going to make 0:41:32.760 --> 0:41:36.240 any positive long term changes in US manufacturing. 0:41:36.760 --> 0:41:37.399 Amand them all. 0:41:37.480 --> 0:41:40.440 Bloomberg Business Week senior reporter joining us back there in 0:41:40.440 --> 0:41:42.919 the Bloomberg Business Week Studio. Check out her, his story 0:41:42.960 --> 0:41:45.399 and more at a Bloomberg dot com slash business Week 0:41:45.440 --> 0:41:48.080 and also, of course, on the Bloomberg terminal. 0:41:48.719 --> 0:41:52.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:41:52.520 --> 0:41:55.480 live weekday afternoons from two to five e's during listen 0:41:55.560 --> 0:41:59.160 on Applecarplay and Android Otto with the Bloomberg Business app, 0:41:59.280 --> 0:42:01.680 or watch us live on YouTube. 0:42:02.200 --> 0:42:05.680 Well, the backlash against DEI has been Swift Coles just 0:42:05.719 --> 0:42:08.880 the latest retailer to back away from using DEI language 0:42:08.880 --> 0:42:11.640 amid criticism of the policies from the Trump administration. 0:42:12.320 --> 0:42:14.120 Under pressure, many companies across. 0:42:13.880 --> 0:42:17.440 Sectors, including Victoria's Secret Target metaplatforms in Walmart, have been 0:42:17.480 --> 0:42:21.440 pulling back from DEI, some dropping diversity related hiring and 0:42:21.520 --> 0:42:24.839 promotion goals. Really curious what Jensen Harris has to say 0:42:24.880 --> 0:42:27.360 about all this. He's the co founder and CEO of Texteo. 0:42:27.920 --> 0:42:31.120 The company makes software that removes bias from workplace communications, 0:42:31.160 --> 0:42:34.600 so think performance reviews, job descriptions, and more. Texto says 0:42:34.640 --> 0:42:36.319 that a quarter of the companies in the Fortune five 0:42:36.400 --> 0:42:40.040 hundred have used Texio. Full disclosure. Bloomberg is a customer 0:42:40.080 --> 0:42:43.719 of Textios. Bloomberg managers and other company leaders use the 0:42:43.800 --> 0:42:46.880 company software to ensure their job descriptions, performance reviews, and 0:42:46.920 --> 0:42:48.919 manager feedback are written in a way that's clear, fair 0:42:49.200 --> 0:42:53.520 and equitable. Also, Bloomberg Beta, the early stage VC company 0:42:53.520 --> 0:42:55.880 backed by Bloomberg LP, the parent company at Bloomberg Media, 0:42:55.960 --> 0:42:59.680 is an investor in Texteo. Jensen joins us from Las 0:42:59.760 --> 0:43:01.719 Veigs I guess Jetson, Good to see you. Have you 0:43:01.800 --> 0:43:05.839 noticed companies embracing your software differently. Just in the last 0:43:05.840 --> 0:43:09.320 few months have as we've seen such a backlash to DEI. 0:43:11.880 --> 0:43:14.879 Well, I think an important thing to realize is that 0:43:14.960 --> 0:43:19.239 most companies aren't actually stepping back from the principles of 0:43:19.719 --> 0:43:23.240 diversity of fairness in hiring and in how they treat 0:43:23.280 --> 0:43:28.160 their employees. Even after these executive orders that came out 0:43:28.760 --> 0:43:32.400 a few weeks ago, eighty percent of American companies have 0:43:32.520 --> 0:43:36.840 said they're staying the course or they're actually investing more 0:43:37.520 --> 0:43:41.439 in ensuring that they're hiring the best folks for their 0:43:41.440 --> 0:43:44.960 companies and giving them the tools to get fair feedback, 0:43:45.120 --> 0:43:48.400 for instance, that helps them grow and thrive. And so 0:43:48.680 --> 0:43:54.480 I actually think that almost every CEO understands that at 0:43:54.480 --> 0:43:57.680 the center of their business being successful are the people 0:43:57.880 --> 0:44:00.640 that they've hired and the people that they need to 0:44:00.680 --> 0:44:04.480 grow and promote to do great work. And so I 0:44:04.560 --> 0:44:07.879 don't think there's actually much controversy about when you want 0:44:07.880 --> 0:44:10.200 to hire the best people, you need to cast the 0:44:10.200 --> 0:44:13.799 widest net. I don't think that there's actually much controversy 0:44:13.840 --> 0:44:17.239 about you should treat your employees fairly and ensure that 0:44:17.280 --> 0:44:20.680 all of them have an opportunity to get the feedback 0:44:20.719 --> 0:44:23.480 they need to do a great job, and so I 0:44:23.520 --> 0:44:28.160 think kind of this is a bit of a tailwind 0:44:28.320 --> 0:44:31.960 actually for folks who actually want to invest in the 0:44:32.000 --> 0:44:33.160 people out of their companies. 0:44:35.120 --> 0:44:39.360 So talk about how Texteo has evolved. Because you launched 0:44:39.360 --> 0:44:43.279 the company in twenty fourteen. Obviously tech and AI has 0:44:43.400 --> 0:44:49.479 grown so much since then, and DEI has become much 0:44:49.520 --> 0:44:53.480 more of a hot button issue. What are the biggest 0:44:53.560 --> 0:44:59.239 changes that you've seen for Textio over the last few years. 0:45:00.640 --> 0:45:03.360 Yeah, So we were first to market as an artificial 0:45:03.400 --> 0:45:07.279 intelligence company to HR. We've been doing AI in the 0:45:07.440 --> 0:45:11.640 HR space for more than a decade now, and so 0:45:12.760 --> 0:45:16.960 the last decade has really been for us taking our 0:45:17.120 --> 0:45:23.760 core technology, which is about helping optimize talent. And we've 0:45:23.880 --> 0:45:27.799 started with hiring a decade ago, ensuring that people could 0:45:27.800 --> 0:45:33.520 build recruiting content, job postings and brand language that can 0:45:33.760 --> 0:45:38.600 attract the widest set of qualified candidates to roles. Really 0:45:38.640 --> 0:45:43.799 about hyper optimizing that content to perform well. And over 0:45:43.840 --> 0:45:46.560 the last decade we've just continued to get further and 0:45:46.600 --> 0:45:53.040 further into other important aspects of running a company. So 0:45:53.400 --> 0:45:59.080 we have done performance feedback optimization, ensuring that I mean, 0:45:59.160 --> 0:46:02.759 managers hate writing performance reviews, and we built software that 0:46:02.880 --> 0:46:08.840 gives them the ability to write really effective performance reviews. 0:46:09.080 --> 0:46:14.320 In halftime, we have done pure feedback. We're actually tomorrow 0:46:15.360 --> 0:46:20.240 introducing interview feedback, which is a new product that ensures 0:46:20.600 --> 0:46:22.799 and I think especially important in this world in which 0:46:22.800 --> 0:46:26.200 everyone is thinking about meritocracy and how can we ensure 0:46:26.200 --> 0:46:28.040 that we hire the best. The way you do that 0:46:28.239 --> 0:46:31.480 is by interviewing folks, And tomorrow we're announcing a product 0:46:31.520 --> 0:46:35.720 that actually optimizes interview feedback to ensure that it's clear 0:46:36.040 --> 0:46:39.239 that it's fair, that it's based on merit and to 0:46:39.680 --> 0:46:42.640 help companies know that they're hiring the best folks for 0:46:42.719 --> 0:46:45.160 the role. So that's really been the last decade for us. 0:46:45.400 --> 0:46:50.320 Then about broadening the application of our world class AI 0:46:50.480 --> 0:46:56.760 technology in a proprietary way to really transform all of hr. 0:46:57.640 --> 0:47:00.560 Hey Jensen, you said you were first to market with 0:47:00.640 --> 0:47:03.520 this type of AI. How do you train the AI? 0:47:03.680 --> 0:47:05.759 What is the II powered by? You know, we talk 0:47:05.800 --> 0:47:08.239 about AI now in the context of a lot of 0:47:08.280 --> 0:47:12.040 the lms that are powering what's happening in other services 0:47:12.280 --> 0:47:15.560 and other platforms like you know, anthropics, cloud or open 0:47:15.600 --> 0:47:16.680 aies chat, GPT. 0:47:16.840 --> 0:47:17.839 What power is your AI. 0:47:21.000 --> 0:47:23.319 Yeah, that's a great question. You know, we were one 0:47:23.400 --> 0:47:27.839 of the first companies that brought generative to business back 0:47:27.920 --> 0:47:31.040 in twenty nineteen, so more than five years ago, and 0:47:31.160 --> 0:47:35.759 so the idea of how do you train AI to 0:47:36.080 --> 0:47:40.400 be safe to use and effective is a really important 0:47:40.440 --> 0:47:41.759 one and one that we've been thinking about for a 0:47:41.840 --> 0:47:46.160 long time. So Textdeo's data is really based on a 0:47:46.320 --> 0:47:49.600 whole bunch of different signals in the world. Some of 0:47:49.680 --> 0:47:52.920 it is trained from sort of our signals of what's happening, 0:47:53.360 --> 0:47:57.240 you know, for instance, in recruiting across hundreds of millions 0:47:57.320 --> 0:47:59.960 of job posts in the world and seeing what goes up, 0:48:00.440 --> 0:48:04.080 what goes down, how fast is a job filling, how 0:48:04.120 --> 0:48:08.160 did different companies sound online, And we can take all 0:48:08.200 --> 0:48:11.960 of those signals along with sort of our proprietary knowledge 0:48:12.120 --> 0:48:15.120 of what actually is filling, what jobs are filling, what 0:48:15.239 --> 0:48:19.080 industries are filling, what language works well in different locales 0:48:19.080 --> 0:48:21.600 around the world, like I would talk to someone looking 0:48:21.640 --> 0:48:23.959 for a job from New York differently than I would 0:48:24.120 --> 0:48:26.400 London or San Francisco, for instance, And. 0:48:26.520 --> 0:48:27.160 We take. 0:48:30.000 --> 0:48:33.360 Which ends up being hundreds and hundreds of millions of 0:48:33.480 --> 0:48:37.960 data points and use that to create refine the models, 0:48:38.239 --> 0:48:41.399 and then humans are actually responsible for ensuring that those 0:48:41.520 --> 0:48:44.960 models can be trusted, that they're safe, and most importantly, 0:48:45.200 --> 0:48:48.600 that they actually work, that they actually create the optimizations 0:48:48.680 --> 0:48:52.960 that the models predict they will. Now we have a 0:48:53.400 --> 0:48:58.200 real advantage compared to a company like open ai, for instance, 0:48:58.239 --> 0:49:01.600 which is we build models just for HR. We are not, 0:49:02.000 --> 0:49:04.720 you know, writing a letter to Santa. We're not writing 0:49:04.760 --> 0:49:07.600 your one hot chicken recipe. We don't care about any 0:49:07.640 --> 0:49:11.680 of that general purpose stuff. We optimize in a hyper 0:49:11.800 --> 0:49:16.160 way for HR scenarios and HR optimization, and so in 0:49:16.239 --> 0:49:19.680 a sense we have a real leg up on everyone 0:49:19.719 --> 0:49:20.440 else in this space. 0:49:21.640 --> 0:49:24.880 We talk a lot on this show about supply chains 0:49:25.120 --> 0:49:30.279 and chip designers, and I'm wondering, as a company that 0:49:30.880 --> 0:49:35.880 uses AI, has it gotten cheaper? Has it gotten easier 0:49:36.400 --> 0:49:38.000 to leverage AI? 0:49:38.360 --> 0:49:43.359 Just in the last year or so, Certainly. 0:49:43.160 --> 0:49:47.120 The pace at which optimizations are happening and the pace 0:49:47.200 --> 0:49:52.000 at which compute is becoming more and more easy to 0:49:52.080 --> 0:49:55.480 access in a cost effective way, it has leveled the 0:49:55.560 --> 0:50:00.000 playing field a little bit. That said, it's still pretty expensive, 0:50:01.000 --> 0:50:04.120 and a lot of companies that over the last year 0:50:04.239 --> 0:50:08.320 or two have decided to try to layer on artificial 0:50:08.360 --> 0:50:11.920 intelligence on top of their legacy systems have found that 0:50:12.000 --> 0:50:15.480 it's an expensive proposition, and so I think that's a 0:50:15.560 --> 0:50:20.680 place where companies that really can embrace doing domain specific 0:50:20.880 --> 0:50:25.400 models for HR but or for finance for sales are 0:50:25.440 --> 0:50:27.120 going to find that they have a much easier job 0:50:27.239 --> 0:50:32.720 because the models are right size for the tasks versus again, 0:50:32.840 --> 0:50:36.840 an open AI general purpose model where you're paying for 0:50:36.960 --> 0:50:39.800 a lot of compute in some cases in order to 0:50:40.760 --> 0:50:43.160 get a relatively small amount of value. 0:50:43.200 --> 0:50:47.080 Back when you left Microsoft more than ten years ago 0:50:47.200 --> 0:50:49.840 to launch Texto, and Emily kind of alluded to this 0:50:49.960 --> 0:50:53.480 with the evolution of the company, what did you envision 0:50:53.640 --> 0:50:55.960 texto would do versus what it's doing now. 0:50:59.640 --> 0:51:04.200 So we started Texteo with a really clear vision that 0:51:04.920 --> 0:51:11.279 the world of HR was being behind and that we 0:51:11.440 --> 0:51:15.359 could take the technology that we had to turn these 0:51:15.480 --> 0:51:20.000 incredibly important aspects of business, right, I mean, think about it, 0:51:20.080 --> 0:51:24.719 there's probably nothing more important for most businesses than who 0:51:24.800 --> 0:51:28.560 you hire. Are those people great? Are you getting access 0:51:28.600 --> 0:51:32.600 to the best talent? And then how do you help 0:51:32.680 --> 0:51:35.040 those people grow? How do they give them the food, 0:51:35.280 --> 0:51:38.400 the water, the help, the you know, everything we think 0:51:38.440 --> 0:51:41.120 about you a greenhouse. All the people at your company, 0:51:41.280 --> 0:51:43.759 how do you give them all everything they need to thrive? 0:51:44.160 --> 0:51:49.120 And that is clear feedback, that's fair feedback. That's ensuring 0:51:49.320 --> 0:51:52.360 that they can tell their manager what's working, what's not working. 0:51:52.680 --> 0:51:56.719 It ensures that you get visibility across your entire workforce 0:51:56.800 --> 0:51:59.799 about who actually should be promoted and maybe who needs 0:51:59.840 --> 0:52:03.560 to let go because they're not a match. And so 0:52:04.560 --> 0:52:08.120 we knew that this was incredibly fundamental, and the tools 0:52:08.160 --> 0:52:10.880 that HR teams were using were locked in the past, 0:52:11.200 --> 0:52:15.239 locked in the general electric and IBM models of the 0:52:15.320 --> 0:52:17.960 nineteen fifties of how to do those things. And so 0:52:18.200 --> 0:52:21.759 we thought that we could, with a dual strength in 0:52:22.440 --> 0:52:27.959 AI and user interface, create next generation tools that would 0:52:27.960 --> 0:52:32.160 be phenomenally easy to use, but also transformative in terms 0:52:32.200 --> 0:52:37.280 of actually helping managers, for instance, not hate doing performance reviews, 0:52:37.760 --> 0:52:42.000 helping recruiters were stretched to the hilt with how many 0:52:42.160 --> 0:52:46.960 roles they have to fill now being cavisuals to automate 0:52:47.080 --> 0:52:52.239 that make it easier and to outcase their competitors and 0:52:52.320 --> 0:52:53.240 competing for talent. 0:52:54.840 --> 0:52:56.600 Jensen Good have to leave it there. Do appreciate you 0:52:56.680 --> 0:52:59.040 joining us this afternoon. Jensen Harris is the co founder 0:52:59.080 --> 0:53:00.880 and CEO of Text You. 0:53:02.000 --> 0:53:05.920 Rob macle I'll beout you let me drive. Oh no, no, no, no, 0:53:06.400 --> 0:53:12.640 this is not a toy, honey. Please, I'll revels. Excuse me, 0:53:13.000 --> 0:53:13.799 I want to drive. 0:53:13.800 --> 0:53:16.840 It's a good question. 0:53:20.800 --> 0:53:23.960 This is the drive to the clothes plunks for music. 0:53:24.080 --> 0:53:25.560 Well, briar Jela. 0:53:25.320 --> 0:53:27.160 Don on Bloomberg Radio. 0:53:28.600 --> 0:53:30.920 Well, we did just hear it from Charlie Pellett just 0:53:31.000 --> 0:53:34.000 about ten minutes fifteen minutes ago in the close of 0:53:34.080 --> 0:53:36.000 trading here, and we're seeing the S and P five 0:53:36.080 --> 0:53:37.839 hundred off. It's best levels of the day, but still 0:53:37.880 --> 0:53:40.560 up one percent. Well, the Dow out performing up one 0:53:40.600 --> 0:53:43.520 point one percent, the NASDAK composite higher by just about 0:53:43.600 --> 0:53:47.279 seven tenths of one percent. Let's see what George Young 0:53:47.360 --> 0:53:49.360 has to say about this. He's a partner and portfolio 0:53:49.400 --> 0:53:52.400 manager at Villary Funds. He joins us from New Orleans. 0:53:52.440 --> 0:53:56.120 He manages the Villary balance to funds. V I l 0:53:56.760 --> 0:53:59.160 X is the ticker year to date, it's in the 0:53:59.200 --> 0:54:03.640 forty eighth percent, down just about one tenth of one percent. 0:54:03.960 --> 0:54:06.560 George, how are you good? To see you right doing? 0:54:06.560 --> 0:54:06.920 All right? 0:54:07.960 --> 0:54:08.680 Hey, we're trying to. 0:54:08.640 --> 0:54:11.600 Figure out the actual effect on markets that this president 0:54:11.800 --> 0:54:14.440 is having right now, because he's getting a lot of 0:54:14.480 --> 0:54:17.680 attention for the selloff that we saw in the last 0:54:17.760 --> 0:54:20.239 few weeks. Do you think the sell off is a 0:54:20.280 --> 0:54:23.440 result of uncertainty around tariffs and Trump's policies. 0:54:24.600 --> 0:54:24.840 I do. 0:54:25.160 --> 0:54:27.960 The market really does not like uncertainty, and you've had 0:54:28.520 --> 0:54:31.560 all sorts of different uncertainties. It's a lack of predictability 0:54:31.960 --> 0:54:34.880 and that makes our job tough. That makes regular investors 0:54:35.000 --> 0:54:37.359 job tough. So you want to know about intert rates, 0:54:37.360 --> 0:54:39.160 You want to the economy, Well, that's going to be 0:54:39.239 --> 0:54:42.399 directly affected by tariffs, and that is going to get 0:54:42.440 --> 0:54:45.040 passed on at the consumer. How the consumer reacts as 0:54:45.080 --> 0:54:45.680 the big question. 0:54:47.600 --> 0:54:51.560 So obviously a lot of the downturn in stocks as 0:54:51.640 --> 0:54:54.080 of late, I guess has to do with all of 0:54:54.160 --> 0:54:58.920 that uncertainty on the horizon. When do you think the 0:54:59.040 --> 0:55:01.880 market downturn end? I mean, we are up today, but 0:55:01.960 --> 0:55:04.000 when you look at the SMP year to date, we're 0:55:04.040 --> 0:55:04.960 down about three percent. 0:55:05.920 --> 0:55:08.200 Yep, that's correct. Well, a couple of comments to that. 0:55:08.480 --> 0:55:10.920 The SMP is down three percent, but if you take 0:55:11.000 --> 0:55:14.640 out the magnificent seven, the SMB is actually up. So 0:55:14.920 --> 0:55:16.440 that's one of the things I think that we're focused 0:55:16.480 --> 0:55:18.560 on is you don't want to fall in love with 0:55:18.640 --> 0:55:19.040 the stock. 0:55:19.120 --> 0:55:20.040 It won't love you back. 0:55:20.280 --> 0:55:24.080 So the Magnificent Seven have been darlings for the past year, 0:55:24.120 --> 0:55:26.359 the past couple of years. So we try to look 0:55:26.400 --> 0:55:29.520 for things that are undiscovered, that are unrecognized, that have value, 0:55:29.640 --> 0:55:32.960 and it can offer the dividend return, can offer growth, 0:55:33.160 --> 0:55:36.920 and specifically you want to look long term. So I 0:55:36.960 --> 0:55:38.759 can't give you a data to stay exactly when the 0:55:38.800 --> 0:55:40.400 market's going to turn this way or that way. But 0:55:40.480 --> 0:55:42.200 what I can tell you if you look at history, 0:55:42.880 --> 0:55:45.680 is that the stock market has outperformed the bond mark, 0:55:45.760 --> 0:55:48.760 and the US stock market in particularly we're domestically oriented, 0:55:49.080 --> 0:55:52.000 has outperformed what other indexes in the world have done. 0:55:52.120 --> 0:55:55.080 So we remain optimistic and we try to look past 0:55:55.200 --> 0:55:58.120 the vagaries the whip saw, and that can be problematical 0:55:58.200 --> 0:55:58.880 for investors. 0:56:00.239 --> 0:56:02.359 Well, Georgie, you sent along some stock picks. I want 0:56:02.360 --> 0:56:03.600 to go through a couple of them. I want to 0:56:03.600 --> 0:56:08.080 start with Lineage, the global temperature controlled warehouse that that's 0:56:08.120 --> 0:56:10.239 comprised of cold storage warehouses. 0:56:10.239 --> 0:56:12.719 You're bullish on this company, it's a reed. Why do 0:56:12.760 --> 0:56:13.120 you love it? 0:56:14.280 --> 0:56:15.520 Well, we love it for a couple of reason. You 0:56:15.640 --> 0:56:17.560 get growth and you can also get the income, so 0:56:17.600 --> 0:56:19.719 it's set up like a ree as you said. But 0:56:19.840 --> 0:56:21.680 what's interesting, they're the largest in the world that when 0:56:21.719 --> 0:56:24.160 public a couple of years ago, the founders still own 0:56:24.200 --> 0:56:26.880 about thirty percent of the company, so they put their 0:56:26.920 --> 0:56:28.759 money where their mouth is. They did go public for 0:56:28.840 --> 0:56:31.920 liquidity purposes, but at the same time they believed in 0:56:31.960 --> 0:56:34.960 this company long term. So the important thing is they've 0:56:34.960 --> 0:56:37.000 got over four hundred centers around the world. They're the 0:56:37.120 --> 0:56:39.840 largest in the world. They've got ninety six different patents, 0:56:40.239 --> 0:56:42.839 and all the food that we not all the food, 0:56:42.960 --> 0:56:45.920 the vast majority of the food that we consume is 0:56:46.120 --> 0:56:49.000 shipped and stored in climate controlled warehouses. 0:56:49.080 --> 0:56:50.440 So it's important that you. 0:56:50.560 --> 0:56:53.680 Understand that they're the most efficient they have. We just 0:56:53.760 --> 0:56:56.239 toured a facility about a month ago that's local here 0:56:56.280 --> 0:56:59.279 in New Orleans. They're the most up to date. It's 0:56:59.360 --> 0:57:01.400 not the old day where you had palettes who were 0:57:01.440 --> 0:57:03.160 being run around left and right. 0:57:03.480 --> 0:57:07.440 This is automated, this is mechanical. This is very efficient stuff. 0:57:08.040 --> 0:57:09.600 Okay, that's food warehouses. 0:57:09.920 --> 0:57:12.600 Tell us about copper because one of your other picks 0:57:12.800 --> 0:57:15.239 is Report macmarin sure. 0:57:15.600 --> 0:57:18.240 So if you contrast that with something like oil that 0:57:18.360 --> 0:57:20.680 has anywhere from a ten to a thirty year useful 0:57:20.760 --> 0:57:24.960 life in most drilling prospects, this has a ninety year 0:57:25.240 --> 0:57:28.280 life and there's no substitute for copper. Again, look at 0:57:28.320 --> 0:57:31.720 something another commodity like oil, there are arguably other substitutes, 0:57:31.760 --> 0:57:35.360 alternative energies, etc. When it comes to copper, that's all 0:57:35.400 --> 0:57:37.800 you can use, and they are in very difficult places. 0:57:38.240 --> 0:57:40.280 Freeport Copper owns one of the largest in the world 0:57:40.280 --> 0:57:46.240 of Grassburg mine in Indonesia. Copper is dependent on demand, 0:57:46.760 --> 0:57:49.800 and that is somewhat dependent on Chinese demand specifically. 0:57:50.080 --> 0:57:52.560 But if you look at every electric vehicle, everything you. 0:57:52.640 --> 0:57:56.600 Own, energy is electricity is clean energy, and you need 0:57:56.720 --> 0:57:57.760 copper to make that work. 0:57:57.920 --> 0:57:58.880 We love for report. 0:58:00.040 --> 0:58:01.880 Hey George, before we let you go, Atlas Energy as 0:58:01.880 --> 0:58:04.920 a number another one of your picks. They under sand 0:58:05.000 --> 0:58:08.160 in the Premium Basin in Texas. What's your view on Alice. 0:58:09.480 --> 0:58:11.760 Well, it's interesting they have the sand and they also 0:58:11.840 --> 0:58:14.360 have something called Dune Express, which is a forty two 0:58:14.440 --> 0:58:17.040 mile conveyor belt throughout West I just. 0:58:17.120 --> 0:58:19.120 Heard about this conveyor belt in a podcast that I 0:58:19.240 --> 0:58:22.120 was listening to over the weekend. This is what is 0:58:22.160 --> 0:58:24.520 it the largest conveyor belt in the country. 0:58:25.120 --> 0:58:26.680 Exactly, you're telling my story for me. 0:58:26.800 --> 0:58:27.320 This is great. 0:58:28.040 --> 0:58:30.560 So they've got a wonderful yield of about five percent. 0:58:31.320 --> 0:58:33.440 They've been a little rocky recently because it made what 0:58:33.560 --> 0:58:36.840 we think is a great acquisition to provide energy electricity 0:58:37.120 --> 0:58:40.240 to these wells being difficult location. So again it's sort 0:58:40.280 --> 0:58:43.400 of like the Freeport story, where is the copper difficult 0:58:43.440 --> 0:58:46.880 places West Texas, difficult to get energy out there. But 0:58:47.160 --> 0:58:50.200 more importantly, sand has been shipped by trucks heretofore, which 0:58:50.280 --> 0:58:52.400 is slow, expensive and very dangerous. 0:58:52.680 --> 0:58:55.120 So this Dune Express is going to save money, It's 0:58:55.160 --> 0:58:57.760 going to save lives. It's great, great change. 0:58:58.920 --> 0:59:00.520 I feel like I got to do a remote broadcast 0:59:00.600 --> 0:59:02.439 from this conveyor belt just to see it, or maybe 0:59:02.720 --> 0:59:04.840 go for a ride on this conveyor belt. George, really 0:59:04.880 --> 0:59:07.440 appreciate you joining us. Thanks so much for taking the 0:59:07.480 --> 0:59:10.680 time this afternoon. George Young's portfolio manager at Villary Funds. 0:59:10.720 --> 0:59:12.760 He joins us from New Orleans. 0:59:13.760 --> 0:59:18.880 This is the Bloomberg Business Week podcast, available on Apple, Spotify, 0:59:19.080 --> 0:59:23.120 and anywhere else you get your podcasts. Listen live weekday 0:59:23.160 --> 0:59:27.120 afternoons from two to five pm Eastern on Bloomberg dot Com, 0:59:27.480 --> 0:59:31.200 the iHeartRadio app tune In, and the Bloomberg Business app. 0:59:31.480 --> 0:59:34.280 You can also watch us live every weekday on YouTube 0:59:34.560 --> 0:59:36.720 and always on the Bloomberg terminal