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 Stenebec from Bloomberg Radio.
Speaker 1: So much going on when it comes to geopolitical news
Speaker 1: on our radar. Chinese President she urging his country to
Speaker 1: accelerate fundamental scientific research so it could become self reliant
Speaker 1: in critical technologies, basically really kind of countering Washington sanctions
Speaker 1: on everything from semis to software. You've also got a
Speaker 1: Chinese top diplomat calling for peace talks to resolve the
Speaker 1: Russian war in Ukraine. And then there's a fascinating Bloomberg
Speaker 1: opinion piece today that talks about if American intelligence is
Speaker 1: right and China really is about to arm Russia in
Speaker 1: its genocidal war against Ukraine, we may be entering a
Speaker 1: new era in international relations, asking if it may be
Speaker 1: an even more dangerous one to dress it all. We've
Speaker 1: got ed price principle for the geopolitical forecasting firm, or
Speaker 1: he Is principle, i should say, of geopolitical forecasting at ERGO,
Speaker 1: which is a global intelligence consulting in forecasting firm. By
Speaker 1: the way, Ed a former British trade official, his work
Speaker 1: with members of the European and British parliaments. We are
Speaker 1: so delighted to have him here with Maddie and myself. Ed.
Speaker 1: There is so much going on. How do you separate
Speaker 1: out the week from the chaff when it comes to
Speaker 1: what's going on in foreign affairs and geopolitics? Hi, Carol,
Speaker 1: I hope you guys are very well. It's difficult, right
Speaker 1: It's really hard right now to separate the signal from
Speaker 1: the noise. My firm was previously very successful at doing
Speaker 1: that at the start of this war. If you remember,
Speaker 1: we very successfully called it. We know, we said they
Speaker 1: were going in with the seventy eight percent confidence a
Speaker 1: year ago. Today, a year later, it does seem that
Speaker 1: the war in Ukraine is harder to read. I would suggest,
Speaker 1: although there are probably a few a few themes that
Speaker 1: we can point to that might help. One of them, Carol,
Speaker 1: is the just at the moment that it seems that
Speaker 1: Russian mistakes are compounding. And by Russian mistakes I mean
Speaker 1: the sort of strategic tomfoolery of using your best troops
Speaker 1: the spetsnaz your naval infantry, your parachute paratroopers at the
Speaker 1: start of the conflict and getting them essentially killed disproportionate
Speaker 1: to other troops. Strategic mistakes like that are compounding at
Speaker 1: just the time that the Ukrainians are getting new vehicles,
Speaker 1: new equipment, and the morale is very high. So I
Speaker 1: think that's maybe one thing. So when we zoom out
Speaker 1: from the Russia Ukraine situation and look a little bit
Speaker 1: more broadly at all of the global geopolitical tensions right now, Ukraine, China,
Speaker 1: the global economy, spy balloons, what is your biggest concern
Speaker 1: and situation to watch for the year ahead? Right? I mean,
Speaker 1: I would be very clear that my biggest concern is
Speaker 1: not necessarily the most likely concern. The biggest concern, of course,
Speaker 1: should be that this local war in Ukraine and that
Speaker 1: the threat of conflict over or in Taiwan become the
Speaker 1: same thing, and that there is a general confluence of
Speaker 1: the sorts of trends that we're seeing with regard to
Speaker 1: great power competition right now. I don't think that that's
Speaker 1: likely that must remain the biggest concern. But within that,
Speaker 1: I mean, you guys just mentioned the fact that the
Speaker 1: Chinese might be thinking about arming the Russians is helping
Speaker 1: with material, that is a concern because, of course, you know,
Speaker 1: ridiculous spy blooms are one thing, but sending arms, sending
Speaker 1: lethal aid to Europe from China, you know, when you
Speaker 1: think about it, that's that's very concerning. You know, it's interesting.
Speaker 1: In this opinion piece too, it says Chinese military support
Speaker 1: for Russia. Again it's an opinion piece by Andrea's Cluth
Speaker 1: said Chinese military support for Russia would finally turn the
Speaker 1: Ukrainian conflict into a proxy war between two hostile blocks
Speaker 1: with a third trying to stay out of the fray.
Speaker 1: And it does I do wonder, you know, ed, do
Speaker 1: we need to be thinking that this is this is
Speaker 1: where we're going. We've talked about kind of a technology
Speaker 1: war and different things going on, but is this what happened?
Speaker 1: We're dividing the world up into maybe three key blocks here.
Speaker 1: I think that the essence of the problem is that
Speaker 1: Uncle Sam did half a job after the Second World War,
Speaker 1: and by that I mean he conquered three countries, Germany,
Speaker 1: Japan and the United Kingdom. I wouldn't necessarily put it
Speaker 1: like that to my friends, But he did and filled
Speaker 1: those three countries with two things, democracy and free markets.
Speaker 1: For then some unknown reason after that, Uncle Sam decided
Speaker 1: that the two big naughty countries China and Russia. And
Speaker 1: again I wouldn't necessarily call them naughty to their faces,
Speaker 1: but the two big naughty countries were only given access
Speaker 1: to markets, right and not? There wasn't a concerted effort
Speaker 1: to export democracy to Russia and China. So in a way,
Speaker 1: we Americans I'm America. Now, we Americans have done half
Speaker 1: a job after the Second World War? And the big
Speaker 1: question is can you get away with that? Is it
Speaker 1: okay that democracy only really went halfway around the world
Speaker 1: when the means of markets and capitalism went all the
Speaker 1: way around? That's that's so interesting. I love the way
Speaker 1: you put that. My question with China in the US
Speaker 1: specifically is always like it's a symbiotic relationship, right, if
Speaker 1: we need each other. Can China really afford to risk
Speaker 1: interacting with Russia on the war when its economy just reopened?
Speaker 1: I wonder, in the context of what you just mentioned
Speaker 1: about China embracing free markets but not democracy, how you
Speaker 1: think about that relationship. Well, I don't want to get
Speaker 1: too deep and dark here, but if you if you
Speaker 1: think about the Chinese ability as an autocracy, as a
Speaker 1: totalitarian regime to absorb the sort of punishment that a
Speaker 1: future sanctions or blockade regime might impose on it, it
Speaker 1: doesn't care about human life in the same way that
Speaker 1: Americans do, right and so, and that Europeans do. That's
Speaker 1: not to say that your average Chinese individual or Chinese
Speaker 1: household doesn't care about if I'm talking about the government,
Speaker 1: to be clear, and so, PRC, I think we'll be
Speaker 1: able to pull things out of the bag in a
Speaker 1: future confrontation that look more like and feel more like
Speaker 1: an autarchy, a strategic autarchy, for which I suspect Belton
Speaker 1: Road has a pretty good preparation in many ways that
Speaker 1: probably surprise us. And so really the question is to
Speaker 1: what extent can European economies and the American economy withstand
Speaker 1: a direct economic confrontation. I mean, I've said it before,
Speaker 1: maybe we need some sort of strategic garden furniture reserve.
Speaker 1: You know, it's a silly way of putting it, but
Speaker 1: we're on the hook. No, that is a really, really
Speaker 1: good point, and it's interesting you know, we had a
Speaker 1: great story out from our Bloomberg team about what the
Speaker 1: UK government basically was doing and kind of doing a
Speaker 1: disaster scenario if China invaded Taiwan and TSMC was shut
Speaker 1: down or impacted the global supply chain, as we know
Speaker 1: that they produce so many what is it, ninety percent
Speaker 1: of the chips used in the world. So I guess
Speaker 1: I always think about what's the constructive conversation as all
Speaker 1: this stuff is going on, where investment strategist ed continue
Speaker 1: to say that the big concerns this year are geopolitical.
Speaker 1: You know, we're seeing that. So what is the constructive
Speaker 1: and we've only got about forty five seconds left here.
Speaker 1: The constructive answer from Taiwan is don't worry about it
Speaker 1: right now. Ergo's best sources have the prospect of an
Speaker 1: invasion at a very very low chance. That's for all
Speaker 1: sorts of reasons that we can get into another day.
Speaker 1: But do expect some kind of disruption, something stopping short
Speaker 1: of a blockade, because of course that's an act of war.
Speaker 1: But do expect that the PRC and the Communist Party
Speaker 1: in China are going to make life more difficult in
Speaker 1: that region. Still worried about Russia. I'm always worried about Russia. Yeah,
Speaker 1: I'm always worried about Russia. But I think we're on
Speaker 1: top and I think Ukrainians will win. All right, listen,
Speaker 1: great to check in with you. I know it's busy
Speaker 1: on your end as well, So thanks for carving out
Speaker 1: some time. Ed Price, his principle at Ergo, former British
Speaker 1: trade official and of course joining us via zoom here.
Speaker 1: I believe it was in New York City. You're listening
Speaker 1: to the Bloomberg Business Week podcast. Got us live weekdays
Speaker 1: from two to five pm Easter on Bloomberg Radio, The
Speaker 1: Bloomberg Business a band you two. You can also listen
Speaker 1: live to our flagship New York station, Just Say Alexa
Speaker 1: play Bloomberg, Eleve and Dirty. As we all know, we're
Speaker 1: nearing that one year mark since the Russian invasion of
Speaker 1: Ukraine and as Ukrainians continue to fight to defend their country,
Speaker 1: the continued war requires tapping into a vast donor network
Speaker 1: that's blossomed over the plast twelve months to supply soldiers
Speaker 1: with everything from boots to battle tanks. Carol, Yeah, we're
Speaker 1: talking crowdfunding. Who knew, well, our Mark Champion knew this story,
Speaker 1: By the way, is Today's Bloomberg Big Take. It is
Speaker 1: one of our most read stories on the Bloomberg. As
Speaker 1: we said, it is also Today's Big Take podcast, which
Speaker 1: you can find up Bloomberg dot com or wherever you
Speaker 1: get your podcasts, and be sure to not miss the
Speaker 1: Big Take on Bloomberg Radio. That's weeknights at eleven pm
Speaker 1: Wall Street Time. Mark Champion, Bloomberg News Senior reporter for
Speaker 1: International Affairs, who wrote the story, He is in London, Mark,
Speaker 1: incredible story. Like I said, who knew it. It's kind
Speaker 1: of a form of crowdfunding. Tell us what exactly is
Speaker 1: going on? Yes, well, I've been going in and out
Speaker 1: of Ukraine for the last year and it really struck
Speaker 1: me every time I went the amount of just stuff
Speaker 1: that was getting uh, you know, provided to the front.
Speaker 1: Wherever you were. You went into a company, they had
Speaker 1: a warehouse full of stuff and it was all donated.
Speaker 1: And the more I know was there, the more it
Speaker 1: became clear that this isn't just you know, the normal
Speaker 1: stuff you'd expect about, you know, food for refugees and
Speaker 1: some but it was also weapons for the front, cars
Speaker 1: for the front, everything that you can imagine that. You know,
Speaker 1: people just all have relatives there. Their sons and brothers
Speaker 1: and fathers are all at the front, and they were
Speaker 1: trying to find the stuff that they said they needed,
Speaker 1: and so they're filling all the gaps. But the scale
Speaker 1: has become really enormous. So you know, the one a
Speaker 1: fund in particular that I talked to call come Back Alive,
Speaker 1: they raised one hundred and sixty million in the last
Speaker 1: dollars in the last year. You know, there's others of
Speaker 1: similar scale. The Central Bank, if you want to just
Speaker 1: give extra money, the Defense Ministry Central Bank has raised
Speaker 1: six hundred and fifty million dollars. And you know that
Speaker 1: beyond those funds, which they are funding sort of expensive
Speaker 1: million dollar drones and mortars and all sorts of things
Speaker 1: like that. But beyond those funds, you just have the
Speaker 1: tiniest little operations all over the place. You know, one
Speaker 1: place I went to was a guy as a former
Speaker 1: graffiti artist who decided he was just going to help
Speaker 1: all his friends who were going to the front, and
Speaker 1: they were taking their cars and he camouflaged them so
Speaker 1: he cannot now as camouflage you know around you know,
Speaker 1: eighteen hundred vehicles and then also rifles and all sorts
Speaker 1: of things. That's so, that's such an interesting point. I
Speaker 1: wonder if that means that there's a sense on the
Speaker 1: ground that the folks who are respondable for the crowdfunding
Speaker 1: understand the needs of civilians in the area in a
Speaker 1: way that maybe the big players like the US funders
Speaker 1: don't necessarily understand. Was that your impression, Mark, Yeah, I
Speaker 1: think that's true. I mean there's just a lot of
Speaker 1: you know, gaps to fill, and you know, the US
Speaker 1: can't be on top of all of that. The Ukrainian
Speaker 1: Defense Ministry, you know, for reasons of money, of bureaucracy
Speaker 1: or whatever, it can't do everything. And you know, these
Speaker 1: is just something that Ukrainian has become very used to. Um.
Speaker 1: They because they had very sort of inefficient and corrupt governments,
Speaker 1: they became, uh, you know, over more than a decade,
Speaker 1: they've built up this sort of instinct to crowdfund no
Speaker 1: matter what it is. You know, a popular uprising like
Speaker 1: the Maidan protests in twenty fourteen. Well, then when the
Speaker 1: war began in the donbas in twenty fourteen fifteen, immediately
Speaker 1: the first instinct is not to ask the government, you know,
Speaker 1: because you don't think you'll get anything the government. If
Speaker 1: you give anything that the government, you think it will disappear.
Speaker 1: So people have just become used to doing stuff themselves.
Speaker 1: They just instantly do it, and they just instantly begin
Speaker 1: Facebook groups and so on to say, let's get a
Speaker 1: car for so and so so that he can go
Speaker 1: to the front. So it's it's just really ingrained, and
Speaker 1: I think it is actually more important than the dollar value,
Speaker 1: simply because it says to every soldier at the front um,
Speaker 1: you know, I've got an entire society behind me. Talk
Speaker 1: to us about some of the people behind some of
Speaker 1: these Crown crowdfunding efforts. We're talking about what Hollywood celebrities
Speaker 1: were talking about, oligarchs, we're talking about everybody. Yeah, absolutely, So,
Speaker 1: you know the fund that was set up by the president,
Speaker 1: President Celenski, he has one called United twenty four and
Speaker 1: they've raised two hundred and eighty seven million dollars. And
Speaker 1: for that fund, he has really reached out and he's
Speaker 1: persuaded by b Streisan to be an ambassador the fund.
Speaker 1: There's a number of other celebrities that have become attached
Speaker 1: to the fund in one way or another and so
Speaker 1: they raise money. And then you have others who are
Speaker 1: as you mentioned the oligarchs. You know, some of the
Speaker 1: oligarchs who are not very popular, and we're even seen,
Speaker 1: you know, some years ago as being kind of pro
Speaker 1: Russian because they supported the party that former president Janakovic
Speaker 1: used to you know, represent So you know Aria Ahmetze,
Speaker 1: who's the richest man in Ukraine. He has a big
Speaker 1: steel company called met in Best. They owned as a
Speaker 1: style in Mariupol. The steel plant where they were the
Speaker 1: last stand was made in Mariupol. They've lost a lot
Speaker 1: of their assets, but he has actually provided one hundred
Speaker 1: and fifty thousand sets of bulletproof vests which they've made
Speaker 1: in his factories, you know, eighty thousand tank traps, all
Speaker 1: kinds of stuff which really does mount up. Well, Carol,
Speaker 1: you bring up a great question about the people who
Speaker 1: fund this effort and who have kind of been the
Speaker 1: leaders behind it. I wonder Mark, if you can talk
Speaker 1: about the people who are most impacted by it? Is
Speaker 1: this civilian Is it folks who are actually fighting, Who
Speaker 1: is most benefiting from this extra cash? Well, it really
Speaker 1: is everybody, but the Ukrainians are focused very much, you know,
Speaker 1: on people who remain in areas that are either at
Speaker 1: the front or they're in areas that were occupied and
Speaker 1: were then retaken by the Ukrainians, and services there has
Speaker 1: sort of broken down. Medical services, you know, food is
Speaker 1: difficult to sort of distribute all those sorts of things.
Speaker 1: So basically, you know, as I say, it's it's the
Speaker 1: great strength of this is that it's incredibly flexible. It
Speaker 1: just kind of responds because everybody knows somebody and they
Speaker 1: then move into these areas and provide services that the
Speaker 1: government is just you know, incapable or too slow or
Speaker 1: you know, doesn't have the resources to do. And it
Speaker 1: really is a kind of lifesaver in these areas. It
Speaker 1: is for civilians, it's but a lot of it is
Speaker 1: for the front, for the soldiers U. It's interesting too,
Speaker 1: and it's funny, you know, Mark, as we were getting
Speaker 1: ready and talking about your story in the newsroom, one
Speaker 1: of the things that came up from one of our producers,
Speaker 1: Aria Gami, he said, you know, wait a minute, I
Speaker 1: understand the US is sending billions of dollars in equipment
Speaker 1: and providing support. We know, other nations and allies of
Speaker 1: the US are certainly, and of Ukraine are providing support.
Speaker 1: Why is this ultimately necessary? Because nothing is enough. I mean,
Speaker 1: this is a big war. We haven't seen a war
Speaker 1: like this since World War Two in terms of pure intensity.
Speaker 1: I mean they have been other very intense wars, but
Speaker 1: not like this. And you know, the Russian side in
Speaker 1: particular is very well armed. It has the entires, you know,
Speaker 1: not the entire so the predominant part of the stocks
Speaker 1: of the former Soviet Union that it built up for
Speaker 1: the Cold War, and in many ways this is you know,
Speaker 1: they're running down through the Cold War stocks of the
Speaker 1: former Soviet Union. The Ukrainians on the other side, you know,
Speaker 1: they're still he starts at this war with around sixteen
Speaker 1: hundred tanks. You know, Germany has three hundred. You know,
Speaker 1: Britain has two hundred and twenty. So it's you know,
Speaker 1: they they it's not like they had nothing. But you
Speaker 1: need so much in order to pursue a warline there.
Speaker 1: It just eats resources at an incredible rate, and you
Speaker 1: need a lot of everything because it gets destroyed. You know,
Speaker 1: the ninety percent of drones get destroyed. A lot you know,
Speaker 1: pickup trucks that people bring they get destroyed, either you know,
Speaker 1: because they get hit, or they just you know, in
Speaker 1: an accidents, or they just you know, get stuck in
Speaker 1: mud or whatever. That it just eats through resources at
Speaker 1: an incredible rate. And to be fair, we've talked about
Speaker 1: the new double issue Bloomberg Business Week gets out cover
Speaker 1: story is of course marking the one year Russian invasion
Speaker 1: into Ukraine, but talks about, you know, specifically, Maddie, the
Speaker 1: shortage of ammunition on both sides. I mean, both sides
Speaker 1: are going through a lot when it comes to any
Speaker 1: kind of defense equipment, and they're just kind of running
Speaker 1: through it. Yeah, and it's it's so critical. I wonder Mark,
Speaker 1: in our final kind of thirty seconds with you here,
Speaker 1: if you can talk about you mentioned the intensity of
Speaker 1: the war. What is something that you understand about the
Speaker 1: situation on the ground that folks who haven't been in
Speaker 1: Ukraine might be missing about the story. Well, I think
Speaker 1: when you hear that the war has slowed down in
Speaker 1: the East and yet you hit, then the casualty rates
Speaker 1: are really high. That is simply about intensity. So they
Speaker 1: may not be moving, but there is a lot of
Speaker 1: artillery shells that are just being exchanged on either side
Speaker 1: and bodies now at this part of the war, just
Speaker 1: bodies on the Russian side being thrown at the war.
Speaker 1: So when you hear that things were to nothing's moved
Speaker 1: or slow, it doesn't mean that the war has itself
Speaker 1: has slowed down in terms of intensity, and it hasn't
Speaker 1: at all. Yeah, it's pretty amazing though, and to think
Speaker 1: about it was just a year ago then it all started.
Speaker 1: But you look at how much devastation and how many
Speaker 1: resources are still needed to continue on Mark Champion Incredible story,
Speaker 1: Marks Senior reporter for International Affairs at Bloomberg News, joining
Speaker 1: us on the phone from London. Be sure to check
Speaker 1: out his Bloomberg Big Take. Can also find it on
Speaker 1: the Bloomberg Terament. Of course, check out the Bloomberg Big
Speaker 1: Take on Bloomberg Radio weeknights at eleven pm in all
Speaker 1: street time, you're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us live weekdays from two to five pm Easter
Speaker 1: on Bloomberg Radio, the Bloomberg Business Band You Two. You
Speaker 1: can also listen live to our flagship New York station,
Speaker 1: Just Say Alexa, play Bloomberg Eleve and Dirty. Well you
Speaker 1: know what, Maddie, we had some data out earlier this
Speaker 1: morning we talked about with Scarlett and Romain. It talks
Speaker 1: specifically about output at US factories up the most in January,
Speaker 1: by the largest amount in early a year. So we're
Speaker 1: talking about improving supply chains, firm or demand getting and
Speaker 1: giving some relief, if you will, to what's been a
Speaker 1: really challenged manufacturing sector. So much needed relief after the
Speaker 1: past couple of years of supply chain shocks. Right, it's
Speaker 1: been crazy. Right, We're just talking a little bit about
Speaker 1: Cisco and the manufacturing and the backlogs just in general.
Speaker 1: We want to get to our next guests. Mattive Holdings
Speaker 1: is a publicly held company. It's got about a one
Speaker 1: and a half billion dollar market cap. It makes and
Speaker 1: sell specialty materials for manufactory two customers in more than
Speaker 1: a hundred countries, so it's got a great global perspective.
Speaker 1: Julie Chartel is the presidency of the company. Just ringing
Speaker 1: the closing bell at the New York Stock Exchange and
Speaker 1: that's where we find our via Zoom. Julie, good to
Speaker 1: have you here on Bloomberg BusinessWeek on Bloomberg Radio. First
Speaker 1: of all, tell us a little bit about your customers,
Speaker 1: your business and what vantage point that gives you when
Speaker 1: it comes to manufacturing and the economic outlook. Sure, thank
Speaker 1: you for having me today. It's a real honor and
Speaker 1: privilege to be here at the New York Stock Exchange
Speaker 1: and it marks a key milestone formative as a specialty
Speaker 1: materials company. We're you've created through the merger of two
Speaker 1: former specialty materials companies MINA and SWM, and so combined,
Speaker 1: it's a really powerful statement that we're making into the market.
Speaker 1: We have complementary technologies that we sell into a diverse
Speaker 1: area of different categories, whether that's filtration media for cleaner
Speaker 1: air and water and the strong macro trends behind those things.
Speaker 1: It's release liners and applications for medical packaging and its
Speaker 1: tapes and abrasives. Into the industrial space as well, we've
Speaker 1: seen great strength and really a supply chain that is
Speaker 1: starting to improve, and that's a great spot to be
Speaker 1: in as a manufacturer. How would you describe the overall
Speaker 1: manufacturing environment today and what does that tell us about
Speaker 1: our overall economy. What's kind of an insight that you
Speaker 1: have because of your work in manufacturing that the rest
Speaker 1: of us might not. I think It's interesting because it's
Speaker 1: a little bit of a dichotomy. We are seeing, you know,
Speaker 1: the supply chains start to right size after what I
Speaker 1: would say is two years of challenges in our supply
Speaker 1: chain in manufacturing, whether that's driven by the rising interest rates,
Speaker 1: record levels of inflation, the Ukraine War, some of the
Speaker 1: conflicts in China, or some of the outcomes of COVID
Speaker 1: in China. We're starting to see that settle in and
Speaker 1: so our supply chain is opening up a bit, loosening
Speaker 1: up a bit, and that's really important for our customers.
Speaker 1: It means we're able to get back to a service
Speaker 1: level and predictability and lead time that is most valuable
Speaker 1: to them. And I think what we really recognize as
Speaker 1: manufacturers is it's important to have a global supply chain,
Speaker 1: but it's really important to have local supply because during
Speaker 1: this time, supply and availability became the number one priority
Speaker 1: for all of our customers. Hey, Julie, two questions, So
Speaker 1: are you back, Are the supply chains back to where
Speaker 1: we were pre pandemic and all of the bottlenecks, And secondly,
Speaker 1: you talk about local supply chains, are we seeing more
Speaker 1: and more companies tap into that change? Their supply chains,
Speaker 1: make sure that they're kind of in their backyard. So
Speaker 1: if you could address those two things, that would be great.
Speaker 1: Sure on the supply chain, I'd say we're headed and
Speaker 1: headed back to pre pandemic levels, but still not there.
Speaker 1: But we're seeing chemical availability become more standardized or seeing
Speaker 1: lead times become more standardized, so the availability is really improving.
Speaker 1: We aren't seeing a tremendous amount of deflation yet, at
Speaker 1: least not in the categories in which we compete. We're
Speaker 1: seeing a start to moderate, but we still have prices
Speaker 1: at very high levels for most of our supplies. And
Speaker 1: I will tell you that we're in the past. Maybe
Speaker 1: pricing was the number one discussion with customers. It is
Speaker 1: supply chain now. And so, just as I was mentioning
Speaker 1: in to your question, that local availability and there's different
Speaker 1: ways to do that, whether that's having manufacturing assets in
Speaker 1: the backyard of our customers in our markets, or having
Speaker 1: availability through different means of transportation and quick turn, you know,
Speaker 1: an agile type of transportation system. It's significantly important because
Speaker 1: many customers and many suppliers and many manufacturers have learned
Speaker 1: how impactful it is when some of those materials that
Speaker 1: we did not anticipate. You know, you anticipate your big
Speaker 1: commodity materials to have fluctuations like we've seen. We did
Speaker 1: not anticipate specialty chemicals and some of the other areas
Speaker 1: to have the type of volatility that we've seen. That's
Speaker 1: starting to loosen up and straighten out a little bit,
Speaker 1: but the local supply chain, the reliability, the predictability continues
Speaker 1: to grow in importance with our customers. Have you felt
Speaker 1: any impact from China reopening? Has that impacted you at all?
Speaker 1: And do you anticipated impacting you? You know, very minimal.
Speaker 1: We have a very small footprint in China and a
Speaker 1: very small portion of our revenue in China. We're primarily
Speaker 1: North American and European and a little bit in South America,
Speaker 1: a little bit in Asia. So it's had a very
Speaker 1: minimal impact, I'd say, not significant, all right. So the
Speaker 1: US and Europe are your biggest market recession for either
Speaker 1: of them or how would you describe it at this point? Julk,
Speaker 1: I think they're very different. I mean, we're definitely feeling
Speaker 1: some contraction in Europe in particular, we saw and felt
Speaker 1: and experienced the record level energy hikes we have facilities
Speaker 1: in France and Spain, the UK and Germany, and we
Speaker 1: felt it in all of those areas. I will tell
Speaker 1: you what it's helped us do has become more agile.
Speaker 1: So we've worked really hard to start and forward by
Speaker 1: some of those energies, hedge some of that energy cost
Speaker 1: so that we have greater reliability and predictability, and it's
Speaker 1: made as very agile with our pricing, so that we
Speaker 1: have shorter pricing commitments and contracts and different modifiers that
Speaker 1: are inclusive of different components and some of those specialty
Speaker 1: chemicals and energy that had not been in the past.
Speaker 1: So that's Europe, and i'd say Europe is where we're feeling,
Speaker 1: you know, more of a slowdown. It's a little bit
Speaker 1: hard right now to peel away how much of that
Speaker 1: is really pure demand contraction and how much of that
Speaker 1: is just customers right sizing their inventory, because we know
Speaker 1: throughout the entire supply chain there was significant inventory build
Speaker 1: as customers struggle to get the materials they needed, they
Speaker 1: ordered more and more in anticipation of getting their fair share,
Speaker 1: and as demand starts to correct itself, you know, they're
Speaker 1: often left with high levels of inventory. So there's a
Speaker 1: level of destocking and we're feeling that in North America
Speaker 1: and Europe, but more contraction in Europe. I'd say our
Speaker 1: North American business has remained fairly healthy. You know, I'm
Speaker 1: looking at there's a great function on the Bloomberg terminal.
Speaker 1: It's all about supply chains and basically it looks at
Speaker 1: who are your top suppliers and then who are your
Speaker 1: top customers. But when it comes to your suppliers, a
Speaker 1: lot of it is in the energy space. How would
Speaker 1: you describe that industry right now? The energy space, I
Speaker 1: think they're just going through a tremendous amount of change
Speaker 1: and I think they're you know, it's difficult to predict
Speaker 1: the future right now. There's a lot of pressure from
Speaker 1: getting to clean energy, and then there's the availability and
Speaker 1: you know, some of the efforts that we're seeing or
Speaker 1: the impacts that we're seeing in Europe with the Ukraine War,
Speaker 1: and you know, that created some of the issues that
Speaker 1: we saw earlier this year. So for us, it's really
Speaker 1: been about how do we control our own destiny. Knowing
Speaker 1: there's there's lack of predictability in the marketplace, and particularly
Speaker 1: and energy, how do we make sure we become more agile,
Speaker 1: we become more consistent, and we really take control of
Speaker 1: those factors that we can to push forward through some
Speaker 1: of those issues and reduce the volatility. And are you
Speaker 1: still seeing consumer demand for sustainable manufacturing even with some
Speaker 1: of the volatility that we're experiencing. Yeah. Absolutely, I think
Speaker 1: sustainable manufacturing is it's not a trend. I think it's
Speaker 1: here to stay, and so it's really important that we
Speaker 1: continue to move in that direction. And much of our
Speaker 1: platform from an innovation standpoint is on sustainability. We're often
Speaker 1: the preferred alternative to plastics for some of our packaging
Speaker 1: material and medical packaging materials. So it's a really important
Speaker 1: part of how we move forward. Hey, Julie, twenty seconds.
Speaker 1: What keeps you up at night? What's the biggest risk
Speaker 1: in the outlook? Very quickly if you could, you know,
Speaker 1: it's just the overall global economy. The factors are moving in,
Speaker 1: the indicators are moving in different directions. When we look
Speaker 1: at interest rates versus job race versus manufacturing PMI, typically
Speaker 1: they've moved in unison and they just they're not quite
Speaker 1: doing that right now. So it's the lack of predictability
Speaker 1: that's why for us, it's really important we focus on
Speaker 1: those things we can control. We just merge. We have
Speaker 1: great synergies, we have great we have great cost reduction
Speaker 1: opportunities as well as unlocking growth. So I'm thrilled with
Speaker 1: where we're headed and we're going to focus on those
Speaker 1: things that we can control. Well. Gate great to get
Speaker 1: a check on your business and talk outlook as well.
Speaker 1: Julie Schertel. She is president CEO of Mattev. She just
Speaker 1: ranging the closing belt of New York Stock Exchange and
Speaker 1: that is exactly where we were just talking to her,
Speaker 1: so good to catch up with her. You're listening to
Speaker 1: the Bloomberg Business Week podcast. Catch us live weekdays from
Speaker 1: two to five pm Easter on Bloomberg Radio. The Bloomberg
Speaker 1: Business a band you Doo. You can also listen live
Speaker 1: to our flagship New York station, Just Say Alexa play
Speaker 1: Bloomberg e Love and Dirty. Over the years, we have
Speaker 1: touch base with the CCD team at Cura Leaf, including
Speaker 1: the company's chairman, Boris Jordan. Many times. Cure Leaf, as
Speaker 1: you know, approximately two point seven billion dollars cannabis holding
Speaker 1: company based in Canada, and we wanted to get more
Speaker 1: on the business, including last week's news that Twitter would
Speaker 1: allow cannabis ads, becoming the first major social platform to
Speaker 1: do so. We welcome Cure Leaf CEO Matt Darren joining
Speaker 1: us via zoom in Florida. Matt, good to have you
Speaker 1: here with Mattie and myself. How are you and how
Speaker 1: is business doing? Great? Thank you. Business continues to be brisk.
Speaker 1: It's we're continuing to see that cannabis is a recession
Speaker 1: resistant staple and despite many of the inflation crashers and
Speaker 1: other things going to the economy, people are prioritizing their
Speaker 1: cannabis purchases, which is encouraging to see. All right, optimism,
Speaker 1: you sound optimistic, But in January, you guys did release
Speaker 1: that you're cutting your payroll by about ten percent. You
Speaker 1: were closing operations in California, Colorado, and Oregon at the
Speaker 1: same time. Though, there's some news just last week that
Speaker 1: you opened another dispensary in Florida. I think it's your
Speaker 1: fifty eighth in that state, one hundred and forty eighth
Speaker 1: nationwide in the US. So, first of all, kind of
Speaker 1: square some things for me. Why the cuts in payroll,
Speaker 1: why the shutdowns in California, Colorado and Oregon. So a
Speaker 1: few things first. You know, pure Leaf got more than
Speaker 1: doubled for a number of consecutive years, and with that
Speaker 1: hypergrowth comes opportunities to continue to optimize the business. So
Speaker 1: many of the decisions that we're making, I think are
Speaker 1: natural for high growth companies that are going through its
Speaker 1: next phase of evolution and is something we're seeing really
Speaker 1: throughout the industry as it relates to our markets in
Speaker 1: the West Coast. Look, there are in a resource constrained,
Speaker 1: capital constraint environment. We want to make sure that we
Speaker 1: are allocating our capital and our resources to the markets
Speaker 1: where we see the greatest opportunities, Florida being one of
Speaker 1: them with the largest medical market and adult use on
Speaker 1: the horizon in the coming years. You have some markets
Speaker 1: such as California on the West Coast that have just
Speaker 1: experienced some major challenges for a variety of reasons, from
Speaker 1: lack of enforcement of the illicit market to high tax
Speaker 1: structures in place that have really made it challenging to
Speaker 1: be profitable in California. So for the time being, we're
Speaker 1: continuing to go asset light in those markets and hopefully
Speaker 1: they're going to stabilize in the coming years and you
Speaker 1: know we'll be there. You tease this out a little bit,
Speaker 1: but can you talk to me a little bit more
Speaker 1: about why you like Florida as a market to continue
Speaker 1: to expand in. So Florida has been a wildly successful
Speaker 1: medical program with over seven hundred thousand patients in the
Speaker 1: medical program. You know, the licensing structure allows you to
Speaker 1: expand your cultivation and manufacturing capacity as much as you
Speaker 1: would like, as well as to open up as many dispensaries,
Speaker 1: so you can really build scale in the Florida market,
Speaker 1: which we continue to do by investing in our manufacturing
Speaker 1: and processing capabilities and continuing to open new dispensaries as
Speaker 1: you've seen. So it's really an attractive market, and that's
Speaker 1: just in a medical environment. So with adult use on
Speaker 1: the horizon at some point and one hundred and thirty
Speaker 1: million tourists that come to Florida every year, not to
Speaker 1: mention the demographic ship taking place with many people relocating
Speaker 1: to the state, it really is an attractive climate operating.
Speaker 1: How strong is the demand in Florida that you guys
Speaker 1: have so overweighted your exposure to that state. The demand
Speaker 1: is immense. I think part of what we've seen is
Speaker 1: that there's certain parts of the state that have been
Speaker 1: slower to communities flower to zone for dispensaries. And so
Speaker 1: while there are you know, hundreds of dispensaries throughout the state,
Speaker 1: there's some areas that have really not had much accessibility
Speaker 1: for medical cannabis up until recently. So we're seeing some
Speaker 1: greenfield opportunities in areas outside of Orlando and other parts
Speaker 1: of the state that we're excited to now be represented
Speaker 1: in where we weren't before. Same thing in you know,
Speaker 1: south in Miami Dade County, there's areas that are new
Speaker 1: areas that have been opening up that are now zoned
Speaker 1: for medical dispensaries, whereby previously that was not an option available.
Speaker 1: So we're really we're very focused on opening up a
Speaker 1: locations in these markets, but the opportunities are continuing to
Speaker 1: open up for that. Well. We got some big news
Speaker 1: last week that Twitter is allowing cannabis ads. I imagine
Speaker 1: that that news was music to your ears. Can you
Speaker 1: talk to me about how big of a deal that
Speaker 1: is for you and the business. We see it as
Speaker 1: a really big deal. Twitter being the first major online
Speaker 1: social media platform to allow cannabis companies to advertise, albeit
Speaker 1: subject to restrictions. I think is a real big moment
Speaker 1: for the industry. Historically, we've been very limited in terms
Speaker 1: of the digital marketing that we can do and frankly
Speaker 1: all types of marketing, and so the notion that we
Speaker 1: can now advertise and participate in social media channels, including Twitter,
Speaker 1: which has been very active in the cannabis space, is
Speaker 1: really a whole new opportunity and something that we're really
Speaker 1: excited for to capitalize on. My understanding, to advertise on Twitter,
Speaker 1: it are that cannabis companies must be pre authorized by
Speaker 1: Twitter and meet many requirements. What are you learning about
Speaker 1: those requirements? So, yes, there are a number of requirements, uh,
Speaker 1: you know in the early stages here, UM, the we
Speaker 1: do need to be pre authorized by the platform, UM
Speaker 1: to post ads. There's restrictions on what can be advertised.
Speaker 1: You know, we're not advertising you know, most cannabis products
Speaker 1: in general. UM, So there's some significant limitations on um,
Speaker 1: you know, what can exactly be advertised. UM. And there's
Speaker 1: certain pre authorizations uh that are there as well as
Speaker 1: jurisdictions um where we are able to um, you know,
Speaker 1: offer these ads. So help me, help me out. Is
Speaker 1: this correct that one of the most significant restrictions is
Speaker 1: that cannabis companies can't promote or offer for sale cannabis products.
Speaker 1: Isn't that what advertising is? You are correct? Now we're
Speaker 1: able to offer advertise certain products that are at a
Speaker 1: very dimnimus amount of THHC, things like our outstanding topicals,
Speaker 1: which do quite well in places like Florida. But you're right,
Speaker 1: there are a lot of restrictions in terms of actually
Speaker 1: advertising the products that we dispense. But I will say
Speaker 1: that that is still progress from where we have been at,
Speaker 1: where we've not been able to have any sort of
Speaker 1: advertising presence on these platforms. So while certainly we're more
Speaker 1: limited than conventional CBG companies and others, this is progress
Speaker 1: from what we've been dealing with the last decade. So
Speaker 1: we'll take progress for the moment. Are you also a
Speaker 1: little nervous? And it just harkens back to kind of cigarettes,
Speaker 1: This whole idea that you can't target minors, I mean, like,
Speaker 1: how do you not well? I think there's something that
Speaker 1: we take very seriously. Now. Curely's roots are as a
Speaker 1: health and wellness company coming out of the medical space,
Speaker 1: and that's still very much in our DNA, even as
Speaker 1: we transition to adult use and are offering products across
Speaker 1: a variety of ways. You know, there's certainly ways to
Speaker 1: market and advertise that are not being directed towards youth,
Speaker 1: and that in terms of the way that products get presented,
Speaker 1: and you know, many of those things. So I think
Speaker 1: there's absolutely ways to market cannabis products. And the reality
Speaker 1: is a huge portion of our customer base is, you know,
Speaker 1: kind of skewing older than younger. There's the reality. And
Speaker 1: forgive me, I really probably should have has phrased it
Speaker 1: more like it's hard to avoid anybody from seeing the
Speaker 1: ads that are out there. I'm not sure I didn't
Speaker 1: mean to mean that you guys are necessarily going to
Speaker 1: target young folks, but I mean once the stuff is
Speaker 1: out there, pretty much anybody can see it. Matt, come back,
Speaker 1: because I'd love to continue this conversation and love to
Speaker 1: know more as you guys find out about the advertising rules.
Speaker 1: Matt Darren, He's chief executive officer of Purely joining USPA
Speaker 1: Zoom from Florida. This is Bloomberg Radio. You're listening to
Speaker 1: the Bloomberg Business Week podcast. Catch us live weekdays from
Speaker 1: two to five pm Eastern on Bloomberg Radio, the bloom
Speaker 1: Berg Business Band You two. You can also listen live
Speaker 1: to our flagship New York station Just Say Alexa play
Speaker 1: Bloomberg e Love and Dirty. So it is safe to
Speaker 1: say and we have all become obsessed with balloons after
Speaker 1: that Chinese surveillance balloon found its way over the United States.
Speaker 1: Well said, which is why we knew. We wanted to
Speaker 1: bring you this story in the current double issue of
Speaker 1: Bloomberg BusinessWeek, which is out on newstands, on line up,
Speaker 1: Bloomberg dot com, Slash business Week, and of course on
Speaker 1: the Bloomberg terminal. Let's get more with us is Christina Lindblag,
Speaker 1: Global Economics editor at Bloomberg BusinessWeek. She's in our Bloomberg
Speaker 1: Interactive Broker studio along with Jeff Wise, Bloomberg BusinessWeek freelance contributor.
Speaker 1: He joins us via zoom from Westchester, New York. Christine,
Speaker 1: I want to kick it off with you. We are
Speaker 1: all obsessed about balloons, but they've been out there for
Speaker 1: a long time, that's right, And as often happens when
Speaker 1: we are interested in things in the sky, We've reached
Speaker 1: out to Jeff who knows a lot about aerospace, and said,
Speaker 1: why don't you like give us a little history of
Speaker 1: the balloons and also like, what accompanies are you know
Speaker 1: in this field? Now, what could the Chinese have been
Speaker 1: trying to do with this? So maybe Jeff can kick
Speaker 1: it off by telling us, Yeah, give us a little
Speaker 1: bit of a snapshot of how long these craft have
Speaker 1: been around and what they've been used for and what
Speaker 1: they're being used for now. Well, thanks, Christina. You know,
Speaker 1: it's it's such a back to the future kind of technology.
Speaker 1: You know, people have been using balloons for literally hundreds
Speaker 1: of years to engage in surveillance on the other side,
Speaker 1: in military operations, and here we are, in a age
Speaker 1: when people are talking about hypersonic rockets and the like.
Speaker 1: We have this balloon floating overhead, and it turns out
Speaker 1: it's pretty hard to see, it's pretty hard to shoot down,
Speaker 1: and so I wanted to find out, well, what is
Speaker 1: it actually doing. What's the point of floating a balloon
Speaker 1: over someone like they did, And it turns out there's
Speaker 1: there's lots of handy things you can do, like sniffing
Speaker 1: out signal intelligence. All right, So take us Jeff, if
Speaker 1: you will, to a company that you write about in
Speaker 1: your story Aerostar, right. This is a super interesting company
Speaker 1: was actually started by the guy who kind of reinvented
Speaker 1: the hot air balloon, used modern materials after World War
Speaker 1: Two to make it the kind of hobby that it
Speaker 1: is today. You know, we see hot air balloons floating
Speaker 1: all over the place, and you don't realize that somebody
Speaker 1: actually created this technology and popularize it. This company went
Speaker 1: on to build high altitude balloons for the military, and
Speaker 1: they were able to do something that's harder than it sounds.
Speaker 1: If you put a if you fill a bag of
Speaker 1: gas with hydrogen or helium and float it up into
Speaker 1: the upper atmosphere, it eventually leaks out and comes down.
Speaker 1: But they figured out a way to basically keep these
Speaker 1: balloons up in the high stratosphere indefinitely, and that means
Speaker 1: you can float a kind of anywhere in the world
Speaker 1: for really months at a time. Their longest flight is
Speaker 1: over one hundred and fifty days, almost six months, which
Speaker 1: it's pretty obviously when you say that Timeline, Jeff, that
Speaker 1: these balloons can do a lot that planes can't. But
Speaker 1: can you talk a little bit about some of the
Speaker 1: other benefits balloon surveillance might offer that a plane over
Speaker 1: an aerospace just can't provide. Yeah, I mean the first
Speaker 1: thing that came to my mind is satellites. I mean,
Speaker 1: the Chinese are flying satellites over us all the time anyway,
Speaker 1: why not just use those? Well, it turns out that
Speaker 1: satellites have an important limitation, which is that they're if
Speaker 1: they're low enough to get really high resolution images there
Speaker 1: maybe twenty fifteen miles up, they're moving really fast, and
Speaker 1: they as they go around the Earth, they only come
Speaker 1: back over a certain patch of ground, like maybe every
Speaker 1: day and a half or something. And so if you
Speaker 1: want to really have a long, lingering look at something
Speaker 1: and look at it from even closer than two hundred
Speaker 1: and fifty miles up, a stratospheric balloon is really a
Speaker 1: good option. Another cool thing about the modern stratospheric balloons,
Speaker 1: this has only really been possible in the last you know,
Speaker 1: fifteen years or so, is that by adjusting the altitude,
Speaker 1: you can insert this balloon into winds they're going in
Speaker 1: the right direction that you want it to go, and
Speaker 1: you can either you know, park it over someplace on
Speaker 1: the other side of the Earth literally, or you can
Speaker 1: put in a spot and just keep it there. And
Speaker 1: so that's very useful if you want to look at
Speaker 1: something for a long time, which can be very useful
Speaker 1: for a surveillance operation. Jeff, what do you think the
Speaker 1: Chinese might have been using the balloon that was shot
Speaker 1: over the Atlantic? Four? But there's a special technology that
Speaker 1: might be interested, isn't there. Yeah, exactly. There's this new
Speaker 1: kind of communications technology that the US military has been
Speaker 1: developing that I had never heard of, but that it
Speaker 1: basically tries to conceal the signal so that it's difficult
Speaker 1: to intercept. It's called ld LPI Low probability of intercept,
Speaker 1: and basically you're trying to hide your signal in the
Speaker 1: background noise, so you're actually trying to send it at
Speaker 1: as low power as you can get away with. That
Speaker 1: makes it really hard to detect, especially if you're far away.
Speaker 1: So this is the advantage of a balloon that's only
Speaker 1: maybe you know, twenty miles up instead of twenty or
Speaker 1: fifteen miles up, so it's much closer and it's much
Speaker 1: more likely to sniff this out. This is just speculation.
Speaker 1: I don't know if this is what it's for. Aerostar
Speaker 1: doesn't know if this is what the Chinese are doing,
Speaker 1: but the US military at this point definitely knows because
Speaker 1: they have recovered the instrumentation that was on boards balloon
Speaker 1: that was shot down, and they're going to know exactly
Speaker 1: what the Chinese were aft. Jeff, what's wild in a
Speaker 1: world where I feel like defense, aerospace, everything is getting
Speaker 1: much more technologically sophisticated. Balloon seems so quaint, if you will,
Speaker 1: but it's not the Wizard of Oz balloon, as you say.
Speaker 1: There's some pretty wild technology on these balloons. Yeah, it's
Speaker 1: much more high tech than it seems. Because while the
Speaker 1: idea of you know, putting a lighter than aircraft you know,
Speaker 1: up in the atmosphere is hundreds of years old, the
Speaker 1: way that they do it, the altitude that they get,
Speaker 1: and the way that they can control it is very
Speaker 1: sophisticated and actually quite hard to do. And it's taken
Speaker 1: that it took them a number of years to get
Speaker 1: it right, and now that now that they got it right,
Speaker 1: clearly either the Chinese were watching them, taking notes or
Speaker 1: maybe just developing it on their own separate, parallel path,
Speaker 1: but it is really a whole new technology. Hey, real
Speaker 1: quickly thirty seconds there. It's a lot less expensive, right,
Speaker 1: which makes it much more accessible to potential bad actors
Speaker 1: very quickly. Yeah, I mean it's much it's very democratizing
Speaker 1: because you know, it's not too hard to put a
Speaker 1: balloon up in there compared to building a whole space rocket,
Speaker 1: launch it into space, tracking into all that. So relatively
Speaker 1: relatively more egalitarian, if you will. I feel like we
Speaker 1: were all looking for this story, especially after Obsessed. We've
Speaker 1: all been. Jeff, thank you so much. Jeff Wise, freelance
Speaker 1: contributor at Bloomberg Business Week via zoom from Westchester, New York. Christine,
Speaker 1: did you feel like like you learn things about balloons? Yeah?
Speaker 1: I could love that story. I do too, Christina Lindblad,
Speaker 1: she's our global economics that are at Bloomberg Business Week
Speaker 1: here in our interactive broker studio. As we said, this
Speaker 1: story is in the new double issue current issue of
Speaker 1: Bloomberg Business Week, out on newsstands, on line at Bloomberg
Speaker 1: dot com, slash BusinessWeek, and oi's on the Bloomberg. You're
Speaker 1: listening to the Bloomberg Business Week podcast. Catch us live
Speaker 1: weekdays from two to five pm Eastern on Bloomberg Radio
Speaker 1: the Bloomberg Business a band. You two. You can also
Speaker 1: listen live to our flagship New York station, Just Say
Speaker 1: Alexa play Bloomberg, ELB and Dirty Well. Our next guest
Speaker 1: as an author, a television host, a philanthropist, James Baird
Speaker 1: Award Michelin Star, decorated chef that again just also earning
Speaker 1: a four star rating from The New York Times. We'll
Speaker 1: talk about that in just a moment. He is definitely
Speaker 1: in a class all his own. We're talking about Eric Repair,
Speaker 1: executive chef and co owner of La Bernadin, now celebrating
Speaker 1: its fiftieth anniversary. La Bernadine one of the rare New
Speaker 1: York City restaurants to be awarded the maximum three Michelin
Speaker 1: Stars for excellent and cuz cuisine. If there is like
Speaker 1: a benchmark and award, he has certainly won it. He's
Speaker 1: also vice chairman of the board of City Harvest. He
Speaker 1: joins this visum in New York City. Eric, Thank you
Speaker 1: so much, Thank you for coming on Bloomberg again. How
Speaker 1: are you. I'm doing great? Thank you for allowing me today. Congratulations.
Speaker 1: We're not quite sure where to start, but let's start.
Speaker 1: First of all, because you were kind enough in the
Speaker 1: midst of the deep depths of the pandemic to come
Speaker 1: on and talk with us about the industry. Tell us
Speaker 1: where we are today and how much we've come back,
Speaker 1: how much we have to go. So the industry came
Speaker 1: back very quickly. People right after the pandemic decided that
Speaker 1: they wanted to splurt and a great experience and live
Speaker 1: life and be happy. And therefore restaurants and the hospitality
Speaker 1: in general are benefiting from that shift of thinking. And
Speaker 1: despite the fact that last year we started the year
Speaker 1: with the omni ron and it was a bit of
Speaker 1: fear attached to that, restaurant did extremely well in general
Speaker 1: in New York City and all over the US and
Speaker 1: no signs of stopping. No, I don't see any stops
Speaker 1: of stopping. The big difference in between last year and
Speaker 1: this year is that more people are going out, but
Speaker 1: spending is a bit less than twenty twenty two. Where
Speaker 1: are you seeing that, Well, the spending is at least
Speaker 1: at Lebernard, and the spending is less in the wine
Speaker 1: consumption or in the in the cocktails. People have the
Speaker 1: tendency to be saving a bit more there we have
Speaker 1: a prefixed menu or testing menu, so people cannot um
Speaker 1: eat something less expensive because again it's it's already decided.
Speaker 1: But for the one consumption, for sure, we see a
Speaker 1: huge difference. And when I talk to my friends in
Speaker 1: the industry, they observe exactly the same phenomenon. So I wondered, too,
Speaker 1: how much ERIC is because of still the inflationary and
Speaker 1: price pressures. How that is playing into kind of your dynamic.
Speaker 1: So we have seen a lot of inflation in twenty
Speaker 1: twenty two. We still see some inflation right as we speak.
Speaker 1: Right now, it's difficult to really quantify the effect, but
Speaker 1: we had to raise our prices by twenty percent in
Speaker 1: a period of time of eighteen months and right now,
Speaker 1: depending on the weather and depending of many components, the
Speaker 1: price of many products and produces varies. And I know
Speaker 1: during the pandemic from the New York Times Rave review,
Speaker 1: which we'll get to, you had seven people working with
Speaker 1: you in the kitchen. Is that correct? So I imagine
Speaker 1: you've got a lot more now. But talk to me
Speaker 1: about what that transition kind of back to quote unquote
Speaker 1: normal has looked like for you, and how have labor
Speaker 1: costs changed for you? So it was very difficult to
Speaker 1: reopen the restaurants because a lot of people that were
Speaker 1: working in our industry went back to other states that
Speaker 1: were open to business, like Florida, for instance, or young
Speaker 1: students that are usually learning in a kitchen of fine
Speaker 1: dining restaurants went back to their families and never came
Speaker 1: back to New York. So when we reopened the restaurant,
Speaker 1: the manage management was here. They were employees that work
Speaker 1: at Lebernard and for a long time, and we were
Speaker 1: short in staff. But we reopened, as you remember, at
Speaker 1: twenty five percent capacity in New York City, and then
Speaker 1: it increased to fifty percent, and then we closed again,
Speaker 1: and then we reopened at ared percent today. From seven
Speaker 1: people in a kitchen that we had, we have sixty cooks.
Speaker 1: We should be about seventy five cooks, wow, or chefs,
Speaker 1: and we are a little bit short. The salaries are
Speaker 1: in general much better than what they were pre Covide,
Speaker 1: because again it's a shortage of labor, labor in a
Speaker 1: kitchen and in the dining room as well, and therefore
Speaker 1: it has a huge impact on the budget of of
Speaker 1: the restaurants. Yeah, and some of the inflation is passed
Speaker 1: to the consumer and some of it is absorbed by
Speaker 1: the owners of restaurants. And I know that you differ
Speaker 1: from Noma and Copenhagen, which is a restaurant that does
Speaker 1: not they have unpaid interns, and I know that you
Speaker 1: pay everyone on your staff. Talk to me about where
Speaker 1: you're able to increase costs the most easily for customers
Speaker 1: in order to maintain the profits that you need to
Speaker 1: run the best. The prefix that was pre COVID was
Speaker 1: twenty percent less than than today we had. We had
Speaker 1: to raise the price of the food. People didn't really
Speaker 1: mind and understood. The lunch price has also increased drastically
Speaker 1: because we were very inexpensive for lunch. But today people
Speaker 1: understand again that the price of goods has changed and
Speaker 1: we do not have people questioning the price of our menus.
Speaker 1: The price of the wine is basically the same and
Speaker 1: people have a lot of choice. We have about thousand
Speaker 1: bottles different wines at Lebanada, and people can choose inexpensive
Speaker 1: fare or exceptional price. Of course, Hey, you know, Eric,
Speaker 1: we had Danielle Blue on back in December, and you
Speaker 1: know I do recall. I want to go back to
Speaker 1: what you said about workers and some of them leaving
Speaker 1: and they went to Florida, and that was one of
Speaker 1: the things he said. I think labor was a really
Speaker 1: tough issue for him as well, and just this whole
Speaker 1: idea that workers who were in the industry have left,
Speaker 1: they haven't come back, and they've found jobs elsewhere, and
Speaker 1: so that that continues to be a real chronic problem.
Speaker 1: It is a big problem, especially for fine dining restaurants
Speaker 1: because usually we again have a lot of students who
Speaker 1: come from culinary schools or people who are starting their
Speaker 1: career and they want to go into fine dining because
Speaker 1: it's where they learned the basics and it will give
Speaker 1: them huge opportunities in their future. Those young people make
Speaker 1: a big sacrifice to live in New York City. Usually
Speaker 1: they have roommates, they live not necessarily in Manhattan, and
Speaker 1: when COVID happened, they left and they didn't come back
Speaker 1: to New York because the lifestyle is too expensive, and
Speaker 1: they find those other jobs in all the places. Do
Speaker 1: you ever think about or do you and you and
Speaker 1: the industry at home, you know, think about It's something
Speaker 1: that's come up with FED speakers, It's come up with
Speaker 1: certainly politicians, this whole idea of immigration and opening up
Speaker 1: the borders more a little bit, and just got about
Speaker 1: thirty seconds and then we'll come back and continue the conversation.
Speaker 1: We will love that. Of course, we would love to
Speaker 1: have more immigrants, legal immigrants coming and helping us in
Speaker 1: the kitchens, because they stay with us for a long time.
Speaker 1: Let me read you something. A great restaurant can be
Speaker 1: a sort of cultural preserve, a place where rare skills
Speaker 1: are passed on from one pair of hands to the next.
Speaker 1: Even formal restaurants services built uncareful study of human behavior.
Speaker 1: If it's done right. A restaurant like Liberta Dan is
Speaker 1: run by people who know things that others haven't learned yet.
Speaker 1: This is part of what ran through my head too
Speaker 1: when I tasted those scallops and their cream sauce and
Speaker 1: thought they kept it alive. Now, this is of course
Speaker 1: a New York Times review that gave La Bernardine four
Speaker 1: stars again, and I believe it's the fifth consecutive time
Speaker 1: that they have gotten this with us. Of course, as
Speaker 1: you know, is Eric Repair, executive chef co owner of
Speaker 1: La Bernardine with us on the phone here were actually
Speaker 1: via zoom in New York City. Eric to hear that
Speaker 1: and to get this distinction again, how does it feel? Well?
Speaker 1: It feels good because the New York Time is an
Speaker 1: institution and Pete Wells is a tough food critique. To
Speaker 1: have four stars since the opening of Le bernardin which
Speaker 1: is since nineteen eighty six, it's exceptional. We are the
Speaker 1: only restaurant in New York to have that record, and
Speaker 1: we celebrated for a few days the review, and now
Speaker 1: we are back to work and trying to create an
Speaker 1: amazing experience for the clients that come to Lebernard. Then
Speaker 1: we are leaving the passion. We are living the dream.
Speaker 1: I'm glad to hear that you celebrate it at least
Speaker 1: a little bit, though you deserve that and much more.
Speaker 1: I have to wonder there's been a lot of bad
Speaker 1: press lately for these incredible restaurants. Right it feels like,
Speaker 1: I don't know, if you've seen the movie The Menu.
Speaker 1: There's TV shows about being a Michelin chef and just
Speaker 1: how challenging it is. What do you think maybe is
Speaker 1: getting misunderstood about what hard work you do and the
Speaker 1: challenge and beauty of these Michelin star restaurants. Well, fine
Speaker 1: dining restaurants are meant to create exceptional experiences for the clients,
Speaker 1: and people who work in those restaurants are very passionate
Speaker 1: and love the hospitality industry. Of course, in the kitchen
Speaker 1: is about craftsmanship, artistry in the dining room is about
Speaker 1: loving to interact with clients. And we have a team
Speaker 1: of somebody that about a lot of expertise with the
Speaker 1: wines and they have passion for discovering and testing grid
Speaker 1: wines and sharing their passion for the clients. So this
Speaker 1: is what fine dining restaurants are meant for now. It's
Speaker 1: some restaurants that have good practices like Lebernard and where
Speaker 1: every employee is paid with fair prices, fair salaries, where
Speaker 1: we pay also the over times and we have benefits
Speaker 1: for our employees, and where we treat all the employees
Speaker 1: with tremendous respect. And you have some other restaurants that
Speaker 1: are getting a bit of bad press lately because they
Speaker 1: don't have the same standards as Lebernard. And yeah, it
Speaker 1: speaks the culture, right we talk about it's got to
Speaker 1: be from the bottom up, the top down. I want
Speaker 1: to ask you something, how does this process w In
Speaker 1: other words, do you know when Pete Wells is going
Speaker 1: to come in. Does he walk in? And are you
Speaker 1: all surprised? Walkers there? We've all seen it in movies,
Speaker 1: you know, when the critic comes into a restaurant. How
Speaker 1: does it actually work? So Pete Wells's pretty well recognized
Speaker 1: in New York because it's the food critique of the
Speaker 1: New York time for many, many years. I think he's
Speaker 1: there for twelve or fourteen years. But you never know
Speaker 1: when he's going to show up. But what he does.
Speaker 1: He sent some friends first, and they have a fake name,
Speaker 1: and you see them where wherever you decide to see
Speaker 1: his friends. Usually they're not necessarily the most well dressed
Speaker 1: people in the dining room, and they're not necessarily well
Speaker 1: known by the by the team, so sometimes they end
Speaker 1: up in the back of the restaurant and not in
Speaker 1: the front. But then he shows up, and then they
Speaker 1: choose at the very last minute whatever they want to
Speaker 1: experience from the menu, and they have interaction with the
Speaker 1: staff and with the summer years again for the wines.
Speaker 1: So when Pete Wells arrive and he's with his friends
Speaker 1: and decide to eat many dishes, it's basically too late
Speaker 1: because if your fish is not fresh, yoursels are not good.
Speaker 1: It's nothing you can do. It's too late. You can't
Speaker 1: redo everything, do you. Carol mentioned some of these movies,
Speaker 1: and one of them they say that the cretic comes
Speaker 1: and drops a fork on the ground to see how
Speaker 1: the staff reacts. And that's a tell that it's a
Speaker 1: it's a critic in the restaurant. Is any of that true?
Speaker 1: I have seen that with few critics. Yes, yes, it's
Speaker 1: it's sometimes they drop the napkin on purpose or fork
Speaker 1: or something like that, or they make a mistake and
Speaker 1: or sometimes like those of day, for instance, Pete Wells
Speaker 1: wanted to have the dessert and when we're about to
Speaker 1: serve the desserts, they decided to have cheese at the
Speaker 1: same time. So we had to coordinate bringing the cheese card,
Speaker 1: cutting the cheese and serving it at the same time
Speaker 1: as the desserts that were coming from the pastry. So
Speaker 1: that's the way they do to basically test the quality
Speaker 1: of the service. All right, Eric just got about thirty seconds.
Speaker 1: What are you having for dinner tonight? Tonight for dinner,
Speaker 1: I'm going to test the sauce. I'm going to test
Speaker 1: the food without double deeping, and that will be my
Speaker 1: dinner because I eat only once a day for lunch.
Speaker 1: All right, Wow, it's so interesting all of it, and
Speaker 1: just such a joy to spend this time with you.
Speaker 1: And congratulations because the distinction, as we said, getting that
Speaker 1: four star rating from the New York Times again is
Speaker 1: just and subsequently getting it for several years here's just
Speaker 1: really remarkable. Eric, thank you so much. Be well. Eric Repair,
Speaker 1: executive Shaw, co owner of Lebruna Dan as we mentioned,
Speaker 1: celebrating its fiftieth anniversary. I believe the first time he
Speaker 1: got a four star rating was back when he was
Speaker 1: twenty nine years old in nineteen ninety five. But again
Speaker 1: getting it for the fifth consecutive time, so really remarkable, right,
Speaker 1: huge accomplishment and story you know, so good, such a
Speaker 1: good chat. You're listening to Bloomberg Business Week. Carol Master,
Speaker 1: Madison Mills. This is Bloomberg Radio. You're listening to the
Speaker 1: Bloomberg Business Week podcast. Catch us live weekdays from two
Speaker 1: to five pm Eastern on Bloomberg Radio, the Bloomberg Business App,
Speaker 1: and you too. You can also listen live to our
Speaker 1: flagship New York station, Just say Alexa play Bloomberg eleven thirty. Okay,
Speaker 1: so Carol, and I are very obsessed with the story
Speaker 1: we're about to talk about. So listen up, lean in
Speaker 1: a little bit. The midlife crisis. We've all been dreading it,
Speaker 1: hearing about it throughout our lives. Chris Rouser edited a
Speaker 1: fantastic piece about it, and we just knew that we
Speaker 1: had to talk about it. All right, Chris, come on
Speaker 1: in on this tell us about First of all, I
Speaker 1: want to know, like, were you guys sitting around in
Speaker 1: the newsroom or doing a zoom call and you're like,
Speaker 1: I'm turning forty. Somebody's like turning forty and they were
Speaker 1: having like a fit or how did it come to be?
Speaker 1: You know, it's not nice to guess a person's age, Carol,
Speaker 1: you know how you know how it came to be?
Speaker 1: Normally around this time, we do how to spend your
Speaker 1: bonus special? Okay? You know in good years and this
Speaker 1: year bonuses are down on Wall Street thirty percent. We're
Speaker 1: going to a recession. Is not the look. We were like, Okay,
Speaker 1: how do we address like sort of this moment in
Speaker 1: the year when you're looking ahead and you're thinking about
Speaker 1: money maybe And we were like midlife crisis issue because
Speaker 1: I am actually a geriatric millennial as the term for it,
Speaker 1: which means that I was born in nineteen eighty one
Speaker 1: and I recently turned forty, and I remember looks great
Speaker 1: you can all see on YouTube. And anyway, I remember
Speaker 1: when my mother turned forty, we biked the supermarket and
Speaker 1: we got her a cake that said over the hill
Speaker 1: and it had like gravestones. Awful, Oh my god, my mother.
Speaker 1: Can you imagine? And you know, so a lot so
Speaker 1: millennials are just churning forty now, and they are they
Speaker 1: have less money than previous generations, than Gen Z, than
Speaker 1: Baby boomers. They're very busy. They're getting inundated by news
Speaker 1: saying you should change your jobs every twelve years. You should.
Speaker 1: The Great Resignation had more quits in a given year
Speaker 1: than any other time. And there's all these fitness and
Speaker 1: self care and wellness all around us. The self care
Speaker 1: industry is trillion dollars globally, and yet millennials don't feel
Speaker 1: like they can take advantage of that. They feel like
Speaker 1: they have a wellness deficit because they don't have enough
Speaker 1: money to do the traditional midlife crisis and leave their
Speaker 1: job and leave their family or whatever. So they're reinterpreting it.
Speaker 1: And one thing I love about your story too, is
Speaker 1: that you talk about how the midlife crisis, or the story,
Speaker 1: I should say, was originally framed as a male only thing.
Speaker 1: Women didn't necessarily have no idea like I think of
Speaker 1: the graduate the movie. Yes, but anyway, go ahead. Yeah,
Speaker 1: So it was actually it was a phrase that was
Speaker 1: coined by a paper in nineteen sixty five by a
Speaker 1: psychologist named Elliott Jacque called death in the midlife Crisis,
Speaker 1: and it was about kind of how like artists and
Speaker 1: creative types around the age thirty five stopped feeling young
Speaker 1: and looking at their youth and started looking forward to death.
Speaker 1: And so it sort of became quickly this cultural thing
Speaker 1: laughing where people she still has a few years to go,
Speaker 1: she can laugh in thirties and forties midlife start reassessing
Speaker 1: their life. And you know, at that time, the people
Speaker 1: who could afford to do that were white men. It
Speaker 1: wasn't really something that was afforded to women or people
Speaker 1: of color. And so the tropes of it are very
Speaker 1: much like get a fast car, like get a too pay,
Speaker 1: get a mistress, stuff like that, get divorced, and it's
Speaker 1: just not that way. You know, women go through midlife
Speaker 1: crisis too, but they were left in the dark, right,
Speaker 1: like they were just like they just weren't normal papers.
Speaker 1: They just worn in the papers. So can you can
Speaker 1: you give me some advice. I'm a younger millennial. I'm
Speaker 1: millennial gen z cusp. So teach me how to teach me.
Speaker 1: I have a birthday coming up that I'm not looking
Speaker 1: forward to. Okay, so teach me hang out out. Yeah,
Speaker 1: you guys can totally kick me out. But what's what's
Speaker 1: the advice? How do I approach amid life crisis someday? Right?
Speaker 1: So you know, someone said it this way, like my
Speaker 1: life feels very hungry, but my pockets are empty and
Speaker 1: there is a desire to like, Okay, I want to
Speaker 1: make changes. And say you've got ten plates spinning in
Speaker 1: the air. What you do is you don't you know,
Speaker 1: you don't drop any of the plates. You negotiate with
Speaker 1: the plates to make small changes in your life so
Speaker 1: that you can pick up a hobby that you've always
Speaker 1: wanted to pick up on the side, or say, you know,
Speaker 1: you don't leave your family and go start start a
Speaker 1: life elsewhere, but you can because of remote work, move
Speaker 1: your family elsewhere, which, as we know, lots of people
Speaker 1: are doing. You can move to Alaska or Maine and
Speaker 1: have a great quality of life and just slow everything down.
Speaker 1: Some people are you know, if you ever listen to
Speaker 1: Dan Savage the Love Columnists, like people are rethinking monogamy
Speaker 1: rather than getting a divorce and breaking up families. We
Speaker 1: talk to a designer said, you know, I commonly make
Speaker 1: a snoring room, which is, you know, sort of an
Speaker 1: excuse for people to sleep in two separate bedrooms. As
Speaker 1: you know, once the kids leave or as they get older.
Speaker 1: So much about that. So many couples are sleeping in
Speaker 1: separate bedrooms. It's really become a thing. And you know
Speaker 1: we used to do that like that, that used to
Speaker 1: be pretty common. Yeah, my grandparents did. Yeah, I got
Speaker 1: a grandparents, you know, and they love each other, no
Speaker 1: doubt about it. But I think it was because my
Speaker 1: grandparents snoring. I mean, if Grandpather's snoring, a lot of us,
Speaker 1: if we didn't live in New York apartments would probably
Speaker 1: have snoring rooms a lot more frequently. And you know,
Speaker 1: instead of buying a super fast car. Because the millennial
Speaker 1: generation is so fitness and wellness oriented, people are buying
Speaker 1: a nice bike, you know, and they're getting out on
Speaker 1: the road. They're extending their lives, they're improving their wellness.
Speaker 1: And that's another thing. The midlife is so much longer
Speaker 1: because our lives are longer, and certainly people feel younger
Speaker 1: now turning forty than they did when our grandparents were
Speaker 1: turning forty. It's just a different thing, and so it
Speaker 1: doesn't have to be this thing that happens all at once.
Speaker 1: People are taking small changes over a period of time.
Speaker 1: I thought about that too, Chris, Like, I don't know
Speaker 1: how you are, but grown up. I'm one of a
Speaker 1: lot of kids, and I just my parents, Like I
Speaker 1: think when they were they weren't even that old. But
Speaker 1: I'm like, God, you're old, Like they seemed older their
Speaker 1: appearance and just everything. They're terrible grand I really hope
Speaker 1: that's changing, is it? I don't know, is it? I
Speaker 1: think it is. Yes. According to the experts that we
Speaker 1: talk to, it is people think of themselves as younger
Speaker 1: when they are in you in midlife, and that actually
Speaker 1: really affects the way that you go through the world,
Speaker 1: the way that you interact with people, and how you
Speaker 1: treat yourself. Yeah, exactly, and I do feel like people,
Speaker 1: you know, this whole idea. First of all, I find
Speaker 1: it disturbing, this whole idea that you've got generations that
Speaker 1: are coming off the financial crisis, coming off so many
Speaker 1: things and don't have the money or there's not the
Speaker 1: retirement pact, Like it's just a different financial picture. Yeah,
Speaker 1: when you if you come of age during a time
Speaker 1: of crisis, you can have up to a ten percent
Speaker 1: just like standard deficit in your earning power as you
Speaker 1: get older. Because people really make their biggest strides and
Speaker 1: earning on the scale of world, they're going to be
Speaker 1: in their in their first ten years of working. And
Speaker 1: so the wealth to income ratio for people and there
Speaker 1: in their late thirties and forties is lower than previous generations.
Speaker 1: People on average have at least twenty thousand dollars less
Speaker 1: less than they did in Gen X. Even are people
Speaker 1: who are approaching the midlife crisis era maybe thinking, Okay,
Speaker 1: instead of investing in a new house, I'm just going
Speaker 1: to invest in a retirement fund. Are we seeing any
Speaker 1: like big pushes for retirement. That's you know, that's not
Speaker 1: something that our experts actually said. And I think that
Speaker 1: because the wealth to income ratio is lower for this generation.
Speaker 1: I think people don't really see it as an option
Speaker 1: for themselves. They even if they're making money, they don't
Speaker 1: have as much saved or invested. Yeah. So I have
Speaker 1: to say that when I first went through the brief
Speaker 1: and I said that don't let Grandpa get a new girlfriend,
Speaker 1: I thought that was part of the mid life it is.
Speaker 1: We just got a couple of minutes left here. I
Speaker 1: mean there's other stuff. Yeah, So the rest of the
Speaker 1: pursuit section is all themed around it is, right. So
Speaker 1: we've got a big story on the first electric rolls Royce.
Speaker 1: So if you really do want to explourage on a car,
Speaker 1: this is a good one to do. It's amazing. It's
Speaker 1: like half a million dollars. We have a really interesting
Speaker 1: story about by Lily Gurma about how black women is
Speaker 1: leaving America. Other these groups that have conferences to sort
Speaker 1: of teach black women to move to other places, how
Speaker 1: to work remotely, how to bring their families. Thousands of
Speaker 1: women are doing it in midlife, taking their kids. It's
Speaker 1: a really interesting story. And then Max Chafkin, who we
Speaker 1: all love, did a review of the book that's out
Speaker 1: now about Sumner Redstone and Shari Redstone and telling the
Speaker 1: saga of sort of like the Chaotic End of Times
Speaker 1: with by Common CBS, and that is the one that's
Speaker 1: entitled don't let Grandpa get a new girlfriend. It's the
Speaker 1: real life succession, which you know, I'm obsessed with him.
Speaker 1: Will not stopped talking about ever. I can't wait for
Speaker 1: you to come in and tell us about the movie
Speaker 1: deal the max is getting offered this. I want to
Speaker 1: go back to the black women though, why black women?
Speaker 1: Is it just that noticeable trend? Well, first, a part
Speaker 1: of it is that like this middle this idea of
Speaker 1: midlife real valuation has spread to more people than just
Speaker 1: white men. So like people of are feeling empowered to
Speaker 1: do this, and you know, one woman at the end
Speaker 1: of the story says, you know, we are keep we
Speaker 1: keep putting ourselves and our work and our you know,
Speaker 1: tears into America to try to get on the hopes
Speaker 1: that one day we're going to be treated better. And like,
Speaker 1: I'm tired of waiting around for that to come back.
Speaker 1: I can go elsewhere and have a much higher quality
Speaker 1: of life and you know, live and work rather than
Speaker 1: work to live, you know, or I don't how that
Speaker 1: phrase goes yeah, and you know, one of my brothers
Speaker 1: says it all the time. Yeah. One a woman traveled
Speaker 1: around the world and was like, Wow, this is just
Speaker 1: is so much better in other places. Where are they going.
Speaker 1: They're going to Portugal, They're going to Mexico, They're going
Speaker 1: to the Caribbean. A lot of people going to Mexico,
Speaker 1: sometimes as far away as Highland, just places where the
Speaker 1: dollar goes further because some of them say, you know,
Speaker 1: the privilege of having you know, a little bit of
Speaker 1: money and being American erases the negative privilege of being
Speaker 1: a black person in these places. Well, it's another great section.
Speaker 1: We had some fun with you, but some real serious
Speaker 1: stuff as well. Would you do free mid Left Crisis.
Speaker 1: I'm having it right now. Yeah, I'm trying to write
Speaker 1: a book. I think I'm going to write a book,
Speaker 1: which is something you can kind of do on the side,
Speaker 1: carve out time for make promises to yourself, check out
Speaker 1: the magazine, check out Pursuits. Chris Rosser, thank you as always,
Speaker 1: have a good weekend. Editor of Bloomberg Pursuits. You're listening
Speaker 1: to the Bloomberg Business Week podcast. Catch us live weekdays
Speaker 1: from two to five pm. Eastern on Bloomberg Radio The
Speaker 1: Bloomberg Business a band you two. You can also listen
Speaker 1: live to our flagship New York station, Just Say Alexa
Speaker 1: play Bloomberg e Love and Dirty. You might remember the
Speaker 1: movie The Monumentsman back in twenty fourteen with George Clooney,
Speaker 1: loosely based on a non fiction book, and it was
Speaker 1: about an Allied group on a mission to find and
Speaker 1: say pieces of art and more before they were destroyed
Speaker 1: by the Nazis in World War Two. Well, in keeping
Speaker 1: with that, our next guest has written about the true
Speaker 1: story museum curators who saved the prices treasures of China's
Speaker 1: Forbidden City during that war. As well. We welcome author
Speaker 1: and journalist formerly at the BBC, Adam Brooks. He's got
Speaker 1: a book out, a new book, Fragile Cargo, the World
Speaker 1: War two race to save the Treasures of the Forbidden City,
Speaker 1: and he joins us via Zoom in Washington, DC. Adam,
Speaker 1: good to have you here with Maddie and myself. Tell
Speaker 1: us about why you wanted to write this book or
Speaker 1: what initially kind of brought you to it. Yeah, I'm
Speaker 1: quite simply that it was a great story that it
Speaker 1: does have It is a bit reminiscent of the monument's men,
Speaker 1: but it's kind of larger in scale, and it had
Speaker 1: never really been told in English before. That hasn't been
Speaker 1: a full accounting of this this thing. So as I
Speaker 1: dug into it, I found all these kind of new
Speaker 1: sources emerging in China, and gradually this extraordinary story twenty
Speaker 1: thousand wooden cases pact full of the most irreplaceable art
Speaker 1: in Chinese culture, moving through the Second World War for
Speaker 1: sixteen years. It's an absolutely amazing tale, it is, and story, Adam,
Speaker 1: can you for those who are completely unfamiliar, just give
Speaker 1: us the quick kind of geopolitical context of what was
Speaker 1: going on in China at the time and the specific
Speaker 1: museum that you write about in your book. Right, so
Speaker 1: we all know something about the Forbidden City, right. It's
Speaker 1: that huge set of palaces with the great, big tower
Speaker 1: and red walls in the middle of what today we
Speaker 1: call Beijing. Inside there, the emperors lived for hundreds of years,
Speaker 1: and they had this colossal collection of art, more than
Speaker 1: a million pieces of art, paintings, jewels, jades, bronzes, you
Speaker 1: name it, all kinds of art. And in the nineteen
Speaker 1: thirties when Japan invaded China and began gobbling up Chinese territory,
Speaker 1: the curators inside the Forbidden City, which by this time
Speaker 1: was called the Palace Museum, decided that they had to
Speaker 1: evacuate this art to save it from the Japanese. They
Speaker 1: would terrified of air raids, they were terrified of looting
Speaker 1: and plunder that it could get stolen. So they boxed
Speaker 1: it up in these twenty thousand wooden cases, and for
Speaker 1: the next sixteen years they moved it all over China
Speaker 1: and hid it in villages and caves and temples in
Speaker 1: the far west of the country. Tell us how they
Speaker 1: did that, because I'm reading and I'm going through and
Speaker 1: there's landslides and they're just navigating some crazy situations. Talk
Speaker 1: about some of the conditions that they had to deal
Speaker 1: with too. The logistics were ridiculous, So they loaded these
Speaker 1: cases on steamships, they loaded them on trucks. Sometimes they
Speaker 1: were actually carried on shoulder poles by porters. They went
Speaker 1: up rivers, they traveled over mountain ranges, and sometimes they
Speaker 1: were just literally a daze ahead of the Japanese advance.
Speaker 1: And all the time the curators who were doing this
Speaker 1: were frantically improvising and trying to keep this invaluable art
Speaker 1: not just safe but dry, out of the way of
Speaker 1: Japanese bombing and away from these soldiers and trying to
Speaker 1: make sure that it didn't get eaten by bugs and
Speaker 1: termites and stuff like that. So, I mean, the logistics
Speaker 1: of the thing were really quite eye popping, and I
Speaker 1: try in Fragile Cargo to give you a sense of
Speaker 1: who these people were and how they lived and what
Speaker 1: they ate and what life was like in wartime China,
Speaker 1: which which is something I think we've kind of forgotten
Speaker 1: in the United States. I have to say. My dad
Speaker 1: was one of four brothers, and they are all were
Speaker 1: in the war in different places. My dad was in
Speaker 1: France and Germany, my uncle was out in the Pacific
Speaker 1: like it. But it's it was an era that I
Speaker 1: think it's important that we all kind of have some
Speaker 1: awareness of the war. You know, the world at war truly,
Speaker 1: and you're just talking about devastation everywhere, and you know,
Speaker 1: thinking about just what that situation was and just people
Speaker 1: watching their culture, their world everything just come undone. So
Speaker 1: I mean in China, China alone, historians think that's between
Speaker 1: fourteen and twenty million people died that war. I mean,
Speaker 1: it's the same level as sort of the Soviet Union.
Speaker 1: By comparisons, our losses in the United States are a
Speaker 1: little over four hundred thousand people, nearly twenty million in China.
Speaker 1: The ferocity of the Japanese advance, the way that the
Speaker 1: Japanese military treated people in China and across all the
Speaker 1: territories that they conquered in East Asia. You know, it
Speaker 1: really bears just trying to uncover that history a bit
Speaker 1: and remember it, because it really is a huge strand
Speaker 1: of human experience that I think in danger of kind
Speaker 1: of losing. And Adam, I know that you spent time
Speaker 1: in Beijing as a reporter, of course, can you talk
Speaker 1: a little bit about how that impacted your perspective on
Speaker 1: the history of China and how kind of writing and
Speaker 1: reporting on the book itself has changed your perspective about
Speaker 1: the China and specifically the moves from Beijing that we
Speaker 1: see today. Well, when I was there in China, things
Speaker 1: were not nearly as tough for reporters as they are now,
Speaker 1: so we were still able to move a little bit freely.
Speaker 1: There was surveillance and harassment from the authorities, but nothing
Speaker 1: like it is today. You know, China under Sieging Ping
Speaker 1: has really closed down a great deal to foreign scrutiny
Speaker 1: and to journalism. I'm of a view that taking some
Speaker 1: time to not just look at the reporting on China.
Speaker 1: I mean, I've sort of come to realize that if
Speaker 1: you spend a bit of time looking at the origins
Speaker 1: of modern China, where what is this thing, the Chinese
Speaker 1: Communist Party? What does it come from? You know, we
Speaker 1: kind of know that Chairman Mao built it, but how
Speaker 1: did what did he do? What did he really think?
Speaker 1: What happened before the Communist Party? All these things can
Speaker 1: kind of inform your sense of modern China and try
Speaker 1: to begin to instruct us a little bit as to
Speaker 1: why this country feels very threatened a lot of the time,
Speaker 1: somewhat paranoid a lot of the time, and why the
Speaker 1: Communist Party's default position is to kind of close down
Speaker 1: and batten down the hatches the way it is right,
Speaker 1: the way it is now. And I think it's very
Speaker 1: important that we in the United States sort of understand
Speaker 1: that dynamic in China and try to make sure that
Speaker 1: we don't this is my personal view, right, but try
Speaker 1: to make sure we don't talk ourselves into escalating against
Speaker 1: China when we don't really need to. Adam very quickly
Speaker 1: twenty twenty five seconds here, so was most of the
Speaker 1: art saved, salvage and now somewhere where we can see it.
Speaker 1: Just was. It was remarkable how little of it got broken,
Speaker 1: how little of it got lost. It's most of it
Speaker 1: is now back in Beijing. But some of the very
Speaker 1: best stuff ended up going to Taiwan and is now
Speaker 1: in Taipei. But yes, you can see it on those
Speaker 1: two great museums. It's there and save today well, incredible story,
Speaker 1: real the world, and you play it out in your
Speaker 1: book Fragile Cargo, The World War two Race to save
Speaker 1: the Treasures of China's Forbidden City. We've been just talking
Speaker 1: with Annam Brooks. He's author and journalist us from Washington,
Speaker 1: DC right here on Bloomberg Business Week. This is the
Speaker 1: Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere
Speaker 1: else you hit your podcast. Listen live each weekday starting
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Speaker 1: tune In, and the Bloomberg Business App. You can also
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Speaker 1: and always on the Bloomberg Terminal