WEBVTT - Bloomberg Businessweek Weekend - December 2nd, 2022 0:00:01.040 --> 0:00:05.400 This is Bloomberg Business Week inside from the reporters and 0:00:05.600 --> 0:00:09.200 editors who bring you America's most trusted business magazine, plus 0:00:09.240 --> 0:00:12.559 global business, finance and tech news as it happened. Its 0:00:12.600 --> 0:00:16.480 Bloomberg Business Week with Carol Messier and Bloomberg Quick Takes. 0:00:16.520 --> 0:00:21.119 Tim Stinovic on Bloomberg Radio. Hi, everyone, Welcome to the 0:00:21.160 --> 0:00:25.079 weekend edition of Bloomberg Business Week. We know that everyone 0:00:25.120 --> 0:00:27.479 is still talking about FIT Chief J. Powell's comments this 0:00:27.560 --> 0:00:30.080 past week signaling the Fed will slow the pace of 0:00:30.120 --> 0:00:33.400 interest rate increases next month, yet stressing the need for 0:00:33.479 --> 0:00:35.519 rates to keep rising for some time to beat inflation. 0:00:35.720 --> 0:00:37.280 No doubt about it, Tim, it was top of mine. 0:00:37.400 --> 0:00:40.720 Also top of mind Carol protests in China, Apple's exposure 0:00:40.760 --> 0:00:42.800 to that, and a recent conversation that we had with 0:00:42.880 --> 0:00:45.120 Cathy Wood. She of course is the founder's CEO and 0:00:45.240 --> 0:00:48.280 ce IO of our convest who covered everything from the 0:00:48.280 --> 0:00:51.600 collapse of f t X and Sam Bankman Freed to Ellen, 0:00:51.880 --> 0:00:55.440 Tesla and Twitter. We even talked about General Motors stock 0:00:55.480 --> 0:00:57.840 that she's been buying. The full in depth conversation in 0:00:58.000 --> 0:01:00.000 our second hour. All of that to come, we beat 0:01:00.000 --> 0:01:02.600 again with the chaos in the place known as iPhone City. 0:01:02.880 --> 0:01:05.920 We're following the protests over the COVID zero lockdown policies 0:01:05.959 --> 0:01:09.119 in China. That may be easing, but time will tell. 0:01:09.480 --> 0:01:12.280 Related to all of that, a Bloomberg exclusive, it's in 0:01:12.360 --> 0:01:14.760 the text section of the new issue up Bloomberg Business Week. 0:01:14.800 --> 0:01:17.839 It's about Apple's reliance on China and how it's growing 0:01:17.920 --> 0:01:20.800 perilous because of the chaos in the world's second largest 0:01:20.800 --> 0:01:24.440 economy and a country that turns out tons of Apple products. 0:01:24.600 --> 0:01:27.959 We bring in Joshua Breusteing. He's technology editor a Bloomberg 0:01:27.959 --> 0:01:30.319 Business Week. He joined us along with the editor of 0:01:30.319 --> 0:01:35.200 the magazine, Jill Webber. Where Apple gets its iPhones predominantly 0:01:35.240 --> 0:01:39.759 has been from fox Con facilities in China. UM and 0:01:39.920 --> 0:01:43.280 with the COVID zero situation in China and sort of 0:01:43.360 --> 0:01:47.600 how the country and company have responded fox Con to 0:01:48.080 --> 0:01:50.920 the circumstances, it's really led this to be a quite 0:01:50.960 --> 0:01:55.760 hot situation. Josh What transpired that and what were you 0:01:55.760 --> 0:01:59.640 guys watching as you started to pull this story together. Yeah, 0:01:59.720 --> 0:02:04.880 The largest iPhone production facility, known as iPhone City UH 0:02:05.040 --> 0:02:08.919 is in Shangho, China. About of the latest iPhone fourteen 0:02:08.960 --> 0:02:13.720 models are produced there and since October they have been 0:02:14.400 --> 0:02:17.240 UM experiencing a COVID outbreak within the plant. This is 0:02:17.280 --> 0:02:20.119 an enormous place, About two hundred thousand people work there, 0:02:20.800 --> 0:02:24.200 and UM fox Con which runs the facility, attempted to 0:02:25.040 --> 0:02:29.200 UM lock the plant down. UM isolate UH workers who 0:02:29.240 --> 0:02:32.680 may have COVID and UM and try to keep the 0:02:32.880 --> 0:02:36.320 this this the outbreak from spreading. The problem was they 0:02:36.360 --> 0:02:41.200 weren't really prepared to handle this and UM workers were 0:02:41.200 --> 0:02:43.839 complaining of unsanitary conditions of being held in places where 0:02:43.840 --> 0:02:46.960 they didn't have access to adequate food. Hundreds of workers 0:02:47.080 --> 0:02:50.120 left the plant in October and UH there were some 0:02:50.120 --> 0:02:54.000 some violent protests from workers who were protesting that they 0:02:54.040 --> 0:02:56.400 were not going to get paid if they didn't stay 0:02:56.480 --> 0:02:59.359 through a certain amount of time and just she described 0:02:59.400 --> 0:03:03.280 the dorm tory sort of pretty awful conditions during this lockout. 0:03:03.280 --> 0:03:07.400 But these are pretty coveted jobs in China, are they not. Yeah, absolutely, 0:03:07.480 --> 0:03:10.120 there were workers who are leaving jobs UM that it 0:03:10.160 --> 0:03:13.000 was surprising because people get these jobs and they're known 0:03:13.000 --> 0:03:16.400 as good jobs. What's happened over the recent past has 0:03:16.440 --> 0:03:19.600 been that the COVID situation has really changed the way 0:03:19.639 --> 0:03:22.320 that this production facility operates, and people thought they had 0:03:22.360 --> 0:03:24.760 something good and now feel like they're being really mistreated. 0:03:24.840 --> 0:03:26.919 I feel like the eyes are on Apple right now 0:03:26.919 --> 0:03:29.680 and watching what they are doing, and we have seen them, 0:03:29.720 --> 0:03:32.520 you know, begin to branch out. How how does you 0:03:32.560 --> 0:03:34.480 and your team kind of think about what's going on 0:03:34.520 --> 0:03:37.320 with Apple specifically and what it means more broadly. Yeah. Absolutely. 0:03:37.360 --> 0:03:39.200 I mean, if you want to look at a situation 0:03:39.240 --> 0:03:41.400 for a company that kind of represents something larger, you 0:03:41.400 --> 0:03:43.840 have the world's most valuable company. It makes an enormous 0:03:43.840 --> 0:03:46.240 amount of phones in China, and what you've seen Apple 0:03:46.280 --> 0:03:49.760 do is look to diversify a fox con its main 0:03:49.920 --> 0:03:54.160 manufacturing partners moving to other countries, to India, Vietnam. So 0:03:54.320 --> 0:03:57.560 you see it looking for for alternatives if things aren't 0:03:57.640 --> 0:03:59.400 going to be if they can't count on China, they 0:03:59.440 --> 0:04:02.360 need to know where else they can get phones from. 0:04:02.400 --> 0:04:05.320 So what's the status now, Josh, It's it sounds like 0:04:05.440 --> 0:04:08.800 it's just chaos there They actually still or the assembly 0:04:08.840 --> 0:04:12.000 line still working or is it sort of in a 0:04:12.040 --> 0:04:16.080 frozen while all this plays out. Yeah, so the facility 0:04:16.160 --> 0:04:19.960 is still working. There are are clearly disruptions. UM. We've 0:04:20.000 --> 0:04:24.560 reported that UM someone familiar with the operations says there 0:04:24.560 --> 0:04:27.000 could be a production shortfall of close to six million 0:04:27.080 --> 0:04:30.200 iPhone Pro units this year. The thought is that they 0:04:30.200 --> 0:04:32.240 maybe they could recover that next year, but these are 0:04:32.279 --> 0:04:36.159 serious production interruptions. UM and Apple has already been dealing 0:04:36.320 --> 0:04:39.080 UM with this even before the acute problem of the 0:04:39.160 --> 0:04:41.880 last couple of weeks. Josh, some of the reporting was 0:04:42.200 --> 0:04:45.960 incredible because of how specific and inside the operations and 0:04:46.000 --> 0:04:48.440 the protests we were able to get. What stood out 0:04:48.480 --> 0:04:50.640 to you as you worked on the story. I think 0:04:50.640 --> 0:04:52.839 it was really interesting to hear from some of the 0:04:52.839 --> 0:04:55.640 workers who were there that the story that that we're 0:04:55.640 --> 0:04:59.159 publishing UM focuses on one worker who had been making 0:04:59.279 --> 0:05:02.120 phones for a decade. UM finally got fed up in 0:05:02.120 --> 0:05:05.880 October and left, went home, was lowered back by more money, 0:05:06.040 --> 0:05:09.920 and UH immediately was was actually in a quarantine period 0:05:10.520 --> 0:05:14.160 UM when these protests broke out last week, and then decided, 0:05:14.560 --> 0:05:17.400 you know, I can't stay here like I came back, UM, 0:05:17.440 --> 0:05:19.240 I'm going to go find a job at a different place. 0:05:19.320 --> 0:05:21.160 As he said, other people are hiring. Will you talk 0:05:21.200 --> 0:05:23.280 about you know these workers or or the team talks 0:05:23.279 --> 0:05:27.680 about workers in isolation. There's no food, there's trash piling up. 0:05:27.720 --> 0:05:31.360 I mean, these are it sounds like pretty horrible conditions. Yeah. Absolutely, 0:05:31.360 --> 0:05:33.360 And I think that what you're seeing is a breaking point. 0:05:33.400 --> 0:05:36.719 I mean, at one point we describe they built barriers 0:05:36.760 --> 0:05:39.760 between the dormitories and the production facilities so that people 0:05:39.800 --> 0:05:43.599 basically couldn't stray or or run away, basically in between 0:05:43.920 --> 0:05:46.320 home and the job. And I don't know, that's pretty dystopia. 0:05:46.360 --> 0:05:49.919 It's a little bit like a prison. Absolutely, Hey, Josh, 0:05:50.120 --> 0:05:54.440 just long term here, Um, no doubt fox Con has 0:05:54.720 --> 0:05:57.960 uh an, Apple will have this longstanding relationship with China, 0:05:58.040 --> 0:06:02.360 But what other options does Apple and fox can potentially 0:06:02.440 --> 0:06:05.640 having the long term? So fox Con is already making 0:06:05.680 --> 0:06:08.479 more iPhone four team models in India, more than any 0:06:08.480 --> 0:06:12.400 previous generation, and it's expanded into Vietnam and Thailand as well, 0:06:12.440 --> 0:06:14.839 And I think that's a sign of how much Chinese 0:06:14.880 --> 0:06:19.880 policies are potentially hurting China itself. At the same time, um, 0:06:19.920 --> 0:06:24.839 Apples spent decades building up this production capability, and it's 0:06:24.880 --> 0:06:26.520 not like it can just turn off this switch and 0:06:26.520 --> 0:06:29.200 turn around somewhere else if it really wants to reduce 0:06:29.200 --> 0:06:32.080 its reduction up reliance on China. It's going to be 0:06:32.120 --> 0:06:35.160 a long term project. That was Joshua Breustein. He's technology 0:06:35.240 --> 0:06:38.040 editor for the magazine Bloomberg Business. We editor Joel Webber 0:06:38.040 --> 0:06:40.440 with us there as well. Mike Regan's sticking around for 0:06:40.480 --> 0:06:42.880 our next segment coming up after the break, we examine 0:06:42.920 --> 0:06:45.720 the broader implications of the Chinese COVID response that has 0:06:45.760 --> 0:06:48.280 put tons of millions of people on the brink. You're 0:06:48.279 --> 0:07:01.560 listening to Bloomberg Business Week. This is Bloomberg. This is 0:07:01.600 --> 0:07:05.440 Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes. 0:07:05.560 --> 0:07:10.400 Tim Stenovik from Bloomberg Radio. Hard to miss the videos 0:07:10.400 --> 0:07:13.040 and pictures and stories about the protests that have erupted 0:07:13.080 --> 0:07:16.240 over the past week or so across China as its 0:07:16.240 --> 0:07:19.520 populous rails against the country's COVID zero strategy. We've got 0:07:19.600 --> 0:07:21.840 the perfect voice to help explain what's happening in the 0:07:21.840 --> 0:07:24.760 People's Republic and what it means for President Shi jang Ping, 0:07:25.120 --> 0:07:27.680 who's just a few weeks removed from cementing his rule 0:07:27.720 --> 0:07:30.880 at the twentie National Congress of the Chinese Communist Party. 0:07:31.000 --> 0:07:34.240 Andy Brown is former editorial director at Bloomberg New Economy 0:07:34.400 --> 0:07:37.200 he spent three decades and Asia's both China editor and 0:07:37.280 --> 0:07:40.000 columnist for The Wall Street Journal. Andy now leads the 0:07:40.080 --> 0:07:42.840 China Hub as a partner over at Brunswick Group. That's 0:07:42.840 --> 0:07:45.760 a critical issues advisory firm. He joined me and Bloomberg 0:07:45.800 --> 0:07:48.880 Market senior editor Mike Reagan last Monday. I think it 0:07:49.120 --> 0:07:53.440 is the beginning of the end of COVID zero and 0:07:53.480 --> 0:07:58.120 it is going to be I fear a messy, chaotic, 0:07:59.000 --> 0:08:05.760 uh and deadly unwinding of an irrational, poorly conceived, and 0:08:05.760 --> 0:08:10.920 and disastrously executed policy that has Ci Jimping's name all 0:08:10.960 --> 0:08:14.560 over it. He owns it, and he owns the public 0:08:14.640 --> 0:08:19.000 outrage that led to this, to these street protests and 0:08:19.120 --> 0:08:27.160 campus protests all all over all over China over the weekend. Look, 0:08:27.160 --> 0:08:29.800 it's an indictment of she himself, but it's also an 0:08:29.840 --> 0:08:33.840 indictment of the system that he set up UM. And 0:08:33.920 --> 0:08:42.520 it is a top down, heavy handed, personalized system, UM inflexible, ideological, 0:08:43.120 --> 0:08:48.640 highly politicized, at times brutal. And the system failed, and 0:08:48.679 --> 0:08:53.439 it's failed catastrophically. And you know, the irony is that 0:08:53.920 --> 0:09:00.480 it has triggered precisely the thing that s Jimping most fears. 0:09:00.520 --> 0:09:04.200 So you know for the first time protest, right, well, protest, 0:09:04.280 --> 0:09:07.960 but the type of protests, so you know their protests 0:09:08.000 --> 0:09:11.040 in China occur all the time, Okay, but they're you 0:09:11.120 --> 0:09:15.040 they're almost always localized, single issue protests. Uh. You know, 0:09:15.280 --> 0:09:18.160 workers aren't getting paid in a factory or in a 0:09:18.240 --> 0:09:21.600 rural area. You know, some government connected business has grabbed 0:09:21.640 --> 0:09:25.320 your land. A lot of protests, um, this is but 0:09:25.360 --> 0:09:28.080 they're never they're never networked, right and and they're very 0:09:28.120 --> 0:09:34.120 easily contained. This These are nationwide protests that bring together 0:09:34.360 --> 0:09:39.600 disparate groups of people, poor people, rich people, students, workers 0:09:39.960 --> 0:09:43.600 together for a common cause, and that is to defeat 0:09:44.200 --> 0:09:49.359 COVID zero, which has led to enormous amounts of frustration 0:09:49.960 --> 0:09:52.280 within the population. And the trigger for this was a 0:09:52.360 --> 0:09:55.480 fire in the room chi in an apartment blog killed 0:09:55.480 --> 0:09:58.040 at least ten people, including we see the picture of 0:09:58.040 --> 0:10:02.000 this lovely weaker lady and and and her children. And 0:10:02.040 --> 0:10:05.920 the suspicion was that they had got trapped in their 0:10:05.960 --> 0:10:10.120 apartment by COVID restrictions. So fire exit's being blocked or 0:10:10.360 --> 0:10:13.000 you know, in these concrete barriers to get placed around 0:10:13.040 --> 0:10:15.960 box of the fire trucks couldn't get in and extinguished 0:10:16.000 --> 0:10:19.520 the blaze. And this triggered something very deep, very emotional. 0:10:20.360 --> 0:10:23.920 You know that that that lady was was everybody's mother, 0:10:24.080 --> 0:10:28.200 everybody's sister, you know, everybody's wife. Those children could have 0:10:28.240 --> 0:10:31.439 been my kids, because you've got four hundred million people 0:10:31.480 --> 0:10:34.120 in China now living under some kind of a lockdown. 0:10:34.440 --> 0:10:38.440 Many of those in precisely those conditions. You know, their 0:10:38.440 --> 0:10:41.839 front doors have been welded closed because they can't get out, 0:10:41.880 --> 0:10:44.080 and people live in fear and have been living in 0:10:44.160 --> 0:10:47.480 fear now for a long time. And so you know, 0:10:47.520 --> 0:10:51.200 this fire just just triggered this, this this swelling sort 0:10:51.200 --> 0:10:54.000 of a surge of anger right across the country, and 0:10:54.000 --> 0:10:55.920 it was so big, it wasn't you know how how 0:10:55.960 --> 0:10:59.120 clever they are and how how you know efficient they are, 0:10:59.240 --> 0:11:02.480 and that blow kicking discussion on social media, this out 0:11:02.679 --> 0:11:06.760 this outbreak a bust was was was just so passionate 0:11:07.040 --> 0:11:10.360 that they couldn't contain it. S Jimping has no good 0:11:10.480 --> 0:11:17.160 options here, Okay, he only has tough decisions, difficult trade offs. 0:11:17.200 --> 0:11:20.320 So I am I'm pretty sure that with every fiber 0:11:20.360 --> 0:11:23.920 of his body he wants to crack down. Okay, I 0:11:23.960 --> 0:11:27.200 mean he is haunted by the collapse of the Soviet Union, 0:11:27.240 --> 0:11:31.080 which you know, he blames. They lost their ideology, abandoned 0:11:31.080 --> 0:11:34.360 style and repudiated style, and but they lost controls of 0:11:34.400 --> 0:11:38.000 the levers of power. They compromised, you know, Glass, Gnast 0:11:38.080 --> 0:11:41.240 and PARASTROI. He's absolutely determined that that is not going 0:11:41.280 --> 0:11:43.760 to happen. And he doesn't he doesn't want his policy, 0:11:44.280 --> 0:11:47.280 his signature policy, to be derailed, to be challenged by 0:11:47.320 --> 0:11:50.920 street protests. And I'm pretty sure that they are already now, 0:11:51.160 --> 0:11:53.920 you know, going off to some of these leaders of 0:11:54.440 --> 0:11:58.000 the protest. But here's the thing. The more you know, 0:11:58.080 --> 0:12:02.360 if if he cracks down uh violently, you know, he 0:12:02.360 --> 0:12:06.400 he could he could promoke an even bigger social explosion. 0:12:06.440 --> 0:12:08.680 People have had enough. I mean, they've they're really up 0:12:08.720 --> 0:12:11.880 to here with with zero COVID. Now, on the other hand, 0:12:12.480 --> 0:12:15.959 if he opens up and opens up too quickly, uh, 0:12:16.080 --> 0:12:21.280 he risks an explosion in cases and and and mass death. Uh. 0:12:21.360 --> 0:12:23.960 You know, even under the most optimistic scenarios, if if 0:12:23.960 --> 0:12:27.600 they opened up like Taiwan did, what Singapore did? You know, 0:12:27.640 --> 0:12:30.840 because of the infectiousness of Omi crown, you know, and 0:12:30.880 --> 0:12:33.559 the vulnerabilities that you have in and even a highly 0:12:33.640 --> 0:12:36.880 vaccinated uh society, you're still going to get you know, 0:12:36.960 --> 0:12:40.640 a million or more deaths. Now that that's dynamite, spry 0:12:40.679 --> 0:12:43.640 and big. You know, the Americans lost a million, Uh, 0:12:43.720 --> 0:12:46.360 the Europeans lost a million. This proves you know, the 0:12:46.920 --> 0:12:50.199 the decadence and incompetence and the corruption of their system. 0:12:50.280 --> 0:12:53.160 Their their careless system. But we in China have to 0:12:53.200 --> 0:12:55.800 have a have a superior system. You know, nobody, very 0:12:55.800 --> 0:12:59.320 few people died outside of the original outbreak, so he's 0:12:59.400 --> 0:13:02.440 he's going to be very very careful. And but you know, look, 0:13:02.720 --> 0:13:06.959 uh this, you know, the real problem here is that 0:13:06.960 --> 0:13:10.160 there has been a staggering failure and it is the 0:13:10.280 --> 0:13:14.360 failure to build defenses against omicron that you know, they've 0:13:14.360 --> 0:13:18.720 been so fixated on, you know, on zero COVID that 0:13:18.760 --> 0:13:24.640 they haven't invested in ICU beds, in train specialist medical staff. 0:13:25.160 --> 0:13:31.199 Most importantly, they haven't uh adequately vaccinated the elderly population, 0:13:31.679 --> 0:13:33.679 you know, so and and of course they have no 0:13:33.800 --> 0:13:36.560 natural immunity. Now, Andy, do you think if China had 0:13:36.600 --> 0:13:41.000 accepted the Western vaccines, the Maderida and visor vaccines, would 0:13:41.040 --> 0:13:43.920 would it be a whole different scenario here? Would would 0:13:43.920 --> 0:13:46.520 the they'd be able to open a lot, a lot 0:13:46.840 --> 0:13:50.280 less risky than they are now. You know, I think 0:13:50.320 --> 0:13:55.520 people exaggerate this point. Uh, look is baffling, right, why 0:13:55.559 --> 0:13:58.320 they didn't take m RNA vaccine. It's the best in 0:13:58.440 --> 0:14:02.199 class vaccine, but it's not. It's not the game change 0:14:02.280 --> 0:14:07.760 that people say it. It might be Chinese vaccines, Okay, 0:14:07.840 --> 0:14:11.319 they're fine, right, they do a fine job. Um, they 0:14:11.360 --> 0:14:15.320 prevent serious illness, they prevent death. But that's if you 0:14:15.400 --> 0:14:18.520 have your your three dose regimen, right, you get your 0:14:18.559 --> 0:14:21.200 two vaccines and your boosted. The problem that they have 0:14:21.440 --> 0:14:25.600 is that they haven't insisted that the elderly get vaccinated. 0:14:25.840 --> 0:14:28.320 That was Andy Brown. He's a partner at Brunswick Group 0:14:28.360 --> 0:14:31.120 and a former colleague of ours here at Bloomberg, where 0:14:31.160 --> 0:14:33.880 he was editorial director at Bloomberg New Economy. Mike g 0:14:33.880 --> 0:14:36.560 Regan will be back a bit later in the program. Meantime, 0:14:36.600 --> 0:14:39.160 we've seen more protests flare up in various parts of China, 0:14:39.200 --> 0:14:41.600 even amid optimism that China make ease off some of 0:14:41.600 --> 0:14:44.800 its COVID zero policies, including about to speed up COVID 0:14:44.800 --> 0:14:47.680 shots for the elderly, Still ahead on Bloomberg Business Week. 0:14:47.680 --> 0:14:50.720 Our cover story sheds land on the potentially deadly game 0:14:50.800 --> 0:14:53.720 being played by some young American users of the wildly 0:14:53.760 --> 0:14:58.200 popular Chinese own social media platform TikTok. This is Bloomberg 0:15:01.680 --> 0:15:05.640 broadcasting from the financial capital of the world, Bloomberg eleven 0:15:05.720 --> 0:15:10.320 Frio in New York to Washington, d C. Bloomberg to Boston, 0:15:10.400 --> 0:15:13.840 Bloomberg one oh six one to San Francisco, Bloomberg nine 0:15:13.920 --> 0:15:17.040 sixty to the country Sirius XM Chado one nine team, 0:15:17.120 --> 0:15:20.280 and around the globe the Bloomberg Business app and Bloomberg 0:15:20.360 --> 0:15:25.720 Radio dot Com. This is Bloomberg Business Week. Time now 0:15:25.760 --> 0:15:28.400 for this week's cover story. Also Bloomberg Big Take from 0:15:28.400 --> 0:15:31.320 the past week. This one is heart wrenching and disturbing. 0:15:31.440 --> 0:15:33.920 It's in the latest issue of Bloomberg Business Week. It's 0:15:33.920 --> 0:15:38.080 on how TikTok's viral challenges, specifically the so called blackout challenge, 0:15:38.360 --> 0:15:42.280 are luring young users to their deaths. Bloomberg investigative reporter 0:15:42.320 --> 0:15:45.320 Olivia Carville reveals how the company behind the most popular 0:15:45.320 --> 0:15:48.280 app in the US is responding to these horrifying cases 0:15:48.560 --> 0:15:52.120 and the consistent failure of the platform's age verification mechanisms. 0:15:52.120 --> 0:15:55.000 Olivia and Bloomberg Business Week editor Joe Weber join us 0:15:55.040 --> 0:15:57.240 with more. This is one of these things that everyone 0:15:57.280 --> 0:15:59.800 just assumes, you know, kids are not going to find 0:15:59.800 --> 0:16:01.880 them ols in places that they're not supposed to be in. 0:16:02.160 --> 0:16:06.120 Just truly scary. Some of these corners can become Olivia 0:16:06.320 --> 0:16:08.800 bring us into how you went about reporting the story, 0:16:08.960 --> 0:16:12.680 because it really involves some tragic elements. Yeah, it does. 0:16:12.920 --> 0:16:16.440 I started reporting this piece by trying to get a 0:16:16.480 --> 0:16:21.400 sense of what happens inside TikTok. After a child dies 0:16:21.600 --> 0:16:24.920 participating in an online challenge, and maybe there's been a 0:16:24.960 --> 0:16:29.680 headline and some local news reports connecting TikTok to their death, 0:16:30.160 --> 0:16:34.120 how does the company respond and what happens internally? And 0:16:34.440 --> 0:16:36.720 the way to answer that question was to try and 0:16:36.720 --> 0:16:39.960 build sources on their trust and safety team. This is 0:16:40.000 --> 0:16:44.360 the team that is built within TikTok to handle the 0:16:44.400 --> 0:16:47.400 worst case scenarios. These are the fixes of the Internet, 0:16:47.480 --> 0:16:49.280 the people who come in and clean up the mess, 0:16:49.520 --> 0:16:53.880 protect the company's reputation, but also try and protect users. 0:16:53.960 --> 0:16:56.760 And I spoke to more than two dozen current and 0:16:56.840 --> 0:16:59.880 former trust and safety insiders to get a sense of 0:17:00.040 --> 0:17:03.400 what happens at TikTok, and that's how we were able 0:17:03.480 --> 0:17:06.000 to tell the story is really through the lens of 0:17:06.000 --> 0:17:08.840 that trust and safety team. Your piece starts out with 0:17:09.240 --> 0:17:12.800 just the tragic story of Ariannia Royo. Can you share 0:17:12.800 --> 0:17:15.919 her story and what her family has gone through. Arianne 0:17:16.119 --> 0:17:19.480 was a nine year old girl. She lived down in Milwaukee, Wisconsin, 0:17:19.640 --> 0:17:22.760 and she loved TikTok. You know, this is the most 0:17:22.800 --> 0:17:25.359 popular app in the world, and it is hard to 0:17:25.400 --> 0:17:31.200 deny the success of this company. Seventy percent of teenagers 0:17:31.200 --> 0:17:33.960 in America are using TikTok, and they're using it more 0:17:34.480 --> 0:17:37.960 than all of the other apps out there, Facebook, Snapchat, Twitter. 0:17:38.680 --> 0:17:41.880 So Arianni, like most kids, fell in love with TikTok 0:17:42.359 --> 0:17:44.800 and she was using the platform on a daily basis 0:17:44.960 --> 0:17:49.240 and she really enjoyed participating in the trending challenges. In 0:17:49.320 --> 0:17:53.320 February of last year, she attempted the Blackout challenge, which 0:17:53.359 --> 0:17:56.919 is where children try and choke themselves with household objects 0:17:57.040 --> 0:18:00.080 until they black out and then film the adrenaline and 0:18:00.240 --> 0:18:04.080 rush or the high they get regaining consciousness. But at 0:18:04.119 --> 0:18:09.520 the age of nine, Ariani unfortunately was unable to save herself. 0:18:09.600 --> 0:18:12.280 She had choked herself with a metal dog leash and 0:18:12.880 --> 0:18:17.040 she tragically died. So Olivia. Obviously TikTok is aware that 0:18:17.440 --> 0:18:20.440 there's a challenge here and that they have happened. There's 0:18:20.480 --> 0:18:23.280 been lawsuits. What does the company have to say about 0:18:23.320 --> 0:18:25.760 it and with their official response, and then what are 0:18:25.800 --> 0:18:28.840 others saying about that response? Yeah, I mean, these dangerous 0:18:28.880 --> 0:18:32.159 challenges bounce across platforms. They exist on TikTok, but they 0:18:32.200 --> 0:18:35.200 exist on all the others as well, and users actually 0:18:35.240 --> 0:18:41.240 try and sidestep safety restrictions by doing things like misspelling keywords. 0:18:41.240 --> 0:18:44.359 So rather than writing blackout challenge, which has been banned 0:18:44.400 --> 0:18:48.760 on TikTok, they'll right black out with a zero and 0:18:48.800 --> 0:18:52.480 try and get around the the artificial intelligence or the 0:18:52.560 --> 0:18:54.880 systems that have been set up to try and protect kids. 0:18:55.480 --> 0:18:59.680 So TikTok really doesn't want this content on its platform. 0:18:59.720 --> 0:19:02.240 It's done what it can to train its moderators to 0:19:02.320 --> 0:19:05.880 take down any content relating to the Blackout Challenge, and 0:19:06.119 --> 0:19:09.000 it also prevents anyone from being able to search for 0:19:09.040 --> 0:19:12.160 Blackout Challenge related content in the app, and it set 0:19:12.200 --> 0:19:15.639 those um those safety restrictions in place at the start 0:19:15.680 --> 0:19:17.840 of last year, after the first ten year old girl 0:19:17.920 --> 0:19:23.080 died attempting this particular challenge, but unfortunately, kids are smart 0:19:23.160 --> 0:19:26.040 and they know how to get around these safety restrictions 0:19:26.080 --> 0:19:28.920 and they're doing that, and that means that the challenges 0:19:28.960 --> 0:19:33.080 continuing to spread across social media platforms. And the most 0:19:33.119 --> 0:19:36.720 recent cases that we could find of deaths associated to 0:19:36.800 --> 0:19:40.240 the blackout challenge was August of this year. So despite 0:19:40.280 --> 0:19:44.040 all of those safety features being implemented, the deaths have 0:19:44.160 --> 0:19:46.560 kept happening. Where do you think we need to go 0:19:46.680 --> 0:19:48.960 from here to get on top of this, Well, that 0:19:49.080 --> 0:19:51.920 question of age verification is like the elephant in the room. 0:19:52.040 --> 0:19:54.159 This is one of the hardest things for these social 0:19:54.200 --> 0:19:57.600 media platforms to do. How can you tell the exact 0:19:57.680 --> 0:19:59.919 age of the person who was on the app, you know, 0:20:00.200 --> 0:20:04.760 using that device. And don't forget that children's content is 0:20:04.800 --> 0:20:09.320 allowed on TikTok. You can film your children or your 0:20:09.400 --> 0:20:12.320 siblings who are under the age of thirteen and post 0:20:12.359 --> 0:20:16.639 about it. Every social media platform in the US at 0:20:16.720 --> 0:20:18.840 least has a rule that says you have to be 0:20:18.880 --> 0:20:21.919 over the age of thirteen to use the product. You know, 0:20:21.960 --> 0:20:24.760 they call it within the industry the age gate, and 0:20:25.040 --> 0:20:28.040 it's very hard to enforce that. So these companies are 0:20:28.080 --> 0:20:30.000 trying to find ways around it. But this is one 0:20:30.040 --> 0:20:33.199 of the biggest challenges that social media platforms face. That 0:20:33.240 --> 0:20:36.480 was Bloomberg Investigative reporter Olivia Carville and Bloomberg Business We 0:20:36.520 --> 0:20:38.800 Get It or Jil Weber on this week's cover story. 0:20:39.000 --> 0:20:40.680 Just head to Bloomberg dot com or check it out 0:20:40.680 --> 0:20:43.080 on the terminal for a full length video feature on 0:20:43.160 --> 0:20:45.520 this piece. Hard to stomach, but I gotta say it 0:20:45.560 --> 0:20:47.600 important for the parents of young kids to see and 0:20:47.600 --> 0:20:51.120 know about. You're listening to Bloomberg Business Week. Coming up next, 0:20:51.160 --> 0:20:53.160 we shift gears and take a look at a key 0:20:53.240 --> 0:20:56.760 area of the consumer economy, the travel and hospitality sector. 0:20:56.920 --> 0:20:58.960 Then we get a post Thanksgiving pulse check with Price 0:20:59.040 --> 0:21:08.639 Line CEO bread Larth. This is Bloomberg. You're listening to 0:21:08.720 --> 0:21:12.600 Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes 0:21:12.720 --> 0:21:17.520 Tim Stinovik from Bloomberg Radio. Just over two and a 0:21:17.560 --> 0:21:21.480 half million passengers passed through US airport checkpoints last Sunday, 0:21:21.520 --> 0:21:24.760 according to Transportation Security Administration data. We're talking about the 0:21:24.800 --> 0:21:26.720 t s A. That's the most in a single day 0:21:26.720 --> 0:21:29.920 since before the COVID nineteen pandemic, up about four and 0:21:29.960 --> 0:21:32.200 a half percent from the same day last year. Again, 0:21:32.240 --> 0:21:34.399 according to the t S, a still a little one 0:21:34.440 --> 0:21:37.000 day tally fell about eleven percent shy the same figure 0:21:37.040 --> 0:21:40.720 in that's when two point eight million travelers were screened. 0:21:40.800 --> 0:21:42.679 With a look at the travel scene this past weekend 0:21:42.760 --> 0:21:45.520 and what maybe to come a bloomberg market, Senior editor 0:21:45.560 --> 0:21:48.879 Mike Reagan and Carol spoke with Priceline CEO Brett Keller 0:21:49.119 --> 0:21:51.320 on the heels of a cross country flight to the 0:21:51.320 --> 0:21:53.960 East Coast. The plane was completely packed, you know, a 0:21:53.960 --> 0:21:56.440 little bit of a delay coming into New York, but overall, 0:21:57.000 --> 0:22:00.359 you know, the Thanksgiving period of travel across the tree 0:22:00.400 --> 0:22:04.280 was very smooth. Yeah, Brett. Obviously, inflation has been the 0:22:04.359 --> 0:22:07.000 hot topic all year. I'm wondering what you're seeing as 0:22:07.000 --> 0:22:10.920 far as prices in the travel, hotel, airfare, that sort 0:22:10.960 --> 0:22:14.119 of thing. Are they rising as much as you know, 0:22:14.240 --> 0:22:18.200 cp I would suggest something like seven Actually a little 0:22:18.200 --> 0:22:20.840 hotter than that. Um depends on, you know, whether you're 0:22:20.880 --> 0:22:22.760 booking a flight or book in a hotel, but they're 0:22:22.760 --> 0:22:26.200 both up on the hotel side, you know, prices up 0:22:26.920 --> 0:22:29.480 seven eight percent versus where they were a year ago today, 0:22:29.480 --> 0:22:31.000 so a little less in the CPI. But when you 0:22:31.000 --> 0:22:34.520 look at flies and they're closer to fift, especially if 0:22:34.520 --> 0:22:37.520 you're flying overseas. So with the cost of jet fuel, 0:22:37.960 --> 0:22:40.160 you know, really up fifty where it was a year ago. 0:22:40.280 --> 0:22:44.000 That's pushing prices higher along with labor costs, and consumers 0:22:44.040 --> 0:22:47.360 seem to be shaking off those higher prices. They continue 0:22:47.400 --> 0:22:50.560 to prioritize travel over other purchases and are really hitting 0:22:50.560 --> 0:22:52.120 the road. So here at price line, you know, we're 0:22:52.200 --> 0:22:57.520 really seeing good, healthy travel demand. October actually accelerated from 0:22:57.560 --> 0:23:00.320 where it was in August and September. As we look 0:23:00.320 --> 0:23:02.919 into next year, patterns seem to be holding up at 0:23:02.960 --> 0:23:06.640 least so far. So are we back at levels based 0:23:06.680 --> 0:23:09.960 on what you're seeing off your platform? Brett, Yeah, we're 0:23:10.080 --> 0:23:12.240 very close. On the hotel front. If you just look 0:23:12.240 --> 0:23:15.439 at industry data broadly, for for the hotel category, you know, 0:23:15.480 --> 0:23:18.639 their occupancy rates are just about where they were in 0:23:18.680 --> 0:23:22.440 two thousand nineteen, maybe a percentage point below, but very healthy. 0:23:22.480 --> 0:23:25.199 On the flight side, even higher in the nineties in 0:23:25.280 --> 0:23:28.880 terms of you know, seat capacity utilization. So things look 0:23:29.119 --> 0:23:31.959 pretty good in the industry right now. And you know, 0:23:32.480 --> 0:23:36.320 consumers no longer have any COVID concerns, especially here in 0:23:36.400 --> 0:23:38.840 domestic travel in the US, and we're seeing a really 0:23:38.840 --> 0:23:42.600 strong demand into Europe and now starting into Asia as 0:23:42.640 --> 0:23:45.320 they've lifted restrictions there. Let me just just to follow 0:23:45.359 --> 0:23:47.600 on that. So I am always curious Brett on a 0:23:47.640 --> 0:23:50.320 platform like yours, I mean, how much visibility do you 0:23:50.359 --> 0:23:52.840 have looking out? Is it a couple of months, is 0:23:52.840 --> 0:23:55.159 it's six months, is it twelve months? What kind of 0:23:55.240 --> 0:23:57.560 visibility do you have in terms of what the environment 0:23:57.640 --> 0:24:03.320 might be for travel heading? Sure, Well, the average booking 0:24:03.320 --> 0:24:07.000 window for a consumer booking you know out into the 0:24:07.040 --> 0:24:10.679 future is usually pretty close in two three to four weeks. 0:24:10.720 --> 0:24:13.320 That's really where most of the bookings happen. But we 0:24:13.400 --> 0:24:16.120 do see, you know, well into the future people will 0:24:16.119 --> 0:24:18.480 book out to three and four months for certain types 0:24:18.480 --> 0:24:20.760 of vacations, and so that's a good proxy for what 0:24:20.800 --> 0:24:24.120 we're seeing, and so far that data looks pretty good. 0:24:24.119 --> 0:24:26.720 Things are still relatively healthy as we look into the 0:24:26.760 --> 0:24:30.199 future into first quarter of next year, so you know, 0:24:30.280 --> 0:24:34.400 demand again appears to be holding up um and we'll 0:24:34.480 --> 0:24:36.240 we'll see where it goes from there. But so far, 0:24:36.320 --> 0:24:38.480 we're we're happy with how things are playing out in 0:24:38.480 --> 0:24:40.960 the travel space. You know, Brett, I think probably a 0:24:40.960 --> 0:24:43.639 lot of listeners hit your site looking for a deal, 0:24:44.320 --> 0:24:46.720 of course, you know, or any tips on how to 0:24:46.800 --> 0:24:50.000 save a few bucks in this holiday season considering prices 0:24:50.040 --> 0:24:53.560 of everything are higher. There any sort of tricks of 0:24:53.600 --> 0:24:56.320 the trade you could share with us, Yeah, absolutely, listen. 0:24:56.400 --> 0:24:58.879 This is why price Line was founded, you know twenty 0:24:58.920 --> 0:25:01.960 five years ago, was to help consumers navigate a very 0:25:02.000 --> 0:25:05.439 complex space and and find savings. So when when you 0:25:05.480 --> 0:25:08.240 think about ways to save money today and this really 0:25:08.320 --> 0:25:11.679 high priced environment, one is you really need to avoid 0:25:12.280 --> 0:25:16.040 these high peak travel dates if your schedule allows, and 0:25:16.080 --> 0:25:18.000 more and more consumers are able to do that now. 0:25:18.119 --> 0:25:21.520 So for example, with the upcoming holidays, try your best 0:25:21.560 --> 0:25:25.040 not to fly on the twenty three and right right 0:25:25.040 --> 0:25:27.760 before and right after a Christmas holiday or the day 0:25:27.800 --> 0:25:30.160 after New Year's Day. Really try and push that out 0:25:30.160 --> 0:25:33.840 a couple of days. You can save fifteen because they 0:25:33.880 --> 0:25:38.240 really optimally price for those dates. From the airline side, 0:25:38.359 --> 0:25:40.960 a second way is on a site like price Line, 0:25:41.040 --> 0:25:44.080 you can book with mixed carriers. You can fly out 0:25:44.080 --> 0:25:47.360 on one airline, fly back on another that can typically 0:25:47.359 --> 0:25:50.520 deliver you anywhere from five percent off of what you 0:25:50.560 --> 0:25:52.240 would pay if you flew out and back on the 0:25:52.280 --> 0:25:55.120 same carrier. So by mixing and matching carriers, you can 0:25:55.160 --> 0:25:58.359 save money. And a third is to package right and 0:25:58.520 --> 0:26:00.879 bundle your your your books together. So if you're going 0:26:00.920 --> 0:26:03.280 to book a hotel and a flight, bundle those together. 0:26:03.440 --> 0:26:05.840 You will save money because we have access to especially 0:26:05.840 --> 0:26:09.959 negotiated rays that can only be used in that bundled experience, 0:26:10.280 --> 0:26:12.520 and that does deliver real value up to you know, 0:26:12.560 --> 0:26:15.960 a couple of hundred dollars a trip when you really 0:26:16.000 --> 0:26:19.080 are thoughtful about destinations and how you book those together. 0:26:19.520 --> 0:26:21.200 You guys do have lots of data you can see 0:26:21.240 --> 0:26:24.400 in real time, like what's interesting to people, what are 0:26:24.480 --> 0:26:29.320 the most popular flights that people are booking right now? Well, uh, 0:26:29.359 --> 0:26:33.679 you know, coming out of consumers really stayed close to 0:26:33.720 --> 0:26:35.960 home and many of them were not really even leaving 0:26:35.960 --> 0:26:39.480 the country. Uh. And so we've seen big markets really 0:26:39.520 --> 0:26:42.919 start to open up this year, especially for Christmas and 0:26:43.119 --> 0:26:47.040 New Year's. So New York, Atlanta, Las Vegas, l A 0:26:47.040 --> 0:26:51.159 all very very top of the charts right now. Also Orlando. Uh, 0:26:51.280 --> 0:26:53.920 that's always been a number one or number two market 0:26:54.359 --> 0:26:56.840 for US in particular, but really for the country, and 0:26:56.880 --> 0:27:00.040 it continues to be a top market for consumers. Of 0:27:00.200 --> 0:27:03.280 what we're seeing a lot more. The second half is 0:27:03.280 --> 0:27:07.360 people are leaving the US to travel overseas, and when 0:27:07.359 --> 0:27:10.199 you look at where they're going in Europe, obviously London 0:27:10.280 --> 0:27:12.600 is a big market, but they're also heading into many 0:27:12.640 --> 0:27:15.600 other interesting destinations there and a few now moving into Asia. 0:27:15.800 --> 0:27:19.919 But really for the holiday period, warm destinations are at 0:27:19.920 --> 0:27:23.920 the top of the list. Locations like Cancoon, Jamaica, Dominican 0:27:24.000 --> 0:27:27.800 Republic are very very appealing to consumers just looking to 0:27:27.880 --> 0:27:29.760 get a break and get some sunshine. A colleague of 0:27:29.800 --> 0:27:32.959 ours here uh said, yep, we just came back from 0:27:33.040 --> 0:27:36.159 Jamaica and so yeah, people, Mike are out and about 0:27:36.240 --> 0:27:38.280 and they're getting out of the US. I'll take any 0:27:38.320 --> 0:27:41.720 of those destinations. Yes, yes, and yes, hot sand, a 0:27:41.760 --> 0:27:45.280 golf course, swimming pool, one of those drinks with the umbrella. 0:27:45.560 --> 0:27:49.080 But Brett, you know, it's such an unusual economic environment 0:27:49.160 --> 0:27:51.960 that we're in right now. We have high inflation but 0:27:52.240 --> 0:27:57.080 super low unemployment. Everyone's worried about a recession. I'm wondering 0:27:57.600 --> 0:28:00.920 which of those variables matter the most to your business. 0:28:00.960 --> 0:28:03.280 You know, is it unemployment, is it g d P 0:28:03.680 --> 0:28:06.800 is an inflation is you know, my guess is unemployment 0:28:06.880 --> 0:28:09.399 is is probably the main thing that would sort of 0:28:10.040 --> 0:28:13.800 be a headwind to travel. Is that a fair assumption. Yeah, 0:28:13.800 --> 0:28:16.080 I think that's a fair assumption. I've been in the 0:28:16.080 --> 0:28:18.280 industry for over twenty five years. You know, we went 0:28:18.320 --> 0:28:21.959 through this back in oh eight, and travel is a 0:28:22.080 --> 0:28:27.000 very resilient category. People seem to prioritize that they always 0:28:27.000 --> 0:28:29.280 want to have that opportunity to visit family, to take 0:28:29.320 --> 0:28:32.040 a break, and so you know, if you're unemployed, obviously 0:28:32.040 --> 0:28:35.080 that makes it very, very challenging to pull together the 0:28:35.080 --> 0:28:37.280 dollars that's required to to take a trip like this. 0:28:37.400 --> 0:28:40.000 But what people will typically do if they're constrained is 0:28:40.040 --> 0:28:43.600 they'll start to modify how they travel. They may drive 0:28:43.640 --> 0:28:46.320 instead of fly, they may you know, drop down a 0:28:46.360 --> 0:28:49.920 star category. Um, they'll find ways to save money but 0:28:50.040 --> 0:28:53.000 still take that trip. And we're not necessarily seeing that 0:28:53.080 --> 0:28:56.360 trade down happen yet, but certainly that's what consumers may 0:28:56.960 --> 0:29:00.200 end up doing if they're really pressed for cash. Right, 0:29:00.280 --> 0:29:02.720 we spend I feel like every day in and out 0:29:02.800 --> 0:29:06.040 here at Bloomberg, because of the upcoming FED meeting, because 0:29:06.040 --> 0:29:08.560 of the FED conversations, because of j pal speaking this week, 0:29:08.560 --> 0:29:11.000 we talk about, you know, the prospect of a recession, 0:29:11.400 --> 0:29:13.360 whether it will be shallow, whether it will be deep, 0:29:13.400 --> 0:29:17.200 whether the FED will overdo it. What's the conversations constructive 0:29:17.240 --> 0:29:21.360 conversations you guys are having at priceline Um when it 0:29:21.440 --> 0:29:25.840 comes to the economic outlook and the possibility of a recession. Sure, well, 0:29:25.840 --> 0:29:28.480 that's obviously on everyone's mind here as well as we 0:29:28.520 --> 0:29:30.080 read the news and everything that's going on in the 0:29:30.240 --> 0:29:35.160 in the category. It's interesting though, is so far the 0:29:35.240 --> 0:29:40.080 hotel chains, the major airlines, they are all signaling good, strong, 0:29:40.200 --> 0:29:42.480 healthy demand for their product. And a lot of that 0:29:42.800 --> 0:29:46.520 obviously is because of consumers not being able to travel 0:29:46.600 --> 0:29:48.520 for really a good year and a half, and so 0:29:48.840 --> 0:29:52.400 that's propelling travel forward. And you know, when you think 0:29:52.440 --> 0:29:56.280 about what consumers are looking to do with whatever extra 0:29:56.320 --> 0:30:00.920 cash they have, they are prioritizing this now over really commodities. 0:30:00.960 --> 0:30:04.400 So you know, as we think about a recession, we're thinking, yeah, 0:30:04.440 --> 0:30:08.640 this could be this could be obviously harmful to the 0:30:09.280 --> 0:30:13.080 industry longer term, but we just don't see that. And 0:30:13.360 --> 0:30:16.880 historically when you look back to Ohay, it weathered that 0:30:17.080 --> 0:30:21.600 very very well as well, So we're very optimistic about 0:30:21.600 --> 0:30:23.840 the next couple of years, even in the face of 0:30:24.160 --> 0:30:27.200 what could be, you know, a recession. But you know, 0:30:27.920 --> 0:30:30.800 you can't predict the future anymore. It's it's becoming a 0:30:30.840 --> 0:30:33.960 bit a bit too challenging, you know, Brett. Quickly, I 0:30:34.000 --> 0:30:35.640 was looking at some of the notes that you sent 0:30:35.760 --> 0:30:40.920 us before the show Um and Cruises. The price you gave, 0:30:40.960 --> 0:30:43.920 the low price for a cruise ship per night made 0:30:43.920 --> 0:30:45.880 my eyes pop out. Is that a type of seventy 0:30:45.920 --> 0:30:47.200 dollars a night you can you can go on a 0:30:47.240 --> 0:30:51.760 cruise work. No, that's absolutely an accurate figure. In fact, 0:30:52.280 --> 0:30:54.280 you know, that's one of and most people don't know this, 0:30:54.440 --> 0:30:57.280 it is one of the most cost effective vacations there 0:30:57.320 --> 0:31:00.520 are because it typically includes obviously food and beverage as well, 0:31:00.920 --> 0:31:02.960 so you bring that together. It's a it's a really 0:31:03.040 --> 0:31:04.520 nice vacation. Now you have to get yourself to a 0:31:04.560 --> 0:31:07.280 cruise port, but there are ways to either drive there 0:31:07.400 --> 0:31:09.160 or find a cheap flight to get you there to 0:31:09.240 --> 0:31:11.080 then get you onto that cruise line. And now you know, 0:31:11.120 --> 0:31:14.280 the cruise lines obviously had a tough time through COVID 0:31:14.360 --> 0:31:16.840 and continue to have a lot of excess capacity, more 0:31:16.880 --> 0:31:20.000 so than many of the other travel categories. So they're 0:31:20.080 --> 0:31:22.360 really they're really rolling out the credits and other things 0:31:22.360 --> 0:31:24.600 to get you onto those ships. That was Priceline CEO 0:31:24.600 --> 0:31:26.880 Brett Keller with me and Mike Reagan. Priceline, by the way, 0:31:26.880 --> 0:31:30.320 a subsidiary of the publicly held Booking Holdings. And that 0:31:30.360 --> 0:31:32.160 wraps up our first hour of the weekend edition of 0:31:32.200 --> 0:31:34.920 Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and 0:31:34.920 --> 0:31:37.200 I'm Tim Stanovic. Ahead in our next hour, we go 0:31:37.240 --> 0:31:40.040 in depth with Kathy Wood of our convest on everything 0:31:40.080 --> 0:31:43.000 from Elon Musk to this year's FED policy and the 0:31:43.080 --> 0:31:46.280 latest on crypto deep freeze brought on by the collapse 0:31:46.320 --> 0:31:48.719 of ft X. Great voice for so much going on 0:31:48.840 --> 0:31:51.320 right now. Yes, a lot of people have lost a 0:31:51.320 --> 0:31:56.360 lot of money around the crypto acid ecosystem, uh, losing 0:31:56.640 --> 0:31:59.920 value here. But if we're right on the underlying techno 0:32:00.000 --> 0:32:06.120 apology and the underlying rules that bitcoin and ether ethereum 0:32:06.280 --> 0:32:10.120 are going to play in this new world, Uh, then 0:32:11.040 --> 0:32:14.800 I think we're going to recover pretty quickly. Stick around. 0:32:15.000 --> 0:32:26.680 This is Bloomberg. This is Bloomberg Business Week inside from 0:32:26.680 --> 0:32:29.840 the reporters and editors who bring you America's most trusted 0:32:29.880 --> 0:32:34.040 business magazine, plus global business finance and tech news as 0:32:34.080 --> 0:32:37.960 it happened, Sloomberg Business Week with Carol Messier and Bloomberg 0:32:38.040 --> 0:32:42.520 Quick Takes Tim Stinovic on Bloomberg Radio. Plenty of head 0:32:42.520 --> 0:32:44.520 in our second hour of the weekend edition of Bloomberg 0:32:44.600 --> 0:32:47.800 Business Week, including our comprehensive interview with Kathy Wood of 0:32:47.800 --> 0:32:51.160 our convest everything from Elon Musk and Twitter and Tesla 0:32:51.280 --> 0:32:53.800 to the ft X implosion. First up this hour, the 0:32:53.840 --> 0:32:56.600 crypto crash from a different angle. The Business Week team 0:32:56.600 --> 0:32:59.160 has a story online at Bloomberg dot com, slash business 0:32:59.200 --> 0:33:01.080 Week and on the term at All about how the 0:33:01.120 --> 0:33:05.000 digital asset turmoil is actually helping couples rekindle their relationships 0:33:05.000 --> 0:33:07.880 at an angle I didn't see Bloomberg Markets Senior editor 0:33:07.920 --> 0:33:10.120 Mike Reagan, and I got more from Business Week contributor 0:33:10.200 --> 0:33:12.840 Joel Stein, as well as the Markets and Finance editor 0:33:12.880 --> 0:33:15.200 for the magazine, Pat right Near. I think all of 0:33:15.280 --> 0:33:18.320 us who spent any time reporting on crypto got to 0:33:18.400 --> 0:33:21.640 know people for whom crypto became kind of a defining 0:33:21.680 --> 0:33:23.840 part of their lives. I mean, you know, a lot 0:33:23.880 --> 0:33:27.440 of people listening to this are just ordinary finance workaholics 0:33:27.480 --> 0:33:30.600 who have a hard enough time sort of paying attention 0:33:30.600 --> 0:33:32.800 to this stuff. Um, you know, when the markets are 0:33:32.840 --> 0:33:36.360 open to crypto has this quality of never being closed, 0:33:36.440 --> 0:33:38.720 even on the weekends and bringing a lot of things 0:33:38.720 --> 0:33:42.560 outside of people's peripheral vision. And UM, I think a 0:33:42.600 --> 0:33:44.080 lot of people have had a hard time kind of 0:33:44.120 --> 0:33:47.640 emotionally managing that. And um, the side effect of that 0:33:47.720 --> 0:33:51.960 is that it's hard on people's relationships. But um, Joel, 0:33:52.000 --> 0:33:54.520 tell me how you kind of came came onto this. Uh, 0:33:54.880 --> 0:33:58.080 these were some people you knew. Yes, my friend Igor 0:33:58.200 --> 0:34:00.800 Hiller who's in the piece, And he was the guy 0:34:00.840 --> 0:34:03.840 I always called when I ever got assigned a crypto 0:34:03.880 --> 0:34:06.600 story to ask him like the basics of like what 0:34:06.680 --> 0:34:09.200 the hell this is all about? And he was over 0:34:09.200 --> 0:34:12.160 for dinner with his longtime girlfriend. They've been together for 0:34:12.200 --> 0:34:15.360 like four years, and they told us that kind of 0:34:15.400 --> 0:34:17.480 like what started as a really funny story and turned 0:34:17.520 --> 0:34:20.479 really kind of sad and serious where they almost broke 0:34:20.600 --> 0:34:23.960 up because he wasn't paying any attention to the relationship 0:34:24.000 --> 0:34:28.000 because he was so obsessed with his cryptop and hanging 0:34:28.000 --> 0:34:31.279 out with them and just checking his phone constantly and 0:34:31.320 --> 0:34:34.319 waiting for n f T drops and just like you know, 0:34:34.440 --> 0:34:37.680 degenerate gambler, maybe you'd call it de Jenning when he 0:34:37.719 --> 0:34:39.960 went into these kind of phases and uh, and she 0:34:40.000 --> 0:34:42.000 kind of gave him an ultimatum that was either crypto 0:34:42.120 --> 0:34:44.640 or her. But you know, Joe, you mentioned those n 0:34:44.640 --> 0:34:46.879 f T drops and I get the impression reading this 0:34:47.200 --> 0:34:50.520 that U n f T is almost really worsened this 0:34:50.600 --> 0:34:54.720 situation because you're stuck there waiting for these things to drop, 0:34:54.800 --> 0:34:57.200 and they can be delayed. Did you get that sense 0:34:57.239 --> 0:35:00.200 to that? You know, the the addiction was almost first 0:35:00.200 --> 0:35:02.400 when it came to n f T s, both because 0:35:02.520 --> 0:35:05.360 of the time consumption and also sort of the potential 0:35:05.480 --> 0:35:07.880 upside and those as an investments, at least for a 0:35:07.920 --> 0:35:10.520 hot minute. There, for a hot minute, n f T 0:35:10.640 --> 0:35:13.800 s were. But throughout the entire you know, crypto cycle, 0:35:13.840 --> 0:35:16.480 there was always a different thing that could occupy you 0:35:16.640 --> 0:35:19.160 twenty four hours a day because crypto markets don't close. 0:35:19.600 --> 0:35:23.280 So during the D five farming phase, there was always 0:35:23.520 --> 0:35:25.520 some new farm that was opening up that you had 0:35:25.520 --> 0:35:27.719 to get involved and get their coin real quick, or 0:35:27.719 --> 0:35:29.760 there'd be a coin drop, right like, people were creating 0:35:29.800 --> 0:35:32.480 new coins all the time, and Elon Musk or someone 0:35:32.520 --> 0:35:34.480 else would tell you that this was a hot coin 0:35:34.520 --> 0:35:35.799 you had to get, and you had to get it, 0:35:35.960 --> 0:35:37.920 you know, when it was minted. So I don't think 0:35:37.960 --> 0:35:39.480 it was just n f t s. There were there 0:35:39.600 --> 0:35:42.279 was always some new craze that you had to get 0:35:42.280 --> 0:35:44.520 involved in, and you know, maybe you had to simp 0:35:44.680 --> 0:35:48.040 some star in order to get involved in that, you know, 0:35:48.320 --> 0:35:51.920 um in that discord channel and by I guess those 0:35:51.960 --> 0:35:53.279 are off in n f t s. But yeah, there 0:35:53.320 --> 0:35:56.040 was always a new craze and even if you kept 0:35:56.120 --> 0:35:57.399 up with one of them, there'd be a new one 0:35:57.400 --> 0:36:02.239 that popped up. Pat, come on back in on the conversation. Yeah. 0:36:02.280 --> 0:36:04.160 You know. One of the things I'm thinking about a lot, 0:36:04.440 --> 0:36:07.759 with all of the really serious stuff having happening now, 0:36:07.920 --> 0:36:12.080 is that, um. You know, UM, we've learned that markets 0:36:12.120 --> 0:36:15.040 can grow up faster than you can teach yourself how 0:36:15.040 --> 0:36:17.960 to think about them, and I think also faster than 0:36:18.000 --> 0:36:21.360 you can teach yourself how to emotionally handle them. Um. 0:36:21.400 --> 0:36:24.959 You know, in the last two years in crypto, even 0:36:25.040 --> 0:36:28.520 for people who aren't investing in it, um, it's been uh, 0:36:28.640 --> 0:36:31.720 something that has moved so fast that it just keeps 0:36:31.719 --> 0:36:38.319 you kind of like mentally and emotionally agitated. Um, but 0:36:38.760 --> 0:36:39.920 you know, I mean I also kind of want to 0:36:39.920 --> 0:36:41.319 talk a little bit about sort of you know, the 0:36:41.320 --> 0:36:43.640 people who are the partners in these situations, and Joel's 0:36:43.640 --> 0:36:45.120 sort of like what they felt like they had to 0:36:45.120 --> 0:36:49.799 do to kind of get ahold of their relationships and 0:36:49.840 --> 0:36:54.400 really like bring their partners back from the brink. Yeah, 0:36:54.520 --> 0:36:58.480 and almost every case there was a guy, and it 0:36:58.560 --> 0:37:01.000 was almost always a young with always the fact we 0:37:01.000 --> 0:37:03.000 were looking all around all we could find with young men, 0:37:03.640 --> 0:37:07.000 uh and and the and the numbers, IM polls and 0:37:07.200 --> 0:37:09.279 and kind of play this out. But it's a bunch 0:37:09.320 --> 0:37:12.560 of young men and they get so wrapped up in 0:37:12.560 --> 0:37:15.640 this and they think it's going to be a life 0:37:15.719 --> 0:37:18.240 changing moment that they can't miss out on. It's all fomo, 0:37:18.440 --> 0:37:21.200 and that there's going to be generational wealth created for 0:37:21.239 --> 0:37:24.120 their grandchildren if they just stick to this one thing. 0:37:24.200 --> 0:37:27.200 And they all kind of we're able to get their 0:37:27.280 --> 0:37:32.160 spouse or more like their girlfriend involved to an extent, 0:37:33.320 --> 0:37:36.040 but um, not as much as they would have liked. 0:37:36.120 --> 0:37:39.279 And then there their relationships started to wither because they 0:37:39.280 --> 0:37:42.200 were so devoted to this one thing. Yeah, Joe, I 0:37:42.480 --> 0:37:45.920 wonder if, you know, if these guys really are creating 0:37:46.000 --> 0:37:48.800 wealth through this, if that sort of changes the equation 0:37:48.840 --> 0:37:51.000 with the wives and girlfriends a little bit too. Were 0:37:51.000 --> 0:37:53.200 any of these guys actually, you know, doing well with 0:37:53.280 --> 0:37:57.360 their trading enough to you know, sort of get the 0:37:57.520 --> 0:38:00.520 get the day pass from their wives and girlfriends? Sure? 0:38:00.560 --> 0:38:02.320 I mean, some of these guys, you know, on a 0:38:02.719 --> 0:38:06.600 exciting day could make ten dollars the guys I was 0:38:06.640 --> 0:38:08.960 talking to at least, and that that goes a little, 0:38:09.080 --> 0:38:11.440 you know, a long way and convincing your girlfriend that's okay, 0:38:11.480 --> 0:38:14.640 you didn't go out with her this weekend. But you know, 0:38:15.040 --> 0:38:17.640 those days were few and far between, especially as the 0:38:17.640 --> 0:38:20.239 markets started to dry up at the beginning of this year. 0:38:20.400 --> 0:38:23.760 But in a lot of these cases, eventually, either because 0:38:23.760 --> 0:38:30.000 of the crash or because of ultimatums, the boyfriends somewhat 0:38:30.040 --> 0:38:33.160 came around and people were able to resolve their relationships. 0:38:33.160 --> 0:38:34.480 And in a lot of the cases where I talk 0:38:34.560 --> 0:38:37.080 to people, So, Joe, what do you think happens if 0:38:37.560 --> 0:38:40.399 the crypto market takes off again? Are these guys incurriagible 0:38:40.520 --> 0:38:43.399 or they they learned their lesson? How do you see 0:38:43.400 --> 0:38:46.920 a plane? I mean, do you know any gamblers to 0:38:47.080 --> 0:38:50.560 be encourageable. Um, you know, I think there's there's hope 0:38:50.640 --> 0:38:52.799 that the lessons were learned, but I think it's it's 0:38:52.800 --> 0:38:55.840 a very powerful draw. That was Bloomberg Business Week contributor 0:38:55.920 --> 0:38:58.600 Joel Stein, with Markets and Finance editor Pat Rigneer Mike 0:38:58.680 --> 0:39:01.359 Reagan taking part there as well. That angle right caught 0:39:01.400 --> 0:39:03.600 us by surprise. I didn't see that coming. Yeah, exactly, 0:39:03.719 --> 0:39:05.759 all right, you're listening to Bloomberg Business Week. Coming up, 0:39:05.800 --> 0:39:07.960 we go the Distance with our invest founder and CEO 0:39:08.080 --> 0:39:10.960 Kathy Wood on f t X SPF and Elon Musk's 0:39:11.120 --> 0:39:15.040 latest venture. I think opening up the algorithms which we 0:39:15.080 --> 0:39:17.840 think he will do, and taking away the kind of 0:39:17.920 --> 0:39:22.160 human driven censorship and allowing the transparency of the algorithms 0:39:22.200 --> 0:39:24.359 that they do put out there. And I think it's 0:39:24.400 --> 0:39:34.520 going to be very healthy. This is Bloomberg. This is 0:39:34.560 --> 0:39:38.480 Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes 0:39:38.520 --> 0:39:44.000 Tim Stinovik from Bloomberg Radio. Whatever happened, why ever happened? 0:39:44.280 --> 0:39:46.520 I had a duty, at a duty to all of 0:39:46.520 --> 0:39:49.360 our stakeholders, to our customers, our creditors. I had to 0:39:49.400 --> 0:39:52.239 do to our employees, to our investors and to the 0:39:52.280 --> 0:39:55.319 regulators in the world to do right by them, to 0:39:55.360 --> 0:39:57.279 make sure the rain things happened at the company, and 0:39:57.560 --> 0:39:59.480 clearly I'd do a good job of that. I was 0:39:59.600 --> 0:40:02.040 shocked by what happened this month. That was fd X 0:40:02.080 --> 0:40:04.080 founder Sandby had been freed from the New York Times 0:40:04.080 --> 0:40:07.120 Deal Book summit on Wednesday, trying to explain the collapse 0:40:07.160 --> 0:40:10.200 of his crypto exchange and trading from Alameda. Certainly a 0:40:10.239 --> 0:40:12.960 lot of questions though still to be answered. All Right, 0:40:13.000 --> 0:40:15.560 for the rest of this hour, speaking of questions and 0:40:15.640 --> 0:40:20.400 views when it comes to SPF and Alameda and f 0:40:20.560 --> 0:40:22.839 t X. For the rest of this hour, we've got 0:40:22.880 --> 0:40:24.839 a well known investor to address many of the big 0:40:24.880 --> 0:40:28.200 stories of the day, including that latest crypto meltdown. We're 0:40:28.200 --> 0:40:31.040 also going to talk about elon, Twitter, Ellen and Tesla 0:40:31.120 --> 0:40:33.880 and so much more. Okay, we're talking about Kathy Wood. 0:40:33.920 --> 0:40:36.440 She's the founder, CEO and c IO of Arc invest 0:40:36.560 --> 0:40:39.600 who joined us prior to Thanksgiving. This was in the 0:40:39.600 --> 0:40:43.000 wake of spfs crypto empire just going belly up, and 0:40:43.040 --> 0:40:46.040 despite the deepest freeze yet in the crypto winter, Cathy 0:40:46.080 --> 0:40:49.879 Wood is staying the course. It's been a very challenging few. 0:40:50.200 --> 0:40:53.680 Uh while I should say twenty months, but uh, you know, 0:40:54.120 --> 0:40:57.799 we're looking at our portfolios right now, and um, we 0:40:57.920 --> 0:41:01.680 are back to where we were in terms of calling 0:41:01.719 --> 0:41:05.000 them deep value portfolios. If you give us a five 0:41:05.080 --> 0:41:09.280 year investment time horizon, I mean, we're seeing incredible values 0:41:09.320 --> 0:41:11.759 for the kinds of growth, kind of growth that our 0:41:11.800 --> 0:41:14.080 portfolios are going to deliver. You know where I want 0:41:14.080 --> 0:41:16.080 to go. I gotta talk to you about the crypto space. 0:41:16.160 --> 0:41:18.480 You um, you know it's it's a world you know 0:41:18.600 --> 0:41:21.080 really well. We think about the ft X collapse, the 0:41:21.200 --> 0:41:24.759 coming undone of Sam Makman freed. You know, you have 0:41:24.840 --> 0:41:26.640 been buying into some of the different names in the 0:41:26.640 --> 0:41:31.640 cryptos based coin base, gray scale, Bitcoin trust. Why should 0:41:31.640 --> 0:41:35.120 investors trust crypto? Why do you trust crypto at this point? 0:41:35.400 --> 0:41:40.120 If you look at the block chains, let's let's use 0:41:40.680 --> 0:41:45.279 the Bitcoin blockchain and ethereum, what you'll find is they 0:41:45.320 --> 0:41:49.280 have the infrastructure. The technology has not skipped a beat 0:41:50.120 --> 0:41:54.880 throughout this entire crisis. In fact, the hash rate, Bitcoin's 0:41:54.920 --> 0:41:58.160 hash rate is at an all time high, and that 0:41:58.400 --> 0:42:01.360 is a real indication of this security of the network. 0:42:02.440 --> 0:42:08.719 On ethereum, we're seeing the total value UH staked at 0:42:08.760 --> 0:42:13.319 twenty four billion. That is an all time high. So 0:42:13.560 --> 0:42:18.319 we think the infrastructure is working beautifully. UM. As far 0:42:18.480 --> 0:42:24.399 as coin Base, UH, this is an onshore regulated UH 0:42:24.719 --> 0:42:30.240 company and wanting to help shape regulations. Brian Armstrong, the CEO, 0:42:30.360 --> 0:42:34.760 and Alicia uh CFO have been leaning in into what's 0:42:34.920 --> 0:42:39.799 going on right now and saying, Okay, regulators, we need 0:42:39.960 --> 0:42:44.520 more clarity in order to protect investors. Those who wanted 0:42:44.560 --> 0:42:49.160 to get involved with a certain types of crypto were 0:42:49.200 --> 0:42:53.600 forced off shore and look at what's happened. So UM, 0:42:53.840 --> 0:42:56.279 I I think that coin base is going to come 0:42:56.320 --> 0:43:00.640 out here looking very very strong. It just lost a 0:43:00.760 --> 0:43:03.920 very big competitor in t X. Well what is the 0:43:03.920 --> 0:43:07.560 market missing though, because you know that could be one narrative, Cathy. 0:43:07.640 --> 0:43:09.879 But at the same time, we haven't exactly seen shares 0:43:09.920 --> 0:43:12.560 of coin based rally since f t x is collapse. 0:43:12.800 --> 0:43:15.680 Do you think to you that represents potentially broader concern 0:43:15.719 --> 0:43:19.520 about just people's interest in crypto following ft x is collapse. No, 0:43:19.760 --> 0:43:23.359 I think it's more fear. I think many people say 0:43:23.400 --> 0:43:26.480 we don't know what we don't know UH, and UH, 0:43:26.840 --> 0:43:29.520 so what we do is we step back, you know, 0:43:29.600 --> 0:43:32.359 put a little perspective into the situation here, and what 0:43:32.400 --> 0:43:36.960 do we have. So the entire crypto asset ecosystem is 0:43:37.000 --> 0:43:41.920 an eight hundred billion dollar ecosystem. Apple is three times 0:43:42.040 --> 0:43:46.200 larger in terms of market cap. So that's some perspective. 0:43:46.800 --> 0:43:49.880 Many people are saying, well, okay, is this another Lehman? 0:43:50.000 --> 0:43:53.160 Could this be uh, you know, could could we see 0:43:53.200 --> 0:43:56.640 the domino effect here? I've just given you one reason why. 0:43:57.320 --> 0:44:02.040 The banking system back in oh eight oh nine trillions 0:44:02.080 --> 0:44:05.200 and trillions of dollars and it was the global banking system. 0:44:06.239 --> 0:44:09.520 Right now we have it seems from f t X 0:44:10.080 --> 0:44:15.600 h five to ten billion dollars in creditors. If ash 0:44:16.040 --> 0:44:19.319 as f t X has filed bankruptcy, they will be 0:44:19.360 --> 0:44:22.919 making claims. If you look at Lehman, that was one 0:44:22.920 --> 0:44:27.160 point to trillion dollars in claims. So again just trying 0:44:27.200 --> 0:44:31.080 to put perspective, this is fraud, this is made off. 0:44:31.400 --> 0:44:35.600 Made off was sixty four billion dollars in claims. Again 0:44:35.760 --> 0:44:39.359 f t X five to ten billion. Now I know 0:44:39.520 --> 0:44:43.960 that crypto assets are you know, they attract a lot 0:44:43.960 --> 0:44:48.879 of attention. This is um you know, the three revolutions 0:44:48.920 --> 0:44:51.200 we talk about all the time you know, a new 0:44:51.239 --> 0:44:56.560 monetary system in terms of the first global private meaning 0:44:56.600 --> 0:45:02.280 not government controlled digital uh, well spased monetary system that's Bitcoin. 0:45:02.440 --> 0:45:05.800 A very big idea. Defy is a very big idea. 0:45:06.400 --> 0:45:11.279 And uh, while that has been thrown into question in 0:45:11.400 --> 0:45:15.400 terms of you know, shifting from one exchange to another, 0:45:16.200 --> 0:45:19.400 we've had a lot of shifting around. But I think, uh, 0:45:19.520 --> 0:45:24.160 I think DEFY in terms of taking the middlemen out 0:45:24.200 --> 0:45:28.919 of financial services and and making the ecosystem much more 0:45:29.000 --> 0:45:33.719 transparent with much less counterparty risk, is going to take off. 0:45:33.760 --> 0:45:36.880 It will continue to move forward, we believe. I think 0:45:36.920 --> 0:45:38.520 one of the things we're trying to figure out is 0:45:38.600 --> 0:45:41.600 how long that we think the industry will be feeling 0:45:41.600 --> 0:45:43.680 the ramifications of f t X. I mean, one thing 0:45:43.719 --> 0:45:46.480 we've learned right with SPF and f t X is 0:45:46.719 --> 0:45:49.120 what we didn't know. So how long do you think 0:45:49.160 --> 0:45:51.319 this goes on? Because you obviously have faith in it, 0:45:51.400 --> 0:45:53.360 You've been buying into it, and you think this is 0:45:53.400 --> 0:45:56.800 a good entry point at this point, whether it's gray Scale, 0:45:56.840 --> 0:45:59.520 whether it's coin base, but um, how long do you 0:45:59.520 --> 0:46:01.319 think we continue to feel the effect? And do you 0:46:01.320 --> 0:46:04.560 think there's more contagion to be felt? Um, well, we 0:46:04.640 --> 0:46:08.320 always look for the whale, uh in in a situation 0:46:08.360 --> 0:46:11.239 like this, and if if there was a whale out there, 0:46:11.280 --> 0:46:14.560 it was f t X and and Sam Bankman Freed, 0:46:15.040 --> 0:46:18.560 you know, king of the hill. Uh. So I think 0:46:18.600 --> 0:46:22.319 we found the whale. And uh, you know, I'm sure 0:46:22.360 --> 0:46:24.680 they are going there's going to be more fallout, but 0:46:24.719 --> 0:46:28.040 we see how big the whale is. And yes, a 0:46:28.080 --> 0:46:30.240 lot of people have lost a lot of money around 0:46:30.480 --> 0:46:35.799 uh the crypto acid ecosystem, uh, losing value here. But 0:46:35.880 --> 0:46:39.640 if we're right on the underlying technology and the underlying 0:46:40.000 --> 0:46:45.440 roles that bitcoin and ether ethereum are going to play 0:46:45.520 --> 0:46:50.359 in this new world, Uh, then I think we're going 0:46:50.400 --> 0:46:53.560 to recover pretty quickly. More ahead with our invest founder, 0:46:53.640 --> 0:46:56.160 CEO and ce IO, Cathy would coming up. She's gonna 0:46:56.200 --> 0:46:58.200 tell us more about her one on one meeting with 0:46:58.239 --> 0:47:01.279 Sam Bankman Freed that is in a different time when 0:47:01.320 --> 0:47:04.000 f t X was still flying high, plus why she 0:47:04.160 --> 0:47:07.040 thinks SPF is a fraud on the level of Bernie 0:47:07.040 --> 0:47:09.440 made off. And we do want to emphasize to listeners 0:47:09.480 --> 0:47:12.320 that regulators are still probing exactly what happened with f 0:47:12.440 --> 0:47:14.799 t X and Bloomberg News will continue to provide new 0:47:14.800 --> 0:47:17.759 information as the case unfolds. I think the thing that 0:47:18.080 --> 0:47:23.360 is shocking is how many people were very close to him, 0:47:23.440 --> 0:47:27.000 and one would have presumed looked at all of the 0:47:27.080 --> 0:47:30.120 documents and got a sense of the books. You're listening 0:47:30.160 --> 0:47:36.880 to Bloomberg Business Week. This is Bloomberg broadcasting from the 0:47:36.920 --> 0:47:40.799 financial capital of the world, Bloomberg eleven Rio in New 0:47:40.880 --> 0:47:45.359 York to Washington, d C. Bloomberg to Boston, Bloomberg one 0:47:45.360 --> 0:47:48.520 oh six one does San Francisco, Bloomberg nine sixty to 0:47:48.600 --> 0:47:51.799 the country Sirius XM Chado one nineteen and around the 0:47:51.840 --> 0:47:55.840 globe of Bloomberg Business app and Bloomberg Radio dot Com. 0:47:55.880 --> 0:48:00.880 This is Bloomberg Business Week. More now, from recent conversation 0:48:00.920 --> 0:48:03.400 with our invest founder, CEO and c I O Kathy 0:48:03.480 --> 0:48:05.879 would When we spoke with her on November twenty two, 0:48:06.200 --> 0:48:08.840 the scope of the ft X bankruptcy probe was and 0:48:09.120 --> 0:48:11.760 still is coming into focus, and even since our conversation 0:48:11.800 --> 0:48:14.080 with her, Carol, we've seen several other dominoes fall just 0:48:14.160 --> 0:48:16.320 in the last few days. That does, of course include 0:48:16.360 --> 0:48:19.600 block Fire recently filing for bankruptcy. Here we ask about 0:48:19.680 --> 0:48:22.319 Sam Bankman freed though and Cathy would. She did not 0:48:22.520 --> 0:48:25.839 mince words here. Again, we do remind you that investigators 0:48:25.840 --> 0:48:28.279 are still looking into whether he committed a crime end 0:48:28.320 --> 0:48:33.319 if so, on what scale, more like made off. We'll 0:48:33.360 --> 0:48:35.719 give us some give us an understanding of what your 0:48:35.760 --> 0:48:39.640 interactions were with Sam Bankman Freed before this followed. And 0:48:39.719 --> 0:48:41.200 have you spoken to him, because I know you were 0:48:41.239 --> 0:48:43.960 at Crypto Bahamas along with many other people earlier this year, 0:48:44.000 --> 0:48:46.920 the ft X Salt conference. Yes, I had a zoom 0:48:47.160 --> 0:48:50.840 my team and I had a zoom with Sam before 0:48:50.920 --> 0:48:56.960 that conference. I think they wanted to have us represented 0:48:57.000 --> 0:49:00.120 at the conference. But other than that one phone call 0:49:00.120 --> 0:49:03.560 just to set up I have never talked to him um, 0:49:03.640 --> 0:49:05.719 and by the end of the phone call seemed to 0:49:05.719 --> 0:49:09.960 be distracted by whatever else he was doing. So that 0:49:10.040 --> 0:49:12.279 was my one exposure to him. And you know, I 0:49:12.320 --> 0:49:16.160 think the thing that is shocking is how many people 0:49:16.360 --> 0:49:20.880 were very close to him, and one would have presumed 0:49:21.480 --> 0:49:24.240 looked at all of the documents and got a sense 0:49:24.280 --> 0:49:27.560 of the books. Uh. The fact that so many people 0:49:28.160 --> 0:49:33.880 were completely fooled um is quite shocking. You know. I 0:49:33.920 --> 0:49:37.959 think he had this aura around him or something that 0:49:38.960 --> 0:49:42.759 caused people to to to ask fewer questions than might 0:49:42.800 --> 0:49:45.480 otherwise have been the case. It's very hard to understand. 0:49:45.760 --> 0:49:47.480 Do you worry it all about as you buy into 0:49:47.480 --> 0:49:50.239 gray Scale, Kathy, you know the whole world of the 0:49:50.239 --> 0:49:53.040 Digital Currency Group and Barry Silver's company, I mean, the 0:49:53.160 --> 0:49:55.719 various connections that kind of go back to f t X. 0:49:55.800 --> 0:49:58.040 Are you at all worried about a liquidation or anything. 0:49:58.560 --> 0:50:02.399 We know that the Gray Scale investment trusts are the 0:50:02.440 --> 0:50:05.239 most valuable part of that company right now, we think 0:50:05.280 --> 0:50:07.879 they're going to try and hold on to that if 0:50:07.920 --> 0:50:11.279 nothing else. Now, one of the things that we know 0:50:11.800 --> 0:50:15.160 that Gray Scale and Michael Sun and Cheim a great 0:50:15.280 --> 0:50:19.759 Scale wanted was to convert this trust into an e 0:50:19.880 --> 0:50:24.120 t F. I think what's happened with the fallout here 0:50:24.719 --> 0:50:28.560 might increase the probability that a Bitcoin e t F 0:50:29.080 --> 0:50:33.640 will be approved. I'm not saying immediately, but we know that. 0:50:34.040 --> 0:50:38.759 And even the newest SEC commissioner him Lizarraga I think 0:50:38.840 --> 0:50:41.800 is his name, has come out and said we need 0:50:41.840 --> 0:50:47.360 as regulators to focus on decentralization and transparency. What is 0:50:47.400 --> 0:50:53.080 the most decentralized and transparent crypto asset in the world. 0:50:53.320 --> 0:50:57.680 It is bitcoin, And yet retail investors do not have 0:50:57.960 --> 0:51:03.160 easy access through liquid asset like uh an E t F, 0:51:03.640 --> 0:51:07.200 which honestly I don't understand given that they approved a 0:51:07.239 --> 0:51:11.680 bitcoin futures um, and so I think it might increase 0:51:11.719 --> 0:51:13.920 the odds we shall see. Well, and some of them 0:51:14.160 --> 0:51:16.680 been wondering whether or not you're playing the arbitrage um 0:51:16.680 --> 0:51:19.680 with GBTC right now, you know, is it that because 0:51:19.680 --> 0:51:21.920 of the trust deep discount at this point, is that 0:51:21.960 --> 0:51:24.759 the thinking for you to kind of be moving more 0:51:24.800 --> 0:51:26.960 money into this name, Well, it is one of the 0:51:27.040 --> 0:51:31.040 few securities we have to own securities in uh E 0:51:31.200 --> 0:51:33.319 t F s, so it is one of the few 0:51:33.400 --> 0:51:36.640 securities we can buy. And yes, it's at a very 0:51:36.680 --> 0:51:40.799 big discount, so it is more attractive bitcoin if they 0:51:40.840 --> 0:51:45.120 were to even liquidate it. You know, we've got such 0:51:45.120 --> 0:51:48.279 a big discount relative to to bitcoin. We don't think 0:51:48.320 --> 0:51:51.080 they're going to This is the most valuable property. I 0:51:51.120 --> 0:51:53.239 think they're going to hang onto it, and I think 0:51:53.280 --> 0:51:56.279 over time the discount will close. Don't know if it's 0:51:56.360 --> 0:52:00.000 because of a conversion to a bitcoin ETF. I'm sure 0:52:00.040 --> 0:52:02.960 the regulators will take a very close look at d 0:52:03.040 --> 0:52:07.000 CG and the gray scale Bitcoin Investment trust, but we 0:52:07.080 --> 0:52:11.000 do know this is a grant ord trust, highly regulated. Kathy, 0:52:11.040 --> 0:52:14.640 We've talked coin Base, We've talked g BTC. Are there 0:52:14.680 --> 0:52:17.320 any other opportunities in crypto that you see right now 0:52:17.360 --> 0:52:20.040 in the wake of f TXs collapse as prices have 0:52:20.120 --> 0:52:23.560 been beaten up. Well again for our e t f s. 0:52:23.680 --> 0:52:26.360 As you mentioned on coin base, we also owned Square 0:52:26.680 --> 0:52:31.480 and it is interesting that Jack Dorsey has chosen the 0:52:31.600 --> 0:52:39.440 most transparent, most decentralized crypto asset to center blocks crypto 0:52:39.600 --> 0:52:44.160 exposure too, and I realized he's trying to from a 0:52:44.200 --> 0:52:48.320 developer community point of view, leave them on their their own. 0:52:48.440 --> 0:52:51.919 But we do think bitcoin, uh, and you can see 0:52:51.960 --> 0:52:56.000 through the behavior of the infrastructure hasn't skipped a beat 0:52:56.200 --> 0:52:59.399 at more secure than it was yesterday, the day before, 0:52:59.400 --> 0:53:01.960 in the day before. So I have a feeling this 0:53:02.040 --> 0:53:05.719 is going to elevate Bitcoin in the eyes of not 0:53:05.800 --> 0:53:09.640 only the crypto world, but the investment world at large. 0:53:10.080 --> 0:53:12.120 And I have a feeling it's going to have more 0:53:12.280 --> 0:53:14.879 running room through the rest of the world. We think 0:53:14.880 --> 0:53:16.920 they're going to be very successful. That, of course is 0:53:17.000 --> 0:53:19.799 Kathy would of our convest will wrap up getting her 0:53:19.800 --> 0:53:23.080 thoughts on one of her longtime investments. Yes, safe to say, Tim, 0:53:23.120 --> 0:53:26.439 she is the original Tesla bowl. We asked Kathy Wood 0:53:26.440 --> 0:53:29.080 on where Elon his e V giant and yes, Twitter 0:53:29.280 --> 0:53:40.719 go from here? This is Bloomberg. You're listening to Bloomberg 0:53:40.760 --> 0:53:44.399 Business Week with Carol Messer and Bloomberg Quick Takes Tim 0:53:44.440 --> 0:53:49.120 Stinovich from Bloomberg Radio heading for home on this weekend 0:53:49.120 --> 0:53:51.919 broadcast and bringing you are Deep Dive with Kathy would 0:53:51.920 --> 0:53:55.440 of our Convest. We talked with her just before Thanksgiving. 0:53:55.800 --> 0:53:58.120 At the time, she reaffirmed her forecast her Bitcoin to 0:53:58.160 --> 0:54:01.719 reach a million dollars per coined by though she did 0:54:01.760 --> 0:54:05.680 say the recent crypto crash could slow institutional adoption. Of course, 0:54:05.680 --> 0:54:08.760 our Convest has interests that go well beyond digital assets. 0:54:08.960 --> 0:54:11.840 One of those is Elon Musk. Cathy Wood has already 0:54:11.840 --> 0:54:14.719 bet big and cashed in on Tesla. Now she's looking 0:54:14.719 --> 0:54:17.160 to do the same with Twitter, purchasing a private stake 0:54:17.200 --> 0:54:20.160 in Twitter via our adventure fund back in early November. 0:54:20.600 --> 0:54:23.080 The question now is mother Musk is the right person 0:54:23.320 --> 0:54:26.200 for this job too. We owned Twitter for quite a 0:54:26.200 --> 0:54:30.320 while and we sold it into the rumors that Ellen 0:54:30.440 --> 0:54:32.959 was going to buy it because we knew there would 0:54:32.960 --> 0:54:36.000 be a lot of controversy around that, so it moved 0:54:36.040 --> 0:54:38.000 into the sixties. I think it got to seventy and 0:54:39.160 --> 0:54:42.520 we sold there and have been watching from the sidelines. 0:54:42.560 --> 0:54:45.279 But if you look at that model longer run, it 0:54:45.360 --> 0:54:49.960 has not delivered on the promise. And I think opening 0:54:50.200 --> 0:54:53.879 up the algorithms which we think he will do, and 0:54:53.960 --> 0:54:58.360 taking away the kind of human driven censorship and allowing 0:54:58.400 --> 0:55:01.239 the transparency of the algorithm is that they do put 0:55:01.280 --> 0:55:04.319 out there, you know, allowing people to question them, I 0:55:04.360 --> 0:55:06.920 think it's going to be very healthy. If you look 0:55:07.160 --> 0:55:11.480 at the daily average users, I think the various metrics 0:55:11.520 --> 0:55:15.280 that you can count daily, they have been going up dramatically. 0:55:15.480 --> 0:55:17.880 So I know a lot of people who you know, 0:55:17.960 --> 0:55:22.640 basically decided to quit Twitter because they didn't like the 0:55:22.760 --> 0:55:25.960 kind of censorship and so forth that was going on. 0:55:26.040 --> 0:55:28.960 So I actually like what he's doing. It seems interestingly enough, though, 0:55:29.000 --> 0:55:31.160 that a lot of brands don't like what he's doing, Kathy, 0:55:31.160 --> 0:55:33.600 and we've seen some prominent companies pull back or at 0:55:33.680 --> 0:55:37.160 least pause advertising on the plant pot. Of course, I 0:55:37.160 --> 0:55:39.040 mean that makes sense if you know you don't necessarily 0:55:39.080 --> 0:55:40.879 want to support the guy who owns Tesla if you're 0:55:40.920 --> 0:55:44.520 making competitive vehicles to Tesla, but bigger brands that are 0:55:44.520 --> 0:55:47.680 worried about brand safety, and I'm wondering, you know, it 0:55:47.719 --> 0:55:50.160 doesn't seem like it's necessarily moving in the direction of 0:55:50.239 --> 0:55:53.640 increasing revenue from an advertorial perspective right now, I do 0:55:53.800 --> 0:55:57.239 think that this is not just an advertising vehicle. In fact, 0:55:57.440 --> 0:56:01.480 this is that probably might diminish quite significantly in terms 0:56:01.560 --> 0:56:06.000 of its importance longer run. You'll remember that Ellen started 0:56:07.040 --> 0:56:12.440 his entrepreneurial pursuits with a precursor to PayPal. So he 0:56:12.920 --> 0:56:15.880 very a very long time ago had this idea of 0:56:15.920 --> 0:56:21.040 a digital wallet, a super app like what's app um 0:56:21.360 --> 0:56:24.840 in mind, and of course took a big detour into 0:56:24.880 --> 0:56:27.839 another passion of his um. We know he knows a 0:56:27.840 --> 0:56:32.680 lot about this world, and I think if anyone in 0:56:32.719 --> 0:56:35.800 the US can do this, I think he can. I 0:56:35.840 --> 0:56:39.120 think he'll surround himself by the right business leaders. He's 0:56:39.160 --> 0:56:41.839 not going to do this himself. Many people say, aren't 0:56:41.840 --> 0:56:45.719 you worried about Tesla, No, we're not. Because of our 0:56:45.760 --> 0:56:50.280 work on electric vehicles. They are are grabbing a disproportionate 0:56:50.280 --> 0:56:52.840 share and will continue to do so of a market 0:56:52.880 --> 0:56:58.799 that we think will account for eighty five to of 0:56:58.920 --> 0:57:03.480 all cars sold in the world, So that's on automatic pilot. 0:57:03.800 --> 0:57:06.640 He's now working on autonomous, which we think is going 0:57:06.680 --> 0:57:09.839 to work. In fact, I just had the pleasure of 0:57:10.000 --> 0:57:14.440 riding in a Cruise car in San Francisco, an autonomous 0:57:14.480 --> 0:57:20.000 car GM just wanted to see, wanted to check it out, 0:57:20.160 --> 0:57:22.480 and I have to tell you I love the ride. 0:57:22.720 --> 0:57:26.640 And Uh, I know autonomous is possible because Cruise and 0:57:26.720 --> 0:57:28.880 Weimo are doing it, and we think Tesla is going 0:57:28.960 --> 0:57:32.640 to do it in a much bigger way. So that's Tesla. 0:57:32.760 --> 0:57:36.680 But onto Twitter, it really needed to be shaken up. 0:57:38.440 --> 0:57:41.160 I think think he can make it be a great 0:57:41.200 --> 0:57:44.200 business and very profitable. And if so, how I do 0:57:44.720 --> 0:57:50.040 think about the amount of data that Twitter has uh, 0:57:50.080 --> 0:57:53.680 and it's proprietary data, and think about the combination of 0:57:53.720 --> 0:57:59.400 that and artificial intelligence. Remember he has AI expertise and experts. 0:57:59.400 --> 0:58:02.280 I know he brought in some of his engineers, UH, 0:58:02.320 --> 0:58:06.240 and they are going to I think surprise and delight 0:58:06.720 --> 0:58:10.480 heading for a super app kind of product. And you know, 0:58:10.560 --> 0:58:13.720 by our estimates and you'll find this in our big ideas, 0:58:13.720 --> 0:58:18.920 I think it was um the value of each customer 0:58:19.640 --> 0:58:24.160 in a digital wallet, uh, should be in the twenty 0:58:24.200 --> 0:58:28.040 thousand plus range, because not just for financial services, it 0:58:28.080 --> 0:58:32.080 will ultimately be for commerce and AI is the glue 0:58:32.160 --> 0:58:34.600 that's going to pull this all together and the data 0:58:34.640 --> 0:58:37.880 that they have, the data is the new oil. You've 0:58:37.880 --> 0:58:42.320 heard that this is absolutely true in the case of Twitter. Well, Kathy, 0:58:42.320 --> 0:58:44.840 I mean the currency Twitter as a currency has worked 0:58:44.840 --> 0:58:47.160 really well for you. You've got one point five million 0:58:47.200 --> 0:58:50.360 followers on the platform. A lot of people see what 0:58:50.560 --> 0:58:53.920 you tweet. We saw eulogies being written for Twitter. It 0:58:53.960 --> 0:58:56.360 didn't end up dying as many people thought it would. 0:58:56.680 --> 0:58:59.400 But what would happen if Twitter went away? And are 0:58:59.440 --> 0:59:05.080 you concerned that this is an extremely productive social network 0:59:05.160 --> 0:59:08.480 for us? It is our most productive and you know 0:59:08.720 --> 0:59:14.320 it truly is the global public town square. You know 0:59:14.720 --> 0:59:19.120 I can write an open letter to the FED and 0:59:19.200 --> 0:59:21.840 put it out over Twitter. Now do I think the 0:59:21.840 --> 0:59:25.360 Fed's going to listen to me? No, I don't, but 0:59:25.800 --> 0:59:29.280 that they may listen, that the FED board members may 0:59:29.360 --> 0:59:34.160 listen to someone who might think that I have something 0:59:34.240 --> 0:59:37.720 to say, which is simply a question. Wait a minute, 0:59:37.920 --> 0:59:41.160 how can you be unanimous seventy five basis points at 0:59:41.160 --> 0:59:44.480 a time? How can you be unanimous when there is 0:59:44.600 --> 0:59:48.880 so much conflicting data out there, including an inverted yield 0:59:48.880 --> 0:59:53.000 curve now at seventy five basis points, that's crazy. I 0:59:53.000 --> 0:59:55.480 think we're going to look back in history and say, 0:59:55.760 --> 1:00:00.320 what were they thinking unanimous? Commodity prices are fall calling. 1:00:00.680 --> 1:00:03.439 You've got excess inventories all over the place. We're seeing 1:00:03.480 --> 1:00:06.320 massive discounting. I think we're going to see deflation and 1:00:06.400 --> 1:00:08.760 then they'll make a move in the opposite direction. But 1:00:08.840 --> 1:00:11.840 we need, we need a steadier hand than that. So 1:00:12.120 --> 1:00:14.160 when Kathy went to you, because you've argued this and 1:00:14.200 --> 1:00:16.320 you and you've put this out there in terms of 1:00:16.320 --> 1:00:19.040 FED policy, in terms of deflation, when do you think 1:00:19.040 --> 1:00:21.840 it will come? I think we're seeing it. I think 1:00:22.000 --> 1:00:24.240 if you look at a lot of commodity prices, not 1:00:24.360 --> 1:00:27.480 only are they down thirty two some of them from 1:00:27.480 --> 1:00:30.400 their peaks, they're down on a year over year basis. 1:00:30.440 --> 1:00:34.080 In fact, on oil itself is almost down on a 1:00:34.160 --> 1:00:37.720 year over year basis. Now the big pushbacks on this 1:00:37.800 --> 1:00:42.400 call we get our wages and rents. We're seeing rent 1:00:42.440 --> 1:00:48.240 inflation reverse quite suddenly and dramatically. What I think we 1:00:48.320 --> 1:00:52.240 will look back in history and say this inflation shock 1:00:53.160 --> 1:00:58.160 was the function of a supply shock caused by COVID 1:00:58.840 --> 1:01:02.720 supply chain probably ms afterwards, and even more problems after 1:01:03.640 --> 1:01:07.480 Russia's invasion of Ukraine. If I can just take one second, 1:01:07.520 --> 1:01:11.560 I would like to give an analogy to the late 1:01:11.680 --> 1:01:14.960 nineteen teams. We were in the middle of the massive 1:01:15.160 --> 1:01:18.640 innovation the history of the world had seen telephone, electricity, 1:01:18.640 --> 1:01:22.400 and automobile all at the same time. But we had 1:01:22.400 --> 1:01:25.200 World War One and we had the Spanish flu sound 1:01:25.240 --> 1:01:28.640 familiar now. That was much worse than what we've gone through. 1:01:28.760 --> 1:01:31.200 We've gone through nothing like that, But there were massive 1:01:31.200 --> 1:01:35.280 supply chain problems back then. And inflation peaked at twenty 1:01:35.320 --> 1:01:40.240 four percent right in June of nine, and by June 1:01:40.280 --> 1:01:45.600 of it was minus fifteen percent. So I think that 1:01:45.800 --> 1:01:48.760 our eight to ten percent inflation, which is where it 1:01:48.960 --> 1:01:51.920 was at the peak, is going to turn around and 1:01:51.920 --> 1:01:54.400 we're going to see some very big surprises on the 1:01:54.400 --> 1:01:57.160 inflation front. And you know who agrees with us, the 1:01:57.160 --> 1:01:59.920 bond market. Look at what the bond market is doing now, 1:02:00.600 --> 1:02:04.520 sevent inverted. That's telling us that the bond market is 1:02:04.560 --> 1:02:09.160 saying recession and or big surprises on the low side 1:02:09.160 --> 1:02:13.720 of inflation. Expectations, so and it's probably both. Kathy unfortunately, 1:02:13.880 --> 1:02:15.240 have a couple of minutes left here. One thing we 1:02:15.240 --> 1:02:17.360 did want to squeeze in. Um. We've been talking about 1:02:17.400 --> 1:02:20.640 in the newsroom that Alliance Bernstein is getting ready to 1:02:20.800 --> 1:02:23.560 launch actively managed disruptor e t f s. And from 1:02:23.600 --> 1:02:27.440 what I understand, you pitched them, you know, years ago. Um, 1:02:27.480 --> 1:02:29.840 how does that make you feel? And you know, to 1:02:29.960 --> 1:02:32.280 see from that you worked at kind of doing a 1:02:32.360 --> 1:02:35.720 very similar thing or looking to do something similar. Yes, well, um, 1:02:35.760 --> 1:02:42.000 Alliance Bernstein I believe got the first fully active, fully 1:02:42.040 --> 1:02:45.920 transparent e t F in I think it was early. 1:02:46.160 --> 1:02:51.000 It got the approved in early two thousand thirteen. So 1:02:51.040 --> 1:02:52.960 that's when I put my hand up and said I'll 1:02:53.000 --> 1:02:57.560 do that. And um uh, there were there was a 1:02:57.640 --> 1:03:03.080 belief that e t f s were not safe or 1:03:03.560 --> 1:03:05.360 you know, there were a lot of arguments against it. 1:03:05.760 --> 1:03:09.680 Probably the biggest one was mutual funds, which are much 1:03:09.720 --> 1:03:13.520 more profitable. I would say the economics there are higher 1:03:13.560 --> 1:03:16.200 than e t f s. How does it make me feel? 1:03:16.560 --> 1:03:20.240 You know, I'm the more the merrier. I I think 1:03:20.280 --> 1:03:24.840 this is a fantastic wrapper for the end consumer. It's 1:03:25.200 --> 1:03:27.480 fully liquid on like mutual funds, you have to wait 1:03:27.480 --> 1:03:31.240 till the end of the day. Transparent, fully transparent, that's 1:03:31.280 --> 1:03:36.240 what that's what investors want. UH. It is more tax effective, 1:03:36.480 --> 1:03:39.800 much more tax effective. We're seeing mutual funds that are 1:03:39.840 --> 1:03:44.440 down thirty percent this year, but they're slapping their investors 1:03:44.480 --> 1:03:50.800 with UH in capital tax gains. UH. And then finally, 1:03:50.960 --> 1:03:54.280 it's more cost effective when you because all of the 1:03:54.640 --> 1:03:56.640 what you see is what you get with these fees. 1:03:56.920 --> 1:04:00.080 There aren't a bunch of hidden fees. So it's a 1:04:00.120 --> 1:04:03.320 great rapper for the end consumer. I highly recommend it, 1:04:03.800 --> 1:04:07.800 and we're happy that that they that they are seeing 1:04:07.840 --> 1:04:10.200 the light. Now. That's Kathy would our can best founder, 1:04:10.240 --> 1:04:12.120 CEO and CEE. I. Oh, if you missed any of 1:04:12.120 --> 1:04:14.600 the conversation, just head on over to our podcast feed. 1:04:14.760 --> 1:04:16.760 And that wraps up the weekend edition of Bloomberg Business 1:04:16.760 --> 1:04:19.240 Week from Bloomberg Radio. Thanks so much for joining us. 1:04:19.400 --> 1:04:22.120 Big shout out to Bloomberg Market Senior editor Mike Reagan 1:04:22.240 --> 1:04:25.000 for helping us out. I'm Carol Masser and I'm Tim Stanovk. 1:04:25.160 --> 1:04:27.640 Be sure to tune into Bloomberg Business Week Monday through Friday, 1:04:27.680 --> 1:04:30.200 starting at two pm Wall Street Time on Bloomberg Radio. 1:04:30.280 --> 1:04:32.400 You can also watch our daily broadcast on YouTube just 1:04:32.440 --> 1:04:35.360 search Bloomberg Global News and check out our Bloomberg Business 1:04:35.400 --> 1:04:38.000 Week podcast. You can find that at Bloomberg dot com, Apple, 1:04:38.120 --> 1:04:40.520 or wherever you get your podcast. 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