Speaker 1: This is Bloomberg Business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine Plus
Speaker 1: Global Business, finance and Tech News. As it happened. Miss
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg radio. Hi Everyone, welcome to the
Speaker 1: weekend edition of Bloomberg Business Week. I'm Tim Stanovic. Carol
Speaker 1: Master will be back next week. The Federal Reserve firing
Speaker 1: its latest salvo in the fight against inflation on Wednesday,
Speaker 1: announcing a third consecutive jumbo interest rate hike. The FMC
Speaker 1: raised its policy interest rate by three quarters of a
Speaker 1: percentage point, and we anticipate that ongoing increases will be appropriate.
Speaker 1: We are moving our policy stance purposefully to a level
Speaker 1: that will be sufficiently restrictive to return inflation to two that,
Speaker 1: of course, was the voice of Fed share j Powell.
Speaker 1: The question is whether continued tightening will prove to be
Speaker 1: too much too soon. We'll discuss that prospect with our
Speaker 1: business week team. Also ahead on the program optimism about
Speaker 1: the Labor picture at a critical US trade hub. We'll
Speaker 1: talk with the executive director at the port of Long Beach,
Speaker 1: and then we'll go beyond our borders for a look
Speaker 1: at China's decades long effort to build the ultimate surveillance state,
Speaker 1: and a business week reveals its annual ranking of the
Speaker 1: world's top NBA programs, and our cover story explores the evil,
Speaker 1: genius and incredible success of Apple's air pods. All of
Speaker 1: that to come, though. We begin with the Global Monetary
Speaker 1: Policy Picture. The economic section this week has a piece
Speaker 1: about the big gamble that central banks around the world
Speaker 1: are following the Fed's lead and raising rates. For More
Speaker 1: Carol and I spoke with Business Week editor Joe Weber
Speaker 1: and Bloomberg's rich Miller. You know, it's incredible. When you
Speaker 1: look through it. It's like nineties central banks of you know,
Speaker 1: hiked and you know like more than half of them
Speaker 1: have hiked by pre court as some of the more
Speaker 1: more than that, as you say, like everybody's trying to
Speaker 1: out Haaulk each other, right, and there are some people worried,
Speaker 1: you know, with everybody going in the same direction, the
Speaker 1: boat's going to tip over into global recession. Right. So
Speaker 1: that's one thing and the other thing is when the
Speaker 1: raise rates, you first see it in the stock market,
Speaker 1: stock market weekends. Then you sort of see it in,
Speaker 1: you know, the housing market, the Housing Market Solce, and
Speaker 1: it comes at the very end, it comes into inflation. But,
Speaker 1: as you say, if they're myopically, you know, focusing on inflation,
Speaker 1: that means they're probably going to Overdo it and that's
Speaker 1: gonna push us into a recession, maybe your recession. You know,
Speaker 1: all all around the globe rich and we're talking millions
Speaker 1: of jobs here. As you write in your piece, analysts
Speaker 1: at black rock reckon that bringing inflation back to the
Speaker 1: feds two goal would mean a deep recession and three
Speaker 1: million more unemployed, and then also hitting the ECBES target
Speaker 1: would require an even bigger contraction. All that, right now
Speaker 1: is is spelling out a global recession, something that affects
Speaker 1: the entire globe. So what does this look like when
Speaker 1: it comes to economic growth? Translating that three million unemployed
Speaker 1: into like growth, you you probably have two, two, and
Speaker 1: a contraction in the economy, in the U S economy. Uh,
Speaker 1: an actual contraction as opposed to sort of, you know,
Speaker 1: the sort of phony contraction that we got earlier this
Speaker 1: year when it was mainly because we were importing more.
Speaker 1: But you know, this would be actual contraction and you
Speaker 1: know pain, the pain would be in the labor market.
Speaker 1: And you know, one of the questions is, you know,
Speaker 1: you know the politicians now, with the most part except
Speaker 1: for UH senator war, and they're sort of cheering the
Speaker 1: Fed on. Yeah, inflations bed. Go ahead, fed, raise the race.
Speaker 1: But you know, once, once you start seeing some pain,
Speaker 1: j Powell has promised us, you you wonder whether the
Speaker 1: politicians will change their tune, which were already saying pain.
Speaker 1: And it made me want to ask you about lag effect.
Speaker 1: What is it really I mean we're seeing it already
Speaker 1: on housing, but the successive and cumulative interest rate hikes
Speaker 1: by global central banks right all of a sudden, I
Speaker 1: feel like it's like when you know you've got a
Speaker 1: clog and you're pushing through, nothing's happening and then all
Speaker 1: of a sudden it comes flying through. I'm waiting for that.
Speaker 1: Is that what's going to happen? I mean, that is
Speaker 1: the danger and that's in the past why the central
Speaker 1: banks would when they did race rates, they'd go in
Speaker 1: small steps, like basis points. So you go, you go
Speaker 1: slowly and you see that you know you have a
Speaker 1: little more time to see what they impact your rates
Speaker 1: were having. You know so, but when you're going and
Speaker 1: when you're galloping ahead in like seventy five basis point chunks,
Speaker 1: you know, you don't have as much time to sort
Speaker 1: of gauge how how the earlier hikes were are affecting growth. And,
Speaker 1: as you say, housing is kind of in the crosshairs here.
Speaker 1: But you know, if housing weekends and you know, people
Speaker 1: are buying lesser appliances, people Um feel that their house
Speaker 1: prices are going down and they're gonna save more and
Speaker 1: that just has ripples. So it just takes time. But
Speaker 1: you know, as you say, it could sort of be like,
Speaker 1: you know, an exploding toilet right could splash right into
Speaker 1: our faces. But I don't want to be graphic here.
Speaker 1: Joe was known for some gracy. No, I know the
Speaker 1: bar bag was the favorite. Might need to dust that
Speaker 1: one off. Look for the you know, your passenger next
Speaker 1: to you. You can get there. Back to Um rich.
Speaker 1: One of the things that I thought was a little
Speaker 1: bit frightening, that I hadn't totally appreciated was um the
Speaker 1: growth forecast charts in your story US goes down pretty
Speaker 1: dramatically when you start to look out euro area worse.
Speaker 1: UK Man, that looks really bad from the sense of
Speaker 1: the folks that you talked to in the daddy that
Speaker 1: you're looking at it is it starting to feel like
Speaker 1: there's that pit in the stomach that's like, Oh God,
Speaker 1: this is going to get really bad. Truth be told,
Speaker 1: the U S we you know, we've held up surprisingly well.
Speaker 1: The Labor markets held up pretty well. The problem in
Speaker 1: the US is we've got this you know, embedded inflation problem.
Speaker 1: That the strongest the economy is, it means probably the
Speaker 1: Fed's going to have to work that much harder to
Speaker 1: slow things down, and that's when you know, you you
Speaker 1: get risk that they slow it down too much and
Speaker 1: we go slip in into a recession rich real quickly.
Speaker 1: Just Kinda at here. Is Inflation still a supply problem
Speaker 1: or is it now kind of more demand problem, and
Speaker 1: that's where the Fed can do something. I think in
Speaker 1: the US it's probably becoming more and more demand problem,
Speaker 1: particularly in the labor market with, you know, wages are
Speaker 1: going up about five six percent a year and to
Speaker 1: be consistent with the Fed's target they have to be
Speaker 1: going up three and a half percent. So I got
Speaker 1: a long way Togo that's why people think unemployment's gonna
Speaker 1: have to go up a lot. So workers finally get
Speaker 1: a break and now it's like, yeah, I'm sorry about that,
Speaker 1: it's not a good thing. We won't blame you, rich
Speaker 1: or we can all started here, because the rich Miller
Speaker 1: is excellent reporting. He's in DC, so there's nothing you
Speaker 1: can do directly. That was Bloomberg Economic Editor Rich Miller,
Speaker 1: along with business week editor Joel Weber, and coming up
Speaker 1: optimism on the Labor front and on supply chains at
Speaker 1: America's second busiest port. Mario Cordero, executive director of the
Speaker 1: port of Long Beach, joins US next. You're listening to
Speaker 1: Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes Tim stinnoby
Speaker 1: from Bloomberg radio. It's the second busiest port in North America,
Speaker 1: generating some two point six million jobs across the US,
Speaker 1: with some seventy five shipping lines connecting long beach to
Speaker 1: two hundred and seventeen seaports. So just how healthy do
Speaker 1: our supply chains look right now, with a smaller backlog
Speaker 1: and fading concerns about potential work stoppages at our docks
Speaker 1: and on the nation's rail system. With more on the
Speaker 1: state of our shipping in cargo industry, we welcome back
Speaker 1: the executive director of the port of Long Beach, Mario Cordero.
Speaker 1: When you look at the metrics here, currently we have
Speaker 1: in the San Peter Bay Complex twelve vessels backed up
Speaker 1: trying to get into the ports. So if you go
Speaker 1: back to January, that number was one hundred and nine.
Speaker 1: So just on that alone it's a tremendous progress is
Speaker 1: being made. Is Any of that seasonal? You know we're
Speaker 1: in peak season right now and I think we're at
Speaker 1: the peak, so to speak. Again you're looking at the
Speaker 1: numbers of the consumer demand or some softening on that.
Speaker 1: So for the third and fourth quarter of the year,
Speaker 1: I think we're looking to diminish demand turns on the
Speaker 1: consumer front. I feel like you have such a great
Speaker 1: vantage point when it comes to you what's going on
Speaker 1: on an economy and we're all kind of on pins
Speaker 1: and needles trying to figure out what comes next. What
Speaker 1: is your read on the state of the U S
Speaker 1: economy right now? I think we have a strong economy.
Speaker 1: We certainly have a strong labor market and keep in
Speaker 1: mind where we were two years ago. I think part
Speaker 1: of the two years was terrible, right, the outlier. So
Speaker 1: are we pre pandemic levels? Are Like? How do you
Speaker 1: in terms of in terms of the job market? I
Speaker 1: think we're approaching pre pandemic levels in terms of the
Speaker 1: jobs that have been added since then. But I think
Speaker 1: the point is we've had a very fast recovery from
Speaker 1: a worse scenario that we experience. So in that regard
Speaker 1: the economy was real hot and now, of course, what
Speaker 1: we're trying to do as a nation is kind of
Speaker 1: soften that. When you look at the activity at the port,
Speaker 1: and it's really just fascinating about just the the amount
Speaker 1: of flow through there and what the imports of the
Speaker 1: exports moving through your port. Largest trading partner country is China,
Speaker 1: which accounts for so much of it. Does recession come
Speaker 1: to your mind a lot in terms of the activity
Speaker 1: you're seeing? A good friend of mine, economist Paul Bingham,
Speaker 1: who has been following this industry for many, many years,
Speaker 1: once said tell me how many containers go through the
Speaker 1: Poort Long Beach and I'll tell you how good the
Speaker 1: economy is. So so far good. Is Inflation a concern? Yes. However, again,
Speaker 1: if you look at the latest plan of action by
Speaker 1: the Federal Reserve, they believe they may be able to
Speaker 1: control this. Will wait to see what that decision is, uh,
Speaker 1: in the coming week, whether that's point seven, five or one,
Speaker 1: oh increase. But I think it's safe to say that
Speaker 1: again we went through an unusual quick recovery. The consumer
Speaker 1: demand has really been extraordinary in the last year and
Speaker 1: a half. Energy prices have gone down. Admittedly, grocery prices
Speaker 1: have gone up. So I think what we're looking to
Speaker 1: is again a very good job market, good consumer demand, considerably, uh,
Speaker 1: considerable in terms of what we experienced puriously. But again
Speaker 1: we are looking at some economic growth, certainly in the
Speaker 1: global arena and at the United States. I think we're
Speaker 1: going to feel some of that also. So it sounds
Speaker 1: like you're saying we're not in a recession right now. Today.
Speaker 1: We're not. I mean, you know, is it removing towards
Speaker 1: your recession? Fore? I mean there's a debate. I know
Speaker 1: that all this is uh highlights. How many like do
Speaker 1: people book? Help me out with, like the shipping understanding shipping,
Speaker 1: having recently been at the Panama Canal fascinating to just
Speaker 1: understand it. Same thing with your report. Do our companies
Speaker 1: booking for December? Are they booking for November? Like, how
Speaker 1: much visibility or how much forward looking visibility do you
Speaker 1: actually have to get an idea of? Wow, things are
Speaker 1: going to slow down. Well, what I can tell you
Speaker 1: is part of the problem that we variance here in
Speaker 1: the nation's largest, most strategic gateway is the advancing of
Speaker 1: that inventory. So, looking forward, some of these companies were
Speaker 1: advancing the inventory, but they certainly didn't want to put
Speaker 1: us back to where we were in the second half
Speaker 1: of uh so I think, uh, it's interesting to watch.
Speaker 1: You know, there's some bigger company to start looking at
Speaker 1: their labor force. Uh. But at this point I will
Speaker 1: say that in terms of the coming holiday Christmas season,
Speaker 1: we're gonna be very well established in terms of that
Speaker 1: inventory because much of that has been advanced already. It's
Speaker 1: already it's already where it needs to be. Right I
Speaker 1: mean for the poor lamumage. If you look at the
Speaker 1: first eight months of this year, we've superseded the numbers
Speaker 1: of our record year last year at this point by
Speaker 1: four point six percent. So that's kind of an indicator
Speaker 1: in terms out of continued volume. But again, it's gonna
Speaker 1: be interesting to see how we end the third and
Speaker 1: approach the fourth quarter, because it doesn't make me feel
Speaker 1: like people are pulling a lot of stuff forward because
Speaker 1: they just don't want to be caught off guard like
Speaker 1: things can get it more expensive, so they're buying now. Yeah,
Speaker 1: or empty shelves, and you don't want that in Christmas rights,
Speaker 1: but especially if you're a retailer. Correct, and I firmly
Speaker 1: believe we're not going to see that scenario for sure. Hey,
Speaker 1: tell us a little bit about what you're saying based
Speaker 1: on where poor traffic is coming from and what that
Speaker 1: says about economies around the world. I know you guys
Speaker 1: have a really good view on Asia. Is there any
Speaker 1: softness there? What we see in Asia, more specifically China?
Speaker 1: You are seeing a slowdown there. UH, in China. So
Speaker 1: that is the domino effect. But is that? Is that
Speaker 1: based on lockdowns in China? Is it based on the
Speaker 1: covid zero policy, or is it is it all tied
Speaker 1: to that? It's all tied to what precipitated these times,
Speaker 1: that is, the covid nineteen pandemic. So I think again, Um,
Speaker 1: we'll see how China handles this. I mean the good
Speaker 1: news is I don't think you're going to see the
Speaker 1: kind of lockdowns in China and we saw in the
Speaker 1: past because they're also watching their numbers in terms of
Speaker 1: their economic growth. So there'll be a softening and as
Speaker 1: we approach three I believe that the good news the
Speaker 1: supply change. Certain United States. I think we're now seeing
Speaker 1: some semblance of normalization and moderation and supply change, so
Speaker 1: that's very good news. Why is it still such a
Speaker 1: lag or such a problem and not back to what
Speaker 1: it should be? I think a lot has to do
Speaker 1: at the congestion in the inland in the model yards.
Speaker 1: I mean this goes back to Chicago in the hubs there.
Speaker 1: I think the class one railroads have been rather challenge.
Speaker 1: They have their own challenges, would be regard to shortage
Speaker 1: of labor and equipment issues. So I think unfortunately we've
Speaker 1: been the victims of the lack of that rail car
Speaker 1: which in my view, should not happen at the world's
Speaker 1: most strategic, significant gateway. I am disappointed on that point
Speaker 1: that it's happened. We're talking with Mario Coudero. He's executive
Speaker 1: director of the port of Long Beach. As we said,
Speaker 1: it is the second busiest port in North America and
Speaker 1: so a great way to get a feel of what's
Speaker 1: going on in the economy. Do you feel like, based
Speaker 1: on what happened and the supply chain problems and just
Speaker 1: it wasn't just port issues, but it was trucking, it
Speaker 1: was just kind of all along the line, that we
Speaker 1: will ultimately see in some ways, more automation potentially come
Speaker 1: into this industry? I think the good news for those
Speaker 1: of us in this industry people finally saw the importance
Speaker 1: and witness the importance of a supply chain. We all
Speaker 1: found out that the supply chain is not as resilient
Speaker 1: as some people may have thought. We took it for granted.
Speaker 1: We took it for granted. So you know, the essential workforce,
Speaker 1: which includes obviously our safety officers, are people in the
Speaker 1: health industry during this pandemic, but also are people who
Speaker 1: work in goods movement, people who work, men and women
Speaker 1: who work on the docks, the truckers, the railroad workers,
Speaker 1: essential workers who moved commerce, which has a great impact, obviously,
Speaker 1: on our GDP, our economy. So I think the good
Speaker 1: news for us is. It's not just about talk of
Speaker 1: how importance this industry is. We've seen it, particularly from
Speaker 1: this administration, in terms of the investment, the funding in
Speaker 1: this industry in America Sports. That was Mario Cordero. He's
Speaker 1: the executive director at the port of Long Beach. Still
Speaker 1: had on Bloomberg Business Week. We go from ships to
Speaker 1: cars and the US auto giant playing the long game
Speaker 1: when it comes to winning the race to the top
Speaker 1: of the E V food chain. This is Bloomberg Broadcasting
Speaker 1: from the financial capital of the world, Bloomberg Eleven, trio
Speaker 1: in New York, to Washington, D C, Bloomberg to Boston,
Speaker 1: Bloomberg one, Oh six one, to San Francisco, Bloomberg nine,
Speaker 1: six to the country Sirius Xm, Channel One ninety and
Speaker 1: around the globe the Bloomberg business and Bloomberg radio DOT COM.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: quick takes. Tim Stenovan on Bloomberg Radio. The iconic American
Speaker 1: automaker General Motors wants to be the tortoise, not the hair,
Speaker 1: in the great electric vehicle race. That's according to Bloomberg News.
Speaker 1: Detroit Bureau Chief David Welch the story in the business
Speaker 1: section of this week's issue of the magazine, and it's
Speaker 1: adapted from David's newly released book charging ahead. GM, Mary
Speaker 1: Barra and the reinvention of an American icon. And the
Speaker 1: company is betting that a slew of e V models
Speaker 1: due next year will prove the wisdom of its deliberate pace.
Speaker 1: So Business Week editor Joe Webber, Carol and I asked
Speaker 1: David White. GM has trailed the competition despite being an
Speaker 1: early mover in the e V space. GM at its
Speaker 1: heart is a really pragmatic company and one thing people
Speaker 1: forget about Mary Barrow, because they see her as the
Speaker 1: first email CEO, is she's an engineer and her sidekick,
Speaker 1: Mark Royce is also an engineer. So for the first
Speaker 1: time since the sixties the company is run by engineers.
Speaker 1: They don't go for buzz. They don't try to jam
Speaker 1: a battery in an existing vehicle to get on the
Speaker 1: cover of business week, although that lightning cover was really,
Speaker 1: really well done by my tellings. They you know, they decide, okay,
Speaker 1: we're going to build a battery pack that can host
Speaker 1: everything from a little Chevy Equinox and actually even smaller
Speaker 1: they're working on subcompacts for global markets all the way
Speaker 1: up to this huge nine thousand pound Hummer and everything
Speaker 1: in between. And they're going to build their battery plants. So,
Speaker 1: other than Tesla, GM has the only battery plant making
Speaker 1: battery packs and sells. It's in Orangetown, Ohio. It's going
Speaker 1: right now. The second one is going to open in
Speaker 1: Spring Hill, Tennessee, near the old Saturn plant, next year. Again,
Speaker 1: engineering mindset. Get your building blocks in place, get your
Speaker 1: plants up, then you spawn this huge family of evs.
Speaker 1: What your story really injes on is this ultium, which
Speaker 1: is the battery platform. So what is Jim Hoping to
Speaker 1: accomplish there and where does this potentially allow them to go?
Speaker 1: Right now they've got too luxury electric vehicles in production.
Speaker 1: They've got the Big Hummer and they've got a cadillac lyric,
Speaker 1: and this is sort of historic. GM goes back to Alfredson.
Speaker 1: Start off with your coolest stuff in your luxury brands
Speaker 1: and then slowly got down the scale. And next year
Speaker 1: they'll have chevy silverado pickup, which the year behind, but
Speaker 1: we'll compete with the fine fifty lightning. Then they have
Speaker 1: the Chevy bloody midsize. That should be family car for
Speaker 1: a lot of people. Not Super Cheap but pretty cheap.
Speaker 1: Then about this time next year the Chevy Equinox. The Equinox,
Speaker 1: now that no one buys families and dams anymore, equinox
Speaker 1: is really Chevy's family car. And they're going to start
Speaker 1: this thing at thirty thousand which, other than the bold,
Speaker 1: which again compact, are Americans still like complex, will be
Speaker 1: the cheapest on the market. And it really to me
Speaker 1: that is it's two things. It's really the fruit of
Speaker 1: this whole Al team thing. They believe they've got the
Speaker 1: scale and the platform where they can democratize electric vehicles
Speaker 1: by bringing mass market family card to people who don't
Speaker 1: have three other four expensive vehicles in their garage. And
Speaker 1: the other thing is it really is a litmus test
Speaker 1: or how ready Middle America is to go with battery
Speaker 1: powered vehicles and charge up the secret sauce. Seems to
Speaker 1: be this ultimum about it, and you write that it's
Speaker 1: really about changing the way cars are made. So what's different? Ultimate? Basically,
Speaker 1: it's a battery pack that makes up the floor of
Speaker 1: the vehicle. This is way over simplification of the guys
Speaker 1: and the factories. And you're not doing that because I'm
Speaker 1: a girl, are you? I am the daughter of an engineer,
Speaker 1: so you can. You can go with it. I'm doing
Speaker 1: it because assembly board, but you're basically bolting whatever vehicle
Speaker 1: it is on top of that skateboard kind of platform.
Speaker 1: It's not quite a skateboard, but close enough, so you
Speaker 1: can and it's also sort of a Lego set. So
Speaker 1: if you need to build it longer or wider or
Speaker 1: shorter or whatever, you can do that. The other thing
Speaker 1: they can do, and this is what they've done with
Speaker 1: the Hummer, you can actually stack them on top of
Speaker 1: each other. So if you have a big, heavy vehicle
Speaker 1: that has a thousand horse power, which the Hummer does,
Speaker 1: so you need a lot of power on board, you
Speaker 1: can just add more battery, which we have more electricity
Speaker 1: by stacking these cells on top of each other. She
Speaker 1: can have a big and wide and you can stack
Speaker 1: them up for more energy. There's just really is kind
Speaker 1: of like a Lego said, but this really is. This
Speaker 1: is commercializing electric the battery itself doesn't have any special
Speaker 1: chemistry or special sauce. It's a commercialization and an industrial
Speaker 1: plan and you know, always interesting. We also had this
Speaker 1: hurts knows that. Hurts is going to get into this.
Speaker 1: So so clearly to have the scale and bring the
Speaker 1: cost down. You know hurts is liking what they see
Speaker 1: out of GM. But so how does how does that
Speaker 1: kind of fit into bars master plan here? GM's plan
Speaker 1: is to sell a million evs in the US and
Speaker 1: I think really the only one who would be probably
Speaker 1: doing that by then Tesla and some Manoa sta. GM
Speaker 1: could be ahead by then because dog fleet. But it
Speaker 1: gives them, it gives gm a lot of different vehicles
Speaker 1: and a lot of potential, a lot of production in
Speaker 1: their for potential sales line. So hurts likes what they
Speaker 1: see because they're saying they're going to buy vehicles from
Speaker 1: five different GM brands, so Buick, Cadillac, Chevy, GMC and
Speaker 1: also bright drop, which is GM's commercial band business. And
Speaker 1: so clearly hurts seas enough that GM has got enough
Speaker 1: production in their plan where over the next five years
Speaker 1: they can buy a hundred and seventy five vs. that
Speaker 1: was Bloomberg News. Detroy Bureau chief David Welch. David's new
Speaker 1: book charging ahead GM, Mary Barra and the reinvention of
Speaker 1: an American icon is out now. Jill Leber there with
Speaker 1: us as well, and we should note that David helped
Speaker 1: to break the news from this past week that hurts
Speaker 1: plans to buy as many as one seventy thousand evs
Speaker 1: from General Motors over the next five years. So a
Speaker 1: big win for GM on that front. You're listening to
Speaker 1: Bloomberg Business Week. Up next the story about China's Communist
Speaker 1: Party is building a new kind of political control and
Speaker 1: shaping the will of the people through the sophisticated and
Speaker 1: often brutal harnessing of data. This is Bloomberg Business Week
Speaker 1: on Bloomberg radio. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg radio.
Speaker 1: Last week's Business Week cover story profile a Chinese spy
Speaker 1: who wanted general electrics trade secrets, and he ended up
Speaker 1: giving the U S Intel on China instead. We know
Speaker 1: espionage and the surveillance of other countries or nothing new,
Speaker 1: but when it comes to domestic surveillance, China is taking
Speaker 1: the practice to an entirely new level. Wall Street Journal
Speaker 1: Reporters Josh Chen and Liza Lynn are out with a
Speaker 1: new book surveillance state, inside China's quest to launch a
Speaker 1: new era of social control. Carol and I began our
Speaker 1: conversation by asking Josh about the situation on the ground
Speaker 1: for the average citizen in the People's Republic. If you're
Speaker 1: walking down the street in China, especially these days with Covid,
Speaker 1: you're being you're being tracked in any number of ways.
Speaker 1: There are cameras with, you know, facial recognition capabilities that
Speaker 1: can they can pick your face out of a crowd.
Speaker 1: Cameras can can identify you by the way you walk.
Speaker 1: There are microphones that can grab your voice and these days,
Speaker 1: you know, everyone's walking around with a covid health tracking
Speaker 1: APP in their pocket that tracks where they've been and
Speaker 1: how they've been exposed, whether their their level of exposure
Speaker 1: to uh to covid. A lot of things being tracked and, Lisa,
Speaker 1: both you and Josh like kind of cover this world
Speaker 1: and the different aspects of the book. I want to
Speaker 1: get into what was the story and the reality that
Speaker 1: you were looking to tell in terms of the area
Speaker 1: that that you really cover, and you cover a lot
Speaker 1: of US business and Chinese topics. You look at Silicon Valley.
Speaker 1: So what is it that you wanted to tell when
Speaker 1: you guys set out to do this book together? Yeah,
Speaker 1: on on my part, you know. Um, I guess I
Speaker 1: didn't set out to tell this, but in the process
Speaker 1: of research I had some really interesting findings and one
Speaker 1: of the findings was really how you know, US tech companies,
Speaker 1: particularly those in Silicon Valley, pioneers, such as like Sun
Speaker 1: Microsystems and Cisco. They were one of the first building
Speaker 1: blocks of the Chinese surveillance stage back in like the
Speaker 1: year two thousand, when China helped one of its first
Speaker 1: security public security expos and the police was there to
Speaker 1: basically look at what companies had on offer. Like it
Speaker 1: was mainly Western companies that were selling the systems there
Speaker 1: to them. I guess, to kind of summarize like how impactful,
Speaker 1: like some of the U s companies were, like Sun Microsystems,
Speaker 1: ended up selling China it's first fingerprint database, which is
Speaker 1: a sizable project for a country the size of China.
Speaker 1: Fast forward to today. Um, what Josh and I did
Speaker 1: was we poured through several Chinese government contracts, particularly those
Speaker 1: looking at the surveillance systems bought by police, and what
Speaker 1: we realized was U s companies now weren't selling systems,
Speaker 1: but they were selling components, like part that built the
Speaker 1: surveillance day. There was selling everything from low end hardware
Speaker 1: like heart described, because video surveillance requires a lot of storage,
Speaker 1: to things like cutting edge chips, you know graphic processing
Speaker 1: units sold by nvidia gpus, which originally were built to
Speaker 1: power like gaming, but actually we found that they're great
Speaker 1: for deep learning and all the ai applications, like facial recognition,
Speaker 1: for example, that can recognize like readers or people interests
Speaker 1: in China. So the limits right that the US has
Speaker 1: been imposing on the likes of Nvidian a m D
Speaker 1: to prevent them from selling into China, Lisa. So this
Speaker 1: is something that could ultimately impact China's ability in terms
Speaker 1: of surveillance of those folks that are in the country. Yes, Um,
Speaker 1: in theory, you know, the supply chain is very opaque.
Speaker 1: Um that there are all sorts of ways and means
Speaker 1: that Chinese companies can get around like being on a
Speaker 1: trade black list, for example, or, you know, buying restrictions.
Speaker 1: And I'll probably point you to an example of a
Speaker 1: Chinese company called since time. Since time is China's large
Speaker 1: as AI surveillance company and since time it's both on
Speaker 1: the entity list, the Commerce Department trade blacklist, and it
Speaker 1: is on the investment black list. So US investors cannot legally,
Speaker 1: they're not allowed to be trading on investing in sense
Speaker 1: time shares. What we know, though, from the start of
Speaker 1: this year, when since time tried to list in Hong Kong,
Speaker 1: they actually told investors like they weren't impacted by the
Speaker 1: entity list at all, and that was because, since times,
Speaker 1: when since time was put on the entity list, it
Speaker 1: was one it was one entity. It was its paging
Speaker 1: entity that was put on the list. So since time
Speaker 1: has multiple entities in like Shanghai, Um Hong Kong, and
Speaker 1: these entities were free to buy the type of high
Speaker 1: end US technology that the entity list was supposed to block.
Speaker 1: And in addition to that, when since time tried to
Speaker 1: I P O, since time it's a company that has
Speaker 1: a ton of US investors making up its investor base,
Speaker 1: like people like fidelity capital, Silver Lake. When the when
Speaker 1: they were put on the investment blacklist again, there was
Speaker 1: a legal loophole. Essentially, the entity that was put on
Speaker 1: the investment blacklist with the Hong Kong entity and the
Speaker 1: entity listed in Hong Kong was a Cayman Islands one.
Speaker 1: So true, very smart maneuvering of where the entities a base.
Speaker 1: They managed to get get true um or get over
Speaker 1: get around these restrictions. These are Lyne China correspondent for
Speaker 1: the Wall Street Journal, who joins us on the phone
Speaker 1: from New York, and also Josh Chen, deputy China Bureau chief,
Speaker 1: on the phone from Park City, Utah. Hey, Josh, I
Speaker 1: want to get into how this is all playing out
Speaker 1: in Shinjang, which a remote Asia frontier, of course, where
Speaker 1: we know that the country is oppressing the weaker population.
Speaker 1: What does it look like they're j John, is that
Speaker 1: it's a massive, massive area about twice the size of
Speaker 1: Texas or northwestern and very rich in resources. Um and
Speaker 1: has also long been a sort of typical place for
Speaker 1: the Communist Party to control, and that's because it has
Speaker 1: a large population of weakers and other Turkic Muslims who
Speaker 1: really chafe at Chinese rule and so Um. You know,
Speaker 1: for about the past five years or so the Communist
Speaker 1: Party has been running what you know, what is best
Speaker 1: described as a sort of campaign of forcible assimilation, using
Speaker 1: surveillance technology and a network of internment camps. Um, and
Speaker 1: I first went there discovered some of this in seventeen Um.
Speaker 1: At the time, no one really knew what was happening there. Um,
Speaker 1: and you know I mean that's been a China correspondent
Speaker 1: at that point for for more than a decade. And Uh,
Speaker 1: and what I saw that was just one of the
Speaker 1: most shocking things that I've seen in China. And you know, essentially,
Speaker 1: if you were a weaker Um in Sxinjiang, you are
Speaker 1: subject to constant, pervasive, um suffocating surveillance. Right. So, if
Speaker 1: you go to a bank or a market or a hotel,
Speaker 1: any public place, you have to scan your face and
Speaker 1: your ID card. If you want to buy gasoline, you
Speaker 1: have to make everyone get out of the car again,
Speaker 1: stand your face and I d cards so they can
Speaker 1: track how much gasoline you're buying in one place. If
Speaker 1: you want to buy a knife, they would they would
Speaker 1: take your I d information, all of your your home
Speaker 1: address and they would laser etch it into the knife
Speaker 1: in the form of a Qr Code. Uh. And then
Speaker 1: we collect date on things like how often you pray,
Speaker 1: you know, how far you go to the mosque? Do
Speaker 1: you own a Kuran? Um, what sort of movies and
Speaker 1: music and Apps do you have on your phone? And
Speaker 1: they sent you collect all of this data to track
Speaker 1: and then sort weakers according to how much of a
Speaker 1: risk they might potentially pose to the Communist Party's rule
Speaker 1: in the future. Um, and then those, you know, those
Speaker 1: who are considered risky, are sent to camps to be
Speaker 1: subject to re education. Um, and so it really is
Speaker 1: a pervasive, just sort of unprecedented campaign that they're running
Speaker 1: out there. We are in this really critical phase of
Speaker 1: major disruption innovation that we don't see off in our world,
Speaker 1: and maybe that's explaining also some of the kind of
Speaker 1: discomfort within the financial markets overall. But I do wonder about,
Speaker 1: you know, what is the next phase for China? Present,
Speaker 1: G very much out there front and center, you know,
Speaker 1: wants to lead on higher tech. Doesn't seem to care
Speaker 1: who he maybe ticks off in particular, something like the
Speaker 1: United States and the process. But I mean it's a
Speaker 1: complicated relationship between the two. But I do wonder, you know,
Speaker 1: what is the next phase of China, one that obviously
Speaker 1: will surveil its population very closely. I mean, Josh, how
Speaker 1: do you see it? How do we need to think
Speaker 1: about China going forward, when many people, feel like investors included,
Speaker 1: will say that's going to be one of the big
Speaker 1: macro themes overall for the world, geo politically, market wise, economically,
Speaker 1: what's happening in China? I think you're already seeing sort
Speaker 1: of the future of China with the with the covid
Speaker 1: pandemic Um, you know, with essentially you know in the
Speaker 1: past kind of that that pervasive, applicating surveillance was pretty
Speaker 1: much limited to Shinja. Now, with the COVID pandemic, that
Speaker 1: those systems and those those approaches and those technologies have
Speaker 1: all spread to basically covered the entirety of China. Um,
Speaker 1: and it's clear that Jent Ping is willing and able
Speaker 1: to use those technologies to exert a tremendous amount of
Speaker 1: social control, very tight control. Earlier this year you had
Speaker 1: you had the Shanghai lockdown, for example. You know, the
Speaker 1: wealthiest in China not used to not used to experiencing
Speaker 1: this sort of thing Um, and they were outraged. But
Speaker 1: you know, the Communist Party has persisted with Zero Covid
Speaker 1: and I think that's partly because they're confident that these
Speaker 1: new tools give them the ability to control the situation
Speaker 1: and the economy of society in China in ways that
Speaker 1: they haven't before. Still is a con in and layer
Speaker 1: on top of what Josh said. I mean, how do you,
Speaker 1: how does the world kind of need to think about
Speaker 1: China in the next I don't know, ten fifty years?
Speaker 1: This is already happening. We're not going to have to
Speaker 1: wait ten or twenty years to see this happen. I
Speaker 1: would put it this way. In in the past two decades,
Speaker 1: US and Western companies have had very blind optimism on
Speaker 1: the operating in the Chinese market. Right. So, ten twenty
Speaker 1: years ago, China was seen as this easy place or profit.
Speaker 1: Commercial priorities overshadow any sort of deep thinking about the
Speaker 1: possible human rights abuses that could happen. In the boardrooms
Speaker 1: you'd be hearing people talk about how far you could
Speaker 1: expand in China, what was the best way to get
Speaker 1: your product out in the market? In the last five
Speaker 1: years we've actually seen more like a paradigm shift in
Speaker 1: the way US companies are approaching China. We're seen in
Speaker 1: the last few years more and more reporting about the
Speaker 1: atrocities and seeing jail and now that the US government
Speaker 1: is actually trying to react to China's human rights issues
Speaker 1: with like trade policy, not just foreign foreign policy. We're
Speaker 1: definitely seeing US companies become more cautious about the risk
Speaker 1: and less bushy, mush tailed and starry eyed about the
Speaker 1: potential of China. Are thanks to Josh Chen and Lesa
Speaker 1: Lynn of the Wall Street Journal. Check out their new
Speaker 1: book surveillance state, inside China's quest to launch a new
Speaker 1: era of social control. And that wraps up the first
Speaker 1: hour of the weekend edition of Bloomberg Business Week from
Speaker 1: Bloomberg radio. I'm Tim Stanovic. Ahead in our next hour
Speaker 1: a dispatch from the Earth Shot Prize Innovation Summit. We
Speaker 1: hear from the Executive Chairman of Fortescue on the company's
Speaker 1: multibillion dollar decision to move away from fossil fuels. Plus,
Speaker 1: our Business Week team reveals its annual ranking of the
Speaker 1: world's best business schools, and our cover story on the
Speaker 1: stunning success of Apple's tiniest accessory. This is Bloomberg. This
Speaker 1: is Bloomberg Business Week inside from the reporters and editors
Speaker 1: who bring you America's most trusted business magazine. Plus Global Business,
Speaker 1: finance and Tech News as it happened. Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg radio. Plenty ahead in our second hour of the
Speaker 1: weekend edition of Bloomberg Business Week, including our cup a
Speaker 1: story on the sneaky genius of Athol's Airpod's empire, plus
Speaker 1: key conversations from the Earth Shot Prize Innovation Summit. FORTESCUS
Speaker 1: executive chairman explains the massive investment being made into decarbonizing
Speaker 1: the miners iron ore operations, and the CEO of the
Speaker 1: Earth Shot Prize tells us how innovation can affect climate change.
Speaker 1: First up this hour. It's at that time of the
Speaker 1: year again, Bloomberg Business Week unveiling its annual ranking of
Speaker 1: the world's top NBA programs. Bloomberg Business Week Senior Editor
Speaker 1: Dimitro Cassinidis joined Carol and me to discuss the best
Speaker 1: b schools and, of course, reveal the top program drumroll please.
Speaker 1: Stanford is the number one school year second. Wait, this
Speaker 1: is not last year, this is two. Stanford has been
Speaker 1: the number one school for a few years running now,
Speaker 1: so no surprise. You know it's got a lot going
Speaker 1: for it. That is very much about what people are
Speaker 1: looking for today. The classic industry draws, the proximity to
Speaker 1: the tech industry, very strong programs, very entrepreneurial programs. On
Speaker 1: every point it's really hitting the marks. So it's doing great.
Speaker 1: And then tie for second place, She University of Chicago
Speaker 1: and Harvard UH and the top five get rounded out
Speaker 1: with northwestern and Dartmouth. How often does like the top
Speaker 1: five kind of stay the same? I mean I would
Speaker 1: say that it stays the same for a few years running,
Speaker 1: with some minor shifts among, you know, among the schools.
Speaker 1: This year, the top ten, we're all the same schools.
Speaker 1: Is last year one or two went down one, one
Speaker 1: or two one up one. You know, that's what you're
Speaker 1: dealing with. There are also very minor differences, I want
Speaker 1: to say, at those levels in this ranking, like even
Speaker 1: though your number one or number two or number five,
Speaker 1: the points that are separating you from that next school
Speaker 1: are small and few unless it's one between number one
Speaker 1: and numbers two, three, four and five. Right, that is
Speaker 1: always very far ahead of well, that's what's so interesting. Eight.
Speaker 1: Eight is the score that Stanford got. Um, I'm wondering,
Speaker 1: when it came to diversity, what the this looks like, because,
Speaker 1: you know, you click on that. And, by the way,
Speaker 1: this is the type of thing to go check out
Speaker 1: on Bloomberg DOT COM or look at it on the
Speaker 1: Bloomberg terminal, because it's a great interactive feature here. It's
Speaker 1: so funny because our producer would be like, should we
Speaker 1: put off the story? And that's what we said. It's
Speaker 1: so interactive because you really want to go online with it.
Speaker 1: Exactly it is. Um, I think they've I just want
Speaker 1: to say first, not the one. There's a huge team
Speaker 1: behind this and the real people who are actually doing this,
Speaker 1: with the ones compiling, you know, looking at the data
Speaker 1: and building these amazing interactive tools. So definitely go to
Speaker 1: Bloomberg dot com, slash business hyphen schools, and you will
Speaker 1: have an incredible experience. But diversity, yeah, well, it's you know,
Speaker 1: and Deversity is measured in different ways here and you
Speaker 1: can you can actually filter it in different ways here.
Speaker 1: But what does the rank look like when it comes
Speaker 1: to diversity? Well, you know, I mean I would say
Speaker 1: it's it's uh, it's mixed. So we're looking at diversity
Speaker 1: in terms of gender diversity and then breakdowns with Um,
Speaker 1: black students and Hispanic students, and we say this in
Speaker 1: our overview, to the schools have and if there's one
Speaker 1: area where, you know, we feel like there's a little
Speaker 1: bit of work to be done, it's in working towards
Speaker 1: that parody. So parody is when you're trying to sort
Speaker 1: of reach relative equality among certain groups. You have seven
Speaker 1: schools only where there was gender parody. That was met
Speaker 1: this year, eleven where black students had parody with, you know,
Speaker 1: other groups, and Um, eight schools for Hispanics. So it's
Speaker 1: it's not really you know, there's a ways to go
Speaker 1: and I think in some ways now we're starting to
Speaker 1: talk about how b schools, you know, are they not
Speaker 1: even reflective of what's happening out in the world? There's
Speaker 1: so much talk and pressure, you know, e. s, G. Equality, diversity, Um,
Speaker 1: in the ranks of the C suites, and so that pressure,
Speaker 1: I think, is trickling over to the schools now to
Speaker 1: ensure that they are focused on getting those numbers up there.
Speaker 1: I am curious about the pandemic, as it was tricky right, obviously,
Speaker 1: the pandemic. Anybody in Academian and how that has at
Speaker 1: all impacted rankings or how you guys are looking at
Speaker 1: the different schools in the program I don't think. I
Speaker 1: don't know that they've meaningfully affected the rankings, especially this year.
Speaker 1: We did come back with the rankings after a year off.
Speaker 1: Last year. Right one for but I think the pandemic
Speaker 1: has affected a lot of things on campus as we're
Speaker 1: talking to people, hearing about the priorities of students, the
Speaker 1: interests that are starting to emerge career wise, the classics
Speaker 1: are always there, UH, consulting, finance, technology, but now e
Speaker 1: S G is a big one. Climate change is a
Speaker 1: big one. Um The pandemic and being home and experiencing
Speaker 1: life for two years in very different ways has focused
Speaker 1: people on different things. Interest in certain healthcare careers and
Speaker 1: how we're going to move forward from this age of
Speaker 1: Covid Um, maybe other pandemics, and what kind of opportunities
Speaker 1: are out there. I also think it's really focused the
Speaker 1: schools and the students on how they teach and how
Speaker 1: they learn. So everybody values in person. I don't think
Speaker 1: that's ever going away, but now people know that flexibility
Speaker 1: is possible and there are really many different ways that
Speaker 1: you can fashion how learning is going to happen. When
Speaker 1: you say in person too, and I know we have
Speaker 1: to wrap up, and I do highly recommend people go
Speaker 1: online because it's just so cool to kind of click
Speaker 1: through the different schools and get their rankings and just
Speaker 1: break it down so many different ways. But I do
Speaker 1: think in school, especially when you think about business schools,
Speaker 1: so much of it is outside entrepreneurs, successful entrepreneurs, business
Speaker 1: people who come into to speak and you get facetime
Speaker 1: Tim you know at firsthand when you're up at Columbia
Speaker 1: how important that is. That was Bloomberg Business Week senior
Speaker 1: editor Demitra a CASSIDI's on the top of business schools.
Speaker 1: Go online to Bloomberg dot com slash business week, where
Speaker 1: you can check out the full ranking. Coming up next
Speaker 1: we'll take you to the Earth Shot Prize Innovation Summit
Speaker 1: and learn about an ambitious renewable energy goal announced by
Speaker 1: one of the world's top producers of iron ore. We're
Speaker 1: not moving away or curbing, where stopping all fossil fuel use.
Speaker 1: I've been up to my site. So I've said to
Speaker 1: my major rights of these huge industrial sites says, ok,
Speaker 1: I'm coming up in and I'm going to switch off
Speaker 1: the diesel, I'm gonna switch off the oil and gas
Speaker 1: labor and if you guys do not have plans where
Speaker 1: I can keep them off, I'm probably gonna shut you down.
Speaker 1: Fortescue medals founder and Executive Chairman, Dr Andrew Forrest, joins
Speaker 1: us on the other side. He'll explain why now and
Speaker 1: how much the initiative is going to cost. You're listening
Speaker 1: to Bloomberg Business Week. This is Bloomberg. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovan from Bloomberg radio. Bloomberg News reported this past week
Speaker 1: that fortescue medals group will spend more than six billion
Speaker 1: dollars over the next decade to decarbonize it's iron ore operations.
Speaker 1: Carol and I were in attendance at the Earth Shot
Speaker 1: Prize innovations sime it held in New York's Plaza Hotel
Speaker 1: on Wednesday. The event is geared towards spotlighting climate innovations
Speaker 1: to address the world's most pressing environmental challenges, and we
Speaker 1: had the chance to speak with Ford excuse founder and
Speaker 1: Executive Chairman, Dr Andrew Forrest, about the Australian miners pricey
Speaker 1: pivot toward renewable energy. So we're not moving away or curbing,
Speaker 1: where stopping all fossil fuel use. I've been up to
Speaker 1: my site. So I've said to my major operators of
Speaker 1: these huge industrial sites, says will come coming up in
Speaker 1: and I'm going to switch off the diesel, I'm gonna
Speaker 1: switch off the oil and gas lever and if you
Speaker 1: guys do not have plans where I can keep them off,
Speaker 1: I'm probably going to shut you down. And they've come
Speaker 1: up with these most brilliant, practical plans because they're now
Speaker 1: part of the problem and they're fourth part of the solution.
Speaker 1: And for six point two billion we can step beyond
Speaker 1: fossil fuel and return almost to billion dollars a year
Speaker 1: to share holders. It's got to be a good investment, right,
Speaker 1: all right. So help me out, Andrew. Why Now? Because
Speaker 1: we have the technology now. I mean, I'm an investor
Speaker 1: in breakthrough energy. I'm invested in this, in that. But
Speaker 1: why wait? I mean, everyone's sticking around waiting. The planet,
Speaker 1: I promise you, is cooking. I'm a ecologist. What's happening
Speaker 1: in the oceans is way worse than what's happening on land.
Speaker 1: But it's blowing up on a soil on land. You know,
Speaker 1: the youth across the world can see it. Carbon credits, fuel,
Speaker 1: everything's getting way more expensive. Yet renewable energy is free, okay,
Speaker 1: and it's infinite. Why wait? It's it's not always free
Speaker 1: and infinite, though. It's not infinite in the sense of okay, well,
Speaker 1: if you're using solar, there's SNA time, if using wind,
Speaker 1: there are ideas that are not windy. And if you're
Speaker 1: using hydro power, but there are sometimes that water levels.
Speaker 1: So how are your accounting from? You've heard of fossil fuel, right.
Speaker 1: They spend so much time pumping their gas down into
Speaker 1: these salt domes so they can draw it out later.
Speaker 1: We're not a lot different. I mean we don't have
Speaker 1: to throw it down for months. We'll have batteries. We
Speaker 1: have pumped Hydra, you know, water, up to the top
Speaker 1: of the hill in the day and run it down
Speaker 1: at night. We have gravitational energy which runs these trades
Speaker 1: of ours. We've got the biggest heaviest trains on earth, right,
Speaker 1: five kilometer trains. They take forty tons of vinyl on
Speaker 1: their backs down to sea level. It's more than enough
Speaker 1: parabolical gravity energy than you'll ever need to send that
Speaker 1: train back up the hill and you how much of
Speaker 1: it is also though, in terms of the timing. What's
Speaker 1: going on in terms of the macro environment? Obviously we're
Speaker 1: all talking a lot more about energy and the energy
Speaker 1: crisis that we're seeing over in Europe, specifically because of
Speaker 1: the Russian invasion in Ukraine. Everybody all of a sudden
Speaker 1: is putting their foot on the gas pedal when it
Speaker 1: comes to alternative energy. It's been there and yet the
Speaker 1: ramp up has taken longer. You talk about the technology
Speaker 1: being there, but how much of the macro forces are
Speaker 1: also use? I'm seeing a ramp up the talk. I'm
Speaker 1: saying hang a ramp up a panic, and there should be,
Speaker 1: because we've never had a drying event this year around
Speaker 1: the world, not in the last hundred years in history,
Speaker 1: record temperatures in history. So there's a sense of panic now.
Speaker 1: But we are reacting to what is great for our shareholders.
Speaker 1: Six point two billion in one off, nearly a billion out,
Speaker 1: twenty million out every single year forever, and it does
Speaker 1: not take into account the three billion we earned on
Speaker 1: the way through. So we're gonna build this thing up
Speaker 1: in the next several years, not in ten years, next
Speaker 1: several years. On the way through we start saving money.
Speaker 1: We saved eighty million last year. On the way through
Speaker 1: we will save a further three billion dollars. You take
Speaker 1: that three billion off the six point two. You don't
Speaker 1: have quite ray to return anymore. You have six rate
Speaker 1: to return. That kind of beats Warren Buffett's miracle of
Speaker 1: nine percent. Right, and we're greed. So it's a business
Speaker 1: decision or business and you're also just looking at the environment.
Speaker 1: I am an ecologist, I am a scientist. Yes, I'm
Speaker 1: a business person, but my shareholders will not tolerate filanthby
Speaker 1: for a business. You do filanthy your dividends, Andrews, but
Speaker 1: our business must make money. This is a fabulous business decision.
Speaker 1: So do the other miners, the real tenders of the world,
Speaker 1: and more do they follow your lead? Look, they're good guys.
Speaker 1: I've been in touch with the chief executives all the
Speaker 1: big miners. What have they told you? And I've said
Speaker 1: how you do? Please tell us. Would you share? So,
Speaker 1: of course we'll have full present full how to presentations.
Speaker 1: You get your senior leadership, I'll get my senior leadership.
Speaker 1: Will break down, dollar by dollar, piece by piece, time
Speaker 1: in the full by time and of all, how we
Speaker 1: are doing, not will do it. Are Doing. Are there
Speaker 1: any obstacles that will come into play? At this point
Speaker 1: you've already worked it all out, because they do think
Speaker 1: about as people transition it's not always so fluid and
Speaker 1: smooth because there is such an establishment out there and
Speaker 1: push look, I think because it has not been done before,
Speaker 1: there's another company in the heavy manufacturing, heavy industry world
Speaker 1: that has done it. So I need the disbelief to
Speaker 1: go away. I mean we started as a timely little
Speaker 1: company and we challenged the biggest industry and the resources world,
Speaker 1: which is iron know, it's like a closed shot, totally protected.
Speaker 1: Now we've busted it open, where one of the biggest
Speaker 1: players in the world two under billion tons a year.
Speaker 1: That's not chopped liver right spread around the world. Now
Speaker 1: we're taking that huge manufacturing center and stopping it using
Speaker 1: any fossil fuel and people are saying, yeah, if you
Speaker 1: can do it, wise in everyone. Well, that's the question.
Speaker 1: Don't question that. We can do it. Question why isn't
Speaker 1: everyone else? Well, not everyone else has a background as
Speaker 1: in a college. That's part of it perhaps, but I
Speaker 1: also wonder if you can take us more into your
Speaker 1: thinking behind this, because you know, I spoke years ago
Speaker 1: and you were on the forefront of thinking about the
Speaker 1: environmental concerns when it comes to mining. But something that
Speaker 1: I've been thinking about is, and I mean this with
Speaker 1: all due respect, if there's any sort of like a
Speaker 1: tournament that you're thinking about here, because, with all due respect,
Speaker 1: mining is is something that is not coherent. Okay, well, unfortunately,
Speaker 1: if we were to stop mining, we wouldn't be sitting here,
Speaker 1: this building, wouldn't exist, you know, everything would stop. So
Speaker 1: we have to do mining. Mining is not the problem.
Speaker 1: How we minded. That's the problem. We have to mind brain,
Speaker 1: we have to mind zero emissions. The mining industry can
Speaker 1: step beyond fossil fuel. Now I have a sense of
Speaker 1: a tonement to my kids and to everybody because I'm
Speaker 1: part of a fossil fuel era. But I don't put
Speaker 1: coal in my iron. All My product has zero carbon
Speaker 1: in it. There's nothing in it. So if I can
Speaker 1: persuade my customers to put hydrogen, not coal, in it,
Speaker 1: then I'm super happy. But I haven't exported carbon. Ok,
Speaker 1: that's not my business. I've exported iron and then carbon
Speaker 1: goes into the iron. I want to stop that. I
Speaker 1: want to La Saint to all my customers. We're gonna
Speaker 1: give you green iron first time in your lot. You've
Speaker 1: got green iron ore. Replace the call with hydrogen and
Speaker 1: you've got grain steele. That was fortescue founder and Executive Chairman,
Speaker 1: Dr Andrew Forrest. We'll have more from the Earth Shot
Speaker 1: Prize Innovation Summit just a little bit later in the
Speaker 1: program you're listening to Bloomberg Business Week. Coming up next.
Speaker 1: The world's biggest company in terms of market cap is
Speaker 1: just raking in the cash on its smallest accessory. Our
Speaker 1: cover story looks at the genius of Apple's airpods. This
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Speaker 1: Bloomberg to Boston, Bloomberg one, Oh six, one to San Francisco,
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Speaker 1: and around the globe the Bloomberg business in Bloomberg radio
Speaker 1: DOT COM. This is Bloomberg Business Week with Carol Messer
Speaker 1: and Bloomberg quick takes, Tim Stinovian on Bloomberg radio. For
Speaker 1: anybody scoffing at the idea of buying Apple's forthcoming augmented
Speaker 1: in virtual reality goggles. Just remember that the company has
Speaker 1: already enjoyed a massive windfallen items that had been similarly
Speaker 1: overlooked in their early days on the market. This week's
Speaker 1: Bloomberg Business Week cover story looks at perhaps the quietest
Speaker 1: smash hit of the Tim Cook era. We're talking about
Speaker 1: air pods. For more on how a cooking company turned
Speaker 1: a lost leader into a cash machine, Bloomberg new senior
Speaker 1: markets reporter Katie Graidfeld and I turned to magazine columnist
Speaker 1: Max Chafkin and the editor of business week, Joel Weber.
Speaker 1: It's actually just an amazing success story, and when Max
Speaker 1: first started talking about this, it was like, you know,
Speaker 1: we we might not be able to break out the
Speaker 1: revenue on its own because of how apple kind of
Speaker 1: does its numbers, but like wow, if air pods were
Speaker 1: its own company, it would be massive. How massive, Max?
Speaker 1: So yeah, as you said, Joel, that apple like considers
Speaker 1: air pods to be so irrelevant that it doesn't doesn't
Speaker 1: report this, but when you look at third party estimates,
Speaker 1: we're talking about probably twenty million or so pairs sold
Speaker 1: last year. That works out to, you know, roughly twenty
Speaker 1: billion dollars. So if air pods were its own company,
Speaker 1: you know, would be, you know, one of the large
Speaker 1: companies in America. But and the fact that it's considered
Speaker 1: to be this kind of sideline thing is partly just
Speaker 1: a testament to apple's, you know, utter dominance. Does Tim
Speaker 1: Cook get enough credit for this, because you write in here,
Speaker 1: and I love this line, that basically critics are saying
Speaker 1: that he's been managing the extremely lucrative decline of Apple. Well,
Speaker 1: I would argue that in general people are too you know,
Speaker 1: don't give enough credit to him cook, because I mean,
Speaker 1: obviously the market cap has gone up, you know, dramatically
Speaker 1: over over the last ten years. Um, there have been
Speaker 1: all these successes. Each time the apple does something, everyone
Speaker 1: makes fun of it. You know, we had that with
Speaker 1: the way, we had that with beats. Um, we even
Speaker 1: had that with airpods where, Um, you know, the big
Speaker 1: story was how dumb they looked, and they do look dumb.
Speaker 1: On the other hand, they're they've been very successful. Okay,
Speaker 1: I'm sorry. Speaking of things that looked dumb, Google glass.
Speaker 1: Did I hold on? I'm sorry, no offense, Google glass.
Speaker 1: I remember when these things came out, okay, like a
Speaker 1: decade ago, and there's this great picture of mark injuries
Speaker 1: and wearing them because they raised this fund at injurase
Speaker 1: in horror. What's totally focused on Google glass. Here we are,
Speaker 1: a decade later. We're all walking around wearing Google oh no,
Speaker 1: we're not. We're not all walking around wearing google glass.
Speaker 1: But the reason I'm bringing this up is because this
Speaker 1: is what your story is also about. Max. It's like,
Speaker 1: what are VR ambitions for apple and what can air
Speaker 1: pods tell us about those? Well, I do think that
Speaker 1: if Google had tried to do what apple do with
Speaker 1: air pods, it wouldn't have been a successful and one
Speaker 1: of the reasons it was successful is both because apple
Speaker 1: is really good at marketing stuff, but also because it
Speaker 1: has this ecosystem and they effectively have locked, you know,
Speaker 1: hundreds of more than a hundred million people into this,
Speaker 1: into their system, so that once you're once you've got
Speaker 1: an eye phone, once your family has an iphone, it
Speaker 1: becomes very hard to leave it. And I think we
Speaker 1: can see a similar dynamic with the VR headset. I mean,
Speaker 1: I think we're it's for sure that people will be
Speaker 1: disappointed when that thing comes out. Um. But but we've
Speaker 1: seen that over and over again with Tim Cook's Apple,
Speaker 1: where people the watch was kind of mocked. Air Pods
Speaker 1: are kind of mocked and I'm guessing this one will
Speaker 1: be too. And yet, like, insofar as VR is a
Speaker 1: category which people could debate, I think, if it is
Speaker 1: a category, will be significant for Apple. Okay, so this category,
Speaker 1: that air pods, is part of wearables, home and accessories,
Speaker 1: fastest growing line of business. One reason for that might
Speaker 1: be because you know what happens when you lose your
Speaker 1: air pod, Max. What do you have to do? Well,
Speaker 1: as I've written the story, I've had three pairs of
Speaker 1: air pods. I don't even really like them, but I
Speaker 1: just keep buying them because, you know, they break or
Speaker 1: they fall out. And even this morning I was I was,
Speaker 1: you know, riding the train to work and one fell
Speaker 1: out and I did not notice that had fallen out.
Speaker 1: And and so that's another seventy. Yeah, actually ordered that
Speaker 1: on you. He said, a little vibration uh to Um.
Speaker 1: So within that category. Just talked to us about why
Speaker 1: that category has been growing so fast. Well, it's really
Speaker 1: it's it's two products. It's the Apple Watch, Um and
Speaker 1: it's and it's air pods and air pods about half
Speaker 1: of it. The Watch is a pretty significant chunk as well.
Speaker 1: Um and, and I do think it's kind of weird.
Speaker 1: Wall Street loves to to create this diconomy between services
Speaker 1: and products. That's that's such economy that apple likes, because
Speaker 1: services are growing very fast and they're very profitable. But
Speaker 1: it's not totally clear to me why you would consider,
Speaker 1: for instance, iicloud a separate business when when really what
Speaker 1: it is is like an add on thing you buy
Speaker 1: with your iphone. Your iphone doesn't work without it, and
Speaker 1: I think in a lot of cases like these businesses
Speaker 1: have sort of merged where where they're all just sort
Speaker 1: of part of this overall iphone subscription that we're all paying,
Speaker 1: you know, close to a thousand dollars a year. Four
Speaker 1: that business week columnist Max Chafkin, along with the editor
Speaker 1: of the magazine, Joe Webber, on this week's cover story.
Speaker 1: Katie Kraffeld with us there as well. You're listening to
Speaker 1: Bloomberg Business Week coming up, we're turning our attention back
Speaker 1: to the environment and the groundbreaking innovations being funded to
Speaker 1: help mitigate the threat of climate change. Carol Masser goes
Speaker 1: one on one with Hannah Jones, CEO of the Earth
Speaker 1: Shot Prize. Next this is Bloomberg. To protect his family
Speaker 1: from disaster, Steve used his camera phone by taking pictures
Speaker 1: of its important documents. Steve can always set them stored online.
Speaker 1: Learn more simple disaster prep tips at ready DOT Gov.
Speaker 1: a message from female in the Idcount you're listening to
Speaker 1: Bloomberg Business Week with Carol Masser and Bloomberg. Quick Takes
Speaker 1: Tim stinovy from Bloomberg radio. This past Wednesday, Carol Masser
Speaker 1: and I broadcast our daily Business Week Program from the
Speaker 1: first ever Earth Shot Prize Innovation Summit. The event was
Speaker 1: hosted by Michael R Bloomberg, the founder and owner of
Speaker 1: Bloomberg LP, the parent company of Bloomberg Radio, and the
Speaker 1: U N Secretary General's special envoy on climate ambition and solutions.
Speaker 1: The summit brought together heads of state, government and civil
Speaker 1: society leaders, philanthropists, business executives and grassroot climate activists from
Speaker 1: around the world. They spotlighted emerging innovations that are needed
Speaker 1: to address the world's most pressing environmental challenges. His Royal
Speaker 1: Highness Prince William is the driving force behind the Earth
Speaker 1: shot program he delivered remarks remotely due to the recent
Speaker 1: passing of his grandmother, Queen Elizabeth the second. Just as
Speaker 1: President John F Kennedy so famously said as he challenged
Speaker 1: the United States of America to unite behind the goal
Speaker 1: of putting man on the moon, we choose to do
Speaker 1: these things not because they are easy, but because they
Speaker 1: are hard. I know that the world is an uncertain
Speaker 1: place right now that many families and communities across the
Speaker 1: globe are facing unimaginable challenge us, from conflicts to energy
Speaker 1: crisis and food shortages. While addressing these in the short term,
Speaker 1: we must also remain resolutely focused on tackling the greatest
Speaker 1: challenges that threatened or tomorrow. The Earth Shot Prize awarded
Speaker 1: its first five prizes of one million pounds each last year.
Speaker 1: It aims to recognize individuals with solutions for tackling the
Speaker 1: world's most pressing climate related problems or earth shots. With
Speaker 1: more on the work that the team is doing, carol
Speaker 1: cut up with Earth Shot Prize CEO Hannah Jones at
Speaker 1: the summit. The energy, by the way, in these places
Speaker 1: off the charts, which is exactly what we need. This week.
Speaker 1: We need urgent optimism and we need people feeling totally
Speaker 1: energized by the possibility. And that really takes me back
Speaker 1: to our founder, Prince William P um. He founded the
Speaker 1: earth shot prize after having two insights. He was in
Speaker 1: a conservation project that was really successful in Namibia, but
Speaker 1: he felt terribly frustrated that this successful solution wasn't going
Speaker 1: to scale, it wasn't going to be replicated around the world.
Speaker 1: And yet it was helping poachers become conservationists, it was
Speaker 1: changing the entire landscape. So why wasn't anyone scaling it?
Speaker 1: The second insight was that the dialogue at the time
Speaker 1: back in t was so full of fear and anger
Speaker 1: that he was worried that we wouldn't get to action
Speaker 1: and change if we didn't inject optimism into the conversation.
Speaker 1: So we married those two insights and he created the
Speaker 1: Earth Shot Prize. And the Earth Shot Prize is meant
Speaker 1: to be a beacon for urgent optimism and putting the
Speaker 1: spotlight on solutions that, if scaled, could repair and regenerate
Speaker 1: the planet. And you've got five different categories. Checking me
Speaker 1: a little bit about we do. So we did a
Speaker 1: lot of research into how we should do this and
Speaker 1: we've set up five earth shot challenges. One is oceans, which,
Speaker 1: by the way, I'm so in love with the innovation
Speaker 1: happening in oceans. One is in biodiversity, one is around
Speaker 1: waist cleaner and climate change, and if you think about it,
Speaker 1: all of those things are the things that we need
Speaker 1: to see repaired and restored and regenerated for the Earth
Speaker 1: to be livable, equitable sustainable. So we award one million
Speaker 1: pounds each to a winner in each of the categories
Speaker 1: each year. But Prince William is very clear with us
Speaker 1: the team. We're going to have fifteen finalists as a
Speaker 1: whole and they are our family and we are here
Speaker 1: to support them all, irrespective of who ultimately wins the
Speaker 1: big money, and we see the money as catalytic. So
Speaker 1: we have this incredible partnership and collective of partners, of
Speaker 1: which Bloomberg Philanthropy's is obviously a key one. And so
Speaker 1: when we bring the finalists out into the spotlight, we're
Speaker 1: also looking at how we can give them access to talent,
Speaker 1: access to advice, access to networks of power and ultimately
Speaker 1: to blended capital, because we want them to go from
Speaker 1: being a great working prototype that, if they were scaled,
Speaker 1: could make a huge impact. Let's do that fast, everybody.
Speaker 1: You know what was interesting too, as you guys reached
Speaker 1: out around the globe right people renominating a lot that
Speaker 1: you had to go through. What was it that made
Speaker 1: somebody stand out that you said, I want these people
Speaker 1: to be a finalist and an ultimately, a winner? It's
Speaker 1: a great question and it's the hardest part of our job.
Speaker 1: We have a price council that are made up of
Speaker 1: some incredible people. Christianity forget is we have Hindu Ibrahim,
Speaker 1: we have Sir David Attenborough, the prince, the list goes on,
Speaker 1: Queen Bran, and they have to actually get to a
Speaker 1: place where they have to make the final five. Let
Speaker 1: me tell you, this is a terrible conversation. But before
Speaker 1: there we have a very rigorous process. So we have
Speaker 1: official nominators that bring in nominations every year and from
Speaker 1: that we're looking for, first of all, are these diverse?
Speaker 1: Do they represent really all of the countries in the world?
Speaker 1: Do they bring women to the four? Do they bring
Speaker 1: indigenous communities to the four? How do we make sure
Speaker 1: that we have representation? Secondly, I think do they have
Speaker 1: a potential to make an impact? So right now they're
Speaker 1: working prototype, but how are they going to impact? If
Speaker 1: they went to scale, carbon or biodiversity or sustainable livelihood creation,
Speaker 1: how will they make an impact and do we see
Speaker 1: a pathway to helping them? And if so, they get
Speaker 1: to the next stage, which is how can they inspire
Speaker 1: the world? And really that's a very complicated process. We
Speaker 1: have technical experts we really bring in. We have an
Speaker 1: ex external group that helps us, Deloitte, so that we
Speaker 1: make sure it's fair, objective and consistently. We wanted to
Speaker 1: ask you is I do feel like there's a lot
Speaker 1: of momentum, certainly the investment world when it comes to
Speaker 1: the E S G space. Right a lot of money
Speaker 1: going into sustainability environment. Um. What is it that set
Speaker 1: to you guys, apart with what you're doing at Earth Shot? Well,
Speaker 1: you know, there's not a day when I don't meet
Speaker 1: with a philanthropist or a VC, with an e s
Speaker 1: g fund or an impact investor and after an initial
Speaker 1: conversation they look at me and say, can I tell
Speaker 1: you a secret? Could you be ideal pipeline? I don't
Speaker 1: have enough things that I know what to invest in interesting.
Speaker 1: Now we are sitting on this incredible we've got already
Speaker 1: over two thousand nominations just in eighteen months and we're vetting,
Speaker 1: you know, to get through a different stage. We're looking
Speaker 1: at them and we're saying, but how can we match make?
Speaker 1: How can we match make er ECO innovators with blended capitals?
Speaker 1: Talking to some of your finalists, they say there's a
Speaker 1: lot of things having a seen at the table, but capital.
Speaker 1: It's crucial for scale with ability. Imagine that you are
Speaker 1: any one of these finalists or innovators. You're not walking
Speaker 1: down Sands Hill road and bumping into a VC every day. Right.
Speaker 1: You're living in Nigeria thinking of how you do a
Speaker 1: low cost solar leasing program to help people in the
Speaker 1: local slums to have access to green electricity. But you
Speaker 1: need funding, but you have no access to those networks
Speaker 1: of privilege. Prince William was very clear. I want to
Speaker 1: use my privilege and my platform to convene and make
Speaker 1: that funding conversation happening faster. But having worked so much
Speaker 1: with entrepreneurs, what I'll also tell you this. When you
Speaker 1: go on that journey from being a prototype to being scale,
Speaker 1: you don't just need money, right. You need advice, you
Speaker 1: need to support, you need compassion and kindness, you need
Speaker 1: leadership training, storytelling training. So that's something that we're also
Speaker 1: really supporting and our Global Alliance of partners. They're not
Speaker 1: just putting capital and they're putting staff in, they're putting
Speaker 1: expertise in their opening up their supply chains, you know.
Speaker 1: And what's interesting is, you know, when we think about
Speaker 1: the world capitals and entrepreneurs, they're are doing some really
Speaker 1: cool things, but we're talking literally about saving the world,
Speaker 1: saving the planet, Earth Shot. We talk about moon shots right,
Speaker 1: like doing the unthinkable. This is about existence for everyone,
Speaker 1: and that's where you talk about oceans and earth and energy.
Speaker 1: I mean, this is what we're talking about. It is
Speaker 1: and you know, one of the things to think about
Speaker 1: is this is the sixtieth anniversary of the Moon Shot
Speaker 1: and Prince William was really influenced by President Kennedy's Moonshot
Speaker 1: challenge to the American people because it did two things.
Speaker 1: He didn't just challenge them to land a man on
Speaker 1: the moon and bring them home safely when we knew
Speaker 1: none of the answers to how to do that. What
Speaker 1: actually happened was it unleashed a wave of innovation that
Speaker 1: shaped economic and social progress and, maybe more importantly, he
Speaker 1: unleashed a new mindset in the American people, which was
Speaker 1: we can turn the seemingly impossible possible. We have to
Speaker 1: make this be a short decade and we have to
Speaker 1: unleash that mindset again. We have innovation all over the
Speaker 1: world happening. We've got to believe we can do this
Speaker 1: and change the trajectory of the planet, and it will
Speaker 1: take all of us. That was Hannah Jones. She's chief
Speaker 1: executive officer at the Earth Shot Prize. She spoke with
Speaker 1: Carol at the Earth Shot Prize Innovation Summit this past Wednesday.
Speaker 1: The event was hosted by Michael R Bloomberg, the founder
Speaker 1: and owner of Bloomberg LP, the parent company of Bloomberg Radio,
Speaker 1: and the U N Secretary General's special envoy on climate
Speaker 1: ambition and solutions. The summit brought together heads of state,
Speaker 1: government and civil society, Les Philanthropists, business executives and grassroot
Speaker 1: climate activists from around the world. They spotlighted emerging innovations
Speaker 1: that are needed to address the world's most pressing environmental challenges.
Speaker 1: And that wraps up the weekend. Edition of Bloomberg Business
Speaker 1: Week from Bloomberg radio. Thanks so much for joining us.
Speaker 1: I'm Tim Stanovik. Carol Masser will be back with US
Speaker 1: next week. Be sure to tune into Bloomberg Business Week.
Speaker 1: It's Monday through Friday. It starts at two PM Wall
Speaker 1: Street time on Bloomberg radio. You can also watch our
Speaker 1: daily broadcast on YouTube. Just search Bloomberg Global News and
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Speaker 1: that at Bloomberg dot com, apple or wherever you get
Speaker 1: your podcasts. Bloomberg Business Week is available on newstands now
Speaker 1: at Bloomberg Dot Com and on the Bloomberg terminal, and
Speaker 1: you can also see me on Bloomberg quick take, available
Speaker 1: at Bloomberg Dot com, slash qt and streaming platforms like Roku,
Speaker 1: Apple TV, Samsung TV and more. Have a great weekend everyone.
Speaker 1: This is Bloomberg. What is dedication? The thing that drives
Speaker 1: me every day as a dad is dairy on him.
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