WEBVTT - SCOTUS Social Media Ruling , FedEx Earnings 0:00:02.960 --> 0:00:10.840 Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.080 --> 0:00:18.079 Eastern on Apple Car playing Android Otto with the Bloomberg 0:00:18.120 --> 0:00:21.440 Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.040 or watch us live on YouTube. 0:00:25.079 --> 0:00:28.680 Let's get back to John Tucker in our New York studio. John, 0:00:28.720 --> 0:00:31.520 Supreme Court. We got some rulings today, the notable on 0:00:31.560 --> 0:00:34.320 the crossing the tape. Supreme Court backs White House on 0:00:34.400 --> 0:00:36.800 social media post removal. What do we know about that? 0:00:36.920 --> 0:00:40.879 Yeah, the Court issuing several major decisions this week. They 0:00:40.880 --> 0:00:44.320 could also extend into next week. In fact, twelve opinions 0:00:44.720 --> 0:00:48.279 left in in this term. Paul on Alex Paper opinions 0:00:48.320 --> 0:00:50.640 released to the courthouse in Washington just a few minutes 0:00:50.680 --> 0:00:54.640 before they're posted online. June Grosso, the host of Bloomberg Law, 0:00:55.040 --> 0:00:57.160 joining me now to go over some of these decisions 0:00:57.440 --> 0:01:01.680 with respect to the Biden administration. They're social media contexts. 0:01:01.840 --> 0:01:02.880 What was the decision? 0:01:03.280 --> 0:01:06.920 So the decision, the complaint by a few Republican states 0:01:06.920 --> 0:01:09.760 and people was that the Biden administration, and this was 0:01:09.840 --> 0:01:14.319 during COVID was contacting the social media platforms and getting 0:01:14.319 --> 0:01:18.240 them to change information. That was the charge. So here 0:01:18.280 --> 0:01:20.240 in a six to three case, and both the cases 0:01:20.280 --> 0:01:23.640 today are six to three, which is indicative of how 0:01:23.680 --> 0:01:24.759 this term might end. 0:01:24.840 --> 0:01:25.480 Six to three. 0:01:25.959 --> 0:01:31.759 So the court went off on a standing issue, which 0:01:32.040 --> 0:01:35.080 is procedural, and I know I've discussed this before, but 0:01:35.720 --> 0:01:38.039 it's a way for the court not to reach the 0:01:38.040 --> 0:01:41.319 main issue, but to say the people who are suing 0:01:41.360 --> 0:01:44.080 here don't have standing to sue because they weren't injured 0:01:44.080 --> 0:01:46.959 in any way. But also in doing that, just as 0:01:47.040 --> 0:01:49.920 Amy Cony Barrett, who wrote the majority, said that the 0:01:49.960 --> 0:01:53.560 Fifth Circuit here was wrong in some of the analysis 0:01:53.560 --> 0:01:56.240 that it made and that they couldn't really show that 0:01:56.280 --> 0:01:59.760 it was the government that injured the plaintiffs at all 0:01:59.760 --> 0:02:02.280 these points. So you know, the question is and also 0:02:02.320 --> 0:02:04.000 it's sixty three in the. 0:02:04.560 --> 0:02:07.880 Three, So it sets up how this is going to 0:02:07.880 --> 0:02:10.880 play out before the election in terms of misinformation on 0:02:10.919 --> 0:02:11.639 social media. 0:02:11.800 --> 0:02:12.040 Right. 0:02:12.080 --> 0:02:15.400 Also, there are two other cases that are sort of 0:02:15.520 --> 0:02:18.919 joined that are more important as far as social media 0:02:18.960 --> 0:02:21.920 is concerned, and those are the cases concerning the Texas 0:02:22.360 --> 0:02:27.639 and Florida laws where they're trying to curtail the platforms 0:02:27.680 --> 0:02:31.640 into doing you know, into into and it's another thing 0:02:31.680 --> 0:02:34.680 like a conservative saying that you know they're being unfair 0:02:34.720 --> 0:02:37.600 to us, and it's a question of free speech. So 0:02:37.840 --> 0:02:43.240 the dissent here was the three most conservative justices, Alito, Gorsicic, 0:02:43.360 --> 0:02:44.160 and Thomas. 0:02:44.720 --> 0:02:46.520 How many more cases are going to be? Is that 0:02:46.600 --> 0:02:47.239 it for today? 0:02:47.560 --> 0:02:49.960 There's one other case on public corruption, something that we 0:02:50.000 --> 0:02:53.720 haven't been following, but it continues the Supreme Court's skepticism 0:02:53.760 --> 0:02:55.200 of these public corruption laws. 0:02:55.280 --> 0:02:58.040 All right, June Grasso, the host of Bloomberg Law, with 0:02:58.200 --> 0:03:00.480 me to break down some of these cases. The Supreme 0:03:00.480 --> 0:03:04.560 Court again backing the Biden administration on the social post 0:03:04.960 --> 0:03:11.720 media removal in terms of cases that go against the arguments. 0:03:13.400 --> 0:03:17.320 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:03:17.400 --> 0:03:20.880 weekdays at ten am Eastern on applecar Play and Android 0:03:20.919 --> 0:03:24.120 Auto with the Bloomberg Business. You can also listen live 0:03:24.200 --> 0:03:27.360 on Amazon Alexa from our flagship New York station, Just 0:03:27.440 --> 0:03:31.000 say Alexa Play Bloomberg eleven thirty. 0:03:31.560 --> 0:03:32.760 Let's get back to FedEx. 0:03:33.120 --> 0:03:36.480 Thomas black is the Bloomberg opinion columnists covering logistics, manufacturing, 0:03:36.560 --> 0:03:38.080 and aerospace, joining us. 0:03:38.120 --> 0:03:40.360 Now, So what did you make of that news? In particular? 0:03:41.600 --> 0:03:44.839 A strategic spinoff maybe, or strategic options, I should say 0:03:44.880 --> 0:03:45.920 for its freight unit. 0:03:45.960 --> 0:03:47.960 That pretty much surprised a lot of analysts. What did 0:03:47.960 --> 0:03:48.440 you make of that? 0:03:49.880 --> 0:03:53.680 It was surprising. It potentially could unlock a lot of value, 0:03:53.720 --> 0:03:55.720 and I think that's why the stock price is up 0:03:56.240 --> 0:04:00.920 around fifteen percent today. Investors see that as kind of 0:04:00.920 --> 0:04:04.280 a little gold nugget that's been hidden in FedEx. It's 0:04:04.320 --> 0:04:10.640 the largest less than truckload carrier, and those trucking companies 0:04:10.720 --> 0:04:14.520 tend to have pretty high valuations right now, so they 0:04:14.640 --> 0:04:16.920 could definitely unlock some value. 0:04:17.960 --> 0:04:21.200 So is the expectation that they will spin that out 0:04:21.520 --> 0:04:24.200 or ipo it. What mechanism were they discussing? 0:04:24.200 --> 0:04:27.800 Do you think they didn't want to talk about it? 0:04:27.880 --> 0:04:30.720 They were asked several questions about that on the conference call, 0:04:30.760 --> 0:04:33.400 and they batted them all away. They're going to review it. 0:04:33.880 --> 0:04:37.799 Spin out would be would be easier to do, probably 0:04:37.839 --> 0:04:42.080 more tax friendly as well. They could sell it, sure 0:04:42.080 --> 0:04:44.480 there would be some interested buyers in there. It's a 0:04:44.520 --> 0:04:47.600 pretty high margin business for the trucking company, for trucking 0:04:47.640 --> 0:04:52.360 industry IPO. I presume they could do that as well. 0:04:52.640 --> 0:04:55.719 A spin would probably be the better way to get it, 0:04:56.000 --> 0:04:57.080 you know, trading. 0:04:57.480 --> 0:05:01.120 Yep, you know, just looking at this just the most 0:05:01.120 --> 0:05:03.440 recent results. You know, they're talking about their forecast revenue 0:05:03.440 --> 0:05:05.600 will grow in the load a mid single digit percentage 0:05:06.240 --> 0:05:09.200 in the upcoming period. But boy, they're talking about a 0:05:09.200 --> 0:05:13.400 big gain in EPs net profitability. What are they doing 0:05:13.480 --> 0:05:15.280 on the cost side that's kind of bringing a lot 0:05:15.320 --> 0:05:16.000 more dollars down? 0:05:16.960 --> 0:05:20.240 Yeah, the FedEx story is all about cost cutting. The 0:05:20.279 --> 0:05:22.880 parcel market is a little soft right now. It's been 0:05:22.960 --> 0:05:27.120 that way for a few quarters. As people the revenge 0:05:27.160 --> 0:05:32.599 traveling and all the revenge experiences that people are buying, 0:05:32.600 --> 0:05:36.480 they're not buying as much stuff, so e commerce in 0:05:36.520 --> 0:05:40.159 the package delivery market's a little flat. So FedEx is 0:05:40.279 --> 0:05:43.800 cutting costs hard. That the new CEO, Rod Supermanium, came 0:05:43.800 --> 0:05:45.880 in a couple of years ago and announced this big 0:05:45.920 --> 0:05:48.800 transformation of FedEx, and he's doing it. There was some 0:05:49.160 --> 0:05:52.800 skepticism about how this would work, but he's winning over 0:05:52.880 --> 0:05:57.240 investors now because they've had several quarters in which they 0:05:57.279 --> 0:06:00.520 have increased margins even though their revenue has been on 0:06:00.600 --> 0:06:05.120 the decline because of the market pressure. So so far, 0:06:05.240 --> 0:06:08.000 so good for mister SUPERMANI. 0:06:09.360 --> 0:06:11.920 So you had a great opinion piece out about FedEx 0:06:12.120 --> 0:06:14.560 and you sort of broke down this logistics business and 0:06:14.560 --> 0:06:18.200 then what would be left afterwards, and how FedEx would 0:06:18.200 --> 0:06:21.200 be then a pure play small packaged delivery company, and 0:06:21.240 --> 0:06:23.600 then you'd have this behemoth logistics company. And is how 0:06:23.680 --> 0:06:26.200 much market share they really own? Can you talk us 0:06:26.200 --> 0:06:28.080 through some of those numbers, because I think of what's 0:06:28.120 --> 0:06:30.080 left of FedEx will be quite interesting in how to 0:06:30.160 --> 0:06:30.640 value it. 0:06:31.960 --> 0:06:35.520 Right, So what they would spin out would be there 0:06:36.040 --> 0:06:40.000 less than truckbload UH trucking company. And these are these 0:06:40.000 --> 0:06:44.400 are companies that have a network of warehouses and they 0:06:44.400 --> 0:06:48.400 bring in customers goods and they consolidate them so that 0:06:48.440 --> 0:06:51.240 they can fill a full trailer instead of just taking 0:06:51.320 --> 0:06:54.440 a partial trailer. So they're essentially a trucking It's a 0:06:54.480 --> 0:06:57.000 trucking company. So FedEx is going to keep all of 0:06:57.040 --> 0:07:00.440 its UH if it did spin that, it would keep 0:07:00.480 --> 0:07:03.640 all of its package delivery business. It also has some 0:07:03.920 --> 0:07:08.760 logistics business in which it helps customers move freight around 0:07:08.760 --> 0:07:12.960 the world. They do custom stuff and freight forwarding and 0:07:12.960 --> 0:07:15.480 so forth, so they would keep that as well with 0:07:15.920 --> 0:07:18.440 the main company. So this would be a trucking company. 0:07:19.240 --> 0:07:26.200 They've tried in the past to help to merge these 0:07:26.200 --> 0:07:29.080 companies a little bit more, in other words, having the 0:07:29.120 --> 0:07:32.760 trucking company do some of the package delivery and so forth, 0:07:32.880 --> 0:07:36.360 especially some of the large packages. I'm not sure it 0:07:36.400 --> 0:07:38.840 worked out that well, So maybe that's why they're pivoting 0:07:38.880 --> 0:07:41.560 and saying, well, maybe we could unlock more value instead 0:07:41.560 --> 0:07:43.720 of trying to integrate it more into our system, let's 0:07:43.760 --> 0:07:45.000 just go ahead and carve it out. 0:07:47.160 --> 0:07:49.120 You know, when we talk cost custs in this business, 0:07:49.160 --> 0:07:51.400 a lot of times it means headcount. What have they 0:07:51.440 --> 0:07:53.200 done on the headcount front, because it just seems like 0:07:53.240 --> 0:07:54.600 a labor intensive business. 0:07:56.240 --> 0:07:59.440 They've definitely have lowered some headcount. I don't have the 0:07:59.520 --> 0:08:01.560 numbers off the top of my head, but that's that's 0:08:01.600 --> 0:08:04.960 one of the things. The other is they're trying to 0:08:04.960 --> 0:08:09.880 consolidate their networks. And if they're in the past, if 0:08:09.880 --> 0:08:13.480 there was an express facility and a ground facility in 0:08:13.520 --> 0:08:17.440 the same vicinity, they would just continue to operate those 0:08:17.480 --> 0:08:22.400 and the trucks sometimes would arrive at your house. One 0:08:22.440 --> 0:08:24.960 would be an express truck, one would be a ground truck. 0:08:25.080 --> 0:08:28.280 They're trying to eliminate a lot of that duplication so 0:08:28.760 --> 0:08:32.679 in some cases they're consolidating facilities, they're handing off packages 0:08:33.040 --> 0:08:36.720 so that only one driver comes to your door or 0:08:36.760 --> 0:08:40.520 your business. So that's another way in which they're cutting costs. 0:08:41.000 --> 0:08:43.600 It's not all just head counted operational. 0:08:44.240 --> 0:08:47.320 Yeah, and clearly also, you know, spinning on the logistic 0:08:47.360 --> 0:08:49.720 business will help them cash flow there real quick before 0:08:49.720 --> 0:08:52.400 you let you go. If the spinoff of logistic business 0:08:52.400 --> 0:08:54.160 went the way of M and A, who might be 0:08:54.200 --> 0:08:55.080 potential buyers? 0:08:55.320 --> 0:08:56.000 Oh, good question. 0:08:57.720 --> 0:09:00.400 That's a little bit of shaky ground. But there are 0:09:00.400 --> 0:09:04.520 some large LTL players out there. I'd have to say 0:09:04.679 --> 0:09:10.240 XBO would come to mind, maybe because they have their chairman, 0:09:10.480 --> 0:09:13.640 Brad Jacobs has made a living by acquiring companies, so 0:09:14.000 --> 0:09:17.000 I wouldn't put them. I would put them on the list. 0:09:17.640 --> 0:09:22.680 In fact, when Yellow, which is another LTL carrier, went bankrupt, 0:09:23.280 --> 0:09:26.480 XBO bought the most of the assets. The assets were 0:09:26.480 --> 0:09:29.840 all divided up and sold and XBO came out with 0:09:29.920 --> 0:09:33.840 the lion's share of those. So it's it's it's willing 0:09:33.840 --> 0:09:36.360 to expand through acquisition, So I would put them on 0:09:36.400 --> 0:09:36.720 the list. 0:09:38.520 --> 0:09:40.480 All right, Very good, Thomas Black, Thank you very much 0:09:40.480 --> 0:09:43.400 for joining us. Really appreciate Thomas Black, Bloomberg opinion columnists, 0:09:43.440 --> 0:09:45.600 just giving us the latest on FedEx better and expect 0:09:45.600 --> 0:09:48.360 the results. Taking guidance up stock moving up here about 0:09:48.360 --> 0:09:51.000 about thirteen fourteen percent fifty two week high. About that 0:09:51.080 --> 0:09:52.720 for our friends at FedEx. 0:09:54.160 --> 0:09:58.040 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:09:58.120 --> 0:10:01.480 weekdays at ten am Eastern car playing and broud Otto 0:10:01.559 --> 0:10:04.520 with the Bloomberg Business app. Listening on demand wherever you 0:10:04.520 --> 0:10:08.240 get your podcasts, or watch us live on YouTube. 0:10:09.280 --> 0:10:12.840 We're live here at the very loud Bloomberg invest Conference 0:10:12.840 --> 0:10:15.120 in Lower Manhattan. It's called the World Financial Center for 0:10:15.120 --> 0:10:16.839 those of us that were actually here back in the 0:10:16.920 --> 0:10:19.199 day down in Lower Manhattan, which by the way, is 0:10:19.240 --> 0:10:21.400 a great place. I'm gonna plug it yet again. Come 0:10:21.440 --> 0:10:23.240 down here in warm weather with the kids and stuff. 0:10:23.280 --> 0:10:24.960 There's you know, you're right on the river. Lots of 0:10:24.960 --> 0:10:26.600 cool restaurants, a lot of fun places for the kids 0:10:26.600 --> 0:10:29.120 are run around, big yachts there to look at. So 0:10:29.160 --> 0:10:30.520 it's a great part of the city that I think 0:10:30.559 --> 0:10:33.240 a lot of people kind of miss here. So in video, 0:10:33.320 --> 0:10:35.199 is that our drawdown the last few you know, that 0:10:35.320 --> 0:10:37.200 was it? That was it? Okay, now we're back up 0:10:37.240 --> 0:10:40.199 at it all right in videos up taking up the 0:10:40.280 --> 0:10:42.120 nastac so so so there you go. Let's talk about 0:10:42.120 --> 0:10:44.240 these markets here and where we go. Clark Chang, CEO 0:10:44.280 --> 0:10:48.480 and Chief investment Officer Merrimack Corporation. Clark is a Fuqua 0:10:48.840 --> 0:10:52.160 graduate at Duke University, so he's he's much younger than 0:10:52.160 --> 0:10:55.320 I am, but we will both went to the business exactly. 0:10:55.480 --> 0:10:58.640 Hey Clark, what do you feel about these markets here? 0:10:58.720 --> 0:11:01.440 What's kind of how are you approaching them right here? 0:11:01.480 --> 0:11:04.160 Because we've got a FED that presumably is going to 0:11:04.160 --> 0:11:06.600 be cutting raged at some time, I guess later rather 0:11:06.600 --> 0:11:10.200 than that, the sooner we've got decent earnings, how are 0:11:10.200 --> 0:11:11.000 you guys approaching it? 0:11:11.160 --> 0:11:13.240 I think the FED is thinking they're going to start 0:11:13.240 --> 0:11:15.439 cutting rage, So that's what people think in September and stuff. 0:11:15.440 --> 0:11:17.760 I think every time we talk about this it keeps 0:11:17.760 --> 0:11:21.000 getting delayed more and more, and I don't I think 0:11:21.040 --> 0:11:23.640 this market is very dependent on what the FED does, 0:11:23.679 --> 0:11:26.360 and they're timing of it. So growth is slowing down, 0:11:26.520 --> 0:11:29.680 unemployment is slowly starting to increase, things are heading in 0:11:29.679 --> 0:11:32.160 the right direction, Inflation is coming down, and it just 0:11:32.160 --> 0:11:35.400 depends on how the FED reacts. If they react too quickly. 0:11:35.920 --> 0:11:38.200 I think we could go the wrong direction. May they 0:11:38.360 --> 0:11:40.040 react to slow they go the other direction. So I 0:11:40.080 --> 0:11:42.080 think it's very conditional on how the FED, on how 0:11:42.080 --> 0:11:43.240 the FED basically performs. 0:11:43.360 --> 0:11:46.360 What I was struck with over the last day listening 0:11:46.400 --> 0:11:48.520 to a lot of the Bloomberg in Best Panels is 0:11:48.559 --> 0:11:50.680 how little the FED was really talked about, Like it 0:11:50.720 --> 0:11:52.280 was a little bit here and there, but it was 0:11:52.320 --> 0:11:55.400 mostly about AI, how to invest, what the potentials are, 0:11:55.440 --> 0:11:57.480 and private credit and sort of what do you do 0:11:58.080 --> 0:11:59.920 in that sector as part of the family off of 0:12:00.480 --> 0:12:02.760 how do you guys look at the best investment thesis 0:12:02.760 --> 0:12:03.160 for AI. 0:12:04.520 --> 0:12:07.320 AI is moving so fast that I don't think anyone 0:12:07.400 --> 0:12:09.240 has any idea what's going to happen with it. But 0:12:09.600 --> 0:12:12.200 it's going at an exponential pace. So you know, we 0:12:12.240 --> 0:12:15.240 went from like PCs to the internet, to mobile to 0:12:15.679 --> 0:12:18.120 the cloud, and I think AI is going to be 0:12:18.200 --> 0:12:20.120 much faster. But I think the things that are gonna 0:12:20.240 --> 0:12:22.560 change AI for this next generation, I don't think people 0:12:22.600 --> 0:12:25.520 can even comprehend, like even terms of making like entertainment 0:12:25.520 --> 0:12:29.120 and stuff like that, the like we don't need actors 0:12:29.120 --> 0:12:32.439 and actresses. Sora from Open AI can generate a video live, 0:12:32.920 --> 0:12:34.800 and I think this magic and secret is just in 0:12:34.880 --> 0:12:36.200 terms of how you prompt it. 0:12:36.320 --> 0:12:41.440 I think my artist soul is slowly dying, yes, but. 0:12:41.960 --> 0:12:43.400 It really is changing the world that I don't think 0:12:43.440 --> 0:12:45.599 people even understand. I think the danger of it is 0:12:45.600 --> 0:12:48.960 always going to be the deep fakes, the cybersecurity, all 0:12:49.000 --> 0:12:52.480 that stuff, because I think the hackers are much more 0:12:52.480 --> 0:12:54.880 innovative than the people defending against it, and they only 0:12:54.920 --> 0:12:57.040 have to win once. So I think that's the danger 0:12:57.120 --> 0:12:59.720 of it. I think people are starting to understand this. 0:12:59.720 --> 0:13:02.360 So I think we're starting to see dedicated AI models 0:13:02.400 --> 0:13:05.719 for specific countries. So I think Japan just invested in 0:13:05.840 --> 0:13:08.120 one for their country. I think India is looking at 0:13:08.160 --> 0:13:10.360 it too, because no one wants to be using the 0:13:10.559 --> 0:13:14.520 US LM model. Basically, it's using US data and as 0:13:14.559 --> 0:13:17.480 a result, it reflects more of the US population, the 0:13:17.520 --> 0:13:19.559 Western society and stuff like that. To do that and 0:13:19.600 --> 0:13:22.480 to run that in China is useless because the Chinese 0:13:22.520 --> 0:13:25.640 population they have so many restrictions on jaywalking or chewing 0:13:25.640 --> 0:13:27.760 gum or whatever that it just may not work over there. 0:13:28.080 --> 0:13:29.800 So I think AA is gonna be It's gonna be 0:13:29.880 --> 0:13:32.000 fascinating in terms of how impacts the world. 0:13:32.080 --> 0:13:33.040 The energy usage is. 0:13:32.960 --> 0:13:36.280 Going to be a huge issue. And I mean I 0:13:36.120 --> 0:13:37.760 was I was out in Las Vegas last week and 0:13:38.360 --> 0:13:41.560 William Jensen was actually speaking at an energy conference and 0:13:41.600 --> 0:13:43.520 he's you know, he's a tech guy and he's at 0:13:43.520 --> 0:13:44.360 an energy conference. 0:13:44.400 --> 0:13:46.840 But he was speaking with Edison International, which is the 0:13:46.840 --> 0:13:49.240 CEO that I've spoken to about power usage. 0:13:49.240 --> 0:13:50.360 They're based in California. 0:13:51.080 --> 0:13:54.480 So to that point, do you invest though in this thesis, 0:13:54.480 --> 0:13:57.000 like you're absolutely right, like everything you said makes complete sense. 0:13:57.320 --> 0:13:58.360 Do you make money off of that? 0:13:59.040 --> 0:14:00.800 No, we could definitely make money off I think it's 0:14:00.880 --> 0:14:03.439 changing so quickly. I think the problem is knowing who 0:14:03.480 --> 0:14:06.559 the winner is going to be, no matter what Navidia 0:14:06.640 --> 0:14:10.040 is doing for now, because everything they produce is sold 0:14:10.040 --> 0:14:12.839 out and everyone's trying to get ahead. And if you're 0:14:12.840 --> 0:14:14.280 not buying the chips, you're not going to be on 0:14:14.320 --> 0:14:17.400 the forefront of this technology. So I mean, if they 0:14:17.400 --> 0:14:19.520 can keep the market share that it's fantastic. I think 0:14:19.520 --> 0:14:21.320 they have a mode around them with the software and 0:14:21.360 --> 0:14:24.160 the chip, but I think it's just a home run 0:14:24.240 --> 0:14:24.520 right now. 0:14:24.560 --> 0:14:27.360 And what seems a little bit different AI versus say 0:14:27.360 --> 0:14:29.800 the Internet, for example, is the Internet was a whole 0:14:29.800 --> 0:14:34.040 bunch of new companies, disruptors, whether it's Google or Facebook, 0:14:34.520 --> 0:14:37.920 disrupting the existing business models. Here doesn't seem to be 0:14:37.960 --> 0:14:40.120 that way. It seems to be in Nvidia is the 0:14:40.200 --> 0:14:44.240 chip play. Maybe Microsoft's a software play, you know, and 0:14:44.480 --> 0:14:48.520 it's these existing incumbents that are investing in and building 0:14:48.600 --> 0:14:51.440 up AI capabilities. I guess that's the way to play it. 0:14:51.440 --> 0:14:53.720 It's all it's all in the data. The data is oil. 0:14:53.760 --> 0:14:57.320 The data is what trains these models. The investments that 0:14:57.360 --> 0:14:59.680 you need in the infrastructure in terms of these data 0:14:59.720 --> 0:15:02.400 centers can only come from the largest companies, like say Microsoft. 0:15:02.440 --> 0:15:04.880 I think Microsoft and open ai have a project that 0:15:04.880 --> 0:15:07.560 we working to build the biggest you know, data center 0:15:07.560 --> 0:15:10.440 of the world to basically run AI. So I think 0:15:10.480 --> 0:15:12.920 it is gonna be with those big winners that are 0:15:12.960 --> 0:15:15.200 out there. But if you're a small company, we see 0:15:15.200 --> 0:15:17.560 this a lot on the venture side. You develop something new, 0:15:17.640 --> 0:15:20.680 like say mid Junior, some of these you know videotype 0:15:20.680 --> 0:15:24.080 of creation models, you're you're basically out innovated within six 0:15:24.120 --> 0:15:27.760 months when open I released Sora. So like it's happening 0:15:27.800 --> 0:15:29.520 at such a fast pace set if you're a startup 0:15:29.560 --> 0:15:31.720 and you don't have the capital and the resources and 0:15:31.760 --> 0:15:35.040 the talent to innovate faster than the big guys. Your 0:15:35.040 --> 0:15:38.160 basic business model, business models is basically gone in six months. 0:15:38.360 --> 0:15:40.520 So you were on a panel that was titled meeting 0:15:40.640 --> 0:15:42.600 the Needs of the Rising Generation. 0:15:43.280 --> 0:15:44.040 What does that mean? 0:15:44.560 --> 0:15:46.400 Is that like, we don't have enough kids and everyone 0:15:46.520 --> 0:15:48.640 is gonna get old and there's a big fiscal deficit. 0:15:48.720 --> 0:15:51.040 Does that mean that it's gonna be super isolationist? What 0:15:51.080 --> 0:15:51.640 does that mean? 0:15:51.920 --> 0:15:54.800 I mean we do have a demographic problem. I think 0:15:54.840 --> 0:15:56.360 in the in the modern world where I think the 0:15:56.400 --> 0:15:59.080 population is declining, I think the people are getting older. Well, 0:15:59.120 --> 0:16:01.320 we were talking about earlier is more. There's an eighty 0:16:01.360 --> 0:16:03.360 four trillion dollars of a wealth that's going to be 0:16:03.360 --> 0:16:05.960 transferred from the baby boomers towards the next two generations. 0:16:06.000 --> 0:16:08.680 It's going to happen over the next twenty years. And 0:16:10.000 --> 0:16:12.680 the question is how does it happen? What is this 0:16:12.760 --> 0:16:13.360 next generation? 0:16:13.600 --> 0:16:14.240 Like, what are they? 0:16:14.280 --> 0:16:17.040 What are the what are their intentions? I think I 0:16:17.080 --> 0:16:20.680 think the the generation that generated the wealth after World 0:16:20.720 --> 0:16:24.120 War two, through through housing and through the stock market. 0:16:24.480 --> 0:16:27.560 I mean, their their intention was clear. They were trying 0:16:27.600 --> 0:16:29.560 to generate wealth and have a good cost of living 0:16:29.600 --> 0:16:31.360 and stuff like that. I think the next generation, I 0:16:31.360 --> 0:16:33.360 think is more idealistic, and they do want to help 0:16:33.840 --> 0:16:38.680 solve income inequality, they want to help solve climate impact ESG. Stuff. 0:16:39.200 --> 0:16:41.080 I think the danger with that is the fact that 0:16:41.120 --> 0:16:43.640 if you're not focused on one goal and you have 0:16:43.720 --> 0:16:47.120 conditional goals where this is the best investment relative to climate, 0:16:47.480 --> 0:16:49.880 it's it gets hard to measure how you're actually performing. 0:16:49.960 --> 0:16:52.440 And as a psychologist, we really wanted to make keep 0:16:52.480 --> 0:16:54.560 things simple. We want to have one goal. You can 0:16:54.640 --> 0:16:56.400 have another goal for a different part of your business, 0:16:56.480 --> 0:16:58.440 like say at the foundation, but to combine the two 0:16:58.480 --> 0:17:01.200 into one, I think you really never know how you're doing. 0:17:01.960 --> 0:17:05.080 So from an investment perspective, do you have that in 0:17:05.119 --> 0:17:06.240 your back in your mind? 0:17:06.640 --> 0:17:06.880 ESG. 0:17:07.200 --> 0:17:09.840 And let's not even use those letters because they become toxic. 0:17:09.880 --> 0:17:12.600 I guess it's just just is that part of your 0:17:12.640 --> 0:17:15.600 investment outlook, or you're just there focus on generating the 0:17:15.640 --> 0:17:17.000 best returns for your client. 0:17:17.840 --> 0:17:20.080 We're here to generate returns. And then we have another side, 0:17:20.160 --> 0:17:22.600 the foundation side that does all the charitable stuff. So 0:17:22.680 --> 0:17:24.600 we have two distinct goals and two separate parts of 0:17:24.640 --> 0:17:26.600 our businesses, but we try not to combine the two 0:17:26.680 --> 0:17:27.160 into one. 0:17:28.680 --> 0:17:31.879 Then I guess the question then becomes, how do you 0:17:31.920 --> 0:17:34.840 think of, say the deglobalization part, because you get the 0:17:34.880 --> 0:17:37.440 transfer of wealth. Yes, and we're also going to be 0:17:37.480 --> 0:17:40.400 in an entirely different few decades now as we were 0:17:40.440 --> 0:17:42.760 since like the Industrial revolution, kind of how do you 0:17:42.760 --> 0:17:43.360 think about that? 0:17:44.119 --> 0:17:47.360 I think the world is going in a very bad direction. 0:17:47.440 --> 0:17:50.040 I think if you read Destined for War, you're talking 0:17:50.040 --> 0:17:52.520 about the changes of economic powers. Every time one and 0:17:52.560 --> 0:17:55.160 two changes powered, there is some kind of war, whether 0:17:55.200 --> 0:17:56.680 it be a kinetic war or not. I don't think 0:17:56.680 --> 0:17:59.359 it's going to be the I think we are in 0:17:59.400 --> 0:18:01.679 a cyber war. We are in a tech war. I 0:18:01.680 --> 0:18:04.800 think between China and Russia, North Korea and Iran, they're 0:18:04.800 --> 0:18:06.480 gonna have their own tech stack and the US is 0:18:06.520 --> 0:18:08.240 gonna have our own tech stack with our own allies. 0:18:08.280 --> 0:18:11.040 So there's gonna be two distinct tech stacks are gonna 0:18:11.040 --> 0:18:14.879 be generated from each of these groups of nations. But 0:18:14.920 --> 0:18:16.479 I don't think we're going to share stuff. If you're 0:18:16.520 --> 0:18:18.840 reading the book of How the World Ends, they talk 0:18:18.880 --> 0:18:21.439 about all the cyber stuff, but it is scary the 0:18:21.440 --> 0:18:24.120 stuff that they can do. So I think ultimately that's 0:18:24.160 --> 0:18:25.879 where we're going. And as a result, I think the 0:18:26.000 --> 0:18:29.080 globalization is going to happen. That is going to be inflationary. However, 0:18:29.080 --> 0:18:31.639 that's going to go against AI, which is going to 0:18:31.720 --> 0:18:32.919 be very disinflationary too. 0:18:33.080 --> 0:18:34.840 Because we grew up in a general I'm gonna say 0:18:34.840 --> 0:18:38.480 the last at least a generation was all about globalization 0:18:38.680 --> 0:18:44.320 bringing barriers down out sign and then I know that 0:18:44.400 --> 0:18:48.040 turned maybe four or five, six, seven years ago. Is 0:18:48.080 --> 0:18:48.960 globalization dead? 0:18:49.000 --> 0:18:49.360 Do you think? 0:18:49.600 --> 0:18:51.679 I don't know if it's dead. It just made me 0:18:51.720 --> 0:18:55.080 more compartmentalized within each country's allies and stuff like that. 0:18:55.119 --> 0:18:56.680 It's just but I don't think it's going to be 0:18:56.680 --> 0:18:59.560 as global as it was before because China wasn't a threat, 0:18:59.640 --> 0:19:02.639 nor were the power economic power we were trying to 0:19:02.720 --> 0:19:05.240 I can convince him to come towards the US type 0:19:05.240 --> 0:19:07.879 of you know, type big Colombian market, but they're not 0:19:07.920 --> 0:19:09.840 going to head in that direction. So I think the 0:19:09.880 --> 0:19:12.160 world is changing right now and it's gonna be really 0:19:12.160 --> 0:19:13.480