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Speaker 1: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. Well,
Speaker 1: it was the first full trading week of twenty twenty six,
Speaker 1: A lot already happening, from geopolitical shockwaves in the Americas
Speaker 1: following the US removal of Venezuela's president Nicholas Maduro one
Speaker 1: week ago, to the reveal this past week of the
Speaker 1: latest and greatest gadgets and trends at CES in Las Vegas,
Speaker 1: and then Tim, we can't forget, Like it was almost
Speaker 1: hard to keep up the news from President Trump, coming
Speaker 1: largely in the way of social media, that he would
Speaker 1: move to ban institutional investors from buying single family homes
Speaker 1: as part of a push to address housing affordability. He
Speaker 1: also had some thoughts about the defense sector.
Speaker 3: Yeah, we also don't forget this the final jobs report
Speaker 3: of twenty twenty five. Those December numbers coming in too.
Speaker 3: Wrapped up the week with the Supreme Court not weighing
Speaker 3: in on the legality of President Donald Trump's tariffs. The
Speaker 3: next opinion day for a potential ruling is this coming Wednesday.
Speaker 3: For all the latest out on over to the Bloomberg
Speaker 3: Terminal or Bloomberg dot com as these stories continue to unfold,
Speaker 3: as we put these weekends interviews to bed.
Speaker 1: All right, So this hour we're going to dig into
Speaker 1: the ramifications for Venezuela and its oil reserves after the
Speaker 1: surprise US capture of Venezuela's former president now former President
Speaker 1: Nicholas Maduro. We get into President Donald Trump's emerging new World.
Speaker 3: Order, plus connecting the dots on the bigger picture, a
Speaker 3: world in need of more energy with the CEO of
Speaker 3: Honeywell Process Technology.
Speaker 1: All of that to come. We begin, though, with that
Speaker 1: fall out from last weekend US raid in Venezuela and
Speaker 1: the capture of President Nicholas Maduro and his wife.
Speaker 3: Eric Shatzker is editorial director of Bloomberg New Economy. He
Speaker 3: was one of the few to interview Maduro at Mirafulla's palace.
Speaker 3: That was back in twenty twenty one. He joined us
Speaker 3: to discuss former Venezuelan President Maduro's journey from palace to
Speaker 3: a Brooklyn jail and what's next for the country.
Speaker 4: People who've been watching Venezuela for decades, much longer than
Speaker 4: I didn't see this coming. What we knew over the
Speaker 4: past several weeks and months is that the Trump administration
Speaker 4: had been putting an increasing amount of pressure on Venezuela
Speaker 4: and that there was going to have to be some
Speaker 4: kind of a crystallizing moment, but that it was going
Speaker 4: to come in the form of US helicopters staging a raid,
Speaker 4: an attack on Caracas and seizing Madudu. I think was
Speaker 4: beyond most people's imagination. From all I could tell, it
Speaker 4: was a possibility that Maduda himself hadn't fathomed. Well, what
Speaker 4: was it?
Speaker 3: What you mentioned there had to be a crystallization or
Speaker 3: a crystallizing moment. What were some other scenarios or possibilities
Speaker 3: that you know three or four weeks ago looked more
Speaker 3: realistic than this.
Speaker 4: Air strikes for example.
Speaker 3: That would bring him from power. Well, ultimately unclear.
Speaker 4: It wasn't clear. The Trump administration in its first guys,
Speaker 4: Trump one point zero tried to affect regime change through
Speaker 4: economic sanctions, and so the idea of regime change being
Speaker 4: back on the menu wasn't at all surprising. How they
Speaker 4: were going to affect it was unclear. It's at least
Speaker 4: seemed to me at the time like asphyxiation was economic
Speaker 4: asphyxiation was the method that they were using. Once they
Speaker 4: moved you know, US aircraft carriers you know, and other
Speaker 4: craft into the Caribbean and started boarding oil tankers and
Speaker 4: chasing others away, it seemed it seemed like the plan
Speaker 4: was to just deprive Venezuela of any external revenue, which is,
Speaker 4: for all intents and purposes, the only revenue that matters
Speaker 4: to the Venezuelan economy, and that what would happen next, Well,
Speaker 4: there would very quickly be an economic crisis in Venezuela
Speaker 4: and a popular uprising, and maybe that's what would foment
Speaker 4: some kind of a regime change that would have taken
Speaker 4: it the very least weeks, if not months, to unfold.
Speaker 4: And who knows why at the end of the day,
Speaker 4: the Trump administration chose to go with the ray. They
Speaker 4: are all kinds of theories, right, about, you know, everything
Speaker 4: ranging from somewhat more obviously try and get control of
Speaker 4: Venezuela's oil reserves, to something along the lines of needing
Speaker 4: to box out the Chinese and the Russians and the
Speaker 4: Iranians who had increasingly been getting involved in Venezuelan critical
Speaker 4: mineral extraction and manufacturing. And as I say, there there
Speaker 4: are there's a wide range of theories. I'm in no
Speaker 4: position to attach any credibility to any of them.
Speaker 1: Well, what I want to think about is what's the
Speaker 1: future of Venezuela going forward. And I'm just thinking about
Speaker 1: you know, when you did speak to President Maduro and
Speaker 1: that's what now four and a half years ago, and
Speaker 1: he at that time was looking to rebuild the nation's
Speaker 1: oil industry. He wanted to normalize US relations. How does
Speaker 1: Venezuela get on the path to long term prosperity in
Speaker 1: your view? And what's that stick because it sounds like
Speaker 1: it's still going to be pretty.
Speaker 4: The foremost, it needs a government. Doesn't really have a
Speaker 4: government right now. We have an interim president in the
Speaker 4: form of Delsi Rodriguez, who was Madudo's vice president. They're
Speaker 4: going to have to constitute some kind of at the
Speaker 4: very least caretaker administration. The idea it seems sort of
Speaker 4: preposterous that they would leave the same regime in place,
Speaker 4: just without its figurehead in the form of Maduro. And
Speaker 4: let's not forget that that administration is populated in no
Speaker 4: small part by Chavista hardliners. You know, these are people
Speaker 4: whom the US would classify as communists. I'm not surprised
Speaker 4: for the time being that they've left this government in
Speaker 4: place because Venezuela's institutions, such as they are, aren't ready
Speaker 4: for a democratic administration. So for those who wonder why
Speaker 4: Gonzalez or Mario Corino Machado aren't actually you know, haven't
Speaker 4: been named president of Venezuela, that's at least one good
Speaker 4: reason for that. But eventually, whether it's to pass a
Speaker 4: series of or enact a series of policies that are
Speaker 4: going to help to revive the Venezuelan economy, to restart
Speaker 4: the oil industry, they're going to have to have and
Speaker 4: then subsequently restructure the debt, they're going to have to
Speaker 4: have some form of legitimate government.
Speaker 3: The National Assembly inaugurated Delci Rodriguez Az president. You actually
Speaker 3: spoke to her as well, I did, I did. What
Speaker 3: were your impressions of her.
Speaker 4: She's a very capable individual, very articulate, seemingly whip smart,
Speaker 4: and most importantly, I think she demonstrated this. It's more
Speaker 4: important to talk about what she did than what she said.
Speaker 4: She demonstrated her pragmatism. She's the architect of the economic
Speaker 4: policies that helped Venezuela climb out of the ditch that
Speaker 4: it was in in twenty eighteen. We all remember the
Speaker 4: footage of those empty shelves in Venezuela at the time.
Speaker 4: By the time I got Takarakas in twenty twenty one,
Speaker 4: I wouldn't call it a prosperous place, but the economy
Speaker 4: had clearly come off of its lows and was actually
Speaker 4: growing at a fairly decent clip. Inflation was coming down.
Speaker 4: These are all things that Delsi Rodriguez engineered, not Ma
Speaker 4: Duo himself.
Speaker 1: I keep thinking about the role of China and all
Speaker 1: of this. Who's watching very closely? How should we be
Speaker 1: thinking about China?
Speaker 4: Well, Venezuela, both for China and for Russia and potentially
Speaker 4: for Iran and maybe even India as well. Venezuela presented
Speaker 4: a great opportunity. Here is a resource rich country in
Speaker 4: the Western hemisphere whose government was open to some kind
Speaker 4: of a deal with the United States but really wasn't
Speaker 4: interested in falling back into the American orbit, and welcomed
Speaker 4: Chinese investment, Russian investment, help from both of those countries,
Speaker 4: Iran and potentially India as well. You know, if you
Speaker 4: look at yes, the map is changing. You know, we've
Speaker 4: seen a tilt to the right in the southern Cone,
Speaker 4: and we may see elections tilt more of South America
Speaker 4: toward the right than to the left in the coming months.
Speaker 4: But that was a very useful beachhead and presented, you know,
Speaker 4: sort of in a more let's call it not quite fantastical,
Speaker 4: but imaginary way, you know, a base from which to
Speaker 4: launch operations against whether it be American or Western interests
Speaker 4: from the Western hemisphere. And so at the very very
Speaker 4: very least, by taking al Maduro and reaching some at
Speaker 4: least interim agreement with the Venezuelan government that it be
Speaker 4: under the influence of the United States, they've boxed out
Speaker 4: the Chinese. This is right, the national security strategy in action.
Speaker 1: It's just fascinating, Eric, Thank you so much. Important perspective
Speaker 1: in terms of what we've seen over the last few
Speaker 1: years in Venezuela. Eric Satsker, Editorial director of Bloomberg New Economy.
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Speaker 1: Now, all of that attention on Venezuela get us kind
Speaker 1: of thinking a lot about what really is needed to
Speaker 1: make that country economically viable long term, and also wonder
Speaker 1: if that's kind of the real goal of US action.
Speaker 1: We had a lot of questions this past week tim the.
Speaker 3: Trump administration has promised billions of investment to rebuild the
Speaker 3: country's crumbling energy infrastructure and restart exports with China, Russia,
Speaker 3: Iran and Cuba now effectively cut off from access to
Speaker 3: Venezuelan oil. For more on what the country really needs
Speaker 3: to build back its economy, we welcomed Francisco Rodriguez, Senior
Speaker 3: Research Fellow at the Center for Economics and Policy Research
Speaker 3: at the University of Denvers Corbel School of International Studies.
Speaker 5: Well, the question is what's the alternative, and what was
Speaker 5: the US willing or able to do. I mean, what
Speaker 5: we saw was the extraction of Nicolas Maduro, but not
Speaker 5: a regime change. The regime remains in place. What would
Speaker 5: have been necessary to change the regime that would have
Speaker 5: been a very different operation. The US would have had
Speaker 5: to carry out a land invasion of Venezuela, would have
Speaker 5: had to occupy the country. It would have needed to
Speaker 5: get involved in state building, and the US clearly decided
Speaker 5: not to do that. So then it has to deal
Speaker 5: with the authorities that actually have control over the territory.
Speaker 5: With the US is trying to do is to say, well,
Speaker 5: what to those authorities, what you're going to do is
Speaker 5: going to be circumscribed by the pressure that we're putting
Speaker 5: on you. Will allow you to sell your oil under
Speaker 5: certain conditions, but you have to comply with what we're
Speaker 5: asking you to do. For example, you can't sell the
Speaker 5: oil to China. You have to sell it to the US,
Speaker 5: or you have to translate it to the US in
Speaker 5: some way.
Speaker 3: Professors, it notable to you that there aren't necessarily humanitarian
Speaker 3: elements that are tied to this.
Speaker 5: There's humanitarian and democracy. I mean, there's one problem in
Speaker 5: Venezuela is that this country has undergone a massive economic collapse.
Speaker 5: It suffered a contraction of seventy one percent of its GDP,
Speaker 5: the largest ever peacetime economic contraction in world history. And
Speaker 5: this country has been under a blockade of oil exports
Speaker 5: by the US, a total blockade for approximately one month.
Speaker 5: And this country depends only on oil revenue, that's its
Speaker 5: only source of revenue to fund its economy. So we
Speaker 5: could be looking at a situation in which the economy
Speaker 5: suffers another major humanitarian crisis, another major economic crisis, and
Speaker 5: we have migration out flows, we have our food shortages,
Speaker 5: we have quite possibly a famine. Then there's another issue,
Speaker 5: which is the issue of human rights and democracy. The
Speaker 5: US government has not talked about human rights, it hasn't
Speaker 5: talked about democracy. Secretary of Rubio said, on very vague terms, well,
Speaker 5: after we stabilize the economy, where there's going to be
Speaker 5: a transition that can be done by the Venezuelan people.
Speaker 5: But this is very vague. There was an election, it
Speaker 5: was won by the opposition last year, but that doesn't
Speaker 5: seem to be part of the plans of the US
Speaker 5: government to bring this into the picture.
Speaker 1: Yeah, I guess I just do wonder is energy A
Speaker 1: focus on energy really the path forward to creating a
Speaker 1: sustainable economy in Venezuela longer term?
Speaker 5: Well, I think that right now you have to worry
Speaker 5: about the short term more than the long term. I
Speaker 5: mean the Venezulona economy.
Speaker 1: So is oil the answer short term? Because we've all
Speaker 1: talked about the.
Speaker 4: Stag it has to be.
Speaker 5: The Venezuelan economy has more than ninety percent of its
Speaker 5: exports have been oil for the last one hundred and
Speaker 5: ten years. You're not going to transform this overnight. This
Speaker 5: country is in the midst of a massive humanitarian crisis.
Speaker 5: What you have to do is recover the economy with
Speaker 5: the anchor of that economy, which is oil. Venezuela used
Speaker 5: to produce two and a half billion barrels. I'm not
Speaker 5: talking about ages ago. You're talking about twenty fifteen, before
Speaker 5: sanctions were in post. It was producing two and a
Speaker 5: half billion barrels. Now it's producing around nine hundred thousand barrels.
Speaker 5: That is the driver of the Venezuelan economy. You have
Speaker 5: to increase that oil production and that has to generate
Speaker 5: royalties and revenues for the Venezuela state, so that it
Speaker 5: can fund public spending, so that it can fund imports
Speaker 5: of basics. This is a country that does not produce
Speaker 5: enough food to feed itself. It buys that food with
Speaker 5: the revenues from oil exports. So those oil exports have
Speaker 5: to be directed primarily at making sure that Venezuela's basic
Speaker 5: needs are meant.
Speaker 1: Francisco, what actions by the US will actually help the company?
Speaker 1: Do you agree with what they've done so far is
Speaker 1: big steps forward and will put the company put the
Speaker 1: company put the country on the right path to economic viability.
Speaker 5: Well, we're not sure what they've done right now. I mean,
Speaker 5: we know that they ated the country and took out
Speaker 5: the president, but we're not sure what it is that
Speaker 5: they're doing in terms of this oil deal. The only
Speaker 5: point is that I want to make is that this
Speaker 5: money has to come back to Venezuela. This money has
Speaker 5: to be able to fund the functioning of the Venezuela
Speaker 5: and economy. Otherwise you are going to have a massive
Speaker 5: humanitarian crisis. And what's going to happen is that millions
Speaker 5: of more Venezuela's are going to show up in other
Speaker 5: countries and ultimately in US borders unless you stabilize the
Speaker 5: Venezuela economy.
Speaker 1: All right, we got to leave it there. Thank you
Speaker 1: so much, really appreciate it. Francisco Rodriguez, Senior Research Fellow
Speaker 1: at the Center for Economic and Policy Research at the
Speaker 1: Universe of Denver's School of International Studies.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 2: New York station, Just Say Alexa played Bloomberg eleven thirty
Speaker 2: during the.
Speaker 1: First full trading day after the US strikes in Venezuela.
Speaker 1: So this past Monday, we saw oil stock surge along
Speaker 1: with traditional havens like gold and US treasuries, and yet
Speaker 1: global markets and the US market really didn't come undone.
Speaker 1: It appears financial markets and investors quickly got used to
Speaker 1: President Trump's approach to military operations and US actions around
Speaker 1: the globe.
Speaker 3: And so for more on the new world order and
Speaker 3: global market reaction, we spoke to Peter Cheer, head of
Speaker 3: Macro's strategy at Academy Securities. It's a firm that includes
Speaker 3: military generals on its staff to help evaluate the impact
Speaker 3: of geopolitics and military actions on the investing landscape.
Speaker 1: It is kind of wild, Peter, considering how this year
Speaker 1: has started and the actions in Venezuela and then kind
Speaker 1: of markets to look past it. I'm just curious your
Speaker 1: view on this, and I'm curious what kind of calls
Speaker 1: you were getting from either clients at your firm.
Speaker 6: At Academy, we work with thirty retired generals and admirals,
Speaker 6: So yeah, I think I think the market who's actually
Speaker 6: do make sense though, I think this is the start of
Speaker 6: the year stuff, so I'm not surprised that we're kind
Speaker 6: of rallying away from that. I think on Venezuela, it
Speaker 6: was a very impressive military operation, whatever else you want
Speaker 6: to think about it, it was very successful, incredibly fast,
Speaker 6: you know, this very precision. Now, I think we're not
Speaker 6: going to see a lot on oil energy prices. I
Speaker 6: think there's a lot of building out and what I
Speaker 6: think this is going to really you know, this is
Speaker 6: a quick fix. None of this is a quick fix.
Speaker 6: And I think what this is really going to boil
Speaker 6: down to is this is our first real confrontation with
Speaker 6: China away from either's kind of sphere of influence.
Speaker 3: Right.
Speaker 6: If you think about all the trade negotiation was mainland
Speaker 6: China versus US. You know, there were some tariffs, but
Speaker 6: all of a sudden, we're going and saying we're going
Speaker 6: to take stuff. China's invested a lot of money there,
Speaker 6: China has a lot of loans to companies. How is
Speaker 6: that friction going to play out? China's going to use
Speaker 6: their lawyers to try and stop things. I think this
Speaker 6: is really important too for China because if they kind
Speaker 6: of get pushed out of Venezuela very easily and they
Speaker 6: lose money, the rest of the world where they put
Speaker 6: out their Belt and Road initiative starts looking at that
Speaker 6: and it could be a big role on effects. So
Speaker 6: I think we're going to see friction. I honestly think
Speaker 6: we're going to see China first attack with lawyers, and
Speaker 6: they won't attack anything until they start seeing what we're
Speaker 6: actually doing. So far has just spent a lot of
Speaker 6: talk and noise.
Speaker 3: Greenland has become more of a story. Where does that
Speaker 3: strategy fit in?
Speaker 6: That One's a hard one for us. I think when
Speaker 6: we look at the world, when we kind of view Iran.
Speaker 6: We could see maybe doing something the IRGC. I don't
Speaker 6: think we would do anything with the religious side of
Speaker 6: Iran in any way shape.
Speaker 3: Or for what you said, do something, What do you mean, maybe.
Speaker 6: With support, you know, to attack some of the irg's
Speaker 6: facilities or something if the IRGC gets very aggresive against
Speaker 6: the protesters. I could see something. On Cuba seems a
Speaker 6: little bit more easier to deal with. We already have
Speaker 6: the uss Ford is in the Caribbean Sea. It's actually
Speaker 6: not a very efficient place for it to be. It's
Speaker 6: too small of an area for an aircraft carrier group,
Speaker 6: and it's due for some refitting and remodeling. So I
Speaker 6: think we will try and use it as much as possible.
Speaker 6: So that's why we weren't surprised about action in Venezuela.
Speaker 6: I think we could see activity in around Panama Canal
Speaker 6: where we try and either buy it or invest in it.
Speaker 3: Is that for a China proxy.
Speaker 6: I think for a China proxy, And again I think
Speaker 6: we really want to control shipping through central South America
Speaker 6: and the Panama Canal is a big part of that.
Speaker 6: And don't forget Marco Ruby is the first place he
Speaker 6: went on Greenland. I think we all struggle with why
Speaker 6: this term annex or take keeps coming up. I think
Speaker 6: that's a struggle.
Speaker 3: So to recap Panama, Venezuela, Cuba, Iran makes sense, Greenland
Speaker 3: not so much.
Speaker 6: I find it very difficult to like play why we
Speaker 6: would just wrap NATO. And again, I think we've been
Speaker 6: less thoughtful on NATO and where it's important is but
Speaker 6: this kind of puts a lot of friction. And even
Speaker 6: from a business standpoint, I think I can believe that
Speaker 6: in Venezuela there's a lot of rarest and critical minerals
Speaker 6: that have been underinvested in. I find it hard to
Speaker 6: believe someone hasn't been checking out Greenland and saying this
Speaker 6: is just economically unviable. I do know, and I think
Speaker 6: this is interesting because one of our generals is actually
Speaker 6: now the Undersecretary of War, and before he became Undersecretary
Speaker 6: of War earlier was still working with us. He did
Speaker 6: talk about and point out that China has more icebreakers
Speaker 6: than we do, and so China views themselves as an
Speaker 6: arctic nation. Russia clearly views themselves as an Arctic nation.
Speaker 6: So maybe this is coming something to do with as
Speaker 6: the polar ice caps are melting that it creates different routes,
Speaker 6: so we want some more protection there. So maybe something
Speaker 6: that makes sense. But again that all feels like it
Speaker 6: could be done within the confines of existing rules and
Speaker 6: regulations rather than having kind of this annex or take concept.
Speaker 1: Yeah, I mean, I don't know, how are you thinking
Speaker 1: about this year when it comes to the Trump White House,
Speaker 1: and especially with midterms looming. I've heard some folks say that, Listen,
Speaker 1: there's a lot of pressure on the administration to get
Speaker 1: things done early in the year because as midterms loom,
Speaker 1: there are expectations that they're might be pushback against the
Speaker 1: GOP and the Trump administration. But I'm just curious what
Speaker 1: you're telling your clients.
Speaker 6: So what we've really liked is what we've been calling
Speaker 6: prosec or production for security, and it's kind of along
Speaker 6: the lines of resilience, and that includes anything from chips, electricity,
Speaker 6: so Intel for example. I think there's gonna be huge
Speaker 6: pressure on companies to use US chip manufacturers, right, we
Speaker 6: have to break away from Taiwan. I think there's realization
Speaker 6: we're not producing enough electricity. We will deregulate, we'll get
Speaker 6: electricity in all forms running. I do think President Trump
Speaker 6: will give up on his kind of hatred of solar
Speaker 6: and adapt solar. But you're gonna see solar nuclear I do.
Speaker 3: I think it's just wind is a step too far.
Speaker 6: I think Win's a step too far.
Speaker 3: They really does not like that.
Speaker 6: He really does not like I think there's a visceral
Speaker 6: hatred to it. Partly, I think it does destroy views.
Speaker 6: I think there's questions about his efficiencies, and it does
Speaker 6: kill birds and stuff, and that seems to really bother them.
Speaker 6: So I'm not going to fight the wind.
Speaker 3: I do think on solar housecats kill a lot of
Speaker 3: birds too, truly.
Speaker 6: That is probably true. We had one that was very
Speaker 6: good at that. Yeah, So I think those are all
Speaker 6: the things that we can invest. And we just saw
Speaker 6: point seven billion going into uranium companies. So I think
Speaker 6: you can move away from the AI story and into
Speaker 6: anything that's going to be part of this building out
Speaker 6: of infrastructure. You know, you've got Cat, You've got Deer, Navistar,
Speaker 6: all the heavy equipment makers. I think we're going to
Speaker 6: see real efforts to become slightly more independent.
Speaker 1: Are all nations doing that?
Speaker 6: So how I see this starting as the US really
Speaker 6: jump started this right. The US has been all over this.
Speaker 6: I think what we're starting to see now is capital
Speaker 6: is going to follow next, So investors are starting to
Speaker 6: follow this. We talk to private equity companies who are
Speaker 6: starting to scour the universe for Hey, who's got mining
Speaker 6: rights that have been unused, who's got some interesting patents?
Speaker 6: And around these rarest and critical minerals, I think you're
Speaker 6: going to see again these huge buildouts, potentially in electricity production.
Speaker 6: So it's capital localization dead well. I think other countries
Speaker 6: are going to figure this out eventually, that they have
Speaker 6: to do it. I think at some point Europe's going
Speaker 6: to release like Shell and BP to actually do what
Speaker 6: they're phenomenally good at. And so far there's still constraints,
Speaker 6: but I think everyone's adopting this. I think you have
Speaker 6: to look much closer when you're thinking about supply chains.
Speaker 3: Domestic political risk of this new world order. That's something
Speaker 3: I've been thinking a lot about, especially in an election year,
Speaker 3: because we thought that that the Make America Great Again
Speaker 3: movement was really about keeping within the US's borders, not
Speaker 3: getting involved in foreign wars. The President has talked about
Speaker 3: leaving countries outside of the US alone, and that's not
Speaker 3: really what we've gotten in the last few months.
Speaker 6: No, though, I will say I think if prior to
Speaker 6: you know, Liberation Day and stuff, I think there was
Speaker 6: a lot of hope that we'd work very closely with
Speaker 6: Canada because Canada has a lot of things that we
Speaker 6: need that would be a big part of this. We
Speaker 6: work closer with Mexico, and we kind of got away
Speaker 6: from that, So I think this starts. Maybe it's just
Speaker 6: trying to reshape how these relationships work. Ultimately, I think
Speaker 6: we're going to need things like podash, We're going to
Speaker 6: need to work with Canada. But I do think you know,
Speaker 6: they laid it out of the National Security Strategy and
Speaker 6: it's only three nine pages of double space. It's even
Speaker 6: I could read it. So I would recommend reading it
Speaker 6: because I think it does form this way. Yeah, we've
Speaker 6: been telling corporations for years now, and I think now
Speaker 6: we're getting a lot of incoming calls.
Speaker 3: Like we've been.
Speaker 6: Saying, if you are manufacturing in Thailand and Vietnam, you're
Speaker 6: not really disverse because you're going through the same shipping lanes.
Speaker 6: So I think you've got to be very careful about shipping.
Speaker 6: If you're looking at building a new plant this year,
Speaker 6: I think you want to build it in North, South America,
Speaker 6: or Central America or the US precisely because that's where
Speaker 6: we have a lot more control. So I think that's
Speaker 6: where corporations follow into this. And I don't want to
Speaker 6: say it's going to be us by ourselves. What I've
Speaker 6: been trying to say is I think for every single
Speaker 6: commodity or product, every country is going to have an
Speaker 6: X amount that they want to do themselves so they
Speaker 6: can be sufficient. Why you can do with your close neighbors,
Speaker 6: and then Z or Z you just do on the
Speaker 6: open market. And I think that's going to vary by
Speaker 6: country to country what they can do. But I think
Speaker 6: Europe's behind on this.
Speaker 3: I think the.
Speaker 6: Sad thing is if I look at what we need
Speaker 6: to do in the US, you have a pretty good
Speaker 6: road map. Just look at China's done for the last
Speaker 6: ten years, right, They've basically done prosec on steroids, and
Speaker 6: we're just starting to do it. But it's exciting and
Speaker 6: I think some of it will last past an election cycle.
Speaker 6: Because Biden did do the Chips Act, right, so Whiden
Speaker 6: was not immune to like understanding we.
Speaker 1: Did a lot of President Trump in his first term
Speaker 1: is China strategy.
Speaker 6: Right, So I think this is now truly going to
Speaker 6: replace ESG as a major policy tool, as a major
Speaker 6: way corporations think and how investors think. Right, if everything
Speaker 6: was ESG, I think where we were really is if
Speaker 6: you think about Masso's hierarchy of needs one probably you
Speaker 6: know psych one on one, it proves I took it.
Speaker 6: But we were kind of at this kind of high
Speaker 6: self actualization period, like what would we like sustainability look like.
Speaker 6: But it was all based on the premise that we
Speaker 6: had the basics covered. We really have the basics covered
Speaker 6: if we're dependent on China for those basics. So I
Speaker 6: think this is a pullback to say, to be truly
Speaker 6: sustainable and independent and resilient, you need to do some
Speaker 6: core level of this self yourself. And that's where I
Speaker 6: think we are. It's that evolution.
Speaker 1: What are the implications of that in terms of cost
Speaker 1: to society, in terms of does it make things more
Speaker 1: expensive if we're doing more manufacturing in the United States, Well,
Speaker 1: labor isn't cheap here, so I'm just curious what are
Speaker 1: the implications What does it mean for economic growth? Maybe
Speaker 1: in the United States.
Speaker 6: So I think it's going to be potentially a little
Speaker 6: bit higher on some prices. So it's very good that
Speaker 6: oil and some of these energy costs are coming down
Speaker 6: that will help on this. At the flip side of that, though,
Speaker 6: is if people can go back to working for you know,
Speaker 6: I hate to say the word about say it like
Speaker 6: national champions right where you feel that your industry, your
Speaker 6: job is important to the country, you probably go home
Speaker 6: feeling slightly safer about your job. I think there's a
Speaker 6: lot of benefits from this we've been talking about. The
Speaker 6: Spider Marks is great. He kind of coined the phrase
Speaker 6: for us by the spider marks general spider marks. He's
Speaker 6: quite awesome, but he coined the phrase. We're in a
Speaker 6: pre war environment, and we've always been in a post
Speaker 6: war environment until recently. And I think pre war sounds
Speaker 6: a little bit scary, but it's just like deterrence. If
Speaker 6: you understand that you're in a pre war and you
Speaker 6: do the preparation properly, you deter the enemy. And I
Speaker 6: think the things that to me are really crucial about
Speaker 6: a pre war is it creates a sense of urgency
Speaker 6: which we're seeing and self sacrifice.
Speaker 3: We're speaking with Peter Cheer, head of macro strategy at
Speaker 3: Academy Securities. He joins us here in the Bloomberg Interactive
Speaker 3: Broker's studio. Peter, you mentioned a few We went through
Speaker 3: a little bit around the globe and we talked about Iran,
Speaker 3: We talked about Venezuela, We talked about Greenland, Cuba, Panama.
Speaker 3: What about Mexico and what about Columbia. Have they been
Speaker 3: put on notice?
Speaker 6: I think Colombia has been put on notice. I've been
Speaker 6: much more focused on Mexico. So one of the things
Speaker 6: that we believe to some degree is we've been changing
Speaker 6: the rules of engagement with Venezuela. Right, if you go
Speaker 6: back four months ago, who would have thought we would
Speaker 6: shoot a drug boat? We're now doing that. I think
Speaker 6: the world would have gone ballistic if we did that
Speaker 6: in the Gulf of Mexico or Golf of America. Now
Speaker 6: though it's now standard operating procedure. Right, we've attacked some
Speaker 6: of the drug facilities. I suspect that somewhere in Q one,
Speaker 6: Q two, late Q one orly Q two we approach
Speaker 6: Mexico very serious in Tellson, but I'm like, we can
Speaker 6: work with you to get rid of your cartels, or
Speaker 6: we can get rid of the your cartels without you.
Speaker 6: And to me, the one thing we haven't talked to
Speaker 6: I know we've been talking about so much oil. If
Speaker 6: we can solve Venezuela's drug problem and cartel problem and Mexico,
Speaker 6: it makes both of those countries safer, more viable countries,
Speaker 6: Fewer people need to migrate all of those distries. So
Speaker 6: I think it fits perfectly.
Speaker 1: But then in terms of drugs, maybe I'm crazy here
Speaker 1: and I know we've only got about forty seconds left here.
Speaker 1: What about China and fentanyl? Like, have we covered that?
Speaker 1: If we're talking about narco terrorists? I think I might say,
Speaker 1: wait a minute.
Speaker 6: I'm looking at this more from the ability to kind
Speaker 6: of make those countries safer, where you have some ability
Speaker 6: to influence it so that people don't want to leave.
Speaker 6: A lot of people you talk to people for coming
Speaker 6: from Mexico, their choice is letter sob Yeah, you either
Speaker 6: fight the cartel and die or you join.
Speaker 1: The cart Venezuela eight million people or something.
Speaker 6: So I think if you can do that, and on
Speaker 6: top of that, if you cut the head off the snake,
Speaker 6: maybe the drug cartels and their activities in the US
Speaker 6: do slow down.
Speaker 1: So are you positive about the year?
Speaker 6: Are you upbeat? I am? Actually I'm very positive. I
Speaker 6: think again, this buildout's going to be very interesting. The
Speaker 6: biggest risk to me is China threatening and doing something
Speaker 6: about rarest and critical minerals because we're not there yet
Speaker 6: where we need to be.
Speaker 1: Ten seconds, if President Trump wasn't in the White House
Speaker 1: again for a second term, will we be having this conversation.
Speaker 6: No. I think he actually really kind of planned ahead
Speaker 6: of this though some of it. I think we would
Speaker 6: have finally seen because we've been talking about rarest critical
Speaker 6: minerals for years and years. We're finally realizing the Chips
Speaker 6: Act realize.
Speaker 4: Some of this. This is what progression.
Speaker 6: How we're doing it is just stronger and more aggressive.
Speaker 1: Such a great conversation. Peter Cheer over at Macro Strategy
Speaker 1: and Academy Securities.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch US
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch US live on YouTube.
Speaker 1: Energy markets oil specifically in focus this past week because
Speaker 1: of US actions on Venezuela culminating, as you know, in
Speaker 1: the removal of now former president Nicholas Maduro. That all
Speaker 1: just happening one week ago. Now, the US did say
Speaker 1: throughout the week it would take control of oil from
Speaker 1: that country indefinitely and also split up the proceeds between
Speaker 1: the two countries.
Speaker 3: It also feels like we're talking a lot about energy
Speaker 3: demand again, both supply and demand actually generally, and against
Speaker 3: the backdrop of AI and the build of global data centers.
Speaker 3: So oil is one part of the conversation, Carol, certainly,
Speaker 3: and it's obviously an increasingly important part of the conversation
Speaker 3: given what happened in Venezuela last weekend and what's going
Speaker 3: to happen moving forward. But the question about demand moving forward,
Speaker 3: not just for oil but for energy also on our minds.
Speaker 1: It's such a big part of what we've been talking about.
Speaker 1: And on that last month, Trump Media and Technology Group,
Speaker 1: the company behind True Social, announced a merger with Tae Technology.
Speaker 1: It's a fusion developer with plans to build the world's
Speaker 1: first utility scale fusion power plant. This is all largely
Speaker 1: related to the power grab when it comes to the
Speaker 1: buildout of AI and those necessary data centers.
Speaker 3: Someone with thoughts on the energy markets. Ken West. He's
Speaker 3: president and CEO of Honeywell Process Technology. It's formally known
Speaker 3: as Honeywell Energy and Sustainability Solutions. We should note that
Speaker 3: conversation we had with Ken that was last month before
Speaker 3: the US takeover of Venezuelan Oil.
Speaker 7: So at Honeywell, we're continuing to focus on the evolution
Speaker 7: of energy and how we can provide end in solutions
Speaker 7: for our customers. In Energy and Sustainability Solutions, we bring
Speaker 7: more than one hundred years of technology across the decades
Speaker 7: of development in determining how we can help solve those
Speaker 7: world's problems, from originally processing some of the first gasoline,
Speaker 7: to developing unleaded gasoling and now today developing some of
Speaker 7: the the new renewable fuels that are providing sustainable and
Speaker 7: affordable options for energy expansion for tomorrow.
Speaker 3: You know, we look at and we talk about this
Speaker 3: each and every day. But the challenges that we're seeing,
Speaker 3: at least with energy production and demand here in the
Speaker 3: United States and the grid certainly not being able to
Speaker 3: keep up. Where is the bottleneck? From where you sit,
Speaker 3: You know, to take a.
Speaker 7: Look and first You're absolutely right. The need on energy
Speaker 7: is greater today than it has ever been, and as
Speaker 7: we look out into the long term, we see the
Speaker 7: need just continuing to grow. You know, many forecasts would
Speaker 7: put it at anywhere from twenty to forty percent growth
Speaker 7: over the next twenty years or so out to twenty fifty.
Speaker 7: When we take a look at that bottleneck, it really
Speaker 7: is and being able to develop the infrastructure behind the
Speaker 7: scenes that can produce that power. And so one of
Speaker 7: the first areas that we address that challenge is really inefficiencies,
Speaker 7: and we really come together at the intersection of the
Speaker 7: technology needed to produce power and then digital and optimization
Speaker 7: capabilities with Honeywell Forge that we use to provide sustainable
Speaker 7: and reliable solutions that allow those refineries to produce even
Speaker 7: more power than they did before. So if you take
Speaker 7: case in point a refinery that we are able to
Speaker 7: help become five percent more efficient, do that across twenty refineries.
Speaker 7: We've created a refinery without having to put any brick
Speaker 7: and mortar into the ground.
Speaker 4: Yeah, is that?
Speaker 1: I feel like that's you know, ken the next focal point, right,
Speaker 1: we went, especially when it comes to the AI build out,
Speaker 1: we went to you know, chips, the chip play and
Speaker 1: the data center play, and then it was all of
Speaker 1: a sudden like the power demands and building that out.
Speaker 1: But now I think, whether it's chips, whether it's power centers,
Speaker 1: we're thinking about how to make all of this much
Speaker 1: more productive because that will help everybody meet the energy demand.
Speaker 6: It truly is.
Speaker 7: It both meets the near term and long term energy
Speaker 7: demand and also does it in a way that's economically viable,
Speaker 7: which is just as important as coming up with a solution.
Speaker 7: So one of the airways that we're able to do
Speaker 7: that is by able to connecting to our plants. And
Speaker 7: when we create a connected plant, we're bringing in billions
Speaker 7: of data points every day, and we're connected today to
Speaker 7: more than one thousand process units around the world. And
Speaker 7: we take those billions of data points and we can
Speaker 7: provide predictive potential solutions for those customers to improve reliability
Speaker 7: for tomorrow and to augment their workforce. As I travel
Speaker 7: around the world, one of the things that I clearly
Speaker 7: hear from all of our customers is a challenge in
Speaker 7: getting experienced workforce there to operate these facilities.
Speaker 8: We're able to.
Speaker 7: Take our connected plant solutions that run on Honeywell Forge
Speaker 7: and augment that existing workforce. So we can take a
Speaker 7: control room operator that may have a few years of
Speaker 7: experience that provide them the capabilities of a control room
Speaker 7: operator that may have had forty years of experience. That
Speaker 7: in itself allows our customers to become more efficient and
Speaker 7: continues to improve both reliability and safety of the expansion
Speaker 7: of energy.
Speaker 3: What's the payout that your sales folks have calculated here
Speaker 3: investing in this solution upfront and then the efficiencies that
Speaker 3: it creates, how long does it take to pay for itself?
Speaker 7: Many of these solutions are very fast paybacks. In fact,
Speaker 7: we have had opportunities where we can save millions of
Speaker 7: dollars in operating cost and energy costs that are going
Speaker 7: into a refinery for a very small fee that goes
Speaker 7: into our connected and engineering services. I've seen some of
Speaker 7: these be anywhere from less than a year to just
Speaker 7: a couple of years of payback. It's some of the
Speaker 7: projects that we've provided for our customers. I'll give you
Speaker 7: a perfect example. One of the things that we've been
Speaker 7: able to do. We provide catalysts to refineries and petrochemical plants.
Speaker 7: These are key in making the chemical reaction that actually
Speaker 7: produces the induced product. When you take a look at
Speaker 7: these catalysts, they degrade over time and need to be replaced.
Speaker 7: In the past, you used to have to take a
Speaker 7: sample of the catalyst from the refinery send it to
Speaker 7: our labs in Chicago. We would do microscopy on those
Speaker 7: samples to determine the color, the size, how much gradation
Speaker 7: has happened. Today, we can do this with a digital
Speaker 7: image right on the plant. We can get an image
Speaker 7: every day and let that refinery know exactly the right
Speaker 7: day to change that catalyst over so that they can
Speaker 7: maintain reliable operations.
Speaker 1: All right, That totally makes sense. The more deity of
Speaker 1: coming at you in real time. We talked about that
Speaker 1: with economic data. Hey, one of the things I wanted
Speaker 1: to ask you, Ken, Tim and I spoke with Neil
Speaker 1: Chatterjee yesterday, chief of Governmental Affairs at Palmetto, former commission
Speaker 1: and chairman Commissioner, i should say, and chairman of the
Speaker 1: AFIRK Federal Energy Regulatory Commission. He was during President Trump's
Speaker 1: term and then it carried over a little bit into
Speaker 1: President Biden's term. We talked though about the energy mix
Speaker 1: that's going to be needed for AI data centers, for
Speaker 1: increased manufacturing coming back to the US. But it's also
Speaker 1: this is a global story. What's the energy mix that
Speaker 1: you guys are planning for, And I'm curious when it
Speaker 1: comes to carbon based fuels, when it comes to win,
Speaker 1: when it comes to solar, maybe coal, fusion, fission, nuclear, like,
Speaker 1: help me understand what you see as the dominant energy
Speaker 1: mix going forward, because you guys have to provide the
Speaker 1: tools to meet all of those different industries potentially.
Speaker 7: No, you're absolutely right. One thing is clear and that
Speaker 7: the world needs more at energy and aggregate and what
Speaker 7: we believe is that it's going to take a number
Speaker 7: of different potential options to be able to meet that
Speaker 7: overall demand. So we're really focused in three areas. First,
Speaker 7: we're focused on the optimization of the existing infrastructure that's
Speaker 7: there so that we can make the existing infrastructure more efficient.
Speaker 7: Second is that we see a number of transition fuels
Speaker 7: that are helping bridge that gap that we need in
Speaker 7: both the near term and long term, and LNG becomes
Speaker 7: one of those liquefied natural gas and in fact, we've
Speaker 7: put a significant investment with two recent acquisitions, one for
Speaker 7: the liquefaction process unit that we purchased from Air Products,
Speaker 7: and the other in a company called Sundine that does
Speaker 7: pumps and compressors that are targeted at expansions in the
Speaker 7: LNG space that are helping to drive expansions in liquefied
Speaker 7: natural gas. And then the third is to broaden the
Speaker 7: entire realm of feedstocks that are available. And this not
Speaker 7: only allows responsible and sustainable expansion, but it also allows
Speaker 7: countries that may not have access to fossil fuels to
Speaker 7: also have access to the production of power and energy.
Speaker 7: This can include anything from biomass and other renewable resources.
Speaker 7: So we see it really as being across all three
Speaker 7: and our technologies and solutions are focused at driving the
Speaker 7: entire aggregate up.
Speaker 3: Hey, Ken, just very briefly, we only have twenty seconds
Speaker 3: left with you. But geographically, the areas of opportunity for
Speaker 3: twenty twenty six and twenty twenty seven, what are they.
Speaker 7: Yeah, Well, we definitely see significant new opportunities right here
Speaker 7: in the United States and particularly in areas like the Golfer.
Speaker 7: We're seeing expansions of LNG projects. We see need for
Speaker 7: energy security, and a number of new geographies around the
Speaker 7: world where countries want to have their own access to energy.
Speaker 7: This is across areas like Sub Saharan Africa and the
Speaker 7: Middle East, and we continue to see growth in in Asia.
Speaker 7: So I would say across to our business, we really
Speaker 7: are well represented as about a third in the America,
Speaker 7: is a third in Europe, Middle Eastern Africa, and a
Speaker 7: third in Asia.
Speaker 1: Fascinating, really cool stuff. I hope I hope you'll come
Speaker 1: back because I'd love we both would love to. This
Speaker 1: is something we talk about a lot in terms of
Speaker 1: kind of our energy transition, our energy demands and needs. Ken,
Speaker 1: thank you so much. Have a great holiday season. Ken West,
Speaker 1: President and CEO of Honeywell Energy and Sustainability Solutions. As
Speaker 1: we said this is this unit's going to be renamed
Speaker 1: as Process Automation and Technology, so we'll be talking about
Speaker 1: that in.
Speaker 3: The new year.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 2: flagship New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 3: So some news back in December, the ev tallmaker Archer Aviation,
Speaker 3: announced it partnered with cities across the US to submit
Speaker 3: multiple applications to launch initial air taxi operations. The FA
Speaker 3: set to review applications submitted during this initial phase of
Speaker 3: what's called the EIPP, the ev Tall Integration Pilot Program.
Speaker 3: I'm mentioning this because it's important for a conversation with
Speaker 3: Adam Goldstein.
Speaker 1: I appreciate that, right, there's a process to all.
Speaker 3: Of this, right, Yeah, Adams the founder and CEO of
Speaker 3: Archer Aviation. It's the five point six billion dollar market
Speaker 3: cap ev tall company. He joins us from San Jose, California.
Speaker 3: You were last on with us in early November. A
Speaker 3: lot has happened since then, and I want to start
Speaker 3: with this EPP. You've mentioned in the past plans in California, Texas, Florida, Georgia,
Speaker 3: and New York, but we don't know much beyond exclusivity
Speaker 3: in Huntington Beach, so one part of California. Have any
Speaker 3: more partnerships emerged at this point?
Speaker 2: Well?
Speaker 9: The EPP program was put in place from an executive
Speaker 9: order from President Trump, which really was to ensure that
Speaker 9: America takes a leading position in this new advanced year
Speaker 9: ability space, and so as an industry, we had to
Speaker 9: submit the different cities that we wanted to launch into,
Speaker 9: and those cities are being reviewed and there's discussions being
Speaker 9: had now on where the ultimate launch will take place.
Speaker 9: It's expected that five cities will ultimately get named and
Speaker 9: then ultimately we'll start flying later this year in the
Speaker 9: summer time period. So it's not that they're new partnerships,
Speaker 9: it's we all submitted as an industry for these individual
Speaker 9: cities and we expect that to launch coming up here soon.
Speaker 3: Okay, can you talk about a little more about like
Speaker 3: partnerships that you're working on or the structure of them,
Speaker 3: what they look like, what the opportunities are.
Speaker 9: Sure you should think about this as the industries almost
Speaker 9: like a way mow moment, right. So we have to
Speaker 9: put these aircrafts in the air, get the local communities
Speaker 9: comfortable with them, prove that they're safe, prove that they're quiet,
Speaker 9: and really show that the technologies here and it's ready.
Speaker 9: That's really what this is all about. It's giving everybody
Speaker 9: comfort so we can have the community acceptance so we
Speaker 9: can really launch this thing forward. So of course we're
Speaker 9: looking at some of the biggest cities that makes sense,
Speaker 9: the New York cities, the Los Angeles, those type of cities,
Speaker 9: but also cities that are really leaned in that might
Speaker 9: have some you know, practical type of you know, a
Speaker 9: situation coming up. So, for example, the Los Angeles twenty
Speaker 9: twenty eight Olympics, where Archer was named the exclusive air
Speaker 9: taxi partner was really in our sites. And so we
Speaker 9: did that by partnering with Huntington as a way to
Speaker 9: really put us close to the area, allow us start
Speaker 9: flying it, to know that environment, that airspace really really well,
Speaker 9: start to set up all the infrastructure, and then ultimately
Speaker 9: scale as we get into and closer to the Olympics.
Speaker 1: All right, so let's talk a little bit about finances
Speaker 1: and money, because you know, we certainly like to do
Speaker 1: that kind of stuff. Talk to us. The operations are generating,
Speaker 1: from what we understand, little or no revenue. What would
Speaker 1: that mean from a cash burn point of view, because
Speaker 1: that's certainly important in terms of viability.
Speaker 9: Yeah, So if you look at the whole industry, the industry,
Speaker 9: according to pretty much any analysts, expected to be very
Speaker 9: very big. I think Morgan Stanley's probably the most bullish
Speaker 9: they had a multi trillion dollar evaluation on the industry. Now,
Speaker 9: it's different than autos in the sense that there are
Speaker 9: only a few players. Like in aviation you typically have
Speaker 9: like a Boeing in an airbus type of situation. So
Speaker 9: there's a couple of leading companies in the ebtall industry,
Speaker 9: and it's likely that there's only a few companies that
Speaker 9: ultimately end up getting to market and ultimately scale to
Speaker 9: some very very large numbers, and my guess would be
Speaker 9: larger than any one individual automaker has been excluding Tesla,
Speaker 9: which is more of a a pure AI company in
Speaker 9: my view. So you have this kind of scenario here
Speaker 9: where it's all about surviving to get through certification and
Speaker 9: then scaling into a business that's economically attractive. So that's
Speaker 9: really the goal in the game that we're playing. So
Speaker 9: we have an aircraft we've built that's become very mature,
Speaker 9: we're taking it through the certification process then ultimately going
Speaker 9: to launch it. So how are we going to launch that?
Speaker 9: We start very slowly and methodically. That's what the EPP
Speaker 9: is about. It's a slow, methodical launch, very similar to
Speaker 9: what Weaimo did was it's a slow launch into these
Speaker 9: cities gaining the acceptance. So it's really about proving those
Speaker 9: points today rather than generating revenue today. The revenue will come.
Speaker 9: There has been an overwhelming amount of inbound interest from
Speaker 9: countries all over the world that want these aircrafts there,
Speaker 9: and there's a very few OEMs that actually can deliver
Speaker 9: against that. So the focus really is about the certification side.
Speaker 1: Now, I get it. I get it, and I'm looking though,
Speaker 1: and I get it. Why you guys have a free
Speaker 1: cash flow that's negative by a lot, But I'm just
Speaker 1: I guess I'm just trying to understand from a perspective though,
Speaker 1: as everybody's jockeying for position, what is your cash burn?
Speaker 1: And just is it manageable?
Speaker 9: Sure, so Archer is in a fortunate position where you know,
Speaker 9: we finished the year with nearly two billion dollars of
Speaker 9: cash on hand, so I think the most in the industry,
Speaker 9: you know, by a long shot. We also had lower
Speaker 9: burn than our competitors. But as we've been ramping up
Speaker 9: into you know, closer to the certification production phase, you
Speaker 9: know that burn does go up as we're buildings and
Speaker 9: so we are at a very comfortable position today, but
Speaker 9: it's not something that we're sitting back and getting you know,
Speaker 9: you lazy about or getting too excited about. We are
Speaker 9: still driving every single day to make sure we can
Speaker 9: hit our timelines and actually get these aircrafts to market.
Speaker 9: So if I look at you know, the EPP starting
Speaker 9: in twenty twenty six, and then I look at the
Speaker 9: Olympics in twenty twenty eight, we'll get certified hopefully sometime
Speaker 9: in between that time period, and we have plenty of
Speaker 9: cash to last us, you know, through that time period
Speaker 9: into the commercialization phase, and then ultimately as the aircrafts
Speaker 9: are getting sold and deployed, we can start kind of
Speaker 9: reducing our cash burn and becoming I think, you know,
Speaker 9: a long term vible business.
Speaker 3: What happens if you're not certified by the Olympics.
Speaker 9: Well, we also do have an international strategy as well,
Speaker 9: and so we launched last year in Abu Dhabi. We
Speaker 9: have a great relationship with the with the UAE, two
Speaker 9: of the suffern Wealth funds, our investors in our chure,
Speaker 9: and so we have a secondary path that we're going
Speaker 9: through in certifying those aircrafts around and so it gives
Speaker 9: us a sort of an alternate as well. But then
Speaker 9: there's the other side of the business, which is the
Speaker 9: defense business. And so we announced a partnership with Androl.
Speaker 9: We've been working on new vertical lift aircraft with them,
Speaker 9: signed for defense out.
Speaker 3: This is the OMEN Autonomous air Vehicle, right.
Speaker 9: The OMEN is A is not the big aircraft that
Speaker 9: I was talking about. The OMEN is a smaller drone
Speaker 9: project that Androl has designed that we are providing the
Speaker 9: power for. We are building a new full scale vertical
Speaker 9: lift hybrid aircraft that's designed for defense applications that we
Speaker 9: do expect a program to get announced into the many,
Speaker 9: many billions of dollars, tens of billions of dollars type size.
Speaker 9: We're hopeful that can happen soon. But of course that's
Speaker 9: you know, you know, also not within our control.
Speaker 3: Hey, Adam, you've you've you made a reference earlier in
Speaker 3: our conversation to sort of the Boeing and Airbus, do you opoly?
Speaker 3: And the way those companies of course work is they
Speaker 3: sell or or you know, they sell aircraft to the airlines. Uh,
Speaker 3: and then those airlines then operate the aircraft. Are you
Speaker 3: going to be is archer going to be operating the
Speaker 3: aircraft in addition to manufacturing the aircraft, or when you
Speaker 3: say you're going to sell the aircraft, who do you
Speaker 3: sell that too?
Speaker 9: Yeah, we will focus primarily on the sales side of
Speaker 9: things for the i'll call it from you know, the
Speaker 9: early or maybe even really for the first decade, the
Speaker 9: early years of this industry. And so I think you
Speaker 9: have to earn the right to operate, meaning that is
Speaker 9: going to be a very expensive journey to operate. And
Speaker 9: so by selling the aircraft, it enables us to put
Speaker 9: you know, production through the factory, get the pricing down
Speaker 9: to something that's very affordable for us, and ultimately, over
Speaker 9: the long term, when autonomy comes, you know, we can
Speaker 9: really then think about, you know, considering, you know, scaling
Speaker 9: our own internal airline. We will of course do things
Speaker 9: very small on the airline's side of things to begin with,
Speaker 9: learn the overtime and grow that. So I really think
Speaker 9: it's it's all about sales now. The question that you
Speaker 9: asked is who do we sell that to? So there's
Speaker 9: a couple of different categories. But you can think about
Speaker 9: where vertical lift aircraft exists today, so helicopters, where they're used, hospitals, tourism,
Speaker 9: the IP is one category, and then The new category
Speaker 9: that we're going to add is really the sort of
Speaker 9: air helicopter airport transfer. So we've talked a lot about that.
Speaker 9: So think like a Manhattan to Newark, a San Jose
Speaker 9: to San Francisco.
Speaker 3: Sign me up? Maybe maybe really yeah, yeah, if this
Speaker 3: thing is approved.
Speaker 9: There's really like, if you think about it from a
Speaker 9: safety perspective, this is a significantly safer helicopter. That's the
Speaker 9: easiest way for you to think about that. And that's
Speaker 9: not an atom statement or even an archer statement.
Speaker 4: That's an FAA statement.
Speaker 9: Right. We're certifying them at very high levels of safety.
Speaker 9: So you know, from a perception, a consumer perception perspective,
Speaker 9: you know, if you were willing to take a helicopter,
Speaker 9: this is just a safer version of that. In fact,
Speaker 9: you know, be certifying that levels similar to the big
Speaker 9: commercial airliners.
Speaker 3: All right, So I have to first get ready to
Speaker 3: be willing to take a helicopter just before we let
Speaker 3: you go the cost that you would get this too
Speaker 3: once it is certified per unit? What are you thinking?
Speaker 9: So our goal is to get the cost of the
Speaker 9: aircraft down to two and a half million we sell them.
Speaker 9: That's the target price, and when you do the math
Speaker 9: and translate that through to the end user cost where
Speaker 9: the operator can make money. You get down to prices
Speaker 9: that are similar to the high end of ride share.
Speaker 9: So think like uber Black. So that's really what we're targeting,
Speaker 9: and that can be achieved through volume, of course, and
Speaker 9: so that's not going to happen year one. That's going
Speaker 9: to take several years to get there. And so we
Speaker 9: think once you sort of get across the five hundred,
Speaker 9: six hundred, seven hundred aircraft units, you can get these
Speaker 9: aircrafts to something that becomes very affordable. It even looks
Speaker 9: cheaper than ride share, and ultimately can become a mass
Speaker 9: scale product.
Speaker 1: So you're talking maybe like a ride from Midtown to
Speaker 1: LaGuardia that would cost maybe under one hundred dollars.
Speaker 9: Similar to like a ride share type of price. So
Speaker 9: if you think like Manhattan to JFK Uber Black, that
Speaker 9: probably costs you one hundred and fifty two hundred dollars,
Speaker 9: so somewhere around those type of prices.
Speaker 1: All right, looking forward to it. Good stuff, Adam, stay
Speaker 1: in touch. We love getting the updates from you. Adam Goldstein,
Speaker 1: founder and CEO of Archer Aviation, joining us.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 1: All right, Plenty of luxury and innovation on the road
Speaker 1: in twenty twenty five, but only one. Only one gets
Speaker 1: the crown and can stand out as the absolute favorite
Speaker 1: for our Bloomberg News auto columnist Hannah Elliott.
Speaker 3: Her top pic a two hundred thousand dollars Mercedes Benz Hybrid.
Speaker 3: It's a car with an eight hundred and five horsepower
Speaker 3: hybrid V eight engine, agile all wheel drive, and useful
Speaker 3: back seats. Hannah joined us from the perfect place to
Speaker 3: talk about cars, a garage in downtown LA.
Speaker 8: Yes, yes, this is.
Speaker 10: This is a garage in downtown LA and Rainy LA.
Speaker 10: And it's kind of the perfect spot to talk about cars.
Speaker 10: I have to say, I think it's perfect.
Speaker 5: So talk to us.
Speaker 1: First of all, talk to us about the year that was.
Speaker 1: I mean, you cover really that high end, that luxury space.
Speaker 1: What kind of year was it?
Speaker 8: It was for luxury cars? It was a great year.
Speaker 10: That's that's kind of the theme from twenty to twenty
Speaker 10: five the fact that we have seen luxury sales become
Speaker 10: a bigger portion of overall car sales for the year,
Speaker 10: and that means cars above fifty thousand dollars. You know,
Speaker 10: earlier this fall, the average new price of a car
Speaker 10: beat fifty thousand dollars for the first time ever, and
Speaker 10: luxury cars and electric vehicles did have something to do
Speaker 10: with that. I have to say my favorite car of
Speaker 10: the year though, was a hybrid, which is also a
Speaker 10: big theme. If we want to get into it, we
Speaker 10: can get into it. We amg AMG sixty three se Performance.
Speaker 8: Awkward name, but it's a great car.
Speaker 10: It's a hybrid, all wheel drive V eight over eight
Speaker 10: hundred horse power.
Speaker 8: I really loved it.
Speaker 10: But it also touches on the theme of the year,
Speaker 10: which is hybrids are doing really well.
Speaker 8: Surprisingly.
Speaker 1: I got to ask you, though, did you have range
Speaker 1: anxiety at all?
Speaker 8: No, not at all. That's one of the best things
Speaker 8: about the hybrid.
Speaker 10: You know, evs have, as everybody knows, you know, have
Speaker 10: slowed a little bit. We've lost incentive, et cetera, et cetera,
Speaker 10: and hybrids in particular have really filled that space and
Speaker 10: that's just the thing. You don't have range anxiety. You
Speaker 10: get all of the performance, you get better fuel efficiency,
Speaker 10: but you still get to use the car like you
Speaker 10: do quote unquote a normal car. And I think that
Speaker 10: still does matter for a lot of consumers.
Speaker 3: Not all hybrids are created equal. What's the experience driving
Speaker 3: this hybrid? I think people have the idea of a hybrid.
Speaker 3: You know, it's like at low speeds it uses the
Speaker 3: electric motor, or maybe it turns off when you get
Speaker 3: to a stoplight, that sort of thing. What's the experience
Speaker 3: driving this this hybrid?
Speaker 8: It is phenomenal. It's so it's such a fast car.
Speaker 8: It's such a powerful car.
Speaker 10: This car is faster than the Ferrari Amalfi that I
Speaker 10: drove earlier in the year. And it's this isn't anything
Speaker 10: to say against the Ferrari at all that the Ferrari
Speaker 10: is a great car too, But this Mercedes is less expensive,
Speaker 10: more powerful, faster, and it's a hybrid with better gas mileage.
Speaker 8: It's a two hundred thousand dollars car.
Speaker 10: That's a lot of money, but when you're talking about
Speaker 10: this level of performance, it's a good value. You get
Speaker 10: a lot of bank for your Buck And to answer
Speaker 10: your question, Tim, it drives incredibly, It's so fun.
Speaker 3: How does the hybrid work though? Does it? Does it
Speaker 3: work as a supplement to does the gas engine supplement?
Speaker 10: Like?
Speaker 3: How does it work exactly?
Speaker 8: Its switch it You can switch off between them. You
Speaker 8: can choose which mode you want to drive in.
Speaker 10: If you want to drive in electric only mode, you
Speaker 10: can do that. You can share electric and gas, or
Speaker 10: you can go just for gas too. If you're if
Speaker 10: the battery is done for that drive and you don't
Speaker 10: want to do it anymore, you can pick which is
Speaker 10: also great. There are lots of options. You can save
Speaker 10: the hybrid if you want and use it. You know,
Speaker 10: if you want to, like when you're leaving early in
Speaker 10: the morning and you don't want to wake your neighbors,
Speaker 10: you can stealthily leave your driveway.
Speaker 3: Quietly sneaking around.
Speaker 8: Yeah, I mean, yeah, we're not.
Speaker 10: Gonna say that, but sure it gives you options. And
Speaker 10: that's what I really love about this car.
Speaker 1: You know, you said it was a great year for
Speaker 1: the luxury market, and I always do wonder, Hannah, you know,
Speaker 1: do high end luxury car buyers do they want to
Speaker 1: have in their collection? If you will an EV or
Speaker 1: a hybrid that is, you know, that kind of matches
Speaker 1: our meets with the rest of their collection, if you will.
Speaker 10: That's a great question, and I think the jury is
Speaker 10: still out on that. We are seeing that for high
Speaker 10: end dvs, the really expensive ones, people are not buying them,
Speaker 10: and I think that's because of a combination of factors.
Speaker 10: But what we're really seeing is the hybrids are attainable, accessible,
Speaker 10: they're desirable. The high end EV's people aren't wanting as much.
Speaker 10: I just think they don't have to buy People don't
Speaker 10: have to buy them, so we're not you know, that's
Speaker 10: kind of where what it comes down to. There's so
Speaker 10: many options, and it's nice to feel a little bit
Speaker 10: virtuous about driving an electric vehicle, but let's not forget
Speaker 10: they're a little bit politically polarizing now there are lots
Speaker 10: of other factors involved, So the jury is still out,
Speaker 10: and it'll be very interested interesting to see what happens
Speaker 10: in twenty twenty six, because there's a lot of change
Speaker 10: happening and eve's at the end of the day haven't
Speaker 10: taken off as quickly as we thought they might.
Speaker 1: Yeah, interesting to see. Even in my own family, it's
Speaker 1: not an ev but it was a hybrid that somebody bought,
Speaker 1: you know, my sister and her husband. Hey, I want
Speaker 1: to ask you about kind of the ones to watch
Speaker 1: in twenty twenty six. You have another great story on
Speaker 1: the Bloomberg Hanna. You talk about some of the brands
Speaker 1: such as Tesla, Lucid and Porsche struggling in twenty twenty
Speaker 1: five for some different reasons. We talked about Tesla big
Speaker 1: time with Ross Gerber earlier. Take us through what you're
Speaker 1: kind of watching for twenty twenty six.
Speaker 10: Okay, I'm watching two brands that I'm actually very excited about,
Speaker 10: Audi and Cadillac, and I admit a big reason is
Speaker 10: because both of them are joining Formula one, which means
Speaker 10: that they are there's going to be so much hype
Speaker 10: and excitement and just thrill behind both Audi and Cadillac.
Speaker 10: It also means they're they are going to be pushing
Speaker 10: so hard to be sexy, glamorous, relevant. They've both got
Speaker 10: new product coming out that will sort of coincide with
Speaker 10: this big push into motorsport for each of them.
Speaker 8: Each of them have motorsport.
Speaker 10: Backgrounds, but F one is a completely different level of course,
Speaker 10: so I'm really looking forward to it, and Audi in
Speaker 10: particular has said, and this touches on another theme for
Speaker 10: the year, that they're going to go back to some
Speaker 10: simplicity inside their cars, and that might also mean some
Speaker 10: analog touches.
Speaker 8: It's not just about having a bunch of sk in
Speaker 8: the car.
Speaker 4: Thank god.
Speaker 10: Yeah, that's gonna be We're going to see more of that.
Speaker 10: Mercedes has done that as well, and so has Ferrari.
Speaker 10: The automakers are listening to consumers who are saying, we
Speaker 10: don't want tech just for tech's sake, We would like
Speaker 10: some analog touches that make the car still feel engaging
Speaker 10: for a human. Audi is taking that to heart. They've
Speaker 10: said they're going to be doing that with some of
Speaker 10: their new product. So I'm watching Audi and of course
Speaker 10: Cadillact just because we've got an American F one racing
Speaker 10: team now, so not that Hawes doesn't count, but we've
Speaker 10: got another one. So those are the two that I'm
Speaker 10: really excited about.
Speaker 3: Does it matter still for selling cars that these are
Speaker 3: F one teams?
Speaker 8: I say yes.
Speaker 10: Why there are some people who because all news and
Speaker 10: marketing and a glamour can only reflect well on the brand,
Speaker 10: and I think a rising tide lifts all ships. If
Speaker 10: your brand is doing well on the track and is
Speaker 10: involved with all of these celebrities and really cool people
Speaker 10: who are at F one races. We've got three F
Speaker 10: one races in the US now. That can't help but
Speaker 10: elevate the brand just in general across pop culture. When
Speaker 10: you've got jay Z and Beyonce at the Las Vegas
Speaker 10: Grand Prix, like F one is transcending pop culture and
Speaker 10: just culture in general, and it can't do anything but
Speaker 10: help boost brand awareness, which I think does in turn
Speaker 10: lead at least to people coming in to the dealer
Speaker 10: and looking at cars, and that's ultimately what you want.
Speaker 3: That's Hanna Elliott, Bloomberg News auto columnist.
Speaker 1: All right, so it makes us wonder for how many years,
Speaker 1: right over the last few years we've been talking about
Speaker 1: everybody all in on EV and.
Speaker 3: We know, well, it's change a little bit.
Speaker 1: Right, It's changed a lot. Having said that, BMW is
Speaker 1: going to unveil three new electric vehicles in India as
Speaker 1: the German carmaker looks to grow it's already dominant share
Speaker 1: of the luxury segment in the world's third largest auto market.
Speaker 1: So you know, when we think about the car market.
Speaker 1: It's global. We think about what's going on in the US,
Speaker 1: but as you and I know, when we've had conversations
Speaker 1: with global leaders, what's going on in Europe and in
Speaker 1: the emerging world, especially when it comes to EV, it's
Speaker 1: kind of a different story.
Speaker 3: Yeah, it is. This is all part of a push
Speaker 3: to have EV's account for a quarter of BMW sales
Speaker 3: in the South Asian nation. That's this year, up from
Speaker 3: twenty one percent last year. This according to Hardeep Singh Brar,
Speaker 3: President and CEO of BMW's India business, BMW sold about
Speaker 3: eighteen thousand units in twenty twenty five. It's already close
Speaker 3: to that goal. EV's made up about twenty three percent
Speaker 3: of the sales for the three months that ended December
Speaker 3: thirty first.
Speaker 1: And I think what's interesting is BMW has really withstood
Speaker 1: the high profile entry of Tesla into the Indian market
Speaker 1: a few months back. You know, they've talked about the
Speaker 1: company that is BMW, about their rising EV volumes and
Speaker 1: faster overall growth in the December quarter. So the EV
Speaker 1: market in India some perspectives, all but growing rapidly and
Speaker 1: it is bringing in and attracting big time those global
Speaker 1: players such as Tesla, Wid and VinFast, who are seeing
Speaker 1: sluggish demand elsewhere. So it kind of goes against growth
Speaker 1: in global EV sales, which is expected to slow this
Speaker 1: year as China winds down some subsidies, Europe waivers on
Speaker 1: its phase out of combustion engines, and US producers and
Speaker 1: policymakers make a U turn from the EV segment.
Speaker 3: But these are expensive cars, especially in a country like India,
Speaker 3: which has an emerging middle class, but certainly not on
Speaker 3: par with what you see in other nations. Listen to this.
Speaker 3: For example, Yeah, the average selling price of BMW's evs
Speaker 3: in India is close to six million rupees, so that's
Speaker 3: about sixty six six hundred dollars, Oh my god, similar
Speaker 3: to the starting price for Tesla's model why standard range.
Speaker 3: Both companies face the hefty one hundred percent tariff on
Speaker 3: vehicles they import to the country. This is for a
Speaker 3: small number of very wealthy people in the country.
Speaker 1: Listen, that's a high price in the US market, So
Speaker 1: you think about that. Yeah, this is what's going to
Speaker 1: you know, everybody keeps talking about a cheaper EV model.
Speaker 1: It sounds like China's doing it, So it does sound
Speaker 1: like global automakers in general need to get a little
Speaker 1: bit more aggressive when it comes to that. You can
Speaker 1: read more just check out all of these stories top
Speaker 1: Auto on the Bloomberg Still to come on Bloomberg business Week.
Speaker 1: Gold cheaper than.
Speaker 3: Platinum, the rare pricing value that has watch collectors and
Speaker 3: investors talking. This is Bloomberg.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 1: Bloomberg eleven thirty twenty twenty five was an excellent year
Speaker 1: for watches, with major debuts and innovations. Keep in mind
Speaker 1: a story out on the Bloomberg Too that prices in
Speaker 1: the secondary market for luxury time pieces rose to the
Speaker 1: highest in more than two years, boosted primarily by demand
Speaker 1: for dress watches favored by celebrities like Taylor Swift.
Speaker 3: Brands at every price point began to embrace bold color
Speaker 3: and shapes, a trend of stone dials and design forward
Speaker 3: watches inspired by the nineteen sixties, seventies, and eighties, so
Speaker 3: writes Bloomberg Pursuits Editor at Large Chris Rousing, watchlover, time piece, lover, time, peace, lover.
Speaker 5: Sorry.
Speaker 3: Chris joins us here to talk about the best watches
Speaker 3: of twenty twenty five, along with Felix Salmon, who's Bloomberg
Speaker 3: News senior writer for Ideas and Culture. Welcome.
Speaker 11: I have a watch.
Speaker 12: Okay, Felix should tell you briefly about the name of
Speaker 12: his watch.
Speaker 11: Oh yeah, my watch. My watch has called the Felix Salmon.
Speaker 11: How did that happen, Chris? How did that happen?
Speaker 12: Well, it's a salmon colored dial.
Speaker 3: And it's so literally shopping right into it.
Speaker 12: Watch is the Felix.
Speaker 4: Yeah, it's this.
Speaker 11: Micro brand in Austria called Hubbring Squared and they that
Speaker 11: entry level watch is called the Felix and it comes
Speaker 11: in black, white and salmon. So this is the Felix Salmon.
Speaker 3: Would you have bought it if it weren't the Felix Salmon? No?
Speaker 6: Did you buy Salmon?
Speaker 11: Because but I do like the watch.
Speaker 12: And it has a colored, colorful dial, which is one
Speaker 12: of the biggest trends from this past year, which was
Speaker 12: very fun for me because you know, we talk a
Speaker 12: lot about watches that are very complicated and you look
Speaker 12: at it and it doesn't look so exciting, but they're like, no,
Speaker 12: inside it's doing all of these things, and I like that.
Speaker 12: But it's sometimes it's just great to wear a watch
Speaker 12: where you walk by in someone who doesn't know anything
Speaker 12: about watches, just like, WHOA, that's cool.
Speaker 3: What is that?
Speaker 1: Hence the Avocado watch.
Speaker 12: Hens the Avocado watch, which I'm not wearing because I
Speaker 12: broke it yesterday.
Speaker 3: Is there any sort of warranty?
Speaker 12: There is a warranty, which is so it's fine. I
Speaker 12: was not upset, but I did it bounced off my hand.
Speaker 12: Was I was trying to put on the strap and
Speaker 12: a crystal breck, so I couldn't wear it unfortunately, but
Speaker 12: I will wear it for you guys. I was hoping
Speaker 12: the studio Underdog. Avocado is one of this really cool
Speaker 12: British brand's fruit watches. So they have pineapple and they
Speaker 12: have watermelon, and when they can't they do these drops
Speaker 12: and you have to wait and like pounce just to
Speaker 12: buy it. Because they only make like a couple hundred
Speaker 12: of them.
Speaker 11: The supreme of watches, it's.
Speaker 12: Not they don't do a ton of partnerships. This is
Speaker 12: what I think of like supreme as being what people
Speaker 12: really want.
Speaker 2: But yeah, they are.
Speaker 12: There's like a lot of brand if some brands, indie
Speaker 12: brands do these big drops, And Studio Underdog did one
Speaker 12: at this watch fair in New York and when I went,
Speaker 12: there were like lines around. They had these red carpet
Speaker 12: lines around the fair and you got a ticket and
Speaker 12: people who didn't get the tickets were so mad. Anyways,
Speaker 12: Studio Underdog very cool.
Speaker 3: So can I actually get something like this or one
Speaker 3: of these or a variation of this. Yeah, they're actually
Speaker 3: going and waiting in Lino's store.
Speaker 12: They do drops every like six months or so, and
Speaker 12: they have a permanent collection of cool, colorful watches and
Speaker 12: it's not impossible to get them when they do the drop.
Speaker 3: The reason I'm asking specifically about this one is because
Speaker 3: I would venture to say, this is probably the one
Speaker 3: that's most within my price range. Yeah, they're usually like
Speaker 3: sub seven hundred dog. Yeah, I love these.
Speaker 6: Okay, where else do we go?
Speaker 3: Well?
Speaker 12: So, a huge trend from last year and a bit
Speaker 12: the year before and going into this coming year are
Speaker 12: precious stones or semi precious stone dials, which means styles
Speaker 12: that are turquoise or malachite or Tiger's eye or something
Speaker 12: even more strange or random that you've never heard of.
Speaker 12: And sometimes those can be very very expensive because the
Speaker 12: big brands do them, but there's also cheap versions. So
Speaker 12: I picked out this Baltic pink prismic watch, which is
Speaker 12: very cool. It's pink albite, but pink dial watches are
Speaker 12: very cool. Right now, Rolex makes one that everybody wants,
Speaker 12: but you can get this one for about sixteen hundred dollars,
Speaker 12: which is way less expensive than the Rolex.
Speaker 3: If I could get any watch on this list, it
Speaker 3: would probably be the Warhol ask watch that's on there.
Speaker 3: That's pretty cool, that is very cool, very interesting about you.
Speaker 12: So Andy Warhol was a watch person and he had
Speaker 12: about seven pha watches and he liked this style, which
Speaker 12: is like this big, chunky, semi ovoid style. It used
Speaker 12: to be called the black Tie. Now it's called the
Speaker 12: Andy Warhol And they and PJA, the brand, has a
Speaker 12: partnership with andwarf Hall Foundation, and so they make the
Speaker 12: watches together. And these are more expensive. They're like seventy
Speaker 12: eight grand and they're limited, but they're very cool.
Speaker 6: Interesting watch.
Speaker 1: But I think my daughter did some more work like that.
Speaker 11: Oh oh, I my child could do that. Yeah, you
Speaker 11: know you're not really okay, Murphy brown.
Speaker 4: Out out out.
Speaker 1: Where shall we go next?
Speaker 12: Well, you know, I have to say there was one
Speaker 12: watch this year that we wrote about in BusinessWeek that
Speaker 12: I really like, which is a new version of the
Speaker 12: Chanel J twelve watch, which is an all ceramic watch.
Speaker 12: Sanelle was really out in front on making these all
Speaker 12: ceramic watches. People don't always regard Chanel as being like
Speaker 12: a serious watchmaker because it's a fashion brand, but the
Speaker 12: movements inside are Kanisi. It's solid watchmaking. And this year
Speaker 12: they've only made the watch in black or white, like
Speaker 12: all white including the bracelet, or all black, and this
Speaker 12: year they made it in a beautiful dark blue, and
Speaker 12: I got very excited about it, and Felix came over
Speaker 12: to me at my desk and said, I'm sorry, I
Speaker 12: just want to be clear on this. What's exciting about
Speaker 12: the this watch is that it's blue. And I was like, yeah, God, Felix,
Speaker 12: du don't you get it?
Speaker 2: Yeah?
Speaker 11: I remember when it came out in white, and then
Speaker 11: everyone got very excited that it came out in black,
Speaker 11: and now I guess we have to get excited to
Speaker 11: get into this.
Speaker 12: So many years later, it's like twenty years before they
Speaker 12: had another color. It's just a beautiful color. It wears
Speaker 12: really well. And now you know some of the watch
Speaker 12: people who throw a poop poo to that model over
Speaker 12: the years because it was a fashion watcher coming around
Speaker 12: to respecting it because it's blue, because there's always been
Speaker 12: a good watch, but it helps that it's blue.
Speaker 3: Perhaps that's a perfect segue to talk about colors of
Speaker 3: watches versus metals of watches, and about one of Felix's
Speaker 3: recent stories that I would argue is finally we're valuing
Speaker 3: watches the correct way. Just the metal that's on your wrist,
Speaker 3: nothing else.
Speaker 11: Wait, it's super interesting that there's a huge number of
Speaker 11: gold watches out there from like the tier of grands,
Speaker 11: of brands that don't have a lot of resaler value,
Speaker 11: which are genuinely trading for their meltdown fit value because
Speaker 11: gold has become so expensive. It's well over four thousand
Speaker 11: dollars announce. Now, if you have a watch with a
Speaker 11: gold bracelet that is likely to have five, six seven
Speaker 11: ounces of gold in it, you do the math. It's
Speaker 11: you know, that's way more than the watch would be
Speaker 11: worth just as a watch, And so yeah, I think
Speaker 11: a lot of these watches are actually being melted down
Speaker 11: and turned into gold.
Speaker 1: I love that you kind of went through though, because
Speaker 1: I think as a world we think about platinum and
Speaker 1: being that as the top, and yet you kind.
Speaker 3: Of because it was. It was for a good part,
Speaker 3: it was for a good right.
Speaker 11: But now as gold on a per around basis is
Speaker 11: worth like roughly twice as much as platinum, and gold
Speaker 11: has been worth more than platinum for well over a decade.
Speaker 11: So the idea that you get like a gold card
Speaker 11: and then you want an upgrade, you get a platinum card.
Speaker 11: That still works in your mind that platinum is like
Speaker 11: a higher level, but in terms of actual value, it
Speaker 11: hasn't been true for a long time.
Speaker 3: And so go ahead.
Speaker 12: Chris so Felix points out that there's this like sort
Speaker 12: of ephemeral ideas like yes, like the goal now I'm
Speaker 12: platinum on delta. But also a platinum is heavier, so
Speaker 12: it feels it has a sense of feeling more weighty,
Speaker 12: it's harder to work with and that's a lot of
Speaker 12: you know, a lot of watch people talk about like, oh, it's.
Speaker 3: So hard to work with, but I'm.
Speaker 11: Just gonna come out and say that platinum like, no
Speaker 11: human being can tell the difference between the weight of
Speaker 11: gold and weight of platinum. They're right next to each
Speaker 11: other on a periodic table. Platinum is a lot heavier
Speaker 11: than white gold because white gold has a bunch of
Speaker 11: extra I believe the technical term is umskia in it
Speaker 11: that isn't gold. But yeah, the piece that I wrote
Speaker 11: was really about let's compare a white gold watch to
Speaker 11: a platinum watch, mainly because they just look the same.
Speaker 11: And I remember before I even wrote this piece, I
Speaker 11: went up to Gus, I'm right about this, right, they
Speaker 11: look the same, And yeah, they're exactly the same.
Speaker 3: Yeah, I mean, you have a picture of the two
Speaker 3: versions of Rolex's day date watch in this piece. To me,
Speaker 3: they look completely indistinguishable. Talk about the difference in prices
Speaker 3: at least on the primary market, and then we can
Speaker 3: get into the secondary market.
Speaker 11: Secondary market, weirdly is kind of also the same. They
Speaker 11: don't really trade any different on the secondary market. Platinum
Speaker 11: is sixty eight thousand, the gold is fifty one.
Speaker 3: Yeah, exactly. Yeah, So okay, so in terms of the
Speaker 3: value of the metals, though, what's the difference there.
Speaker 11: Platinum has just increased quite a lot over the past
Speaker 11: few weeks and so, but roughly speaking, there's twice as
Speaker 11: much metal value in the gold watched and then in
Speaker 11: the cheaper watch than there isn't the more expensive one.
Speaker 3: Is it just sacrilegious to talk about watches this way?
Speaker 12: Chris No, This is so interesting, And when Felix brought
Speaker 12: this up to me, I was like, you know, I
Speaker 12: have a lot of these like ingrained under like sort
Speaker 12: of prejudices about why things are priced away their price,
Speaker 12: and it was so interesting to go into it and
Speaker 12: really look at it and in terms of like value
Speaker 12: for what you're getting, and I think a lot of
Speaker 12: people just don't think about it that way, and it's
Speaker 12: I think it's actually valuable and instructive to think of
Speaker 12: it that way. And honestly, there's a lot of things
Speaker 12: in the world watch business that people just sort of
Speaker 12: do and pricing because it's pricing is based on perception obviously,
Speaker 12: and maybe it's time to look at that.
Speaker 11: So the way I think about these watches in particular
Speaker 11: is that you have the metal and then you have
Speaker 11: something that I call rolexness. You know that you're buying
Speaker 11: the brand, you're buying the day they you're buying the
Speaker 11: history or whatever, the marketing. The value of the metal
Speaker 11: plus the rolexness is the value of the watch. That
Speaker 11: doesn't work because the amount you're paying for the rolexness
Speaker 11: is twice as much in the platinum watched than it
Speaker 11: is in the gold watch, and the rolexness, surely, Chris
Speaker 11: is the same in both cases.
Speaker 12: Yes, And the rolexness really is how it makes you
Speaker 12: feel to wear it. This watch is unusual because it's
Speaker 12: it's identical, but in other models of the brand there's
Speaker 12: certain tells where you can tell it's platinum from looking
Speaker 12: from afar. So they have like an ice blue dial
Speaker 12: that only exists on platinum watches, which means if you
Speaker 12: see that and you're a rolex person, you know, oh,
Speaker 12: that person paid a lot more for that watch than
Speaker 12: someone else who's wearing the watch.
Speaker 11: We should mention that the day they has its own
Speaker 11: like if you know, you know thing, which is that
Speaker 11: not only does white gold look exactly the same as platinum,
Speaker 11: but both of them look exactly the same as steel.
Speaker 11: Rolex just doesn't make a steal day date. If it did,
Speaker 11: it would be a lot cheaper. But that's one of
Speaker 11: those things that if you see the day of the
Speaker 11: week at the top of the rolex, then you know
Speaker 11: it's precious metal.
Speaker 3: You make the point felix and the piece that the
Speaker 3: color gold to some people, it's not as attractive necessarily
Speaker 3: as the silverish color of platinum or white gold. And
Speaker 3: there's this idea that it's polarizing to some people.
Speaker 11: There are definitely people who just like I don't like
Speaker 11: wearing gold. But let's put this in context. Gold jewelry,
Speaker 11: like yellow gold jewelry, is orders of magnitude more popular
Speaker 11: than platinum or white gold. It is the baseline from
Speaker 11: which everything else is just an afterthought.
Speaker 1: It's just fascinating though, like I think about I know
Speaker 1: we have to wrap up, but like I go back
Speaker 1: to like the fifties when my parents got married, like
Speaker 1: she had a platinum like platinum rings, Like there were
Speaker 1: certain eras where like you wanted things to be in platin.
Speaker 12: Well, when Cardier I started using platinum, like the early teens,
Speaker 12: like it was it became everything everything was was based
Speaker 12: on platinum. Yeah, and uh, and now I will say
Speaker 12: gold watches all gold watches are kind of coming are
Speaker 12: becoming the thing that people sort of want, even though
Speaker 12: it's pretty gaudy.
Speaker 3: You know what, I really want to know the era
Speaker 3: we live in the world.
Speaker 11: We just had a whole segment on what is it
Speaker 11: getting good?
Speaker 3: Yes? Are you going to buy a new watch this year?
Speaker 12: I mean, don't tell my husband.
Speaker 3: That's a that's a yes, baby.
Speaker 1: I think he'll probably find out that you buying a
Speaker 1: new watch this year.
Speaker 11: I was telling Chris there was well, there's I was
Speaker 11: gonna I'm thinking about buying a watch as a present
Speaker 11: for a friend of mine. But again, this seems to
Speaker 11: be one of these things that exists only in techto
Speaker 11: wins the world on TikTok And then how do I
Speaker 11: find this? We can't get it. We'll look it, Chris
Speaker 11: christ people, I have people.
Speaker 3: A big thank you to Felix Samon and Chris Rouser.
Speaker 3: Felix is Bloomberg New Senior writer for Ideas and Culture,
Speaker 3: Chris Rouser Bloomberg Pursuits Editor at Large.
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