Speaker 1: This is Bloomberg business Week Inside from the reporters and
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Speaker 1: Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 2: It was a holiday shortened week for many, but that
Speaker 2: didn't make it any less busy. As we kicked off
Speaker 2: with a decisive victory for Donald Trump in the Iowa Caucuses.
Speaker 2: We got more big banker innings and a strong US
Speaker 2: retail sales report. Yep, we were all out shopping in
Speaker 2: the month of December. And we also got daily headlines
Speaker 2: over what some have described as escalating tensions in the
Speaker 2: Middle East. This a main topic that was on the
Speaker 2: minds of the folks at the annual meeting of the
Speaker 2: World Economic Forum in Davos.
Speaker 3: On that in Davos this past week, Robert Garrett, CEO
Speaker 3: of Hackensack Meridian Health it's one of the largest healthcare
Speaker 3: systems in New Jersey. Well, he's stopped by to give
Speaker 3: us a check up on global healthcare, including the role
Speaker 3: of AI.
Speaker 4: It is everywhere.
Speaker 2: Also this week a big deal in the chip space
Speaker 2: involving two companies that really are in household names, and
Speaker 2: yet the deal one of the largest in the last
Speaker 2: twelve months plus.
Speaker 3: From bitcoin to back to work, We've got the five
Speaker 3: ETFs to watch in twenty twenty four, and a little
Speaker 3: bit later on we got Peak Ski co founders Andy
Speaker 3: Wirth and Olympic and World Championship gold medalist Body Miller
Speaker 3: on disrupting the ski industry.
Speaker 4: Yeah, that was a fun conversation.
Speaker 2: All right, all of that to come, We begin with
Speaker 2: the World Economic Forums annual meeting in Davos, where some
Speaker 2: of the conversations there help shape this week's narrative. This
Speaker 2: year's theme rebuilding trust, and they were asking leaders who
Speaker 2: were there. Will the coming year be a period of
Speaker 2: perma crisis or will twenty twenty four be a time
Speaker 2: for resolution, resilience and recovery.
Speaker 3: There's some reason to look at the glasses half full.
Speaker 3: Maybe it's all to talk about a soft landing scenario
Speaker 3: and rate cuts, But on the other hand, is reported
Speaker 3: out in a Bloomberg Big Take this week, if the
Speaker 3: pessimists have their way, there are plenty of year ahead
Speaker 3: risks to get keep leaders awake at night.
Speaker 4: That's for sure.
Speaker 2: That story, by the way, a collaboration between Bloomberg News
Speaker 2: and Bloomberg Economics. Bloomberg News Global Economics editor Ben Holland
Speaker 2: joined us with more.
Speaker 5: Yeah, we started from the point that the pessimists have
Speaker 5: tended to get things right in recent years, and so
Speaker 5: obviously after a few years in which we've had, starting
Speaker 5: with the pandemic, it was pretty clear to see all
Speaker 5: the things that could go wrong. And I think where
Speaker 5: we started was the two major conflicts that are still
Speaker 5: unfolding in twenty twenty four with no evident and in
Speaker 5: sight most of all them, add least which is dominating
Speaker 5: our headlines every day. I think that was kind of
Speaker 5: the starting point for global.
Speaker 6: Risks this year.
Speaker 1: Yeah.
Speaker 3: I think a lot of people, certainly if you would
Speaker 3: go back a year, did not see that coming. And
Speaker 3: at this point we are what more than one hundred
Speaker 3: days into Israel's and the Israeli gods of war. But
Speaker 3: the threat is not just within that region. Then it's
Speaker 3: a threat that is really concerns a wider, more global
Speaker 3: wide or more global involvement of this war.
Speaker 6: Yeah.
Speaker 5: So I think whenever you talk about a conflict in
Speaker 5: the Middle East. The vector by which people think that
Speaker 5: that's likely to affect world economy or that could in
Speaker 5: the worst case affect the world economy is of course
Speaker 5: via energy prices, and we haven't really seen that in
Speaker 5: the as you say, in one hundred days of the
Speaker 5: conflict in Gaza so far. But the risk that oil
Speaker 5: markets have been worried about, of course, was that the
Speaker 5: conflict could escalate, and I think it's hard to say
Speaker 5: after one hundred days, even though it perhaps in fact
Speaker 5: did not escalate in the way that people fit, it's
Speaker 5: hard to say that the risk has gone any less.
Speaker 5: And when we look at what's been happening in the
Speaker 5: Red Sea in the last week or so, you could
Speaker 5: actually easily argue that it's got more. And not only that,
Speaker 5: but in addition to the biggest risk of all Middle
Speaker 5: East conflicts, which is an effect on the world economy
Speaker 5: via oil prices, you now have a very clear risk
Speaker 5: of some kind of effect shipping prices also because we
Speaker 5: are seeing disruption too a very important trade route, and
Speaker 5: it's not really clear that anybody can do a whole
Speaker 5: lot about it.
Speaker 2: Yeah, it certainly feels like, you know, every day we
Speaker 2: see the headlines, we talk about the Red Sea, we
Speaker 2: talk about you know, those giant ships, you know, pausing
Speaker 2: or taking a longer route, a more costly route. But
Speaker 2: it does feel like as attacks seem to escalate, dare
Speaker 2: I say it, it does feel like we're just kind
Speaker 2: of waiting to see does it go truly the escalation
Speaker 2: route or does Folks somehow global leaders say Okay, we
Speaker 2: got to stop this before it just you know, takes
Speaker 2: off and running and we really are kind of in
Speaker 2: a third World war, if you will, even though some
Speaker 2: might say that we already are there. Hey, I want
Speaker 2: to go to the FED because we just talked about
Speaker 2: it with our TV colleagues, the FED getting it wrong.
Speaker 2: It does feel like the markets are kind of pulling
Speaker 2: back from expectations of an aggressive FED sometimes, and we
Speaker 2: keep getting warnings from FEDS if they could get this
Speaker 2: wrong or could they.
Speaker 5: The FED and any central bank can always can always
Speaker 5: get it wrong, of course.
Speaker 1: Yeah.
Speaker 5: So what we found interesting when we were looking at
Speaker 5: the risks from the point of view central bank policy
Speaker 5: particularly was the comparison between the US and Europe. I
Speaker 5: think where obviously, in both cases you've had very subessential
Speaker 5: interest rate increases the kind of policy that should slow
Speaker 5: down the economy, And in either case, has it really
Speaker 5: led to the kind of drastic slow down that you
Speaker 5: might have expected if you plugged in quite that big
Speaker 5: interest rate hike into the models.
Speaker 6: And we kind of felt that there were.
Speaker 5: Two different risks going on in the US versus Europe.
Speaker 5: And in the US it seemed that maybe a bigger
Speaker 5: risk was that just the thing didn't work, you know,
Speaker 5: it didn't slow down the economy all that much. It
Speaker 5: might actually start heating up again in ways that the
Speaker 5: FED doesn't like. And of course what we talked about
Speaker 5: with the Middle East conflict and to shipping costs or
Speaker 5: energy costs, that could play into that too. And so
Speaker 5: you might have a risk that the FED that things
Speaker 5: it's done, realizes at some point in twenty four that
Speaker 5: maybe it isn't done. Whereas in Europe you seem to
Speaker 5: have kind of the opposite risk, which was a central
Speaker 5: bank that's done a lot, economy slowed down, but it
Speaker 5: did not come to a kind of juttering hope. But
Speaker 5: what if it's all still in the pipeline, you know,
Speaker 5: the famous long variable lags of monetary policy. What if
Speaker 5: in Europe. That stuff is still yet to bite in
Speaker 5: a big way. That is what could lead to a
Speaker 5: sharpest slow down in Europe.
Speaker 3: And twenty four hey Ben in the piece you guys
Speaker 3: mentioned this natural language processing model that captures FED speaker sentiment.
Speaker 3: This is cool. What does it show and how does
Speaker 3: this work?
Speaker 5: It's a kind of linguistic analysis of what FED people
Speaker 5: are saying, quite literally with a waiting attached to the
Speaker 5: various words that they use. It's based on news reports,
Speaker 5: but based on thousands of news stories that come out
Speaker 5: with direct comments from FED speaking because it's an attempt
Speaker 5: to gauge, you know, if you could, if you could
Speaker 5: literally measure their worst to see how that you know,
Speaker 5: whether they're tilting in the hawchesh or dubbish direction based
Speaker 5: on the use of certain keywords, certain kind of phrases
Speaker 5: that come into play.
Speaker 6: What would it tell you?
Speaker 5: And what it tells you I think is pretty clear
Speaker 5: in the chart and the story, which is that yes,
Speaker 5: they're pivoted, but the pivot has a long way to
Speaker 5: go before it actually gets into the area of you know, yeah,
Speaker 5: we're about to cut raids.
Speaker 2: All right, Let's get to also one of the largest
Speaker 2: economies out there and we're talking about China.
Speaker 4: Twenty twenty three.
Speaker 2: We all thought, Okay, that's going to be the year China.
Speaker 4: Comes roaring back.
Speaker 2: It did not, you guys, note it still looks a
Speaker 2: little bit wobbly.
Speaker 5: Yeah, the risk of the long running real estate crisis there,
Speaker 5: which of course in other countries like Japan in the
Speaker 5: in the nineties and the United States in two thousand
Speaker 5: and eight. I think it's on everyone's mind that, you know,
Speaker 5: really as they crunch can lead to a deeper financial crisis.
Speaker 5: Hasn't happened in China, and what you've had a disappointing rebound,
Speaker 5: but the risks this year, we think it kind of
Speaker 5: tilted to the downside in China and the selling point
Speaker 5: is not great anyway.
Speaker 3: So we don't have time then to get to everything
Speaker 3: on the list here, but I want to give you
Speaker 3: the choice to go where you want to go. And
Speaker 3: what are audience watching and listening right now needs to
Speaker 3: know about the year ahead.
Speaker 5: Well, you know, a couple of to try and end
Speaker 5: on a bright note here in the piece, we basically
Speaker 5: focused on the things that can go wrong, and obviously
Speaker 5: there's a lot that can go wrong. It was kind
Speaker 5: of interesting to look at a couple of coonomies where
Speaker 5: you feel like, you know, most things that could go
Speaker 5: wrong already have gone wrong, which is Turkey in Argentina,
Speaker 5: and both of them are still facing very severe challenges,
Speaker 5: but just the possibility that those countries might turn a corner.
Speaker 5: There's been a long time incoming. In Argentina still that
Speaker 5: you know, their inflation rate is above two hundred percent
Speaker 5: and there is a substantial risk that it kind of
Speaker 5: takes off even from there. But after a radical change
Speaker 5: of policy and with some support from the IMFF, it
Speaker 5: does seem possible that they could turn the corner. This
Speaker 5: here in Turkey has also done a kind of you
Speaker 5: turn away from its very orthodox policies. It looks now
Speaker 5: like things might be stabilising there. So that's let's highlight
Speaker 5: those as the kind of things.
Speaker 4: Right, final thoughts twenty seconds.
Speaker 2: Risks are risks, right, they may not play out, and
Speaker 2: we need to remember that, right.
Speaker 5: That would be the best good outcome, I think, is
Speaker 5: if none of the bad outcomes.
Speaker 4: Yeah, yeah, I'm.
Speaker 2: Going to I mean, the guys are out of are
Speaker 2: the individuals in Davos right now are seeing the glasses
Speaker 2: half full of their feeling they're seeing a lot of
Speaker 2: resilience despite.
Speaker 3: This list of risks.
Speaker 2: Well, that's why, well said, Well said, Ben, thank you
Speaker 2: so much. We really appreciate Ben Holland, Global Economics editor
Speaker 2: at Bloomberg News on zoom from Washington, DC. This is
Speaker 2: the Bloomberg Big Take, which you can catch on the
Speaker 2: Bloomberg also at Bloomberg dot com slash Big Take, and
Speaker 2: you can read more of those stores and other big takes.
Speaker 4: Always love it. It's a big think piece which we can.
Speaker 3: Apply across a lot of great year ahead pieces.
Speaker 4: A lot of risks.
Speaker 2: Maybe cross my fingers, cross my toes, they don't come out.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: Well, we talk about it all the time, just how
Speaker 2: big a contributor it is to the economy, and we're
Speaker 2: talking about healthcare. Spending on health accounted for seventeen point
Speaker 2: three percent of US GDP and twenty twenty two for
Speaker 2: a total of four and a half trillion. That's according
Speaker 2: to the centers for Medicare and also Medicaid services Tim.
Speaker 3: Yeah. Last week we got the numbers from the BLA
Speaker 3: self Care adding thirty eight thousand jobs in December second
Speaker 3: and hiring only to the government.
Speaker 1: A lot of.
Speaker 3: Money, yeah, a lot of people.
Speaker 4: Yeah.
Speaker 3: When it comes to healthcare in the US.
Speaker 2: We got a lot of questions. So we think about
Speaker 2: how will AI transform this. What about the role of
Speaker 2: private equity in the hospital and healthcare space? Will it
Speaker 2: cut costs and most importantly improve patient outcomes. We've got
Speaker 2: a great guest to really take a big view perspective
Speaker 2: on this. Robert Carrott is chief executive officer of Hackensack
Speaker 2: Meridian Health. I know the system well, a New Jersey
Speaker 2: based hospital network eighteen hospitals, seven thousand doctors in more
Speaker 2: than five hundred locations that provide care. He is also
Speaker 2: chair of World Economic Forum Health and Healthcare Governor's Community,
Speaker 2: and before he heads over to Davos for next week,
Speaker 2: he joins us here in the blueberg A Directive Broker studio.
Speaker 2: Happy New Year, Nice to have you back.
Speaker 3: How are you I am great?
Speaker 7: Happy New Year to both of you.
Speaker 2: Great to be back to It does feelk it feels
Speaker 2: good to be back. It feels like we're kind of
Speaker 2: back to normal, as they say, because.
Speaker 3: We all just get COVID once a year, and you
Speaker 3: know COVID.
Speaker 2: For my routine, right, it is kind of weird.
Speaker 4: So let's start with Davos.
Speaker 2: You're getting over there, you're heading over there. What's top
Speaker 2: of mind for you?
Speaker 7: So you know, as in this new role as chair
Speaker 7: of the Healthcare.
Speaker 4: Going what does that mean? What exactly is that?
Speaker 7: So what that is is we convene healthcare stakeholders and
Speaker 7: we decide what the priority topic or topics should be.
Speaker 7: And as the chair, I have to really convene that group.
Speaker 7: There's a steering committee, and then I have to actually
Speaker 7: chair the meetings that actually take place there. So this year,
Speaker 7: when we thought about all of the topics over the
Speaker 7: last few years, there was health equity and the inequity
Speaker 7: that exists in you know, underserved countries versus the western countries.
Speaker 7: I think like a thirty year gap in life expectancy
Speaker 7: as one example. Then we thought about healthcare access and
Speaker 7: not having equal access across the globe to healthcare and
Speaker 7: healthcare programs. We thought about climate change and the impact
Speaker 7: climate change has on health, and then we thought about
Speaker 7: moving healthcare outcomes and adding more value to the healthcare system,
Speaker 7: all of those. If you think about all those four topics,
Speaker 7: they all are going to be so impacted by what
Speaker 7: is really the most profound innovation of of our our.
Speaker 4: Don't say it.
Speaker 1: Don't go there, don't go there, I won't.
Speaker 3: I'm tempted everything bitcoin bitcoin, Yeah, yeah, health bitcoin Is
Speaker 3: that what you're going to say?
Speaker 8: You know?
Speaker 7: Okay, yeah, the way they say it's the penicillin of
Speaker 7: our generation. But you know what, So so we thought
Speaker 7: AI really did make sense because it really wraps around
Speaker 7: all four topics. So the Steering Committee, we had those discussions,
Speaker 7: they agreed, and so what's going to happen at DAVOS
Speaker 7: is we're going to have a discussion from some of
Speaker 7: the stakeholders pharmaceutical company CEOs as well as device CEOs,
Speaker 7: the device maker CEOs, healthcare systems CEOs as well as
Speaker 7: insurers all around the table hearing about AI. What their
Speaker 7: their take is, what where the impacts are going to be,
Speaker 7: what the pitfalls might be, what safeguards we have to
Speaker 7: set up. Then we're going to bring in the policy makers.
Speaker 7: So we're going to have health ministers from different parts
Speaker 7: of the world come in. We're going to hear from
Speaker 7: their perspective. Then the policymakers leave the room and the
Speaker 7: governors get back together and we break out into small
Speaker 7: groups and we decide what our action plan is going
Speaker 7: to be going forward. And we leave there not just
Speaker 7: with what the problems are or what the challenge, what
Speaker 7: are the solutions. And I'm committed as the chair to
Speaker 7: meet once a month following Davos. So it's not going
Speaker 7: to be something that's going to be put on the
Speaker 7: back burner till next January. It's going to be talked about.
Speaker 3: Okay. So you've thought a lot about AI and healthcare,
Speaker 3: help us understand I mean, I think a lot of
Speaker 3: people have experienced with chat GBT and understanding what generative
Speaker 3: AI can do. But apply that to healthcare space for us,
Speaker 3: and if you think about the world that you want
Speaker 3: to see in five to ten years, paint that picture
Speaker 3: for us. What does it actually look like if AI
Speaker 3: has helped healthcare?
Speaker 7: Well, the first thing I would say, tim is really
Speaker 7: identification of disease earlier. I think that really probably will
Speaker 7: be the most profound impact. And we're already seeing some
Speaker 7: some case studies and some pilot programs that are indicating
Speaker 7: some potentially some some breakthroughs there. You know, at Hackensack
Speaker 7: Meridian as an example, we have we have a pilot
Speaker 7: going on now that is identifying stage three kidney disease earlier.
Speaker 7: And that's that has some profound impact because if you
Speaker 7: can really identify it early enough and apply some prevention.
Speaker 3: But how does it how does it do that?
Speaker 7: Like, well, the technical pieces through through algorithms and patient data,
Speaker 7: they're able to.
Speaker 3: So basically the correct me if I'm wrong, the patient
Speaker 3: will come in and be asked a series of questions
Speaker 3: and the answers to those questions would determine, would go
Speaker 3: through some sort of algorithm and.
Speaker 7: And come back and say, Okay, this patient, you know,
Speaker 7: in three years from now is likely to have you know,
Speaker 7: advanced kidney.
Speaker 3: That's interesting because I a doctor could do the same
Speaker 3: thing right.
Speaker 7: Well, they don't always have all the tools at their disposal.
Speaker 7: This could aggregate imaging, it could aggregate patient data, family history, demographics.
Speaker 7: It's just a lot for a clinician to really do so.
Speaker 2: Almost like having a massive spreadsheet and putting all the
Speaker 2: endpoints and from different sources and just saying almost like
Speaker 2: a probability study, if you will statistically and say you're
Speaker 2: more likely to have these problems.
Speaker 7: Another good example, you know to your question, tim is
Speaker 7: in radiology and imaging. So a radiologist has to read
Speaker 7: an average radiologist in a given day has to read
Speaker 7: like one hundred and fifty scans through AI. They're able
Speaker 7: to then tell the radiologists these three or five need
Speaker 7: priority based on based on the patient's history, the data
Speaker 7: in the medical record, and the scan itself. You need
Speaker 7: to pay attention to these because they may need treatment
Speaker 7: earlier on. So that's really that's been really really helpful.
Speaker 7: When I think about AI in the future, I think
Speaker 7: about some of the clinical outcomes that can approve. There's
Speaker 7: also the efficiency side too, which.
Speaker 2: Is hang on for a second, because I want to
Speaker 2: bring one element into it. Just because we have a
Speaker 2: headline crossing the Bloomberg, UK Prime Minister rehis SUNAC authorizing
Speaker 2: joint military strikes with the US against the Huthi rebels
Speaker 2: in Yemen, and his cabinet approved, according to a person
Speaker 2: familiar with the matter, as the Allies looked to deter
Speaker 2: further attacks commercial vessels in the Red Sea, so his
Speaker 2: cabinet approving the decision on a conference call today air
Speaker 2: strikes possibly as soon as later in the evening, according
Speaker 2: to those familiar. So we continue to see heightened tensions
Speaker 2: in the Middle East. The reason I wanted to jump in,
Speaker 2: Robert is that I do feel like there's going to
Speaker 2: be a lot of conversations in Davos about risk that's
Speaker 2: out there.
Speaker 4: We've got two big wars. You talk to geopolitical.
Speaker 2: Strategies and they say, actually, there's about one hundred levels
Speaker 2: of kind of some kind of outbursts or activity, smaller
Speaker 2: ones attacks around the world. Some say we're already a
Speaker 2: world at war. So when you look at the healthcare
Speaker 2: issues that, yes, are so important to ministers, how are
Speaker 2: they going to think about prioritizing that the money, the need,
Speaker 2: the efforts when you've got some really serious situations going
Speaker 2: on right now.
Speaker 7: I mean it's going to be it's going to be
Speaker 7: a challenge, no doubt, for even in the US. I
Speaker 7: think in terms of, you know, our budgetary priorities right right.
Speaker 2: And even after coming off of a global pandemic that
Speaker 2: shut the world down. It's interesting how things can be
Speaker 2: put to the side.
Speaker 7: But you know, if you think about it, you know,
Speaker 7: just in terms of even climate change and its impact
Speaker 7: on health. I mean, that's going to continue to get
Speaker 7: worse and worse. I mean I saw a statistic just
Speaker 7: the other day that I think between the years twenty
Speaker 7: thirty and twenty fifty, two hundred and fifty thousand more
Speaker 7: people each year will die around the globe because of
Speaker 7: climate changes impact on health and healthcare. So we can't
Speaker 7: ignore those problems as we have these these geopolitical crises
Speaker 7: out there.
Speaker 2: But it does make it harder right to make countries
Speaker 2: and ministers to kind of get their initiatives.
Speaker 7: Absolutely, and that's why you know, our voice as as
Speaker 7: a healthcare provider has to get even louder and say, okay,
Speaker 7: you know what, we understand your challenged and you have
Speaker 7: you know, these immediate issues, and there's a war in
Speaker 7: the Middle East, and we have Ukraine, and we have
Speaker 7: all these other situations out there, but we have to
Speaker 7: we can't ignore everything else. I mean one of the
Speaker 7: one of the.
Speaker 2: Just about thirty seconds and then we'll come back and
Speaker 2: talk more.
Speaker 7: Yeah, just just quickly carel One of the lessons from
Speaker 7: COVID was that too much was probably put on that
Speaker 7: back burner, Like as an example, in healthcare, people people
Speaker 7: didn't come in for their their screenings, and you know,
Speaker 7: we're seeing higher rates of cancer, higher rates of cardiac disease,
Speaker 7: higher rates of diabetes because of that. So I think,
Speaker 7: what's what's what the lesson learned for me is, Hey,
Speaker 7: you know what, We're always going to have some crisis,
Speaker 7: but we need to be multifaceted and we need to
Speaker 7: pay attention to multitude of issues.
Speaker 2: One thing I want to ask you about money in hospitals.
Speaker 2: We've done a lot of reporting about it. Private equity
Speaker 2: owning about thirty percent of for profit high hospitals. A
Speaker 2: lot of them are in rural areas of the United States.
Speaker 4: You guys are a nonprofit, right correct?
Speaker 2: What's the difference and what advantages do help me understand
Speaker 2: being a nonprofit hospital.
Speaker 7: Nonprofit hospital, you are tax exempt and your you have
Speaker 7: a mission to serve your communities. You have to have
Speaker 7: a board that's representative of those communities, so you don't
Speaker 7: have you don't have stockholders or shareholders that you have
Speaker 7: to to report to. In any margin or any profit
Speaker 7: that we make as a non for profit gets really
Speaker 7: reinvested in the in the health system, whether that's through
Speaker 7: capital investments to improve infrastructure, or new programs or services,
Speaker 7: or our people, our thirty six thousand team members.
Speaker 2: So what do you make of all the money that
Speaker 2: is going into the for profit hospital system? Because you've
Speaker 2: seen some of the horror stories we've reported on it
Speaker 2: here at Bloomberg, good or bad?
Speaker 7: You know, I think it's it's a mixed bag. It's
Speaker 7: how I would put it. Let me let me explain
Speaker 7: that I think it's in on the good side. Coming
Speaker 7: out of COVID, so many hospitals and even in health
Speaker 7: systems were stressed, particularly in rural areas, and they would
Speaker 7: have closed if it wasn't for maybe some some for
Speaker 7: profits or private equity coming in and and helping to
Speaker 7: bail it out.
Speaker 1: You know.
Speaker 7: The problem, of course is you know, where where, what's
Speaker 7: what's the mission, what's the where's the where's the priority?
Speaker 7: I do think that private equity is is probably here
Speaker 7: to stay in health care for for some period of time.
Speaker 7: So I look at it as if it's if it's
Speaker 7: coming to my market, coming to New Jersey, private equity
Speaker 7: companies which they have, they're gonna they're gonna be there
Speaker 7: with or without Hackensack Meridian Health partnership. So I actually
Speaker 7: am looking for ways that maybe we can partner and
Speaker 7: maybe yes, so maybe there are some joint venture oportunities
Speaker 7: where our mission still will stay true, but we'll be
Speaker 7: able to provide some services and programs and have a
Speaker 7: partner that can help us provide them. So one example
Speaker 7: of that is we recently announced a partnership with a
Speaker 7: company called One Medical, which is you guys are probably
Speaker 7: familiar with them. They're part of the Amazon On network.
Speaker 7: They were coming to New Jersey again with or without
Speaker 7: Hackensack Meridian Health. They are a group of primary care providers.
Speaker 7: We do have a shortage of primary care physicians in
Speaker 7: New Jersey, so we thought it's best to partner with
Speaker 7: them to make the One Medical Group part of our
Speaker 7: medical group at Hackensack Meridian Health. And we're able to
Speaker 7: expand primary care coverage and we're going to be opening
Speaker 7: up new primary care centers throughout New Jersey with One Medical.
Speaker 7: So that's an example where I think it can be
Speaker 7: it can be positive.
Speaker 3: Do you worry though, that the interests of a private
Speaker 3: equity firm aren't necessarily aligned with high quality patient outcomes?
Speaker 7: I do do tim, and that's why I think that
Speaker 7: you know, where wherever possible, if there's ways that we
Speaker 7: can partner and keep the not for profit mission in healthcare,
Speaker 7: I think that's that's that's positive. Now, of course, you
Speaker 7: know there's going to be give and take if you
Speaker 7: if you do have a true joint venture. But we
Speaker 7: would only find I mean, from our perspective, we would
Speaker 7: only want to partner with UH with a company that
Speaker 7: shares our values and our mission. But yes, I'm basically
Speaker 7: you know, unchecked. I think that private equity may not
Speaker 7: necessarily have the same interest as a not for profit
Speaker 7: health system.
Speaker 3: When you look at the data, which ownership structure has
Speaker 3: the best patient outcomes?
Speaker 7: I still think the not for profit hospitals and the
Speaker 7: not for profit health systems have the best patient outcomes
Speaker 7: that I that I've seen, and that that's patient quality
Speaker 7: and patient safety data. Now, maybe from an efficiency perspective,
Speaker 7: some private equity and some for profits do have a
Speaker 7: you know, a decent track record, so they're let the
Speaker 7: stay might be lower, their readmission rate might be a lower,
Speaker 7: and those are those are important factors. But you know
Speaker 7: what I consider most important are you know, quality and
Speaker 7: patient safety outcomes.
Speaker 2: You know when you you talked about in New Jersey
Speaker 2: that there's not enough primary care doctors, and I do
Speaker 2: wonder I'm going to be a little crazy, But are
Speaker 2: we getting to a point where it feels like we
Speaker 2: keep talking tim right with guests about shortage of healthcare
Speaker 2: workers nurses. We've been talking about that for years, like
Speaker 2: a little bit of a hunger game scenario where where
Speaker 2: it's going to be really rough to find the care
Speaker 2: and the right people that you need to do.
Speaker 4: I feel very dust in New York.
Speaker 3: But still the doctors who I know are are so
Speaker 3: burned out. Yes, and they're not. They're early in their careers. Yeah,
Speaker 3: the work that they do is so important, but they're not.
Speaker 3: It's not like you know these other jobs where people, oh,
Speaker 3: now they only have to go into the office three
Speaker 3: days a week. Now your doc, you have to be
Speaker 3: on site, you're on call on weekends. Like, yes, their
Speaker 3: compensation is good, but it is tough work.
Speaker 7: The burnout actually got much worse as a result of COVID.
Speaker 7: So we when we've done our surveying, we see that,
Speaker 7: you know, with doctors and nurses, but the statistic nationally
Speaker 7: is one out of five nurses, as an example, have
Speaker 7: left the profession since COVID And what's even more scary
Speaker 7: than that is one out of three in recent surveys
Speaker 7: are saying they're seriously thinking about leaving the profession. So
Speaker 7: we already, as as Carol said, we already started with
Speaker 7: a nursing shortage. The one thing that's common to doctors
Speaker 7: and nurses in terms of burnout is they are burnt
Speaker 7: out and frustrated with all the administrative tasks that they
Speaker 7: have to do that take them away from direct patient care.
Speaker 7: So that's where technology will come in.
Speaker 2: When does it come because we've been talking about why
Speaker 2: can't I just walk in with a card and here's
Speaker 2: all my information, here's all my latest tests, and just
Speaker 2: use that. You know, hop it, you got it, and
Speaker 2: it gets updated. It Absolutely maybe that's what we should create.
Speaker 7: It absolutely should be that way.
Speaker 3: But I'll tell you one.
Speaker 7: Technology then just about forty seconds, okay, one technology that
Speaker 7: is coming into fruition now that we're doing a hacken
Speaker 7: second Rarny we're piloting it's going to be rolled out
Speaker 7: and that's virtual nursing. So through remote connections, virtual nurse
Speaker 7: can help the bedside nurse and they can do a
Speaker 7: lot of the administrative tasks, the things the charting, the
Speaker 7: admission and discharge charting that needs to be done, which
Speaker 7: frees up the bedside nurse to spend more time with the.
Speaker 4: Patients actually care for the patient.
Speaker 7: Actually, and we're doing that with physicians too, where they're
Speaker 7: able to spend more time with patients. That's that to me,
Speaker 7: should be the major focus.
Speaker 2: Well, a million more questions we have, Tim and I
Speaker 2: really get into the healthcare space, lots of things.
Speaker 4: So hopefully you will come back soon.
Speaker 3: I sure will.
Speaker 9: We would love to have.
Speaker 2: A safe trip to Davos. Thanks very much well Robert Garrett,
Speaker 2: and good luck with everything. Robert Garrett, Chief executive Officer
Speaker 2: of Hackensack. We're Ridian Health, as we said, of World
Speaker 2: Economic Forum, Health and Healthcare Governor's community.
Speaker 1: This bloom you're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us live weekday afternoons from three to six Easter
Speaker 1: on Bloomberg Radio, the Bloomberg Business App, and YouTube. You
Speaker 1: can also listen live on Amazon Alexa from our flagship
Speaker 1: New York station. Just say Alexa play Bloomberg eleven thirty.
Speaker 10: I'm putting all my eggs in one basket.
Speaker 2: You know, when we think about baskets of stocks, we.
Speaker 3: Used to think about mutual.
Speaker 4: Folks, we did, but alas no more.
Speaker 3: Now we think about ETFs. And as I mentioned earlier, Carol,
Speaker 3: this year's already a huge year for ETFs thanks to
Speaker 3: last week's SEC approval of eleven This spot, well, we
Speaker 3: get approval jefs, we did.
Speaker 4: Lash text sarcasts.
Speaker 3: We got approval you know, via tweet that ended up
Speaker 3: not being correct. I don't know if can't remember that.
Speaker 3: What a week it was, and then the next day
Speaker 3: the actual approval came. But there's so much more to
Speaker 3: ETFs than the shiny new bitcoin ETFs.
Speaker 2: Yes, indeed, Unfortunately, the team that covers ETFs at Bloomberg Intelligence,
Speaker 2: led by senior analyst Eric balchunis who hopefully got some
Speaker 2: sleep over the weekend, while that team, led by Eric
Speaker 2: whittled their global list of two dozen picks down to
Speaker 2: just a handful.
Speaker 3: The story featured in the year Ahead issue of BusinessWeek magazine,
Speaker 3: which is available now on newsstands, on the Bloomberg Terminal
Speaker 3: and at Bloomberg dot com slash BusinessWeek. This story, by
Speaker 3: the way, written none other than Bloomberg BusinessWeek editor Joel Weber.
Speaker 3: Joel's here in the Bloomberg Interactive Brokers studio with us.
Speaker 3: Also with us is Eric Balchunis, senior ETF analyst for
Speaker 3: Bloomberg Intelligence. He joins us on zoom in Philadelphia.
Speaker 4: Joel, if you know how to write a story?
Speaker 3: Yeah, it's amazing. Come on, you have time. Jeez, you
Speaker 3: have time for a story? Oh, come on.
Speaker 11: So Eric and I co host this podcast and we've
Speaker 11: been doing it for years called Trillia.
Speaker 3: You lovet we.
Speaker 11: You know, it's just this thing. It's an er I
Speaker 11: think it's Eric's theory of everything. Like if if you
Speaker 11: could kind of like put it, put the universe into
Speaker 11: one thing, the ETF would explain Eric and investment investing
Speaker 11: in all kinds of other stuff. That's what working on
Speaker 11: trillions with him for me has felt like. And so
Speaker 11: it becomes a really interesting way to kind of like think,
Speaker 11: look at finance and investing and there are there's just
Speaker 11: more and more interest in it. We named it Trillions
Speaker 11: because every year there's more trillions that go.
Speaker 3: Into these things.
Speaker 11: You can still talk about mutual funds. We actually make
Speaker 11: time occasionally on Trillions to do so, uh, and we
Speaker 11: also do this episode every year that we have not
Speaker 11: had a chance to talk about yet. And if you're
Speaker 11: if you'd like to listen to the whole thing, you
Speaker 11: can do so wherever you listen to podcasts. But for
Speaker 11: the year Ahead issue, I took that conversation and kind
Speaker 11: of whittled it down to just a handful. And while
Speaker 11: we were first talking about, you know, we didn't have
Speaker 11: an approved ETF for bitcoin, for spot bitcoin, and then
Speaker 11: last week happened and it was just like we got
Speaker 11: to talk about this with Eric a little bit as
Speaker 11: well as some of these other ones. So Eric, you
Speaker 11: I quote you in the story because you say, by
Speaker 11: what march. By the end of March, we're going to
Speaker 11: know who the winner of the race is sec led
Speaker 11: a lot of ETFs out at first, who's the early
Speaker 11: who's got the early lead?
Speaker 12: Okay, So I've separated the ten launches into what I
Speaker 12: call the Newborn nine and GBTC because it's different being
Speaker 12: a newborn in the ETF world, Joel. As you know,
Speaker 12: we called the terodome. It's a tough industry, so being
Speaker 12: a newborn is a different playing field. GBTC was a
Speaker 12: trust that existed, had thirty billion dollars in assets and
Speaker 12: a bunch of volume, and it converted into an ETF.
Speaker 12: So it came over with like ammunition, right, and all
Speaker 12: kinds of supplies into the tarotome. So if you if
Speaker 12: you look at all of them, GBTC still has the
Speaker 12: most assets and volume, but of the newborn nine, Blackrock,
Speaker 12: no shocker, is in the lead. Fidelity a close second
Speaker 12: arc bit wise, you know, jockeying for the third position.
Speaker 12: But a lot of them are doing well, Like if
Speaker 12: you look at the volume of even like the least
Speaker 12: traded one, which I believe is the Wisdom Tree, it
Speaker 12: did six ten million dollars in the first two days.
Speaker 12: That would be a big hit, a big day for
Speaker 12: any regular new ETF. So a lot of them has
Speaker 12: traded over ten billion dollars in the first three days.
Speaker 12: Unbelievable action in these ETFs. But Blackrock looking like the
Speaker 12: early favorite to be sort of the GLD of bitcoin,
Speaker 12: but it's got to overtake GBTC, which again came in
Speaker 12: with all this assets and volume and still has more.
Speaker 2: There's a story though on the Bloomberg that talks about
Speaker 2: investors pulling over half a billion dollars from the gray
Speaker 2: scale Bitcoin trust in the first days of trading as
Speaker 2: an ATF.
Speaker 4: Is that significant or how do you read that?
Speaker 13: Eric?
Speaker 12: Yeah, so this is a big situation. So the Newborn nine,
Speaker 12: all the volume is inflows pretty much because there's nobody
Speaker 12: with shares to sell because they didn't exist, right. So
Speaker 12: the GBTC, however, are people who probably want to get out.
Speaker 12: Now that's said, you have to take a tax sit
Speaker 12: if you want to get out. So I don't think
Speaker 12: all twenty six billion as it stands now we're going
Speaker 12: to get out. But there could be some people who
Speaker 12: want to get out take the tax hit. Now it's
Speaker 12: a long story short, but they can't go right into
Speaker 12: the new ETF. So that's why I think a lot
Speaker 12: of the new funds into the newborns are new money,
Speaker 12: some maybe GBTC refugees. But over time, I do believe
Speaker 12: GBTC will be like a slowly melting ice cube and
Speaker 12: the Newborn nine will build up and at some point
Speaker 12: they'll probably be it. They'll both settle a little bit.
Speaker 12: But there is an interesting dynamic of play that you
Speaker 12: don't normally see. And so if I had to guess,
Speaker 12: I'd say gbtcc's you know, four or five billion of
Speaker 12: outflows in the first couple months and then kind of
Speaker 12: settles down.
Speaker 11: Isn't it bigger than an ice cube? Though, it's like
Speaker 11: more like a glacier.
Speaker 12: It's a glacier. Yeah, twenty six billion. I mean I
Speaker 12: believe that makes GBTC like the top three biggest holder
Speaker 12: of bitcoin on Earth. So yeah, it is total glacier.
Speaker 6: Glacier changed.
Speaker 3: Yeah, yeah, hey, uh sorry taking over the show, guys,
Speaker 3: this is a trillion podcast. Eric, I got a question.
Speaker 3: I'm curious if you look at the eleven different uh
Speaker 3: spot bay ETFs, should they all have the exact same
Speaker 3: performance every single day because they're tracking the exact same thing,
Speaker 3: like v O O and S P Y for example,
Speaker 3: that track the S and P five hundred. Shouldn't they
Speaker 3: have the same performance?
Speaker 12: Yeah, it should be very close. The only thing you
Speaker 12: might find difference this is what the premium discount the
Speaker 12: price to the Navy. There's been like, I don't know,
Speaker 12: a thirty basis point swing between them, but again these
Speaker 12: are minor points. We were a little worried that the
Speaker 12: price in the NAB would be a little further apart,
Speaker 12: which is a sign that arbitrage and the mechanics of
Speaker 12: the ETF were more difficult because you can only do
Speaker 12: cash creations. Long story short, everything looks pretty good. So
Speaker 12: the dollars you buy it at, like I think, ib
Speaker 12: ibit start at twenty five dollars. Another one might be
Speaker 12: trading at fifty, but the percentage day on each that
Speaker 12: it changes each day should be pretty much lining up
Speaker 12: minus ten twenty BIPs basis points.
Speaker 11: You know, the other thing that I wanted to ask
Speaker 11: you about is trading volumes, because I thought that was
Speaker 11: a really interesting insight. Here you said, don't don't look
Speaker 11: at you know, assets under your management, and obviously GBTC
Speaker 11: is representated of that. But why are trading volumes the
Speaker 11: thing that you all are watching as you evaluate these
Speaker 11: new newborn nine.
Speaker 12: Yeah, because you need two things for a new category
Speaker 12: to have long term growth. You need volume and you
Speaker 12: need low fees. These have both because we already saw
Speaker 12: the few war breakout. You can get them all between
Speaker 12: twenty and thirty basis points even before they were approved,
Speaker 12: even before if few war happened before the race even
Speaker 12: started again, wild stuff. The volume is crucial because when
Speaker 12: you're an investor, an ETF investor, ready, advisor and institution.
Speaker 12: Volume is like a party with people there. No volume
Speaker 12: is like someone who invites you to a party, but
Speaker 12: there's nobody going. And it's just the general way does
Speaker 12: You don't need volume to buy an ETF, but people
Speaker 12: just like to see liquidity. And so when liquidity forms
Speaker 12: around these ETFs, and it's hard because it has to
Speaker 12: grow naturally. Assets you can just shove in there, but
Speaker 12: volume only grows in nature, and so it's harder and
Speaker 12: more covetive. But once you get liquidity, you get more
Speaker 12: liquidity because liquidity attracts the bigger fish because they like
Speaker 12: to go in and not have impact costs. So as
Speaker 12: you get more and more liquid you get bigger and
Speaker 12: bigger fish and more and more liquidity. And I think
Speaker 12: the volume the start that they're off to is really
Speaker 12: really good. It shows that you will find a comfort
Speaker 12: level to any investor pretty quickly. Again, I got the
Speaker 12: low fees, I got the liquidity, and I'm off and
Speaker 12: get this stat I just ran the numbers of the
Speaker 12: five hundred each launched last year. These bitcoin ETFs are
Speaker 12: are already averaging three times. Would all five hundred of
Speaker 12: those traded today. So again the numbers are just outrageously
Speaker 12: high for these products.
Speaker 11: Okay, so do you want to keep talking about bitcoin
Speaker 11: ETFs or do you want to talk about it?
Speaker 12: Let's move on.
Speaker 11: Theyfe words, there's amazingly there are other things.
Speaker 12: Interventions are coming from me. I know it. My friends,
Speaker 12: I can hear them talking about my back.
Speaker 11: Okay, I want to talk about the small caps ETF
Speaker 11: CALF and why that's been an interesting one that stuck
Speaker 11: out to you.
Speaker 12: Yeah, because small caps were left behind last year and
Speaker 12: honestly a lot of the last decade. And here's this
Speaker 12: small cap ETF CALF that did better than the S
Speaker 12: and P last year.
Speaker 6: So that just blew my mind.
Speaker 12: How can a group of small caps actually beat the
Speaker 12: large caps? And the way they did it was they
Speaker 12: looked it's a ETF that looks at cash flow, and
Speaker 12: why looking at cash flow you get to more quality
Speaker 12: small caps, you get to the quality factor. And the
Speaker 12: quality factor was the best of all the quantitative factors
Speaker 12: last year, so it was enough to lift it above
Speaker 12: large So I thought it was interesting. Also, the CTF
Speaker 12: has seen flows for the past forty four months. It
Speaker 12: is decimated. The Russell two thousand which is its index.
Speaker 12: Like I said, it beat the large caps, so you
Speaker 12: know it's decimating the small caps in general. And I
Speaker 12: think when people think of small caps this year, the
Speaker 12: big word on the street is it's time for them
Speaker 12: to play catch up. Well, here's some that already are
Speaker 12: off to a good start, so we wanted to look
Speaker 12: at it. We also want to know if it could
Speaker 12: keep these flows going, because these kind of flows for
Speaker 12: an ETF, it's like Indy like not a Big three,
Speaker 12: are really unusual, and so it was also an indie
Speaker 12: feel good hit of last year, So that's why I
Speaker 12: chose it.
Speaker 3: Okay for my transition to the next ETF, I want
Speaker 3: to bring up a news story that was just published
Speaker 3: in the last fifteen minutes or so. Blackstone's defaulted NYC
Speaker 3: office loan is for sale at a fifty percent discount.
Speaker 3: Right now, we're certainly seeing some stress when it comes
Speaker 3: to Ker real Estate. As the return to work, despite
Speaker 3: Joel's all of Joel's best efforts to get everybody in the.
Speaker 11: Office, I'm going propaganda campaign.
Speaker 3: It's working for me.
Speaker 1: Matt Uh.
Speaker 3: There's a way to bet. There's a way to bet
Speaker 3: on returning to work. Eric how do you do that
Speaker 3: with a desk? Is the ticker that makes sense?
Speaker 12: Yeah, this was a classic thematic ETF. My colleague Athanasias
Speaker 12: chowse it. So this is the Van Neck office in
Speaker 12: commercial reate ETFU. And basically this is a play on
Speaker 12: return to office. Commercial real estate has really lagged the
Speaker 12: real estate stocks in general or the index for real
Speaker 12: estate stocks. So here you have a laggard and you
Speaker 12: have a trend of like all these companies wanted to
Speaker 12: feel back in the office, and so you know that
Speaker 12: we're interested to see if this thing sort of plays
Speaker 12: catch up, because even if the real estate index is flat,
Speaker 12: if this plays ketch up, you get a bump. Plus,
Speaker 12: it was a novel way to slice and dice the
Speaker 12: real estate market. So it's got Boston prop parties. Uh,
Speaker 12: Vernado are the top two holdings, and a lot of
Speaker 12: people use Vernado as sort of the proxy already for
Speaker 12: the return to office. So that's the top holding, so
Speaker 12: you get a lot of that stock.
Speaker 2: In there as well.
Speaker 11: I think it's just interesting, Like I can't speak to
Speaker 11: the Blackstone story necessarily, but there has been this perception that,
Speaker 11: you know, commercial real estate is down and out and
Speaker 11: no amount of rto can help it, but like slowly
Speaker 11: but surely, like there's at some point it becomes like, wow,
Speaker 11: maybe this is a contrarian investment opportunity. And what's amazing
Speaker 11: about that ETF which is brand new. It's like ETF
Speaker 11: can take a whole trade and just like package it
Speaker 11: into a ticker that you can trade.
Speaker 2: Like a like a stock if we get a lower
Speaker 2: rate environment. So it's incredible, right, and make it much
Speaker 2: easier for this these firms.
Speaker 11: Yeah, yeah, Okay, here's another interesting one, especially off of
Speaker 11: last year where you had this Magnificent seven and the
Speaker 11: tech companies just ran away with it. Eric, what is
Speaker 11: Afanasios Uh put forward as a as another way to
Speaker 11: think about tech perhaps in twenty twenty four.
Speaker 12: Yeah, So this is the Investco SMP five hundred equal
Speaker 12: weight Tech RSPT. So equal weighting is a way to
Speaker 12: sort of like take out any kind of imbalance in
Speaker 12: your index, and so people like it. Whether it's the
Speaker 12: SMP equal weighted, this is Tech equal weighted. So you
Speaker 12: get all of the big Magnificent seven, most of them,
Speaker 12: but you get them at one percent or two percent
Speaker 12: weighting each, so you get a little bit more of
Speaker 12: an overweight to the tech stocks that haven't done so well.
Speaker 12: So overall we're calling this sort of like the methadone
Speaker 12: version of the cues, right, And there's many.
Speaker 7: Ways to do this.
Speaker 12: Many people are figuring out how to get off of
Speaker 12: the sort of reliance on these seven stocks, yet they
Speaker 12: want to stay invested in equities. So we've got NASDAK
Speaker 12: covered call is a way to do it. You've got
Speaker 12: equal weighting is another way to do it, midcaps or
Speaker 12: another way to do it. So we think there'll be
Speaker 12: a movement of flow was away from the market cap
Speaker 12: weighted indexes a little bit this year to these types
Speaker 12: of less magnificent seven up ETFs.
Speaker 11: Still get the tech but just you know that goal
Speaker 11: waiting kind of makes it all fat well obviously, Yeah,
Speaker 11: and then.
Speaker 2: Oh, I mentioned if we actually get a FED that
Speaker 2: cuts rates. Here there's a treasury play here.
Speaker 12: Yeah, this is TUA. This is designed by hedge fund
Speaker 12: people who start a company called Simplify, and it's I
Speaker 12: like it because these products are really interesting. This is
Speaker 12: almost like five times leverage short end of the curve.
Speaker 12: So because you're short in five it's not that much,
Speaker 12: but it's a it's a it's a kind of a
Speaker 12: strategy that you might find pimp Goo doing for institutions
Speaker 12: or a hedge fund. Two is the ticker, and this
Speaker 12: company has gotten a lot of actual institutional investors, which
Speaker 12: is rare for a small company, and so I like
Speaker 12: to highlight it because a lot of ETFs they don't
Speaker 12: just package different asset classes, they package like people. I mean,
Speaker 12: these are hedge fund brains designing funds. And TUA is
Speaker 12: their biggest hit so far. And if the rates fall,
Speaker 12: all this should pop.
Speaker 3: Hey, Eric, make sure to tell your friends and family
Speaker 3: you talked about stuff today other than bitcoin et apps.
Speaker 4: Okay, my name is Eric.
Speaker 12: Clip. Hopefully they they turn it to a clip all
Speaker 12: four it to my friends.
Speaker 2: Okay, good, you definitely sound like I got sleep, so
Speaker 2: really good stuff.
Speaker 3: This is so much fun. The two of you are
Speaker 3: pretty you know, we should do a podcasts.
Speaker 11: You know, it's called tillions.
Speaker 4: Podcast about GNIS and of course Jill Webber. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on
Speaker 1: Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business
Speaker 1: app or watch us live on YouTube.
Speaker 2: Chip design company Synopsis screen to buy software developer Answers
Speaker 2: for about thirty four billion in a cash and stock deal,
Speaker 2: marking one of the largest deals announced worldwide in the
Speaker 2: past year. I just want to point out that Answers
Speaker 2: shares were down five point five percent today, Synopsis was
Speaker 2: up three percent.
Speaker 3: Yeah, maybe because the deal Francis came in below prior
Speaker 3: reported levels. That's according to some ann lists who we
Speaker 3: spoke to here at Bloomberg News. Secondly, Carol Advanced micro
Speaker 3: Devices AMD shares rallying out performing the socks a big time,
Speaker 3: the chipmaker trading at its highest in more than two years,
Speaker 3: as Barkley's raised its price target on the stock to
Speaker 3: two hundred dollars from one hundred and twenty dollars, seeing
Speaker 3: AI as a primary driver of growth.
Speaker 2: Basically saying it's not just about Nvidia, because maybe they
Speaker 2: can't do it all.
Speaker 3: I do want to point out that's pretty happy about
Speaker 3: that AMD.
Speaker 2: Number one gainer in the S and P five hundred
Speaker 2: and the Nasdaq one hundred. All right, so let's get
Speaker 2: into it with Bloomberg News Managing editor of Technology and
Speaker 2: Global Cybersecurity here at Bloomberg News is Lindawan. She's here
Speaker 2: in our Bloomberg Interactive Broker studio.
Speaker 4: A lot going on. Let's first talk about the deal.
Speaker 2: These are not companies that I feel like when we
Speaker 2: talk about Sami's do we typically talk about these two companies.
Speaker 4: Tell us about them and what we know.
Speaker 14: Nobody knows about these companies outside of these walls.
Speaker 3: Okay, So can I just say I'm so glad you
Speaker 3: said that. What I'm like, Okay, this is a thirty
Speaker 3: four billion dollar deal, and yes, there have been mumblings
Speaker 3: about this over the past week or so. Yeah, and
Speaker 3: I was like, I should know about the This is
Speaker 3: a big deal.
Speaker 4: This was sixty one percent yea last year.
Speaker 14: By the way, that's right, It's a good gainer. I mean,
Speaker 14: there's a good reason.
Speaker 6: Right.
Speaker 14: So Synopsis owns this very specialized part of the chips
Speaker 14: supply chain, which, as you know, is critical to the world.
Speaker 14: Chips are in everything. They're in televisions, they're in refrigerators,
Speaker 14: they're in cars, they're in like AI compute, you know.
Speaker 14: And Synopsis doesn't make the chips. Synopsis doesn't even make
Speaker 14: the chip machines that make the chips. Synopsis makes the
Speaker 14: software that flows into the machines that then makes the chips.
Speaker 14: And there are very few companies that are in that space,
Speaker 14: so they already have a really good market share in there.
Speaker 14: And this investment, this thirty four billion dollar deal, what
Speaker 14: that does is it increases their stack, so to speak,
Speaker 14: in the technology world. So they're not just designing the
Speaker 14: software that makes the chips, but they're able to now
Speaker 14: integrate this company ansis that builds models that allows men
Speaker 14: manufacturers of everything from cars to like aircraft's defence devices
Speaker 14: and military equipment to model how that equipment is going
Speaker 14: to be used in the real world. So imagine taking
Speaker 14: this like chip design company and merging it with this
Speaker 14: modeling software, and you have like a very powerful combination
Speaker 14: that can go after even.
Speaker 4: Bigger market people one stop shopping. It feels like that's
Speaker 4: right companies.
Speaker 3: Yeah you need your chips, Carol, you know where to go, right?
Speaker 3: We do you do all your chip shopping there?
Speaker 6: Yeah?
Speaker 4: Last time I went chip shopping.
Speaker 2: But it's really it's well, you know, it's funny. I
Speaker 2: love the supply chain analysis function on the Bloomberg and ansays,
Speaker 2: I mean customers are Caterpillar, Boeing, Rose, Royce, Lenovo, HUAWEIH,
Speaker 2: the military, like all of them. Right, And then I'm
Speaker 2: looking at Synopsis, and I'm looking at a lot of
Speaker 2: companies that I don't actually know.
Speaker 14: Oh, well, you just you just mentioned a M D
Speaker 14: m D all the all the major chip manufacturers of
Speaker 14: the world are going to use a contel like Synops Intel.
Speaker 4: That's right, and Ancess.
Speaker 3: Now I see that a customer, they have a.
Speaker 14: Song relationship with each other. What they would say, and
Speaker 14: I think they said it during their call earlier this
Speaker 14: morning when they announced the deal, is that this is
Speaker 14: like years in the making, like they have been using
Speaker 14: each other's technology for quite some time.
Speaker 2: Regulatory problems, regulatory issues, right, because we're interesting. Synopsis rallied,
Speaker 2: which was the acquirer, which is not what you typically see,
Speaker 2: and then answers as the target went down.
Speaker 14: Both moves are counterintuitive to some extent, exactly what you mentioned,
Speaker 14: which is the fact that like the price it's going
Speaker 14: for is less than what the market had expected. There
Speaker 14: were some reports, not from US, there were some reports
Speaker 14: out there about the fact that ances could end up
Speaker 14: going for like four hundred dollars per share and ended
Speaker 14: up going below that. So that's one reason. But another
Speaker 14: reason is exactly what you said. So another reason, of
Speaker 14: course is the regulatory concern over having these two companies
Speaker 14: merge together. That's a pretty powerful market force, and whether
Speaker 14: it gets past the CFTC and other regulatory h we
Speaker 14: don't know. And then there's the geopolitical pressure of China.
Speaker 14: Right will China, a big consumer who has a say
Speaker 14: in these kinds of mergers, even if they're two American
Speaker 14: companies sign off on a deal like this that would
Speaker 14: create a powerful company within here, you know, within these bounds.
Speaker 3: That's surprising to me. Why would China have a say here?
Speaker 14: It's super surprising. I didn't learn this until like another
Speaker 14: deal that involved two other technology companies ended up getting
Speaker 14: ended up falling apart earlier this year. China is a
Speaker 14: major consumer of all things around the world because it
Speaker 14: has huge buying power. It actually has say, an influence
Speaker 14: and approval processes in place for mergers of companies that
Speaker 14: serve the country. That's interesting even if they're outside of
Speaker 14: the country.
Speaker 3: So I did the FAGO function on the Bloomberg terminal
Speaker 3: literally FAGO, And what you can do is you can
Speaker 3: pull up the financial analysis by geography and you can
Speaker 3: see that. In fact, for Synopsis, at least fifteen point
Speaker 3: two percent of the company's revenue in twenty twenty three,
Speaker 3: a fiscal year ended in October, came from China.
Speaker 14: That's exactly right. And actually, in an interview with Bloomberg
Speaker 14: Television not too long ago, Synopsis even said the then
Speaker 14: outgoing CEO of Synopsis said we would be selling even
Speaker 14: more to China. China would represent an even larger share
Speaker 14: of our market if it weren't for the restrictions that
Speaker 14: the US has placed on exports of chip technology and
Speaker 14: chips themselves to that country.
Speaker 3: And it doesn't look like Ansis gets a significant portion
Speaker 3: of revenue from China at this point.
Speaker 2: It's not, but it will, yeah, right, So once it's
Speaker 2: a part of the company, I mean for Synopsis, it
Speaker 2: opens up a ton of different markets for them, right
Speaker 2: that they haven't already played in. So I don't know, net,
Speaker 2: how are you thinking about this? Is this likely to
Speaker 2: happen or we're gonna have to be patient or I
Speaker 2: don't know. How do you think about it? As an analyst?
Speaker 2: I know you can't say yes or no in terms
Speaker 2: of it's going to happen, But.
Speaker 14: So hard to call whether it's actually going to happen.
Speaker 14: But I'll point you to two things. The one, there
Speaker 14: was a very large murderer in aviation today that faced
Speaker 14: some anti trust pushback.
Speaker 4: Talked about right right.
Speaker 14: But on top of that, I will also point you.
Speaker 2: To because they were concerned about anti competitive Would this
Speaker 2: be anti competitive?
Speaker 14: That's the question, right and and they raised that as
Speaker 14: like a potential concern as part of their conversation today
Speaker 14: with investors. But the other thing I'll point you to
Speaker 14: is the estimated closure closing date of this deal is
Speaker 14: the first half of twenty twenty five in the in
Speaker 14: the market's mind, that just points to the fact that
Speaker 14: they are anticipating a potential You.
Speaker 3: Never want a deal to take a year to close.
Speaker 3: I mean even from selling a condo. You know, somewhere
Speaker 3: in the in the US, a realtor is going to
Speaker 3: say to you, let's get this thing closed as soon
Speaker 3: as possible, Bee, because the longer we wait, the more
Speaker 3: this deal can fall in my hand.
Speaker 4: Yeah, we do have an election here in November.
Speaker 3: Are you raising your hand because you want to talk Carol?
Speaker 12: Yeah?
Speaker 2: Okay, is it the expectation that about that election we'll
Speaker 2: get through an election, we'll have a new administration.
Speaker 4: Is that part of it.
Speaker 14: That's an interesting strategy. I hadn't even thought about it.
Speaker 14: Will we be ushering in a different c OFDC that
Speaker 14: is more like merger friendly? I don't know. It's not
Speaker 14: like the Trump administration was.
Speaker 2: Both of them had pushing in terms of China, but
Speaker 2: you never know, right.
Speaker 14: Yeah, that's a dangerous game to play. If that's the
Speaker 14: reason why they're scheduling the closing for first half of
Speaker 14: twenty twenty.
Speaker 4: Five, I don't know. It's just weird. It's a long time.
Speaker 4: Uh quickly, can we move?
Speaker 3: Yeah, go ahead, Can you can talk? Yeah, permission granted,
Speaker 3: I'm giving you permission.
Speaker 2: AMD number one gainer in the S and P five hundred,
Speaker 2: the Nasdaq one hundred.
Speaker 4: I loved what.
Speaker 2: Barclays had to say, and part of it was I
Speaker 2: lost all my notes. But basically and video, yep, it's
Speaker 2: been the chip company we talk about when we think
Speaker 2: about AI, but basically saying maybe they can't do all
Speaker 2: of it, Like the ecosystem that AI is creating, that
Speaker 2: you're going to need more players are shaking your head.
Speaker 14: It was always a crazy phenomenon to be that only
Speaker 14: in video would enjoy an AI bump. It was so
Speaker 14: because we would throw all these other chip companies out there, like, hey,
Speaker 14: remember AMD, Remember you know all of these other companies
Speaker 14: that also and for some reason in video was just
Speaker 14: eating up all that. I mean, they have first mover advantage,
Speaker 14: but first mover advantage only takes you so far. At
Speaker 14: some point, others crowd that area and you have to
Speaker 14: figure out how to continually innovate. And you just had
Speaker 14: AMD like come out with this new and video chip
Speaker 14: rival right like it was only a matter of time
Speaker 14: before everyone woke up to that. I'm just like a
Speaker 14: little surprised that it took that.
Speaker 2: Barkway said, the desire to have a second source what
Speaker 2: overwhelmed difficulties for the software ecosystem. Is there anybody else
Speaker 2: in addition to AM do that you think we should
Speaker 2: be watching in terms of the chip space.
Speaker 14: Like is there any money that should pile into any
Speaker 14: other part financials?
Speaker 2: I know you can't, I won't touch it, but that
Speaker 2: we have on our radar.
Speaker 14: Maxim is like another you know, chips company that comes
Speaker 14: up every once in a while. I will leave it
Speaker 14: there because I don't want anybody to end up trading
Speaker 14: on my on my stuck advice. But but you know
Speaker 14: there are others in the space, and you know, uh,
Speaker 14: frankly arm is a publicly listed company right now. They
Speaker 14: like they market their IPO on the hopes of an
Speaker 14: AI bump, So like there's another one that could be
Speaker 14: a potential play.
Speaker 4: Our producers, right, we have to have you on. That
Speaker 4: was great.
Speaker 2: Thank you so much, Bloomberg News Managing Editor of Technology
Speaker 2: and Global Security, Linda Want, Thank you so much.
Speaker 12: Lynn.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern on Bloomberg Radio,
Speaker 1: the Bloomberg Business app, and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: Plenty ahead in our second hour of the weekend edition
Speaker 2: of Bloomberg Business Week, including top travel destinations this year
Speaker 2: and folks, it's not only.
Speaker 4: About people heading to Italy, know that there's anything wrong
Speaker 4: with that.
Speaker 3: Plus, speaking of travel, for all you ski buffs out there,
Speaker 3: we speak with ski legend Body Miller about his new
Speaker 3: ski company that could jump turn the entire ski industry.
Speaker 2: And we revisit the most anti climactic New Year's Eve
Speaker 2: of them all. Y two K, we're taking a trip yep,
Speaker 2: back to nineteen ninety nine.
Speaker 3: And speaking of trips, first up this hour this week,
Speaker 3: we headed to California Forever. It's a massive project funded
Speaker 3: by a bunch of billionaires. You'll know their names, venture
Speaker 3: capitalist Marc Andreesen LinkedIn co founder Rie Hoffman. They've all
Speaker 3: spent about nine hundred million dollars together to buy sixty
Speaker 3: two thousand acres in Solano County, California. It's just northeast
Speaker 3: of San Francisco, and full transparency.
Speaker 2: They haven't built anything yet, but their plan is to
Speaker 2: create a new city that's self sufficient and sustainable while
Speaker 2: addressing the Bay Arias dire housing shortage. The vision is
Speaker 2: a walkable community.
Speaker 4: So easy, peasy right now?
Speaker 3: Oh yeah, development in California always so easy, Not so fast.
Speaker 3: The plan has sparked fierce opposition from local residents, farmers,
Speaker 3: and politicians, who accused the developer of using shady tactics
Speaker 3: and suing those who stood.
Speaker 5: In the way.
Speaker 2: Writing about it in what was a most read story
Speaker 2: on the Bloomberg this past week, Bloomberg News California Bureau
Speaker 2: Chief Karen Breslau, who joined us from her car.
Speaker 10: I have pulled over. I'm across the street from the
Speaker 10: future City, which is now just these these enormous wind turbines.
Speaker 10: It's actually a beautiful day out here. It's it's been raining,
Speaker 10: so everything's green and the sky is blue, and the
Speaker 10: wind turbines are turning, and it does look it does
Speaker 10: look quite idyllic.
Speaker 4: So piece of cake. They can build it, no.
Speaker 11: Problems, no problem.
Speaker 3: It's nineteen degrees where we are.
Speaker 9: We kind of don't like you right now, Karen, I'll
Speaker 9: keep it to myself, okay, So tell us about this project,
Speaker 9: give us a little bit of the who, what we are,
Speaker 9: and why, just for those who might not be familiar.
Speaker 10: Of course. So we're in Solano County, which is of
Speaker 10: the very excerbs of the of the San Francisco Bay Area.
Speaker 10: This is still a largely rural community, some subdivisions, and
Speaker 10: we're about halfway between the Bay, between San Francisco and Sacramento.
Speaker 10: And this area became a subject of fascinations Solano in
Speaker 10: the last few years. A mysterious land buyer started snapping
Speaker 10: up parcels of land for often very inflated prices, and
Speaker 10: nobody knew who this individual was or individuals. They were
Speaker 10: operating under a mysterious name Flannery and Associates, which has
Speaker 10: just taken off a street sign in this in this county.
Speaker 10: And they were basically the investors were outed last summer.
Speaker 10: And it's all the boldface names you mentioned. It's it's
Speaker 10: Mike Moritz, Loreene pal Jobs, Mark Andresen Reid Hoffman, who's
Speaker 10: who of Silicon Valley investors, And they poured what we
Speaker 10: now you know, so far nine hundred million dollars into
Speaker 10: a as yet unseen new city that will be you know,
Speaker 10: literally supposed to be, you know, stood up in what
Speaker 10: are now you know, fields used for grazing and wind power.
Speaker 10: And the idea is to build this green new city.
Speaker 10: It's part of the new urbanist movement, which is to
Speaker 10: have walkable neighborhoods. In introducing their plans today, you know,
Speaker 10: the developers, the planners talked about creating what sounds like
Speaker 10: a dream to most Californians, which is a place where
Speaker 10: you can walk to anywhere you want to be in
Speaker 10: any given day in ten minutes. So that could be
Speaker 10: your job. It could be your child's school, it could
Speaker 10: be a library of barbershop, a cafe, or your place
Speaker 10: of employment or your own small.
Speaker 2: It's very left fron City, Like I think about that
Speaker 2: concept prought back right, Like you know, Sam left Freck
Speaker 2: and I cross the water from here in Jersey City,
Speaker 2: downtown Jersey that whole idea that they left Rack did
Speaker 2: the same thing the family. This whole Newport area where
Speaker 2: you could live, work, there are schools, everything you could.
Speaker 4: Coldly get to.
Speaker 3: Would Karen talk about the opposite thing, Yeah, talk a
Speaker 3: little bit about opposition and how this is going to
Speaker 3: a vote now.
Speaker 10: Yeah, So there are the reason that the opposition is
Speaker 10: very important is because in California, and particularly in this county,
Speaker 10: it's governed by a land use measure that was designed
Speaker 10: in the nineteen eighties to prevent sprawl. And so none
Speaker 10: of this land is zoned for housing or manufacturing or
Speaker 10: you know, technology or any of the things that the
Speaker 10: that the planners would like to have. So they have
Speaker 10: to go to the voters and get their approval to
Speaker 10: change the county zoning regulations. The problem here is that
Speaker 10: they have alienated already some key constituencies. One would be
Speaker 10: you know the farmers who who comprise a large part
Speaker 10: of the population here, and as you mentioned in your
Speaker 10: in your intro, you know, the organizers, the developers have
Speaker 10: sued several of the farmers claiming collusion and price fixing
Speaker 10: simply because they wanted they didn't want to, you know,
Speaker 10: they wanted a high price for their property. Once they
Speaker 10: saw that that, you know that the farmer next door
Speaker 10: got more. So it's kind of supply and demand. So
Speaker 10: there's a very contentious lawsuit. They've also terribly irritated two
Speaker 10: local members of Congress, John Garmendi and Mike Thompson, who
Speaker 10: represent this area that are very close to Travis Air
Speaker 10: Force Base, which is the largest air force base on
Speaker 10: the West Coast and a key gateway to the Pacific.
Speaker 10: So there were some national security concerns when they were
Speaker 10: in stealth mode. And then the conservationists in this area
Speaker 10: are wondering, why would you not infill the existing small
Speaker 10: cities in this county rather than carving a brand new
Speaker 10: one out of farmland. They're accusing the developers of creating
Speaker 10: sprawl or planning sprawl, rather than you know, this utopian
Speaker 10: green city, which is what they unveiled today.
Speaker 3: Who These are venture capitalists, you know, they're used to
Speaker 3: putting money into things and making an incredible return. Is
Speaker 3: that the plan for this city? I mean, cities are
Speaker 3: public good they're owned by the residents. Any one, how
Speaker 3: does the governrice work here? We have about a minute left,
Speaker 3: but explain how that would work here?
Speaker 10: Yeah, so that the planner of this whole operation is
Speaker 10: a thirty six year old guy named Ian Shromak who's
Speaker 10: originally from the Czech Republic and has spent some time
Speaker 10: in gold and socks, you know, some startups. You know,
Speaker 10: how's the Silicon Valley thing going on?
Speaker 12: And he.
Speaker 10: Keeps saying, you know, my investors, this is patient capital. Well,
Speaker 10: if there's one thing, Silicon Valley isn't known for its
Speaker 10: patient capital. But trumk, it's the planner he's talking about,
Speaker 10: you know, a fifty year time frame before this community
Speaker 10: is fully built out. And so this is not I mean,
Speaker 10: you know, he said, I hope I'll retire off of
Speaker 10: this project. This guy's in his thirties. So the time
Speaker 10: frame for building a city, you know, in history it's
Speaker 10: centuries or millennia, and in this case they're talking about
Speaker 10: fifty years, which is pretty fast by city building standards.
Speaker 10: But that I think that is really one of the
Speaker 10: unanswered questions is what, you know, what kind of return
Speaker 10: on investment are they expecting and what is the timeframe
Speaker 10: is to prove a concept, which is that we can
Speaker 10: go back to the you know, go back to the
Speaker 10: future and recreate American walkable American cities like we saw,
Speaker 10: you know, in the early nineteenth century. There is there
Speaker 10: is a kind of a nostalgia piece to this when
Speaker 10: you you know, fused with green energy.
Speaker 3: We would love to talk about forever. You've got to
Speaker 3: come back, get back to your reporting. We really appreciate
Speaker 3: you joining us. Bloomberg is California Bureau Chief Karen joining
Speaker 3: us from Solana County.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on
Speaker 1: Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App,
Speaker 1: or watch us live on YouTube.
Speaker 3: Were airlines dots falling for another day this after they
Speaker 3: got absolutely hammered on Friday. Back then, Carol, the SMP
Speaker 3: gage of airlines declined the most in nineteen months United's all,
Speaker 3: more than ten percent Delta fell nine percent. American Airlines
Speaker 3: fell nine point five percent. This all a result of
Speaker 3: Delta lowering its profit forecast for the full year, which
Speaker 3: really understand, of course, the challenges the broader industry faces
Speaker 3: when it comes back to recapturing that pre pandemic performance.
Speaker 2: Yeah, like you said, the group overall down seven point
Speaker 2: six percent on Friday, then another one point three percent
Speaker 2: in today's session.
Speaker 4: All right, so concern lingers.
Speaker 2: Even after what was the busiest day ever for US
Speaker 2: air travel just a few months ago. We're talking about
Speaker 2: the Sunday after Thanksgiving, So all right, what's going on?
Speaker 3: Yeah, Haley Berg is back with us. She's lead economist
Speaker 3: for the travel app Hopper. That app analyzes trillions of
Speaker 3: data points i e. Prices on flights, car rentals, and
Speaker 3: hotels to make predictions about how much tickets are going
Speaker 3: to cost. Haley joins us on Zoom from Boston. Haley,
Speaker 3: good to have you back with us. So what gives here?
Speaker 3: Because Hopper says that more than three quarters of Americans
Speaker 3: are going to spend the same or even more on
Speaker 3: travel this coming year. So why are we hearing the
Speaker 3: gloominess when it comes to airlines?
Speaker 6: You know?
Speaker 15: One of the biggest sticking points for prices in the
Speaker 15: last three or four years has been supplied. There have
Speaker 15: not been enough seats to book, and that's why fares
Speaker 15: have been so incredibly high over the past few years.
Speaker 15: Think back to some twenty twenty two domestic airfare the
Speaker 15: highest that we had seen in all of our history
Speaker 15: at Hopper. So supply is now exceeding where it was
Speaker 15: in twenty nineteen. A lot of it is exceeding now
Speaker 15: on international routes. So part of this is just the
Speaker 15: equation of travelers are looking for low prices. There are
Speaker 15: more seats available to books, so they have more options.
Speaker 15: A lot of those options are low cost carriers who
Speaker 15: may have entered or expanded in the last two years.
Speaker 15: All of that is putting downward pressure on prices. Despite
Speaker 15: the fact that fifty percent of our users at Hopper
Speaker 15: are expecting to travel more this year than they did
Speaker 15: last year.
Speaker 2: Is that true domestic versus international travel.
Speaker 15: Yes, we're seeing a tremendous amount of demand for international travel,
Speaker 15: especially among younger travelers, and they're not just hitting the
Speaker 15: London and Paris.
Speaker 10: Of the world.
Speaker 15: They're really going to more off the beaten track destinations,
Speaker 15: destinations where there might be deals or just more unique experience,
Speaker 15: and says, so still very strong demand on international capacity
Speaker 15: there has been slower to recover. Prices to Europe are
Speaker 15: recovering because we've seen capacity added back there. Prices trans
Speaker 15: Pacific very different story. They still remain thirty to sixty
Speaker 15: percent higher because capacity has been slow to recover there.
Speaker 3: What about when it comes to other parts of the
Speaker 3: travel experience? Hotels? I couldn't believe how expensive hotels were
Speaker 3: in the fall when Carol and I were traveling, but
Speaker 3: it was so I couldn't believe how expensive it was.
Speaker 3: What's it going to look like this year?
Speaker 15: You're not alone in feeling like accommodation prices have been
Speaker 15: incredibly high. They have been, and we're expecting them to
Speaker 15: stay about the same this year. If we do see improvement,
Speaker 15: it would probably be towards summer or the second half
Speaker 15: of the year. But yes, demand for travel remains high,
Speaker 15: and that means that hotel stays vacation rentals, especially in
Speaker 15: those peak markets, they're selling out, and that means that
Speaker 15: if you're not booking far enough in advance, you're probably
Speaker 15: seeing an incredibly high prices. What We always recommend is
Speaker 15: for hotels in particular, if you're headed to a big city,
Speaker 15: book at the last minute, that's when those perishable rooms
Speaker 15: are going to go on sale. You're headed to a
Speaker 15: leisure destination, you go to Miami, you're doing a spring
Speaker 15: break trip. Book that very far in advance, couple months,
Speaker 15: because that's when prices will be lowest, when that availability
Speaker 15: is still high.
Speaker 2: What are you looking at, Carol, No, I'm just kind
Speaker 2: of now I'm thinking, are you think No, it's just
Speaker 2: interesting and I just wonder you know what you're seeing.
Speaker 2: We've got a great chart for our folks who are
Speaker 2: watching on YouTube and a streaming service.
Speaker 4: I'm just not sure.
Speaker 2: So if you're basically it says, if you're thinking about
Speaker 2: the main vacation plan you want to take in twenty
Speaker 2: twenty four, and this comes courtesy of our Bloomberg Intelligence team,
Speaker 2: if the costs exceeds your plan budget, what will you do?
Speaker 2: Twelve percent are going to look for a cheaper destination,
Speaker 2: fifteen percent are going to look I guess at attractions
Speaker 2: and maybe what they're spending there. Forty five percent will
Speaker 2: increase their budgets.
Speaker 3: Oh that's just tax and if you're just listening to
Speaker 3: us and not watching. The forty five percent is like,
Speaker 3: you know, the possible changes of your budget ex seeds plan.
Speaker 3: The majority of almost the majority of people, almost half
Speaker 3: the people said they'll just increase magic.
Speaker 2: Yeah, I mean that's bullish, but yeah, it's bullish. But
Speaker 2: it's also interesting when we just did a story about
Speaker 2: where if people found that they had what a ten percent.
Speaker 3: Bump in income er, Yeah, they pay down debt.
Speaker 4: They're going to pay down debt. So help me.
Speaker 2: Are you talking about I don't know what are you seeing?
Speaker 2: Higher end traveler, a bigger pocketbook, lower end?
Speaker 4: Is there any differences?
Speaker 15: There are a few things happening. So our Hopper users
Speaker 15: are primarily millennial in gen Z and seventy seven percent
Speaker 15: of them say that they are going to spend the
Speaker 15: same or more on travel this year. And there's really
Speaker 15: two schools here. One is our millennial generation. They built wealth.
Speaker 15: They are coming out, many of them of a few
Speaker 15: years of savings. Those who were in advantageous positions headed
Speaker 15: into the pandemic. They are spending more on travel. A
Speaker 15: larger proportion of their wealth is going towards trips, vacations.
Speaker 15: They have credit cards that allow them to gain points.
Speaker 15: The more they book they are loyal So this group
Speaker 15: is absolutely spending more and traveling more. And then on
Speaker 15: the flip side, we have incredibly priced conscious travelers more
Speaker 15: on the gen Z and what they're doing. They're taking
Speaker 15: their travel budget and they're saying, can I get two
Speaker 15: trips out of my budget from last year that might
Speaker 15: have been one trip?
Speaker 12: And we often see this.
Speaker 15: Travelers are skipping the trip to Miami and they're going
Speaker 15: to a destination in Puerto Rico that might be a
Speaker 15: whole lot less expensive and flight and in country expenses,
Speaker 15: So there is some optimization within the budget. That's absolutely happening.
Speaker 15: We see that a lot among Copper users because they're
Speaker 15: very pricensit.
Speaker 3: Okay, very briefly, we have top domestic and top international locations.
Speaker 3: Your top domestic locations. We got a list of them.
Speaker 3: We're about to show on the screen which one sticks
Speaker 3: out to you of these five.
Speaker 15: Here, I would say that Orlando is always a big one.
Speaker 15: It's popular, not just for those Disney trips, but all
Speaker 15: so for Port of Orlando starting on cruises, which as
Speaker 15: we know, are coming back you know, in the last
Speaker 15: year or two. So Orlando's always a big one, in
Speaker 15: part because no matter how much demand we see going there,
Speaker 15: prices are low. It's inaccessible and affordable place.
Speaker 4: To visit and international.
Speaker 2: Your top international locations Cancun, Mexico, Dominican Republic, London, England, Rome, Italy, Tokyo, Japan.
Speaker 2: That's kind of a mixed bag. Just got about fifteen
Speaker 2: seconds left.
Speaker 15: Any thoughts on that those tropical destinations are inexpensive alternatives
Speaker 15: to some of those longer hauled trips. But really this
Speaker 15: year is going to be all about Tokyo and the
Speaker 15: return to Asia.
Speaker 1: Wow.
Speaker 3: Wow, that's cool to do.
Speaker 4: That's interesting. Where are you going me?
Speaker 3: Yeah, we don't have anything planned. Oh I'll probably go
Speaker 3: to the American West.
Speaker 4: Oh that's what you said that earlier.
Speaker 2: All right, Haley Burg, lead economist at Hopper, Thank you
Speaker 2: so much.
Speaker 11: That was fun.
Speaker 16: This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern on Bloomberg Radio,
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Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 3: Well, each fall, Bloomberg Pursuits does a ski takeover. They
Speaker 3: highlight where to ski and what gear to use for
Speaker 3: the upcoming season. So in last season's takeover, we sent
Speaker 3: BusinessWeek contributor Gordy Megros to trough out some skis from
Speaker 3: a new company called Peak Ski Company, based in Montana,
Speaker 3: co founded by ski racing legend Body Miller. So here's
Speaker 3: what Gordy wrote after spending all day on the skis, Carol,
Speaker 3: Typically skis require a certain amount of speed and pressure
Speaker 3: to engage the tip and initiate the turn, but these
Speaker 3: carved without having to apply that force at speed on
Speaker 3: the steeps. They held the turn like a race ski,
Speaker 3: and in bumps and slush they were quick and forgiving.
Speaker 3: Not once did I feel off balance, he continued. Anybody
Speaker 3: could use these skis. Beginners would love them because they're
Speaker 3: easy to turn. Experts would two because they still can
Speaker 3: ski aggressively and feel solid underfoot.
Speaker 2: It's a great feel of what these two gentlemen are
Speaker 2: up to. So let's talk more about the skis with
Speaker 2: the co founders of the company, Andy Worth and Body Miller.
Speaker 2: Andy also CEO and president of Peak Ski Company. He
Speaker 2: joins us from Bozeman, Montana. Body, by the way, of course,
Speaker 2: you know him, Olympic and World Championship, gold medalist many
Speaker 2: times over and the chief innovation officer at Peak Ski company.
Speaker 2: He joins us on zoom from Big Sky, Montana. Guys,
Speaker 2: so great to have you here with us.
Speaker 1: Body.
Speaker 4: Let me start with you.
Speaker 2: How did this all come together to create Peak Ski
Speaker 2: and why did you want to do it?
Speaker 17: Well, I've been obviously in skiing since I was grow
Speaker 17: a little and had exposure to a lot of different companies,
Speaker 17: started on K two and ben Fisher, then Rosen Goold
Speaker 17: and Atomic, then Head for eight or ten years.
Speaker 6: So being in the race rooms and.
Speaker 17: Seeing the economics of the way the ski companies worked
Speaker 17: and the challenging aspects of the construction method was kind
Speaker 17: of frustrating for me. It's pretty, it's pretty, it's pretty analogue,
Speaker 17: and they're sort of stuck in a lot of ways.
Speaker 17: We didn't really change much in the ski world. We
Speaker 17: were changing skis all the time, prototyping, but just watching
Speaker 17: what was happening in the consumer market and then sort
Speaker 17: of understanding the business model of you know, those companies
Speaker 17: as I was with them. It was it seemed really
Speaker 17: unlikely that I would go into the hard goods side
Speaker 17: of the business. I know Andy felt the same way.
Speaker 17: We both kind of came into this as skeptics or contrarians,
Speaker 17: but as we dove into it a little bit more.
Speaker 17: I mean, I always wanted to bring better skis to
Speaker 17: the consumer market. There's a big gap between World Cup
Speaker 17: skis and the rest and World Cup skis, granted, are
Speaker 17: specifically designed for racing and hard snow, really smooth, you know,
Speaker 17: perfectly prepared hills, which obviously wouldn't apply as well to
Speaker 17: your consumer, just because the hill's always a little messed up,
Speaker 17: puffs the.
Speaker 6: Snow and nothing as manicured like we get in World Cup.
Speaker 17: But my goal was to bring really good skis to
Speaker 17: the market. And then as I sort of Andy and
Speaker 17: I evolved through this, I had a connection with a
Speaker 17: company in Germany, a good friend of mine, and I'd
Speaker 17: always wanted to sort of modernize the manufacturing process, and
Speaker 17: I think I don't know that Andy and I would
Speaker 17: have done it had we just had the model of
Speaker 17: doing what we're doing right now, which is, you know,
Speaker 17: building skis and selling them direct consumer. It's a fine business,
Speaker 17: but it's the scalability is a little bit problematic in
Speaker 17: this case. The real sort of enticing part was re
Speaker 17: engineering the manufacturing process so that instead of forty five
Speaker 17: minutes to build a ski and it's glue and they
Speaker 17: you know, for those of you who don't know, it's
Speaker 17: a bit like making a sandwich. They call it a
Speaker 17: sandwich construction. It's a lot of different layers laid up
Speaker 17: with blue or pore impregnated with blue, and then you
Speaker 17: compress it and cook it in a press. It takes
Speaker 17: about forty minutes or so right now, which is why
Speaker 17: they've been building skis for next winter already right now,
Speaker 17: because that's how long it takes to build a million
Speaker 17: pairs of ski set.
Speaker 6: And we have a manufacturing process that.
Speaker 17: We're in the in the in the works on where
Speaker 17: we can build a ski in somewhere around ten seconds
Speaker 17: and no blue, so we'll be able to recycle it
Speaker 17: the same machine that it constructs it will take it
Speaker 17: apart and we can retask those materials. So well, that
Speaker 17: was the part that really got us excited. That was
Speaker 17: sort of the why of doing this.
Speaker 3: I want to talk we'll talk, Yeah, I want to
Speaker 3: talk more about that.
Speaker 6: But I hopefully that's what that's where the home run is.
Speaker 3: I want to bring in Andy Worth here because he's
Speaker 3: a many your veteran of the ski industry, having run
Speaker 3: some huge mountains here in the US Squad Valley for
Speaker 3: many years, worked at Interest before that. Andy, U talk
Speaker 3: about the business here and the financing of this. It's
Speaker 3: a little confusing to me about who the investors are
Speaker 3: and who you raised money from and how much money
Speaker 3: you've raised. So give us the details on the business
Speaker 3: side here, and you know the reception that you've gotten
Speaker 3: from as you go out and try to raise money
Speaker 3: for this.
Speaker 16: Thank you very much for that lead. But I didn't
Speaker 16: I should have thought you guys were going to refer
Speaker 16: to Gordy's article on us. We were recipients of that
Speaker 16: in November pleasantly and certainly a respected writer and certainly
Speaker 16: writing for Bloomberg. That's a great lead out relative to
Speaker 16: the business. As Body and I Body mentioned, we were
Speaker 16: both retired about four years ago. I worked in the
Speaker 16: private equity world and also running a bunch of ski resorts.
Speaker 16: As you know, we came out this business with ventrarian approaches.
Speaker 16: The understatement skeptical in many ways. But after doing a
Speaker 16: great deal of research and realizing that what body had
Speaker 16: in his mind was something that could provide an exceptional product,
Speaker 16: new type of product to the market. And we had
Speaker 16: these strategic initiatives on which we were working and we
Speaker 16: commenced building the company, standing it up so to speak,
Speaker 16: and launched in April last year. And Tom, to your point,
Speaker 16: we had established an initial pre cash valuation based on
Speaker 16: pro forma EBITDA on a three year basis and pretty
Speaker 16: contemporary multiples from what I was able to glean from
Speaker 16: other companies. That pre cash valuation was thirteen million small company.
Speaker 16: And then we raised completed eight million dollars raised about
Speaker 16: gosh three four months ago, so postcash twenty one and
Speaker 16: in this case we're currently raising funds through Republic Capital.
Speaker 16: This is crowdfunding, basically a safe note, and it has
Speaker 16: our enterprise value at thirty five million. The reason being, Tom,
Speaker 16: is the we have a clear line of sight now
Speaker 16: on these strategic initiatives. The core of the business are
Speaker 16: the skis and that's what prompted and supports that initial
Speaker 16: fund raising effort and the valuations to which I mentioned
Speaker 16: that I referred to. In this case, we're starting to
Speaker 16: get a clean line of sight on the three strategic initiatives,
Speaker 16: which include technology integration. It's extreme innovation across all levels.
Speaker 16: But technology integration through peak Locate, which is this proprietary
Speaker 16: device we're inserting in the skis Wait.
Speaker 15: Wait, so.
Speaker 4: We're bloomber.
Speaker 2: So we get a little wonky about the financial side
Speaker 2: of it. So it's interesting, So do you guys continue
Speaker 2: along these ways? Is there venture capital money also in it?
Speaker 2: Is the goal to eventually go public?
Speaker 4: Like, how do you think about it?
Speaker 16: Andy, Yeah, No, A great question, of course, and not
Speaker 16: surprisingly on this format. But I think really we're focused
Speaker 16: on right now is advancing on these strategic initiatives, and
Speaker 16: then lessons learned in other acquisition environments in my old
Speaker 16: career is We're going to advance on these initiatives and
Speaker 16: I can get to the point where we can generate
Speaker 16: substantial value for our current investors and investors coming in
Speaker 16: through republic. In this mechanism, we don't have a you
Speaker 16: can't speak to any exit strategy because we're focused on
Speaker 16: an execution right now. Yeah, but we know that we
Speaker 16: can take the value of the business right now thirty
Speaker 16: five million up substantially from here.
Speaker 2: Well, it's interesting, but it come on back in because
Speaker 2: Tim and I were talking when we were prepping for this,
Speaker 2: because Tim's a ski are really into this. Were you
Speaker 2: guys profitable, Like it can be hard to go up
Speaker 2: against the establishment, and you learned a lot about the
Speaker 2: industry and the mechanics and kind of I love what
Speaker 2: you said the economics of the way ski companies work.
Speaker 2: You probably learned a lot about it, which can be
Speaker 2: tough to go against though. Also so I'm just curious,
Speaker 2: were you guys profitable in the first year? I mean,
Speaker 2: how are you looking for about it? And we've got
Speaker 2: about a minute then we're going to come back and
Speaker 2: talk some more.
Speaker 16: Okay, go ahead.
Speaker 17: The typical sales channel that everyone's locked into is really
Speaker 17: the problem. So Andy and I addressed that by going
Speaker 17: direct consumer profitability. We ended up not being profitable year one,
Speaker 17: which was frustrating, but also given the nature of startups,
Speaker 17: was not terribly surprising. But the margins are really good
Speaker 17: when you sell direct. Obviously, the margins are much better.
Speaker 17: You don't have to sell two hundred thousand pairs of
Speaker 17: skis to be breaking even. So I mean, Andy, I'll
Speaker 17: let you fill in, but the really positive stuff we
Speaker 17: took out a year one outweighed the fact that we
Speaker 17: had some quality control issues and just I guess you'd call.
Speaker 6: Him growing days.
Speaker 2: Well, and hang on for a second, because we're gonna
Speaker 2: we've got to do some news and we don't want
Speaker 2: you to get cut off, so we're going to continue
Speaker 2: this and get you to weigh in on that aspect
Speaker 2: of the business.
Speaker 4: When we come back.
Speaker 2: We're talking with Andy Wirth and Body Miller, as we
Speaker 2: said of the Peak Ski Company co founders. Andy also CEO,
Speaker 2: Body also chief innovation officer. And there was a great
Speaker 2: story that was written by Bloomberg business Week that really
Speaker 2: gives you details about what they set out to do,
Speaker 2: what Body set out to do, and it is interesting.
Speaker 2: I love when you know he obviously has learned a
Speaker 2: lot about the business and how they were doing it,
Speaker 2: and just this idea of being able to manufacture much
Speaker 2: more quickly changes the mathematical business.
Speaker 3: And also what skis worked for him when he was young,
Speaker 3: when he was racing. So we'll get into all that.
Speaker 3: Let's get right back to Andy Wirth, CEO and president
Speaker 3: of Peak Ski Company, and Body Miller, Olympic and World
Speaker 3: Championship gold medalist and the chief innovation officer at Peak
Speaker 3: Ski Company. They join us on Zoom from Montana. Buddy,
Speaker 3: I want to go back to you because I was
Speaker 3: struck when you said after the first year you were
Speaker 3: frustrated about not being profitable. But I mean, it's really
Speaker 3: tough for a startup, and I think the expectation to
Speaker 3: actually be profitable after one year. I mean, look at Amazon,
Speaker 3: for example, it took more than a decade to regularly
Speaker 3: become profitable quarter after quarter. Why were you expecting to
Speaker 3: be profitable after the first year.
Speaker 6: I'd sort of.
Speaker 17: Touched on the margins, the margins if we'd you know,
Speaker 17: that we didn't model out quite a bit. Andy's a
Speaker 17: bit of a quant and you know, I always like
Speaker 17: to to sort of use all of our experience and
Speaker 17: knowledge it and feel like either of us were very
Speaker 17: naive coming into this.
Speaker 6: But the margins on our on our product are good,
Speaker 6: and we're.
Speaker 17: Selling right in kind of the sweet spot of where
Speaker 17: you know, they typically net out for a high quality,
Speaker 17: you know, small handmade ski company. But the challenge was
Speaker 17: was quality control. It's just it's a byproduct of the
Speaker 17: manufacturing process itself. It's just very inexact. You're using materials
Speaker 17: that have variances to them, and the assembly process is
Speaker 17: pretty as I said, it's analog, and so there's us
Speaker 17: being direct consumer.
Speaker 6: We didn't feel like we had the.
Speaker 17: Latitude to give anything but perfect skis to people, so
Speaker 17: we ended up with a lot. I don't I think
Speaker 17: it was close to thirty percent of our inventory didn't
Speaker 17: pass the QC inspection of the manufacturer. So it wasn't
Speaker 17: enough snitpicking. It was just the reality and that that
Speaker 17: was way outside of our modeling.
Speaker 6: And you know, that was tough.
Speaker 17: But the great news is we sold. We sold through,
Speaker 17: you know, mid ninety percent of the inventory we had,
Speaker 17: which was basically, you know, above or right the ear
Speaker 17: where we projected. So all of our projections that we
Speaker 17: could control were good, and that would have led to profitability.
Speaker 17: The part that was the problem was we didn't have
Speaker 17: the inventory to sell to get our numbers. But you know, again,
Speaker 17: that's part of the inspiration or the drive to re
Speaker 17: engineer the manufacturing process because everybody wants better stuff, quicker, cheaper,
Speaker 17: and more precise, and that's we're sort of delivering.
Speaker 3: Hey, Andy, come on back in here, because you're building
Speaker 3: this business with Body. I'm wondering where else you can
Speaker 3: go here? Because I know you guys were talking about
Speaker 3: doing a Body Miller Ski academy. You end up pulling
Speaker 3: the plug on the Gramby Ranch location in Colorado back
Speaker 3: in twenty twenty two. Where else can you guys go
Speaker 3: as a partnership.
Speaker 16: Well, kind of the sky's a limit. As they say,
Speaker 16: we neither of us feel like retired guys nowadays. I
Speaker 16: can tell you that's for darn sure. We come at
Speaker 16: this business, in this effort with a great deal of
Speaker 16: passion for the outdoors the mountains, certainly from the ski industry.
Speaker 16: Different angles of attack, but similar ethos and way of
Speaker 16: approaching things. There's a couple of different ventures that we
Speaker 16: have that we're taking on and considering right now. All
Speaker 16: of our emphasis and focuses on Peak, and the primary
Speaker 16: reason being is coming back to this re engineering of
Speaker 16: the entire process by which skis are made that puts
Speaker 16: us in a position to be three four years down
Speaker 16: the road having our machinery process that we with a
Speaker 16: smile on our face, we call Treadstone because it is,
Speaker 16: you know, fairly confidential information that we're working with with
Speaker 16: this group in Germany. But nonetheless it's it's something that
Speaker 16: we anticipate be in a place where we can have
Speaker 16: thirty thirty five forty percent of the world's market share
Speaker 16: made on our machines and our process. And that is
Speaker 16: where when I mentioned value creation, that's where it comes
Speaker 16: into play.
Speaker 2: So does that mean Andy, you'll be making you guys
Speaker 2: will be making skis for other companies, other brands.
Speaker 16: Yes, ma'am. In fact, it might be interested to know
Speaker 16: my best effort at Yogi Bearism is the least important
Speaker 16: thing about our company or the skis, but they're critical,
Speaker 16: and the reason being the skis are critical. But at
Speaker 16: the same time, we're in this to the innovation for
Speaker 16: the innovation on so many different fronts, including the process.
Speaker 2: Right. So body, it's like becoming the Luxotica of skiing, right, Like,
Speaker 2: you don't care what the brand is, but if you
Speaker 2: can improve the process, that's okay.
Speaker 4: Or being like a what is it a founder talking about?
Speaker 17: Yeah, you're talking about really established companies. But the irony
Speaker 17: is besides it's attaching and incredible people. Andy and I
Speaker 17: are big fans of many of the companies that we're
Speaker 17: competing against, and in this way, We're not looking to
Speaker 17: steal market share from them, because at a certain point
Speaker 17: it becomes annoying to manage logistics. In this case, our
Speaker 17: goal is to have ten purchase orders and be delivering
Speaker 17: two million pairs of skis, and they advantage that. I
Speaker 17: think I don't see it stopping there, because we can
Speaker 17: deliver them for twenty or thirty or forty dollars less
Speaker 17: than they make them for themselves. Now, Plus they can
Speaker 17: divest of all their other sort of liabilities. Even though
Speaker 17: a lot of their equipment's amoritized.
Speaker 5: They're just they.
Speaker 6: Understand that there's a lot of fluff there, there's a
Speaker 6: lot of loss.
Speaker 17: We can we can clean that up as well as
Speaker 17: there's things like gray market skis that you know, there's
Speaker 17: a little bit of the inventory is out of control.
Speaker 6: So I think I don't see it stopping.
Speaker 17: I can't see a company saying, hey, build us these
Speaker 17: five hundred thousand pairs and we're going to build the
Speaker 17: other five hundred thousand for forty dollars more and deal
Speaker 17: with percent way.
Speaker 2: Yes, their accountenants or the whole financial team might say,
Speaker 2: oh wait, I mean let's talk about that, guys. The
Speaker 2: impact of climate change body and the lack of snow.
Speaker 2: How are you incorporating that risk and reality into your business?
Speaker 2: I mean, we've finally seen some snow here in New
Speaker 2: York City, but it's barely a sprinkling here. But innovating
Speaker 2: with the idea that more and more skiers maybe skiing
Speaker 2: on man made snow, how does that come into it?
Speaker 4: And body? We've got about thirty forty seconds here.
Speaker 17: Yeah, it's you know, it's just the reality that we're facing.
Speaker 17: I think the ski industry is remarkably healthy. You know,
Speaker 17: I don't think it's an immediate thing for the ski industry.
Speaker 17: I think it's certainly important that we'd be dealing with
Speaker 17: it and addressing it, and in our company, recyclability of
Speaker 17: the skis is a huge part of the technology we're
Speaker 17: working with as well. So, you know, I think I
Speaker 17: don't see it being a massive problem. But you are
Speaker 17: going to have years like this year where it's been
Speaker 17: really tough at the beginning of the season's been tough.
Speaker 2: But do you innovate differently body, Do you make different
Speaker 2: types of skis because of maybe more man made snow?
Speaker 17: No, not really, I mean you think a man made
Speaker 17: snow is on piece you know, and then there's off
Speaker 17: piece skis, and yes, the trend has been going much wider,
Speaker 17: so we certainly address that end of the market where
Speaker 17: it's on groomers on piece skis, but the reality is
Speaker 17: there's a huge demand across the board.
Speaker 3: Right, Hey, Andy, we got about thirty seconds left. I
Speaker 3: want to give you the last word here and just
Speaker 3: ask you what's top of mind as we begin the
Speaker 3: year here and you guys are trying to build this company.
Speaker 16: I appreciate that, Tim, and it got to augment with
Speaker 16: point here is that the climate change matter is something
Speaker 16: that's an exigent threat for us overall. And what we
Speaker 16: do is number one, we reduce our footprint. Number Two,
Speaker 16: we're doing everything we can with this process to actually
Speaker 16: localize where skis are made. And so that's a pretty
Speaker 16: substantial contribution in favor of that. But relative to Peak
Speaker 16: and what we're doing emphasize the fact that we have
Speaker 16: Body and he's got this brilliant mental level, creative mind
Speaker 16: that is unique. It's almost like Chuck Yeger working. It's
Speaker 16: Lucky Martin on the mock Capable airplane back in the forties.
Speaker 16: He's got this unique ability to be an engineer but
Speaker 16: at the same time put those well skid on snow
Speaker 16: that what enables us to take up this all over.
Speaker 4: The nice compliment.
Speaker 3: Very cool. Thank you guys for joining us. Andy Worth,
Speaker 3: CEO and President of Peak Ski Company and Body Miller,
Speaker 3: Olympic and World Championship gold medalist and Chief Innovation Officer
Speaker 3: at Peak Ski.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 3: But Carol, you remember y two k right?
Speaker 16: Really?
Speaker 5: Really?
Speaker 3: Heod We were actually working here at Bloomberg.
Speaker 4: Yeah, I think I just started.
Speaker 2: And one of the things that we were thinking about
Speaker 2: big time was what happens when we go from nineteen
Speaker 2: ninety nine to two thousand and Apparently that can be
Speaker 2: somewhat difficult, sophisticated, complicated when it comes to technology and
Speaker 2: computing devices.
Speaker 4: Like what does that mean?
Speaker 5: Right?
Speaker 2: You go from a year that you specified by with
Speaker 2: two digits to office and you really needed all four?
Speaker 3: Yes?
Speaker 4: Hey, can I just tell you that.
Speaker 2: We were all of us in the news team. We
Speaker 2: went home We were given walkie talkies and everything because
Speaker 2: we thought in case the phones don't work, and we
Speaker 2: had to be ready for when in I guess Asia,
Speaker 2: or whenever it struck two thousand around the globe first
Speaker 2: for like the world to come undone, and I got
Speaker 2: to sell un like I remember, like we're waiting, We're waiting.
Speaker 4: Nothing happened.
Speaker 3: Nothing happened. Well, a new HBO documentary it takes us
Speaker 3: back to that time. It's called time Bomb y two K.
Speaker 6: Why two K?
Speaker 13: Whyks agreed using two digits rather than four made good
Speaker 13: economic sense, But.
Speaker 6: When workers advanced clocks to the year two thousand, the
Speaker 6: world could melt down.
Speaker 12: Our systems are broken.
Speaker 15: We've got a problem with a couple of digits.
Speaker 5: This has to be.
Speaker 3: Solved, all right. That was a clip just from time
Speaker 3: Bomb y two K, new documentary on HBO taking us
Speaker 3: back to the years ahead of Y two K and
Speaker 3: all the chaos and prepping and fears about power grids,
Speaker 3: family nuclear arsenals being at risks, planes falling out of
Speaker 3: the sky. People were very worried. Carol Well, Brian Becker,
Speaker 3: and Marley MacDonald are the documentary filmmakers and producers behind
Speaker 3: time bomb y two K. They join us on Zoom
Speaker 3: from New York. Good to have you both with us
Speaker 3: this afternoon, Brian, I want to start with you, why
Speaker 3: make a documentary about Y two K? Twenty four years later?
Speaker 13: So, when Marlee and I first thought of this idea
Speaker 13: and started looking into it, it was the summer of
Speaker 13: twenty twenty, and the first images you see when you
Speaker 13: google back y TK are shots of empty grocery store
Speaker 13: shelves and people checking out pallettes of water and toilet
Speaker 13: paper at the supermarket, and people in line at the
Speaker 13: gun store. And those images felt awfully familiar to us,
Speaker 13: as given the reality we were living through in the
Speaker 13: depths of the pandemic. We knew there was a countdown,
Speaker 13: We knew from our research that there was extensive footage
Speaker 13: and media coverage of the event, and kind of living
Speaker 13: in that moment of the pandemic made us realize that
Speaker 13: it wasn't just a countdown. It wasn't just something that
Speaker 13: we lived through and then had mostly forgotten about. It
Speaker 13: also had we thought lessons for our present moment.
Speaker 2: Well, I gotta say, Marley, I just remember doing interviews,
Speaker 2: you know, leading up to it. In every conversation certainly
Speaker 2: if it was even just a general market and interview,
Speaker 2: it was like, okay, so how are you guys planning
Speaker 2: for Y two K? And concerns that you know, if
Speaker 2: things come undone and you know we can't track investments
Speaker 2: or market stone, you know, work properly. Having said that,
Speaker 2: when you and Brian went to pitch this, where people like, wait, wait,
Speaker 2: what was Y two K?
Speaker 4: Because it's a long.
Speaker 8: Time ago, definitely, well, everyone who lived through it remembers it,
Speaker 8: which definitely works in our favor when pitching this around
Speaker 8: and was a really actual part of making this project.
Speaker 8: When you tell someone you're working on a movie about
Speaker 8: Why Duke, everyone has to tell you what they were
Speaker 8: doing New Year's Eve nineteen ninety nine.
Speaker 2: But I just tell you one of my producers I think,
Speaker 2: was in kindergarten, so that kind of like at home. Anyway,
Speaker 2: continue please, Yeah, Brian.
Speaker 8: And I became historians of what everyone was doing on
Speaker 8: New Year's Eve nineteen ninety nine. But when we first
Speaker 8: started looking into the project, you know, the first question
Speaker 8: that comes up is was this a joker? Was this real?
Speaker 8: And you know a lot of people remember why cho
Speaker 8: K as a hoax? And it took us months of
Speaker 8: research to come to the conclusion that it was a
Speaker 8: very real problem that was solved. And we did that
Speaker 8: by talking to a lot of computer programmers and talking
Speaker 8: to a lot of people who actually worked.
Speaker 5: On the issue.
Speaker 8: And so we knew we could kind of reclaim this
Speaker 8: narrative in this movie and shine a light on all
Speaker 8: the work and labor that went into actually fixing this
Speaker 8: very real problem.
Speaker 3: Mart Marley, can you talk about the style here? I enjoyed,
Speaker 3: I enjoyed the film, but I was so prize to
Speaker 3: see the way that the documentary was structured in the
Speaker 3: sense that there's no narrator, and it's nobody looking back
Speaker 3: or remembering, or there are no recollections. It's purely based
Speaker 3: on archival footage on videos that were sold at the time.
Speaker 3: News reports, home videos talk a little bit about building
Speaker 3: it in that sense.
Speaker 8: Yeah, So we knew we wanted to do it all
Speaker 8: archival from the jump, because one, there was just enough footage.
Speaker 8: There was a lot of footage, and when we first
Speaker 8: started working with the material, we realized that, you know,
Speaker 8: everything was sort of there, and that if we kept
Speaker 8: it in the world of all archival, we could really
Speaker 8: kind of make this countdown feel more present, tense, feel
Speaker 8: like a time capsule of that actual moment. And Brian
Speaker 8: is an archival producer and found you know, along with
Speaker 8: our team all of that footage. We ended up with
Speaker 8: over seven hundred hours of footage, And as far as
Speaker 8: the structure of the film goes, we knew that we
Speaker 8: wanted to sort of replicate the way that Y two
Speaker 8: K worked in the world. So starting with the technical
Speaker 8: problem watching it sort of radiate out of cubicles and
Speaker 8: into the social consciousness, and then follow that to sort
Speaker 8: of the fringes of America, And we knew we had
Speaker 8: to get to midnight.
Speaker 2: At some point as you went through the footage and
Speaker 2: you guys were gathering at Brian, I mean, what was
Speaker 2: it that kind of jumped out? Was there certain things
Speaker 2: that like, oh my god, Like it was just kind
Speaker 2: of interesting because there was real nervousness about how there's
Speaker 2: my play out?
Speaker 13: Yeah, I mean there's a certain attraction always to footage
Speaker 13: that is kind of unbelievable to watch in the present,
Speaker 13: whether it be you know, a tape made by a militia.
Speaker 6: Titled why to K?
Speaker 13: Why Should I Care? I don't even on a computer.
Speaker 13: But I think what we really started looking for most
Speaker 13: specifically in the footage were moments that could clearly tether
Speaker 13: us from present to past, because we didn't include interviews
Speaker 13: with individuals in the present day. We were looking for
Speaker 13: kind of moments of emotion or introspection or relevance between
Speaker 13: them and now. But of course, you know, when Matt
Speaker 13: Damon is recorded speaking about the nuclear arsenal and his
Speaker 13: fear of the nuclear arsenal potentially shutting down, you kind
Speaker 13: of have to also include things like that in.
Speaker 3: Your movie, A very young Matt Damon promoting at the
Speaker 3: time the talented mister Ripley. I should note, Hey, Brian,
Speaker 3: did you hear have you heard from any of these
Speaker 3: folks who were featured in this Yes.
Speaker 13: Thanks for asking that we actually have relationships with all
Speaker 13: of the individuals who we built scenes.
Speaker 6: Around in this film.
Speaker 13: It didn't feel fair for us to include their historic
Speaker 13: likenesses in our feature without talking to them first to
Speaker 13: gauge what Y t U K meant to them. So,
Speaker 13: for example, Peter Diager, who is one of the first
Speaker 13: individuals who kind of brought White TK to the public's attention.
Speaker 13: I spent two days in his basement with him outside
Speaker 13: of Toronto. He just published a new book focused on
Speaker 13: computer management. And we just appeared on Peter's podcast about
Speaker 13: y TUK, which I can plug here. Candace Turner, who
Speaker 13: in the film calls herself Farmer Jane. I emailed with
Speaker 13: Candace this morning and I went to her farm in Sarcoxi, Missouri.
Speaker 13: She moved there or she lived there in events in
Speaker 13: the lead up to y TK, and she still lives
Speaker 13: on that very same farm. I went to her mud
Speaker 13: room and came back to New York with some VH
Speaker 13: tape VHS tapes of hers toscin ins in d C.
Speaker 13: So we do have relationships with these people.
Speaker 2: You know, it's interesting, Brian and Marley that it's been
Speaker 2: a week where Tim and I have been talking a
Speaker 2: lot about the risks.
Speaker 4: In twenty twenty four.
Speaker 2: We certainly did at the end of last year and
Speaker 2: into the new year, but this week, you know, some
Speaker 2: of the concerns were big time. The November elections and
Speaker 2: basically the US against itself geopolitics certainly came up, and
Speaker 2: it made Tim and I think about how your documentary
Speaker 2: kind of ends up. We're essentially just before midnight in
Speaker 2: the US December thirty first, nineteen ninety nine. You have
Speaker 2: Boris Yeltsin, right, conceding power to Vladimir Putin, who would
Speaker 2: take over to lead what was then what the Soviet Union, Right.
Speaker 3: It was just Russia. Yeah, and there's this ominous sort
Speaker 3: of moment from the newscaster that says, you know, Putin
Speaker 3: wants this to be a strong Russia, but has no
Speaker 3: ambitions beyond like for expansion and to get bigger.
Speaker 4: Here we are twenty four years later, and we know
Speaker 4: that that's very different.
Speaker 2: But I do wonder how you guys are thinking about
Speaker 2: having gone through this process, about some of the risks
Speaker 2: and the concerns that are out there today, and coming
Speaker 2: off a global pandemic that really made us all realize
Speaker 2: whoa our life can change dramatically, and our lives are
Speaker 2: at risk.
Speaker 8: Yeah, you know, it's an interesting thing. So our movie
Speaker 8: actually premiered at a festival last March, and during the
Speaker 8: Q and a's at that time, a lot of the
Speaker 8: questions were relating our film to COVID. Then sometime over
Speaker 8: the summer, the question started to become about the threat
Speaker 8: of AI, and so it's interesting to kind of see how.
Speaker 10: This movie moves through the world as.
Speaker 8: It continues, you know, going through different existential threats, and
Speaker 8: that's I think what we wanted to do with this
Speaker 8: film is really examined the ways in which America faces
Speaker 8: existential threats and kind of the focus on how interconnected
Speaker 8: and dependent we are on each other and really highlighting
Speaker 8: that aspect of getting through things like Y two K or.
Speaker 3: COVID time, I think that we collectively go through an
Speaker 3: experience that will somehow bring us closer together as citizens.
Speaker 3: I turn out to be wrong. I felt this way
Speaker 3: during COVID. That's sort of like everybody was in this
Speaker 3: together and it would be in this uniting force. And
Speaker 3: I look at the landscape right now, Brian, and I
Speaker 3: think that we've never been more divided ever than we
Speaker 3: have been right now.
Speaker 13: I feel the same too, Tim. Why two K almost
Speaker 13: feels like this dry run in which we actually did
Speaker 13: succeed in solving a problem and then, of course, in
Speaker 13: very American fashion, quickly dismissed it as a joke or
Speaker 13: as a hoax after we went through it. It almost
Speaker 13: feels as if we worked on it so well and
Speaker 13: solved it to an extent that we would have learned
Speaker 13: more if more things went wrong after the clockstruck midnight
Speaker 13: on New Year's Eve nineteen ninety nine. Instead, we kind
Speaker 13: of missed this opportunity to think so much about how
Speaker 13: our lives had come to depend upon technology and also
Speaker 13: on each other to an extent.
Speaker 2: You know, it's kind of interesting on a day where
Speaker 2: safe to say, we all got fooled about the approval
Speaker 2: by the SEC of a spot bitcoin etf where a
Speaker 2: headline crossed on Twitter from the official SEC account, and
Speaker 2: then ten minutes later the chair of the SEC comes
Speaker 2: out and said, Nope, that's not correct. They have not
Speaker 2: received approval and that the SEC Twitter account was compromised.
Speaker 2: You just realize how quickly and how vulnerable we are
Speaker 2: and reliant on technology, and how things can be misconstrued,
Speaker 2: got wrong, and you just, I don't know, when you
Speaker 2: start to extrapolate that, you just wonder kind of tim
Speaker 2: where we could go with this.
Speaker 3: Yeah, and also, you know, it was so interesting to
Speaker 3: see that the way technology is shifted, and you know,
Speaker 3: it's been a quarter century roughly since this time period,
Speaker 3: but the technology shifts that we've seen have been absolutely massive. Yeah,
Speaker 3: Marley at also Alliance, Yeah, Alliance is, and it's and
Speaker 3: there's this picture. There's a picture painted Marley in the
Speaker 3: nineteen nineties about the optimism about technology. And I'm wondering
Speaker 3: if you think that the optimism that these folks in
Speaker 3: the nineties talked about and alluded to about school children
Speaker 3: being able to access information at any time has actually
Speaker 3: manifested in something that looks optimistic or looks, you know, scary.
Speaker 3: I mean, there's there's talk about parents being concerned about TikTok,
Speaker 3: mental health and social media, government control of this stuff.
Speaker 3: I mean, what are your thoughts there?
Speaker 8: Certainly I'm I'm very concerned with the state of our
Speaker 8: relationship to technology, and I think that was something that
Speaker 8: we really wanted to sort of capture that techno optimism
Speaker 8: of the nineties in our film. You know, this was
Speaker 8: the first time that people were really welcoming computers into
Speaker 8: their lives. You know, it was at their office or
Speaker 8: in their home for the first time. But I think
Speaker 8: what YGK revealed is just how dependent we actually already
Speaker 8: were on computer systems that we weren't seeing, you know,
Speaker 8: to get on the train or how we get the
Speaker 8: news in the morning. Like everything had already been kind
Speaker 8: of operated by these giant systems, but we hadn't come
Speaker 8: face to face with that. So I think y GK
Speaker 8: was an interesting moment for kind of deconstructing our reliance
Speaker 8: on technology. But yeah, as far as where we've come today,
Speaker 8: you know, we've only gone deeper in that hole. Like
Speaker 8: Brian says, it could have been a moment where we
Speaker 8: had pivoted and maybe taken a different route. But because
Speaker 8: we did get in front of the problem and solve it,
Speaker 8: we've just gone further and further down this road. And
Speaker 8: if something like this were to happen today, you know,
Speaker 8: the same questions would arise.
Speaker 3: Hey, we only have about thirty seconds left, Brian, But
Speaker 3: I want to give you the last word. What's the
Speaker 3: next thing you guys are working on.
Speaker 13: I'm working on a film about the rise and fall
Speaker 13: of the American Enclosed shopping mall. And Marle olpasity to
Speaker 13: describe what you're.
Speaker 8: Working out I'm working on. I'm developing a film based
Speaker 8: on the archives at the Museum of Natural History and
Speaker 8: the origins of natural history museums.
Speaker 3: Very cool, big thank you to both of you for
Speaker 3: joining us. Everybody check out the new film. It's on HBO.
Speaker 3: It is all about y two K. It's called time Bomb.
Speaker 5: Y two K.
Speaker 3: A big thank you to our guest Brian Becker and
Speaker 3: Marley McDonald, documentary filmmakers and producers behind time Bomb.
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