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Speaker 3: Hi everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 3: This week, the longest recorded US government shutdown finally came
Speaker 3: to an end after forty three days that included disrupted
Speaker 3: flights across the country and delayed food aid for millions.
Speaker 3: In fact, one in eight Americans congressional Democrats, eight of
Speaker 3: them in the Senate, crossed the aisle to end the
Speaker 3: federal shutdown, a move some crid as the Democrats caving
Speaker 3: to Republicans. We get into that a little later on.
Speaker 4: Then, as we await the first drop of US government
Speaker 4: economic data, is things get back to normal in Washington, DC.
Speaker 4: What's become normal in the US is a K shaped
Speaker 4: economy where those at the top are doing well and
Speaker 4: those at the bottom are not. And for those struggling
Speaker 4: Americans they are already in recession. That's according to Peter Atwater,
Speaker 4: who started talking about the k shaped economy five years ago.
Speaker 4: He's the subject of a Bloomberg Big Take this week.
Speaker 4: We're gonna hear from him a little later this hour.
Speaker 3: Also we get reads on the consumer, the business environment,
Speaker 3: the global economy, trade, and more as we catch up
Speaker 3: with a few members of the C suite, including the
Speaker 3: CEO at Magna International.
Speaker 4: End Plus, in our second hour, the case against social
Speaker 4: media and its dangerous algorithms determining which ultra processed foods
Speaker 4: are actually bad for you spoiler alert, it's most And
Speaker 4: then Carol SIPs on some wine in the responsible way
Speaker 4: courtesy of the CEO of Maisson Mirabau very nicely said,
Speaker 4: by the way, thank you, I won one year of French.
Speaker 3: It's actually high school paid off.
Speaker 4: Well, thank you, miss Halsey.
Speaker 5: So sweet.
Speaker 3: All of that to come, we begin with Washington, the
Speaker 3: nation's capital, and the longest government shut down on record,
Speaker 3: finally finally coming to an end.
Speaker 4: Writing about the actions by some Democrats to give Republicans
Speaker 4: the votes to bring it all to an end, why
Speaker 4: the vote was surprising, and why it wasn't for the
Speaker 4: Democrats is Josh Green Bloomberg BusinessWeek national correspondent. Josh is
Speaker 4: the author of a couple books, including the New York
Speaker 4: Times bestseller Devil's Bargain, Steve Bannon, Donald Trump, and The
Speaker 4: Storming of the Presidency Democrats Josh crossing the aisle to
Speaker 4: end the shutdown? Was it a quote terrible mistake? A
Speaker 4: Senator Elizabeth Warren told reporters. Governor Gavin Newsom called it
Speaker 4: quote pathetic? Or is this smart ahead of the min terms?
Speaker 4: This is kind of a narrative that's emerging now. Republicans
Speaker 4: will own they see a premiums going up that'll affect
Speaker 4: a lot of their constituents.
Speaker 6: What's the chatter?
Speaker 7: Well, I think the overwhelming sentiment of the Democrat grass
Speaker 7: roots is anger and confusion that, you know, Democrats who've
Speaker 7: just come off the sweeping election victory, who polls showed
Speaker 7: were not being blame for a shutdown that they in
Speaker 7: fact had caused. Why they would suddenly decide to throw
Speaker 7: in the towel without really much much warning.
Speaker 8: I think is upset an awful lot of.
Speaker 7: People, mostly at the grassroots level, but also from a
Speaker 7: lot of the politicians, especially ones like Gavin Newsom, who
Speaker 7: maybe have their eye on the White House and are
Speaker 7: especially attuned to grassroots sentiment. But I think that there's
Speaker 7: another kind of quieter realist wing of the party that
Speaker 7: looked in the mirror and said, look, there's really no
Speaker 7: clear winning exit strategy.
Speaker 8: We've got to pull the plug at some time.
Speaker 7: So let's do it now before things get really bad
Speaker 7: for federal workers, before the entire US airline industry grinds
Speaker 7: to a halt, maybe on Thanksgiving weekend, and just turn
Speaker 7: around and decided to kind of rip off the band aid.
Speaker 7: Now that's caused a lot of anger, but it's not
Speaker 7: necessarily clear that long term that this is going to be.
Speaker 8: The wrong move.
Speaker 3: What's that like thinking or strategizing about? Like, Okay, what
Speaker 3: party gets blamed? And you know, I was thinking about
Speaker 3: this when I was on a TSA line. I mean
Speaker 3: the government shutdown and got at those screen screens and
Speaker 3: who do I see Christy Nome, you know, playing over
Speaker 3: and over on a loop, And I just wonder the
Speaker 3: general public, like who do they blame? And so was
Speaker 3: there a feeling that it was the Republican shutdown? Was
Speaker 3: it both the parties? How was it playing out?
Speaker 7: I mean, it's interesting dynamic. Over the last like three
Speaker 7: or four government shutdowns. What's happened in pretty short order
Speaker 7: is that services start shutting down, national parks start shutting down,
Speaker 7: you have a problem with airlines. Everybody says, well, gee,
Speaker 7: who's to blame. And it's pretty clear whichever party shut
Speaker 7: down the government gets blamed by the other party because
Speaker 7: everybody in that party is on the same page, they
Speaker 7: can kind of point to the same bad guy. I
Speaker 7: think that the tricky thing this time around was that
Speaker 7: President Trump didn't really seem to be all that interested
Speaker 7: in the shutdown for like the first two or three weeks.
Speaker 7: He was much more interested in knocking down the East
Speaker 7: Wing in the White House, building up his new ballroom,
Speaker 7: And so you had this kind of mixed message from
Speaker 7: Republicans where some Republicans in Congress were trying to run
Speaker 7: the ordinary place book of blaming Democrats, but Trump wasn't
Speaker 7: really on that page, wasn't really doing that, and it's
Speaker 7: a much more interesting exciting story to write about this
Speaker 7: grand new ballroom that's apparently going up in the White House,
Speaker 7: and so nobody really focused on who was to blame.
Speaker 7: And when things started going wrong, they just kind of
Speaker 7: naturally blamed the president and the party that controls Congress.
Speaker 3: You know, Josh, I do wonder, like, did things like,
Speaker 3: you know, tearing down the ballroom, showing off a new
Speaker 3: marble bathroom at the White House that the president has,
Speaker 3: having a great Gatsby party for Halloween exactly. That was
Speaker 3: really over the top if you saw some of the images.
Speaker 3: And I don't want to be political, but I do wonder.
Speaker 3: This is a president who said, like, I am here
Speaker 3: for you, and I'm going to take actions that are
Speaker 3: here for more Americans. That's you know, at the same time,
Speaker 3: we're talking about one in eight who aren't going to
Speaker 3: get food stamps because of the government shutdown. So I'm
Speaker 3: just curious how that plays politically. Was that getting noticed
Speaker 3: that kind of gag.
Speaker 7: It definitely was. I think it does two things. I mean,
Speaker 7: going back to sort of that, you know, how a
Speaker 7: party deals with a shutdown. If all Republicans had been
Speaker 7: unified from day one, including President Trump saying, look, the
Speaker 7: Democrats did this, it's their fault, blame them, I think
Speaker 7: things would have ended much earlier. But like as we said,
Speaker 7: that didn't happen. Trump was more concerned with other things,
Speaker 7: and when he did begin to get upset about the shutdown,
Speaker 7: instead of blaming Democrats, he started getting angry at Republicans
Speaker 7: and told them they ought to eliminate the filibuster, which
Speaker 7: would be another way to open the government. But it's
Speaker 7: not something that Republicans wanted to do. And so as
Speaker 7: this fight was going on, you do see these images
Speaker 7: on TV on social media of the redecorations in the
Speaker 7: White House, of these glitzy parties at mar A Lago. Meanwhile,
Speaker 7: you know, food stamps are being frozen. The White House
Speaker 7: is out saying no, we don't want to pay these
Speaker 7: during the government shutdown. Democrats and states are having to
Speaker 7: take them to court. So it really did create a
Speaker 7: political problem that polls show pretty clearly was hurting President
Speaker 7: Trump's approval rating and hurting Republicans and Congress. And that's
Speaker 7: one reason why Democratic kind of grassroots and a lot
Speaker 7: of lawmakers were so upset that moderates in their caucus
Speaker 7: decided to pull the plug in the shutdown early because
Speaker 7: they didn't think it was hurting Democrats.
Speaker 8: They thought it was hurting their opponents.
Speaker 4: I think it was Mike Allen and Axios who wrote
Speaker 4: a commentary about how it could be a challenge for
Speaker 4: the Trump administration to present themselves as fighting for the
Speaker 4: little guy or fighting for the middle class or the
Speaker 4: working class if they're not focused on the ACA subsidies
Speaker 4: or on funding SNAP during this time. I wonder if
Speaker 4: that message will resonate with voters going into the midterms
Speaker 4: in twenty six.
Speaker 9: Yeah.
Speaker 7: I think that's a really smart point. I think it
Speaker 7: might resonate even sooner. I did a Business Week newsletter
Speaker 7: just kind of my gloss on the shutdown and what
Speaker 7: was and what it was not accomplished. And I do
Speaker 7: think that one of the things that Democrats accomplished, even
Speaker 7: though so many of them are unhappy about the way
Speaker 7: things ended, They've added real salients to this issue of
Speaker 7: rising Obamacare premiums. Originally, Democrats said were only going to
Speaker 7: reopen the government if Trump and Republicans agree to fund
Speaker 7: these provisions, it will help extend subsidies, keep insurance affordable.
Speaker 8: Republicans don't want to do that.
Speaker 7: They didn't do that, so even though Republicans are Democrats
Speaker 7: weren't able to win that as a concession to reopen
Speaker 7: the government. It's been on the front pages of the newspapers,
Speaker 7: it's been in the news. I think the American public
Speaker 7: is very aware that these premiums are about to rise,
Speaker 7: and I think partly because of the spotlight that the
Speaker 7: shutdown shown on this issue. If and when those premiums
Speaker 7: do rise, the American people are largely going to bring
Speaker 7: Trump and Republicans and essentially it's going to be up
Speaker 7: to them to kind of find the solution, which isn't
Speaker 7: exactly how Democrats wanted things to end, but it could
Speaker 7: turn out to be that public pressure in the event
Speaker 7: of these rising premiums actually does produce some sort of
Speaker 7: solution that Democrats could get behind.
Speaker 3: So, you know, Josh, when the Republicans and the Democrats
Speaker 3: that went over to the other side are basic, you know,
Speaker 3: broke away and got this Republican promise to vote on
Speaker 3: extending Obamacare insurance premium credits by mid December. So politically
Speaker 3: it will happen or could Republicans back out.
Speaker 7: I think it's very unlikely to happen. I mean, Republicans
Speaker 7: have been adamant that they're not going to vote to
Speaker 7: support these things. So you can have a vote, the
Speaker 7: vote will lose, and that will probably be the end
Speaker 7: of it, at least in the short term. If the
Speaker 7: vote were to win in the Senate, it would go
Speaker 7: to the House houses controlled by Republicans, and they've said
Speaker 7: they might not even take it up. But eventually, if
Speaker 7: insurance premiums do go up and just ordinary people begin
Speaker 7: to react badly to that, including Republican districts, that could
Speaker 7: put pressure on Republicans in Trump to finally have to
Speaker 7: do something about it.
Speaker 3: And there's a record right of people of how they voted.
Speaker 7: Absolutely yeah, And ultimately, look, Republicans control Congress, they control
Speaker 7: the White House.
Speaker 8: The buck stops with them.
Speaker 7: If there needs to be a solution, they're ultimately going
Speaker 7: to have to come through and deliver one.
Speaker 4: That was Josh Green, Bloomberg BusinessWeek National correspondent.
Speaker 3: Now, if the government reopened this past week, all eyes
Speaker 3: now on the Bureau Labors, Statistics and other statistical agencies
Speaker 3: and when they will release key economic data. Some information
Speaker 3: on that tim definely started to come out throughout the
Speaker 3: past week about you know, when and what we might
Speaker 3: be getting.
Speaker 4: In the absence of that data, we've relied on a
Speaker 4: lot of private data for reads on the US economy. Meantime,
Speaker 4: we've also seen earnings and revenue growth for many US companies,
Speaker 4: wealthy consumer shopping and US consumer sentiment that tumbled to
Speaker 4: near the lowest on record as the government shut down
Speaker 4: weigh on the economic outlook and high prices soured views
Speaker 4: about personal finances.
Speaker 3: It's that case shaped economy, right, of some doing well
Speaker 3: in some not. I mean, just this past week, car
Speaker 3: Loans have gone from the safest consumer credit products to
Speaker 3: among the riskies over the last fifteen years as delinquencies
Speaker 3: rose more than fifty percent fifty percent driven by soaring
Speaker 3: car prices and rising interest rates. So that is one
Speaker 3: of the troubling signs Tim, in this economy.
Speaker 4: Yeah, it's the K shaped economy that we've been talking
Speaker 4: about for years. Also talking about it for years. Peter Alwater,
Speaker 4: president of Financial Insights and Adjunct Lecture of Economics at
Speaker 4: the College of Willing and Mary, he started talking about
Speaker 4: the K shaped economy that was during the pandemic.
Speaker 10: Long time five years ago at least, so, Carol, it's
Speaker 10: been more than five and a half years since I
Speaker 10: first started writing about the K shaped economy, and I
Speaker 10: think what's happened is that for those at the top,
Speaker 10: the financial markets have been extraordinary. Meanwhile, for those at
Speaker 10: the bottom, things have just continued to deteriorate, and now
Speaker 10: compounded by the cumulative effect of inflation on particularly food.
Speaker 10: You've referenced the car Loan delinquencies, and that's another sign.
Speaker 10: And I think that those at the bottom have this
Speaker 10: heavy weight, whether it's childcare, education, housing, it feels mighty
Speaker 10: heavy to those at the bottom. And I think at
Speaker 10: this point we really don't have a single economy in America.
Speaker 10: We have two very distinct experiences.
Speaker 3: So are we becoming peter An economy a country where
Speaker 3: there are a few rich people who are living in
Speaker 3: a poor country.
Speaker 10: I would describe it, yeah, as a handful of folks
Speaker 10: who feel invulnerable in a mounting sea of despair.
Speaker 6: Hasn't it been like that for years?
Speaker 11: Though?
Speaker 4: What's different about right now? I remember having the same discussion,
Speaker 4: not with the same data, but in graduate school in
Speaker 4: a class about how in the developing world you start
Speaker 4: to see economies such as this, and that was that
Speaker 4: the professor was arguing where we were headed in the US.
Speaker 4: It's been like this for quite some time.
Speaker 10: The gap has existed, but not to this extreme. And remember, Tim,
Speaker 10: there used to be a sense that there was a ladder,
Speaker 10: a way to progress from the bottom up through the
Speaker 10: middle class and into the upper middle class and then
Speaker 10: into the truly wealthy. And for those at the bottom,
Speaker 10: that ladder's gone. There are no more rungs that enable
Speaker 10: them to go up. And I think we have fallen
Speaker 10: into a more of a cast system that, to your point,
Speaker 10: looks less like America that many were promised, and more
Speaker 10: like a lot of the developed nations around the world.
Speaker 3: So when does it show up, Peter, Because those who
Speaker 3: are at the lower economic rung, if you will, when
Speaker 3: it comes to the US economy or having troubles and
Speaker 3: so they're not going to Chipotle or they're not going
Speaker 3: to Kava and a few other places. But when does
Speaker 3: this really start to show up in our economy in
Speaker 3: the financial markets? Just curious.
Speaker 10: So in terms of consumer sentiment, it showed up almost
Speaker 10: immediately after COVID, when those white collar workers were able
Speaker 10: to pivot to work from home, their confidence was restored.
Speaker 10: They also got boosts from monetary and fiscal policy. And
Speaker 10: for those at the bottom, those stimulus chicks really just
Speaker 10: went through them to their lenders, to their landlords. And
Speaker 10: so this has been ongoing for a long time, and
Speaker 10: I wouldn't underestimate the compounding effect that time has for
Speaker 10: those at the bottom, and I think it's showing up
Speaker 10: in the affordability message that you're seeing now politically, all.
Speaker 3: Right, The other part I want to get to is
Speaker 3: ask you about is the upper part of the K
Speaker 3: when you look at this economy, is it kind of fragile,
Speaker 3: even perhaps potentially for those who are even wealthier in
Speaker 3: this economy?
Speaker 10: I think so, And I think that what there's been
Speaker 10: lots of discussion about the circularity within the AI system.
Speaker 10: I think that circularity exists more broadly between the wealthy
Speaker 10: AI and you see that in first class travel, you
Speaker 10: see that in a lot of the luxury experiences. And
Speaker 10: we used to say that the economy is not the markets,
Speaker 10: but at the upper end, the markets and the economy
Speaker 10: are now indistinguishable. And we need to appreciate the fragility
Speaker 10: of over financial markets. If I look at the amount
Speaker 10: of speculation going on through options and the price price
Speaker 10: to earnings multiples, there are lots of signs that this
Speaker 10: is a market that feels extraordinarily confident, and ironically, that's
Speaker 10: where the fragility ultimately rests.
Speaker 4: What about this idea of the meritocracy, or the idea
Speaker 4: that people actually in this day and age have a
Speaker 4: harder time moving in and out of social strata. The
Speaker 4: American dream is this idea that anyone can come to
Speaker 4: the United States and succeed regardless of where they start.
Speaker 4: You argue that that doesn't exist as much anymore.
Speaker 10: Why is that so wealth accumulation happens more slowly? You
Speaker 10: look at, for example, the fact that it now takes
Speaker 10: to age forty to be a first time home buyer.
Speaker 10: It wasn't that long ago when that age was twenty five,
Speaker 10: and so the wealth accumulation potent for this new generation
Speaker 10: is far less than the generation before, assuming that housing
Speaker 10: is a means for accumulating wealth, and so what you're
Speaker 10: seeing is, particularly with things like childcare and healthcare, the
Speaker 10: burden on those families starting out is substantially higher than
Speaker 10: the one certainly I experienced and likely the one you
Speaker 10: started with.
Speaker 3: All right, so how do we fix this? Because it does.
Speaker 4: Feel like you have three minutes, Peter, fix the pot.
Speaker 12: No.
Speaker 10: I think that policy makers need to be really attuned
Speaker 10: to this. I think they shouldn't ignore the message of
Speaker 10: a affordability that came out of the New York mayoral election.
Speaker 10: What we're seeing is not a movement to the left
Speaker 10: as much as a movement down. And I think policy
Speaker 10: makers really don't appreciate how purple the bottom of our
Speaker 10: economy is, and recently purple with rage. So we need
Speaker 10: to address their shared vulnerability, their despair, because ultimately history
Speaker 10: shows that that when it becomes widespread, those with nothing
Speaker 10: to lose will gladly go after those with everything to lose.
Speaker 4: Do policymakers actually have the tools in a divided country
Speaker 4: to fix this, I.
Speaker 8: Think they do.
Speaker 10: I think it requires them to recognize that it is
Speaker 10: in the best interest of both political parties to address this,
Speaker 10: because we know that anti establishment candidates become more popular,
Speaker 10: we know that progressive candidates become more popular, and so
Speaker 10: it behooves them to pay attention to this and to
Speaker 10: address it. And to be clear, those at the bottom
Speaker 10: are not looking for a handout. They're looking for a
Speaker 10: hand They want to see job training, They want to
Speaker 10: see opportunities that allow them to move up. We saw
Speaker 10: from the soybean farmers and the ranchers. They don't want
Speaker 10: a government handout. They want their products sold. They want
Speaker 10: to have a real meaningful purpose in this economy.
Speaker 3: Peter, I'm thinking of the big take that you do
Speaker 3: with Sara Holder that's on the Bloomberg right now, and
Speaker 3: I guess they were asking. She was asking along with
Speaker 3: Katerina Sariva, talking about this case shaped economy not just
Speaker 3: being kind of the same thing as like measuring inequality.
Speaker 3: And I'm just thinking about a response that you gave
Speaker 3: and you said, it's not just inequality in terms of
Speaker 3: an economic sense, it's inequality multiple dimensions at once. Because
Speaker 3: for those at the bottom, they have scarcity and education
Speaker 3: and healthcare, in childcare, in job opportunity, they have what
Speaker 3: you termed stacked vulnerability, where the economic piece is just
Speaker 3: one more thing. And at the same time, those at
Speaker 3: the top have an overabundance in everything, power, money, influence,
Speaker 3: and so it's become very difficult for those at the
Speaker 3: bottom to ignore what's happening around them. It's also something
Speaker 3: that has accumulated over years. It feels like whether there
Speaker 3: were Republicans or Democrats in the White House are in
Speaker 3: charge in Congress, So is it going to take time
Speaker 3: for us to get this fixed, or do the people
Speaker 3: like I don't know you know. I had a brit
Speaker 3: say to me, you're a young nation. You're going to
Speaker 3: have some kind of uprising, a revolution, Like, I don't know,
Speaker 3: how do you I understand policymakers going at this, but
Speaker 3: it seems like it's a big task.
Speaker 8: Yeah.
Speaker 10: I think those at the top ignore the impatience at
Speaker 10: the bottom. Time moves very slowly when you lack confidence.
Speaker 10: And I also think that those at the top are
Speaker 10: largely blind to the human experience at the bottom, and
Speaker 10: at the same time, those at the bottom are all
Speaker 10: too aware of the abundance that exists above them.
Speaker 4: Thanks to Peter Atwater, president of Financial Insights and adjunct
Speaker 4: lecture of Economics at the College of William and Mary.
Speaker 3: Coming up, how one auto parts manufacturer is faring under
Speaker 3: the president tariffs.
Speaker 4: The CEO of Magna International is next. You're listening to
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Speaker 3: When Magna International reported earnings on Halloween, shares. The autoparts
Speaker 3: manufacturer rallied as much as seven percent inter day in
Speaker 3: response to third quarter sales and adjusted EPs beats. Magna
Speaker 3: management also raised its fiscal year sales forecast thanks to
Speaker 3: strengthen North America and China. There was a lot going on.
Speaker 3: Company based in Canada, biggest automotive supplier of North America.
Speaker 3: Everything from automated driving control modules, powertrains, lighting mirrors, complete
Speaker 3: engineering systems, so much. It is a great, great, great
Speaker 3: read on the auto economy.
Speaker 4: Back with us is Swami Coda Geary, president and CEO
Speaker 4: of nearly fourteen billion dollar market cap autoparts maker Magna International.
Speaker 4: The stock up close to eighteen percent so far this year.
Speaker 4: I want to start with kind of where we left
Speaker 4: off when we spoke to you back in April. This
Speaker 4: was just after the president's so called Liberation Day tariffs.
Speaker 4: You liken them and the additional cost to drawing upon
Speaker 4: the playbooks from past rotating UAW strikes, COVID, the Great
Speaker 4: Financial Crisis, the Chip crisis all rolled together.
Speaker 6: We were pretty.
Speaker 4: Shocked about those comments because you said it was big.
Speaker 4: Is it still that big.
Speaker 6: Of an impact? Has it been that big of an impact?
Speaker 11: Yes, there has been a lot of dynamic challenges in
Speaker 11: the industry, as you know, and Benny spoke to me
Speaker 11: last year. It was fresh, you know at that time.
Speaker 11: As we sit here and look at it, I think
Speaker 11: our annualized tariff impact is roughly in the range of
Speaker 11: two hundred million. But we continue to work with our team,
Speaker 11: with our customers, with our supply base, and mitigating as
Speaker 11: much as possible, you know, adhering to the USMCA compliance.
Speaker 11: All in all, I think we have been able to
Speaker 11: with a lot of self help, a lot of work
Speaker 11: with our customers, we've been able to bring down that
Speaker 11: impact to roughly ten bass points, which means about thirty
Speaker 11: million for Magna this year.
Speaker 3: So I will say our BI team reacted to our
Speaker 3: Bloomberg intelligence team, Swamy reacted and they said they believe
Speaker 3: that your company's continuous cost cutting and operational excellence could
Speaker 3: further release margin gains in twenty twenty six. And they
Speaker 3: talk about in the US major customers are benefiting from
Speaker 3: a more profitable sales mix, with higher sales and pickups
Speaker 3: and SUVs offsetting lower EV production, which should enhance Magnus
Speaker 3: program economics for upcoming twenty twenty six launches. Do they
Speaker 3: have it right?
Speaker 11: Yes, they do. There's a lot of hard work and
Speaker 11: thanks to the team, there's been a lot of traction
Speaker 11: in our operational activities, including some of the activities that
Speaker 11: you men mentioned cost restructuring, optimizing our operations. We have
Speaker 11: really worked through about forty divisions, inter of restructuring, consolidation,
Speaker 11: bringing things together, and when the mix in the volume
Speaker 11: becomes stable and it comes through, you see profitability going
Speaker 11: to the bottom line, and that has been our focus.
Speaker 11: Cost reduction, margin expansion, and free cash flow generation. We've
Speaker 11: talked about one hundred and fifty basis points over the
Speaker 11: last three years, and I'm glad to say we have
Speaker 11: an additional visibility of thirty five to forty basis points
Speaker 11: going into twenty twenty six. So this is a journey.
Speaker 11: It's never going to stop. In an industry that we
Speaker 11: need to constantly work on improvements. We call them continuous improvements,
Speaker 11: and we're starting to see the result of that.
Speaker 3: But you did talk about demand destruction the short term
Speaker 3: when we talked with you in April, right after Liberation Day.
Speaker 3: How has it played out as bad as you expected?
Speaker 3: And where are we today? Your top customers are who's
Speaker 3: who of the global auto industry. So where are we
Speaker 3: today in that demand destruction? Are we done?
Speaker 11: I wish I could have that crystal ball, But you know,
Speaker 11: the way I look at it is we peaked out
Speaker 11: as our industry in North America about seventeen and a
Speaker 11: half million units. Interestingly, I was looking at the data
Speaker 11: go back twenty years. In two thousand and four two
Speaker 11: thousand and six time frame, North American production volumes were
Speaker 11: somewhere between fifteen to sixteen. We are still at fifteen
Speaker 11: to sixteen million units today. I think the volumes held
Speaker 11: up this year, but I always like to stand back
Speaker 11: a little and see where it was Magna. Magna twenty
Speaker 11: years ago was a twenty billion dollar company. Today we're
Speaker 11: a forty billion dollar company. And it's the result in
Speaker 11: the efforts of the team to continue to gain CPV
Speaker 11: and to diversifire customer base, and that's where our focus
Speaker 11: is right And to your point, though, I hope this
Speaker 11: is the trough. If you look at the average age
Speaker 11: of the fleet, it's pretty high. The inventories are pretty normal.
Speaker 11: So I like to say, you know, there is an
Speaker 11: elasticity of demand that's going to come back looking forward,
Speaker 11: if there is no more externalities like we have had
Speaker 11: in the last four years.
Speaker 4: Your company is based in Ontario. We are curious about
Speaker 4: the US and Canada trade negotiations or lack thereof. Given
Speaker 4: the impasse between the US and Canada, how is that
Speaker 4: affecting your industry and you specifically.
Speaker 11: Yeah, As you know, auto industry is very interdependent ecosystem
Speaker 11: and it's pretty complex in North America, so it has
Speaker 11: been challenging. But I would like to look at Magna
Speaker 11: really as a global company. We have tens of thousands
Speaker 11: of people in Mexico, in Canada and in US, and
Speaker 11: obviously we are following the footprint of our customers, looking
Speaker 11: at the economics, looking at transportation, looking at logistics, and
Speaker 11: that is the competitiveness that ultimately lets you be the
Speaker 11: player that you are. Right, So the focus has been
Speaker 11: on it. Whatever the policy is, If there is certainty
Speaker 11: and visibility to the policy going forward, I think it's
Speaker 11: just going to be a tailwind to everybody, the oidiums
Speaker 11: and the supply base in all but Swami.
Speaker 3: Is it broken the US Canada? I mean it's been
Speaker 3: so intertwined really, the North American global auto supply chain.
Speaker 3: But is it, especially the US and Canada, is it
Speaker 3: changed forever?
Speaker 11: Again, I'm not an international trade policy expert speaking from
Speaker 11: but you have a.
Speaker 3: Great advantage and a great window on how it has
Speaker 3: worked and how it feels today.
Speaker 11: It's definitely been strained, right, There's no question about that.
Speaker 11: But I've lived in this industry for twenty six years,
Speaker 11: and what we're talking today is going to impact maybe
Speaker 11: twenty seven or twenty eight. So we're always looking at
Speaker 11: what we are doing today impacts three or four years
Speaker 11: down the road. What we are doing today has been
Speaker 11: planned and decided three or four years ago, So I
Speaker 11: tend to think a little bit in longer cycles.
Speaker 10: You know.
Speaker 11: I'm still hopeful that the policy is going to get
Speaker 11: to a point where it's mutually beneficial to everyone the president.
Speaker 4: In the past, the President of the US has talked
Speaker 4: about his back and forth in his conversations with executives
Speaker 4: at North American auto companies.
Speaker 6: Have you had conversations with the President or his team,
Speaker 6: We have.
Speaker 11: Had obviously a seat at the table in being able
Speaker 11: to communicate facts that possible impacts, the challenges of the
Speaker 11: industry and what could benefit I always say we are
Speaker 11: able to give an opinion one of the opinions. I
Speaker 11: hope it's a dot on the chart. And definitely we
Speaker 11: have talked to all three regions right expressing what is
Speaker 11: the jobs that we have, what is the investments that
Speaker 11: we have made, and how it could impact r Definitely,
Speaker 11: that is the conversation that's always ongoing.
Speaker 3: Hey, Swammy, one thing we wanted to ask you the
Speaker 3: EV retrenchment that we continue to talk about here at Bloomberg,
Speaker 3: how is it affecting your business and the auto industry
Speaker 3: in general. You've got Fordkinson during killing the F one
Speaker 3: fifty Lightning, Stilantis killing the ram EV, and GM taking
Speaker 3: a one point six billion dollar impairment charge on its
Speaker 3: EV assets. That feels pretty chilling. How is that impacting
Speaker 3: you guys?
Speaker 11: In the past, we've always looked at EV and if
Speaker 11: you look at some of the comments that we've made,
Speaker 11: I think we were a little bit conservative. But definitely
Speaker 11: the North American EV penetration has had an impact on us.
Speaker 11: We came back and talked about the impact of our
Speaker 11: revenue going forward in the August I think of twenty
Speaker 11: twenty four. But the key thing has been how we've
Speaker 11: been able to pivot. We had our peak capex spend
Speaker 11: in twenty three twenty two, we got back to the
Speaker 11: sales to capex ratio. Shows our agility and being able
Speaker 11: to get back, and you know, look at optimizing how
Speaker 11: we can re use some of the capital with the
Speaker 11: help of the customers and so on and so forth.
Speaker 11: But overall, EV, I think in other regions continues and
Speaker 11: as a global company, we see that continuing in China
Speaker 11: and Europe. But when it does come back, and we
Speaker 11: still believe EV is a secular trend, that take rate
Speaker 11: is very different than what we all expected a couple
Speaker 11: of years ago. But with the investments already there, with
Speaker 11: the development that's behind us, and our ability to hit
Speaker 11: whether it's an internal combustion engine or a bav or
Speaker 11: a hybrid, that flexibility in our product line has helped
Speaker 11: us whether the storm pretty well. And I know, I
Speaker 11: think that's what we need to continue to do going forward.
Speaker 4: I know that the decisions you make now are decisions
Speaker 4: for four years from now. So are you changing product
Speaker 4: plans to develop more gas powered vehicles or it helps
Speaker 4: make supplies for more gas powered vehicles?
Speaker 11: Yes, Tim, I think we have had a lot of
Speaker 11: content in obviously the internal combustion engine platforms, right, and
Speaker 11: as some of these programs are delayed or pushed out,
Speaker 11: we continue to get leverage on the existing programs and
Speaker 11: we continue to win. The other thing to note is
Speaker 11: a lot of our products, almost eighty percent of our
Speaker 11: product is propulsion agnostic. That means whether a make a
Speaker 11: mirror or a door, or a structure or a seat,
Speaker 11: we'll make it for whatever propulsion it is.
Speaker 3: Right.
Speaker 11: So, as far as we are flexible and continue to
Speaker 11: do that in our processes, we've been able to take
Speaker 11: advantage of that of that flexibility and gain market and
Speaker 11: continue to grow our revenues.
Speaker 3: So I want me just thirty seconds here, any signs
Speaker 3: of a US recession, a global recession. What's the word
Speaker 3: that you would use to describe the marketplace right now?
Speaker 3: Just quickly?
Speaker 11: Yeah, I think there is signs of stress, I would say,
Speaker 11: And obviously that puts us all us on a cautionary foot.
Speaker 11: But like I said, from an auto industry, the inventory
Speaker 11: seem normal. The average age of the fleet is pretty high,
Speaker 11: so we are looking for auto demand not to be
Speaker 11: impacted that much. We've still remained very cautious.
Speaker 4: That was Swami Koda Gharri, President and chief executive officer
Speaker 4: of Magna International.
Speaker 3: I really do love talking with him Tim, because we
Speaker 3: get a great read on the global supply chain. I
Speaker 3: mean auto If you think about how many different countries
Speaker 3: have been involved, how many times there you know different
Speaker 3: parts might be crossing borders. It's really complicated. It involves
Speaker 3: a lot of pieces, and he really gets into it
Speaker 3: and understands it.
Speaker 8: Yeah.
Speaker 4: He also understands that in order to make decisions for
Speaker 4: the next few years, he has to do them now,
Speaker 4: So he talks a lot to us about Okay, if
Speaker 4: this is what we're going to do in twenty thirty,
Speaker 4: this is the decision we need to make right now.
Speaker 4: And one area that I think has sold a lot
Speaker 4: of confusion, not just for automakers but for the parts
Speaker 4: suppliers is the fate of ebs.
Speaker 6: At least here in the AA.
Speaker 4: Love that you went there because this you know, five
Speaker 4: years ago they couldn't make evs fast enough. Fast forward
Speaker 4: to today, it's like, Okay, well, what does demand look like,
Speaker 4: what does adoption look like? And how does that reset
Speaker 4: what these auto companies are doing terms of what they're
Speaker 4: offering to consumers. And when they're offering it.
Speaker 3: But what's interesting is right he is taking the longer
Speaker 3: term perspective. And if you look outside the United States,
Speaker 3: I mean China or elsewhere ev you know, people are
Speaker 3: buying electric vehicles and so I think he's going on
Speaker 3: the assumption that that's the future. And so love getting
Speaker 3: his perspective.
Speaker 4: I always love getting his perspective. We also love getting
Speaker 4: the perspective of the CEO of Axon Enterprise. He's going
Speaker 4: to join us next Yeah.
Speaker 3: It's the company best known for tasers. His stock has
Speaker 3: been on fire over the past decade, but it recently.
Speaker 3: I got to say the company did catch investors off
Speaker 3: guard with earnings and another acquisition.
Speaker 6: This is Bloomberg.
Speaker 2: This is the Bloomberg Business Week Daily podcast. Listen live
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Speaker 2: flagship New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 3: Earlier this month. Axon Enterprise, it's a company known for
Speaker 3: making tasers, missed analyst estimates for third quarter profit after
Speaker 3: it reported higher costs resulting from the implementation of tariffs.
Speaker 3: Now that sent it shares slumping twenty percent and extended
Speaker 3: trading despite reporting record revenues. So investors definitely turned sour
Speaker 3: on that report.
Speaker 4: On top of that, Axon agreed to buy emergency tech
Speaker 4: company Carbine. That's a deal valuing the company at six
Speaker 4: hundred and twenty five million dollars. Still, it is worth
Speaker 4: noting that stock got more than thirty three one hundred
Speaker 4: percent since the end of twenty fifteen. That was when
Speaker 4: Axon was just seventeen dollars.
Speaker 3: Yeah, it's not a seventeen dollars stock anymore. In fact,
Speaker 3: you know, when you look at it on the Bloomberg
Speaker 3: this is a stock that now trades at about five
Speaker 3: hundred and seventy dollars this share. So, as we said,
Speaker 3: it's been on fire, but investors a little bit of
Speaker 3: a rethink from more. We caught up with the CEO
Speaker 3: of Axon, Rick Smith. He is still feeling optimistic.
Speaker 5: Yeah, I'd say the business is the strongest it has
Speaker 5: ever been. You know, it's a public CEO for like
Speaker 5: twenty four years now, and this is the fifth time
Speaker 5: we've come in reported the business with really strong operating
Speaker 5: results and then the stock drops. So I just tell
Speaker 5: our people don't even look at the stock price like
Speaker 5: it's going to move around for a bunch of factors.
Speaker 5: Where we stay focused is building the long term business
Speaker 5: and every previous time it's recovered and we're going to
Speaker 5: stick with that playbook. And if you look at where
Speaker 5: we're growing from some of our new investments, you know,
Speaker 5: from counter drone and fuse this real time crime centers
Speaker 5: and artificial intelligence, our bookings in those areas are up
Speaker 5: almost triple year over year. And then we just announced
Speaker 5: two new acquisitions that is our entry into them mission
Speaker 5: critical voice space, which we think is going to be
Speaker 5: a huge opportunity over the next decade.
Speaker 4: So what are you guys seeing that investors and analysts
Speaker 4: are not seeing because the narrative that you have and
Speaker 4: your tone doesn't necessarily match the reaction from the street.
Speaker 5: Yeah, I mean part of this excuse me was we
Speaker 5: did have a gap operating loss, a tiny one, but
Speaker 5: that's largely because we have this very unique stock in
Speaker 5: center program we call the Exponential Stock Plan, and all
Speaker 5: of our employees participate. And when the stock does really
Speaker 5: well and we're hitting our operating targets, stock comp goes up,
Speaker 5: and so paradoxically, the better the operating business does, the
Speaker 5: more stock comp goes up. And that was the biggest mover.
Speaker 5: But if you look at the adjusted EBIT data, if
Speaker 5: you take that noise out, you know we managed to
Speaker 5: turn in. We've got like seven consecutive quarters over thirty
Speaker 5: percent top line growth, and we turned in right at
Speaker 5: twenty five percent or twenty four point nine adjusted EBITDA
Speaker 5: while maintaining the growth rate. And if you listen to
Speaker 5: our president, who used to be the head of sales,
Speaker 5: is very close to the customer. You know, he was
Speaker 5: pretty bullish on our conference called telling people we think
Speaker 5: the fourth quarter is going to be a monster from
Speaker 5: a bookings perspective. So we're feeling really good, all right.
Speaker 3: I want to come back to that monster for the
Speaker 3: fourth quarter in terms of bookings. But I want to
Speaker 3: say that you know, Rick, you get this. You've been
Speaker 3: a CEO for a long time. When you're kind of
Speaker 3: price for perfection, you know, investors can be like, well
Speaker 3: wait a minute, citizens an investor there, Trevor Walsh said
Speaker 3: the company had little room for error in its report.
Speaker 3: It made investors' concerns about valuations. Stock trades at three
Speaker 3: hundred and ninety eight times current earnings or nearly ninety
Speaker 3: four times future earnings. You've got a forty seven billion
Speaker 3: dollar market cap with projected twenty twenty five earnings of
Speaker 3: two point seven billion, So your price to sales or
Speaker 3: at least there are in terms of your market app
Speaker 3: you know, expectations. I mean, there's there's a lot there
Speaker 3: that they expect everything to kind of just hit perfectly.
Speaker 3: There's also concerns about tyrists of the government shutdown. There's
Speaker 3: also concerns that you just did a second acquisition here
Speaker 3: less than two months after you did that agreement to
Speaker 3: acquire Prepared, which was an AI powered emergency communications platform.
Speaker 3: So why is that valuation or why is that you know,
Speaker 3: market cap versus sales justified?
Speaker 5: Well, first, i'd probably get a note from my general
Speaker 5: counsel telling me not to use words like monster when
Speaker 5: talking about future performance.
Speaker 3: Really, come back, is your phone going off right now
Speaker 3: next to you?
Speaker 9: Yeah?
Speaker 5: Yeah, it probably is. But look, the core business is
Speaker 5: really strong. Gap EPs is a really hard way to
Speaker 5: value the business. Because I talked about the stronger the
Speaker 5: operating business, the more gap EPs gets punished with stock
Speaker 5: competition to expense, so I think something like looking at
Speaker 5: a multiple of revenue is probably a little more like
Speaker 5: gonna be a little more instructive. But look, yes, there
Speaker 5: we are valued as a growing company that's got to
Speaker 5: continue to deliver, and we've been delivering. I think we've had,
Speaker 5: like I said, seven quarters of over thirty percent growth
Speaker 5: and it's our job as a management team to keep
Speaker 5: delivering on that. And you know, if the stock takes
Speaker 5: a breather, you know that's kind of outside our control
Speaker 5: and you don't have an optimist. It creates a great
Speaker 5: entry point for some of our long term investors, and
Speaker 5: we're just going to keep chugging away working on the
Speaker 5: business to make sure we keep growing. And those two
Speaker 5: new acquisitions they're a big piece of it. We made
Speaker 5: a very strategic move to move into mission critical voice.
Speaker 5: We think AI plus voice now is a very magical
Speaker 5: moment and there's a lot of AI hype out there,
Speaker 5: but look, ten percent of our core business bookings this
Speaker 5: year are going to be on our AI services, so
Speaker 5: we're really delivering value to our customers and we see
Speaker 5: doing that in nine to one one call centers and
Speaker 5: then extending across You know, any sort of mission critical
Speaker 5: voice communication is going to be a huge business, and
Speaker 5: we found two very complementary businesses. Prepared allows us to
Speaker 5: go fast into any nine one own call center, and
Speaker 5: then Carbine allows those customers to then go deep and
Speaker 5: get out of the business of running all the hardware
Speaker 5: and move their entire nine one one infrastructure to the cloud.
Speaker 5: And those two together, we think are like chocolate and
Speaker 5: peanut butter. It's gonna be a great combo.
Speaker 3: Well, I do want to ask you about those monster
Speaker 3: bookings for the fourth quarter. But having said that, tell
Speaker 3: us about you said ten percent of the bookings this
Speaker 3: year are going to be on AI services. You know
Speaker 3: how much is still Tasers like, give us an idea
Speaker 3: of what the business is today and kind of where
Speaker 3: you guys are positioning it, especially as you take on
Speaker 3: these acquisitions.
Speaker 9: Got it.
Speaker 5: Well, I'm terrible in details, but I can tell you
Speaker 5: the Taser business is. It continues to grow, even though
Speaker 5: it is a fairly mature business in the US, where
Speaker 5: the real opportunity is our new Taser ten. For the
Speaker 5: first time, we have a weapon that some of our
Speaker 5: customers in Europe were saying is a better weapon for
Speaker 5: their officers than even a handgun. And if we can
Speaker 5: prove that out this winter, we'll be testing it above
Speaker 5: the Arctic Circle and heavy cold conditions with heavy clothing,
Speaker 5: which is our historically been our Achilles heel. If we
Speaker 5: succeed there, we could see Taser really become a driving
Speaker 5: force across Europe and the rest of the world outside
Speaker 5: of the US. So, even though it's been our core
Speaker 5: business from the beginning, Taser we think could be the
Speaker 5: growth engine that pulls body cameras, drones, AI and all
Speaker 5: our other services right along with it.
Speaker 4: Well, let's talk about those other services, because if I
Speaker 4: go back into your earnings and look at twenty seventeen,
Speaker 4: connected devices account for close to seventy percent of your
Speaker 4: total revenue. Software and services was just over thirty percent
Speaker 4: of revenue. If we fast forward to just in recent years,
Speaker 4: last year that pretty much flipped, where connected devices was
Speaker 4: forty percent and software and services is now close to
Speaker 4: sixty one percent of your business. How big does software
Speaker 4: and services get?
Speaker 6: What's the old goal there?
Speaker 5: Well, that's sort of like asking me which of my
Speaker 5: children is my favorite?
Speaker 11: I love them all, but I.
Speaker 6: Mean one of those has a higher margin. Right, Oh, yeah,
Speaker 6: one has a higher margin.
Speaker 5: But when you can do hardware and software together, when
Speaker 5: you can do body cameras, drones in card cameras and
Speaker 5: the software layer, you can just do so much more
Speaker 5: magical things for the customer than if you're a pure
Speaker 5: software play.
Speaker 6: Chah.
Speaker 5: Investors love the software revenue and margins, and so do we.
Speaker 5: But the hardware is also growing and really contributing. And
Speaker 5: it's when you bring it all together that we think
Speaker 5: the magic happens. And that's our real competitive advantage.
Speaker 3: Hey, one of the things I want to ask you
Speaker 3: about is there's been a bunch of reporting. There's a
Speaker 3: story about Flock Safety, which is one of your competitors,
Speaker 3: to be fair, and what's interesting is, I guess you
Speaker 3: guys are all doing deals with the Amazon ring and
Speaker 3: this camera, and you know footage is certainly being shared
Speaker 3: with law enforcement, whether it's ice and others. Again, there's
Speaker 3: a lot of reporting that's being done about this, and
Speaker 3: at the same time some community backlash. So are you
Speaker 3: concerned about community pushback as we have more and more
Speaker 3: surveillance that is out there and that is a big
Speaker 3: part of your business.
Speaker 5: So that's one reason We're really proud of the approach
Speaker 5: we take. We have an Equity and Ethics Advisory Council
Speaker 5: that is comprised of people from communities of concern, particularly
Speaker 5: black and brown communities. Right if we're really talking about
Speaker 5: over policing, I think that's the communities of most concerns.
Speaker 5: All of our approaches, we run through this ethics review
Speaker 5: upfront with people that are n actually very concerned and
Speaker 5: skeptical on these issues, and we build safeguards in that
Speaker 5: help minimize the risk of abuse while maximize the opportunity. Look,
Speaker 5: when a private consumer buys a camera to keep their
Speaker 5: home safe, they're buying and not to watch their dog
Speaker 5: in their at work. They want to stop criminals from
Speaker 5: stealing their stuff breaking into their house. I actually had
Speaker 5: a vehicle stolen years ago, and it took me days
Speaker 5: to get the video from my home security system to
Speaker 5: the police. What we're doing with the ring and by
Speaker 5: the way, we encourage open sharing standards like sharing with
Speaker 5: our competitors. We openly share on a reciprocal basis with
Speaker 5: our competitors. We think this is like doing the right thing.
Speaker 5: With all these cameras out there, we should be using
Speaker 5: them to deter crime and criminal activity, and we think
Speaker 5: you can do that without having to track everybody, you know,
Speaker 5: where they go to in their personal lives. We're talking
Speaker 5: about detecting dangerous criminal acts and detoring those acts in
Speaker 5: the first place.
Speaker 4: So that's with a lot of local law enforcement agencies.
Speaker 4: And I'm curious about the conversations that you have at
Speaker 4: the federal level with the Department of Homeland Security, for example,
Speaker 4: and the way that their officers do or do not
Speaker 4: use your products. What are the conversations that you have
Speaker 4: at the federal level with DHS.
Speaker 5: Yeah, we certainly work with the federal agencies as well,
Speaker 5: and I think where there is some controversy, it's like, look,
Speaker 5: people have different perspectives in different states and in different cities,
Speaker 5: and our system is built so they're like, hey, if
Speaker 5: you are, you know, a city in a very deep
Speaker 5: progressive you can choose who and how you share your data.
Speaker 5: And look, if you're in a border town in a
Speaker 5: red state and you want to be more collaborative with
Speaker 5: those federal agencies, one thing I'll tell you it's not
Speaker 5: our position to try to dictate how government customers and
Speaker 5: that's who we sell to. We're a private corporation shouldn't
Speaker 5: be telling government how to how to use their own data.
Speaker 5: But what we do is we enable them to make
Speaker 5: decisions so those elected officials can be responsive to their
Speaker 5: voters and we can be responsive to their communities.
Speaker 3: One last question, two acquisitions in as many months, is
Speaker 3: there more to come?
Speaker 5: We're probably going to take a little breather here. We
Speaker 5: were not expecting when we went into this. We thought
Speaker 5: we would make one acquisition, but we found that these
Speaker 5: two were really so complimentary that, you know, sometimes you
Speaker 5: got to move quickly when opportunity knocks, and so, yeah,
Speaker 5: this was unexpected, but we're really excited about it.
Speaker 4: That was Rick Smith, the founder and CEO of Axon Enterprise.
Speaker 3: And that wraps up our first hour of the weekend
Speaker 3: edition of Bloomberg Business Week Daily from Bloomberg radio Head.
Speaker 3: In our next hour, the dangers of social media and
Speaker 3: the urgent need to protect its youngest users.
Speaker 4: It's all in, Can't look away, The Case Against Social Media,
Speaker 4: a Bloomberg original investigation produced and directed by an Emmy
Speaker 4: Award winning film duo. Plus many Americans are getting their
Speaker 4: calories from ultra processed foods. Not just adults, but kids, too.
Speaker 4: How bad is that? And Ken Rfk Junior do anything
Speaker 4: about it?
Speaker 3: And he gave up a career in a London office,
Speaker 3: moved his family to France to make rose and do
Speaker 3: it in a way that is good for the climate
Speaker 3: Mother Earth. Will be joined by the owner of Maison Mirabau.
Speaker 3: This is Bloomberg Business Week. I'm Carol Messer.
Speaker 4: And I'm Krim Stanovic.
Speaker 2: You are listening to the Bloomberg Business Weekdaily podcast. Catch
Speaker 2: us live weekday afternoons from two to five pm Eastern
Speaker 2: Listen on Apple CarPlay and Android Auto with the Bloomberg
Speaker 2: Business app, or watch us live on YouTube plenty.
Speaker 3: Hen in our second hour of the weekend edition of
Speaker 3: Bloomberg Business this week, including the family who moved from
Speaker 3: the UK to Provence to live out the dream of
Speaker 3: owning a vineyard and being in a mission as well
Speaker 3: to make rose wine but in a very environmentally responsible way.
Speaker 3: Stephen Kronk. He's the founder and CEO of Maison Marabou.
Speaker 3: He was back to talk wine, regenerative farming and so
Speaker 3: much more. And well we may have.
Speaker 4: Sampled a little bit, Hey, nothing wrong with that.
Speaker 3: Nope, it was Friday, wasn't it.
Speaker 4: It was I think it was. It was definitely Friday. Well, okay,
Speaker 4: so the wine not ultra process, but we also did
Speaker 4: speak about ultra process foods. This is a danger to
Speaker 4: our bodies and it's what the majority of Americans eat,
Speaker 4: yet not all are unhealthy. Gait what Yeah, we're going
Speaker 4: to explain.
Speaker 3: All right, I'm glad we're going to do that. Hey,
Speaker 3: first up this hour, we do want to highlight a
Speaker 3: Bloomberg Original investigation that exposes the real world consequences of
Speaker 3: harmful social media algorithms. It is Can't Look Away the
Speaker 3: Dangers of Social Media. It is a documentary that follows
Speaker 3: a team of lawyers taking on the big tech giants,
Speaker 3: advocating for families whose children have been deeply impacted by
Speaker 3: social media. Now, the original reporting of Bloomberg News investigative
Speaker 3: reporter Olivia Carvell is throughout this film, but there's a
Speaker 3: lot more reporting too as well. The Bloomberg original investigation
Speaker 3: exposing the real world consequences of harmful social media algorithms.
Speaker 3: These companies have been gaslighting us for years.
Speaker 13: This is all about money.
Speaker 4: The purpose of all commercial adventures is to create a demand.
Speaker 3: Our children are the casualties we need to take back
Speaker 3: the power from these companies. They've created a dangerous situation
Speaker 3: and then manipulated these gives.
Speaker 10: They know the levels of addiction, sexual abuse, they know
Speaker 10: the levels of suicide.
Speaker 9: They're not showing our kids what they want to see.
Speaker 14: They're showing you what they can't look away from.
Speaker 3: And that is the Bloomberg original investigation Can't Look Away,
Speaker 3: the Case against Social Media, which is now available across
Speaker 3: Bloomberg platforms. Perry Pelts and Matt O'Neil are the directors
Speaker 3: and producers of the documentary and they join us here
Speaker 3: in studio. Welcome, Welcome to both of you. I got
Speaker 3: to say we've talked to Olivia a lot about her reporting.
Speaker 3: We know you did as well.
Speaker 8: Perry.
Speaker 3: Let me start with you, when you guys decided, I
Speaker 3: don't know, I guess when you first started reading her reporting.
Speaker 3: What struck you?
Speaker 1: What struck us? And first of all, thank you both
Speaker 1: for having us. We really appreciate it. What struck us
Speaker 1: is that what's happening is these companies are looking at families,
Speaker 1: at kids and parents and putting the blame on them.
Speaker 1: This is actually a public health crisis and there's nothing
Speaker 1: short of that. And I think that Olivia's reporting really
Speaker 1: speaks to the fact that this is an algorithm problem.
Speaker 1: It's not a bad parenting, it's not a bad kids issue.
Speaker 9: Yeah.
Speaker 4: The big question that I have as as a parent
Speaker 4: and in a world where we're surrounded by this stuff, Matt,
Speaker 4: is what is the solution here, because these companies don't
Speaker 4: necessarily have the incentive to get us to look away.
Speaker 15: Well, I think the first part of the solution is
Speaker 15: exactly what we're doing, which is starting a conversation because
Speaker 15: a lot of these things. When we started this reporting,
Speaker 15: we had no idea. I had this vague sense that
Speaker 15: social media was bad. I'm a parent, I have young boys.
Speaker 3: We talk about it so much like we understand the
Speaker 3: problems of social media.
Speaker 15: But what I didn't realize was that social media algorithms
Speaker 15: were feeding suicidation to children, body dysmorphia to children. That
Speaker 15: kids are being targeted with the absolute worst things on
Speaker 15: the internet, and it's relentless unpack that.
Speaker 3: What do you mean by.
Speaker 15: That, Well, what happens is that these algorithms start off
Speaker 15: in a way if someone lingers on a sad moment
Speaker 15: because they broke up with a girlfriend or a boyfriend,
Speaker 15: the algorithm catches that and it goes into what some
Speaker 15: people have called a TikTok hole where it continues to
Speaker 15: feed more and more sad content that goes deeper and deeper.
Speaker 15: There's a whistleblower in the film that actually explains this
Speaker 15: in more detail, who used to work at TikTok.
Speaker 3: Well, this is what's interesting, Perry, right, it's not just
Speaker 3: about what you search on, it's basically what you linger on.
Speaker 3: And the social media companies and you know, we're so
Speaker 3: careful when we talk about this because it's alleged and alleged,
Speaker 3: but this is where the whistleblowers come in and provide
Speaker 3: some insight about what the companies actually knew.
Speaker 1: Now, the whistleblowers as well as internal documentation from these companies,
Speaker 1: what they're prioritizing is having kids stay on these platforms engagement.
Speaker 1: They're not prioritizing safety. So what happens is they bring
Speaker 1: in neuroscientists, they bring in behavioral scientists to actually program
Speaker 1: these algorithms so that kids stay on as long as possible,
Speaker 1: and thus the title can't look away from their being
Speaker 1: fed the material that they actually can't look away.
Speaker 4: From, because that's good for business. Like I said, the
Speaker 4: incentives are not aligned with getting kids not to look
Speaker 4: at this stuff. If you show them what they don't
Speaker 4: want to see, they're going to do something else. We
Speaker 4: live in an attention economy. So is there a solution
Speaker 4: in a world where the incentives don't match from a
Speaker 4: public health perspective.
Speaker 1: The incentives have got to change because we right now,
Speaker 1: unfortunately have a legal system in section two thirty that
Speaker 1: protects these companies in a profound way. It treats them
Speaker 1: as passive pipelines. They are not passive pipelines. Algorithms are
Speaker 1: company driven.
Speaker 4: That essentially says section two thirty is that companies these
Speaker 4: social media platforms are not responsible for the content that's
Speaker 4: on their platforms.
Speaker 1: That's exactly right. They are treating them like bulletin boards,
Speaker 1: which is if you go back historically to nineteen ninety six,
Speaker 1: before social media was even around, and you had these
Speaker 1: sites that were more bulletin board driven, they would say,
Speaker 1: it's okay, you can post what you want. The company
Speaker 1: is not responsible. But that's not what our lawyers would argue,
Speaker 1: the lawyers that we follow in this film, R what's
Speaker 1: happening here?
Speaker 3: Matt talk to us about the lawyers because they really are.
Speaker 3: You know, when you go up against big tech, you're
Speaker 3: talking about high powered, expensive lawyers. This group of lawyers,
Speaker 3: it's hard not to be impressed by them. And what
Speaker 3: they ultimately figured out was the argument to do here.
Speaker 15: It's an incredible collection of lawyers led by Matt Bergman,
Speaker 15: also Laura Marquez Garrett, who was that corner office big
Speaker 15: firm lawyer who left because of what she saw happening
Speaker 15: with social media and her concern for her own children.
Speaker 15: What Matt and Laura and the other lawyers of the
Speaker 15: Social Media Victims Law Center came up with is a
Speaker 15: novel legal approach which holds the companies responsible under product
Speaker 15: liability law instead of under the idea of Section two thirty,
Speaker 15: where it's the content is that promising Well, it's made
Speaker 15: its way through the courts. Snap in the case that's
Speaker 15: followed in the film, tries to get it dismissed with
Speaker 15: Section two thirty, and they successfully argue and give these
Speaker 15: families a victory, the first of its kind, that they
Speaker 15: can be held responsible under product liability law. And they've
Speaker 15: moved to discovery and that case is making its way
Speaker 15: through California.
Speaker 3: So when we talk about product liability, you know, Perry,
Speaker 3: I think of things like the tobacco lawsuits, and this
Speaker 3: is what you can think about, right and I think
Speaker 3: about so many products that are out there right now
Speaker 3: that are facing a lot of scrutiny.
Speaker 1: Well, let's go back to tobacco. To your point, how
Speaker 1: about opioids. It is another page out of the same playbook,
Speaker 1: which is basically to blame in this case the parents
Speaker 1: and the kids, and to not hold these companies into
Speaker 1: the companies to say.
Speaker 13: They're abusing good products.
Speaker 1: That is not what we are at least that's not
Speaker 1: what the reporting is suggesting. This is very, very different.
Speaker 1: These are algorithms that need to be changed.
Speaker 3: I want to just mention because when you do a
Speaker 3: documentary and we're at the high level, and as soon
Speaker 3: as we have headlines, you have to remember that there
Speaker 3: are people, right and you guys tell these stories. Olivia
Speaker 3: told these stories. Whether it's Alexander Neville who died because
Speaker 3: of taking a pill laced with fetnel that he got
Speaker 3: on snapchat. England Roberts died after she copied a strangulation
Speaker 3: video she saw on Instagram. It was in her feed.
Speaker 3: Jordan de May six hours from initial contact by who
Speaker 3: he thought was a young woman but wasn't, but rather
Speaker 3: a sextortionist. He killed himself. I mean telling these stories.
Speaker 3: I mean in the film, you're in the bedrooms, you're
Speaker 3: talking to the parents.
Speaker 8: Matt.
Speaker 3: There's a lot of people that were impact and there
Speaker 3: are thousands of cases.
Speaker 15: This is just the tip of the iceberg. And I
Speaker 15: appreciate what you were doing there because you're saying their names.
Speaker 15: I'll add Mason Eden to that, a boy who died
Speaker 15: by suicide after a breakup because he went down one
Speaker 15: of these TikTok holes where here was being fed content
Speaker 15: that actually told him to blow his brains out with
Speaker 15: a shotgun. Actually, these are the shocking sorts of things
Speaker 15: that many of us adults don't know are happening on
Speaker 15: social media. And these parents are taking the most incredible
Speaker 15: tragedy in their lives and turning it into change. Yes,
Speaker 15: they're holding these companies liable and suing them. What they're
Speaker 15: looking for is not necessarily monetary damages. It's for real
Speaker 15: changes to how these companies work. You asked about a
Speaker 15: solution before if Instagram can figure out that I want
Speaker 15: a lawnmower before I know I want a lawnmower, or
Speaker 15: that I need a hair cream to try to grow
Speaker 15: my hair back. It can figure out how not to
Speaker 15: send content that promotes suicide to children.
Speaker 3: Christ you know what my understanding and you and I
Speaker 3: we did a panel here and we did a discussion.
Speaker 3: What does is it TikTok in China dot?
Speaker 15: It's a great question because TikTok is owned by ByteDance.
Speaker 15: The similar app in China has a shut off time
Speaker 15: at night so that children can't access it. Instead of
Speaker 15: promoting whatever the kids are lingering on, it actually promotes
Speaker 15: practicing your musical instrument and doing math problems.
Speaker 3: Sets Perry, what do you hope people you know, run
Speaker 3: with after this film? We've only got about a minute
Speaker 3: or so, Lef, what do you hope they do they
Speaker 3: ask either their kids or I don't know.
Speaker 1: It's a really important question because we don't want to
Speaker 1: scare everybody and not give them anything that solutions oriented
Speaker 1: And when Matt's talking about these families, these families want
Speaker 1: people to be informed so that they don't have the
Speaker 1: same thing happen to them. And the answer is talk
Speaker 1: to your kids, tell them about what's going on, keep
Speaker 1: social media, phones and apps away from them until at
Speaker 1: least high school. Wow, it's the best thing that we
Speaker 1: can do, and change needs to happen at a regulatory level.
Speaker 6: Perry, one last one for you.
Speaker 4: You've got a really interesting background in journalism but also
Speaker 4: in documentary filmmaking, but also in public health. Your documentaries
Speaker 4: have included subjects such as the opioid epidemic.
Speaker 6: Excessive drinking. Is this as big of an epidelt in
Speaker 6: your view?
Speaker 1: I think this is a cataclysmic epidemic in my opinion,
Speaker 1: because now these companies are targeting our children and that
Speaker 1: is different than what was happening in a lot of
Speaker 1: these other None of them is good, but this one is.
Speaker 6: Particularly a public health crisis.
Speaker 3: A public health.
Speaker 15: Crisis, yeah, question about it.
Speaker 3: Laire Ai on top of it, and it's just terrifying.
Speaker 4: Thanks to Perry Pelts and Matthew O'Neil, directors and producers
Speaker 4: of Can't Look Away, The Case against Social Media, the
Speaker 4: Bloomberg original investigation, it's now available on all Bloomberg platforms.
Speaker 3: I have to say, Tim, you know I actually did
Speaker 3: a panel with Matt O'Neil a couple of weeks ago
Speaker 3: here at Bloomberg for another we did a viewing of
Speaker 3: the film, had an audience and then talked with the audience.
Speaker 3: But you and I have done so many interviews about
Speaker 3: social media misinformation that's out on the platform. You know,
Speaker 3: we can go back to elections and political misinformation, but
Speaker 3: just so much stuff that's out there, and for a
Speaker 3: lot of people, you know, they see it as a
Speaker 3: truth or reality. And I think, you know, there's been
Speaker 3: reals on social media companies to be responsible for what's
Speaker 3: on the platform. With this film, this documentary reminded us
Speaker 3: that there is you know, you go back to a
Speaker 3: ruling that basically made these companies not responsible for the
Speaker 3: content on their platform.
Speaker 4: Yes, section two thirty is what you're referring to. Fry
Speaker 4: Peltz talks about it a lot, right.
Speaker 3: The Communications Act of was it nineteen ninety six, I think?
Speaker 3: And so what's interesting is that, you know, in an
Speaker 3: environment where we are inundated by a digital world and
Speaker 3: people spending a lot of time on social media, when
Speaker 3: it comes to something like kids, children, teenagers, what can
Speaker 3: possibly happen as a result of that content, it does
Speaker 3: open up a big question who is responsible for that?
Speaker 4: Well, how would the world be different right now if
Speaker 4: these platforms were held good question responsible for what was
Speaker 4: actually on their platforms.
Speaker 3: Well, and what they like it too is to tobacco, right,
Speaker 3: and when tobacco was kind of be marketed to kids
Speaker 3: and trying, the whole idea is get them hooked early,
Speaker 3: and the same thing with social media, get them at
Speaker 3: least allegedly from some of the inside documents I had
Speaker 3: at companies about this idea of kind of you know,
Speaker 3: targeting kids because you get a customer when they're young,
Speaker 3: they kind of tend to stay with you until they're older.
Speaker 4: Well, I think what a big takeaway from me from
Speaker 4: this conversation was misaligned incentives. You know, we report on
Speaker 4: these companies each and every day and quarterly. We talk
Speaker 4: about the metrics that investors look closely at, the ones
Speaker 4: that actually move the company's stock price. Right, it's time
Speaker 4: spent on the platform, right, It's users on the platform.
Speaker 4: It's not how little did you get young people to
Speaker 4: actually use this platform. That's not what investors are judging
Speaker 4: them on.
Speaker 3: Well, and it's exactly so.
Speaker 4: They're doing everything they can to get people to spend
Speaker 4: more time on the platforms.
Speaker 3: And what's interesting is what they found is that you know,
Speaker 3: kids will search for stuff, and what happens is it's
Speaker 3: not necessarily what you search on that you get targeted for.
Speaker 3: It's what you linger on, how much time you spend
Speaker 3: on an individual post, and then the algorithms seem to
Speaker 3: kick in, yeah, and then target with you. So you
Speaker 3: might have been searching something that was optimistic and all
Speaker 3: of a sudden you get something that's kind of dark
Speaker 3: and you spend a little bit more time because our
Speaker 3: brain is kind of wired to go to those dark things,
Speaker 3: and then all of a sudden, you're getting a lot
Speaker 3: more dark content. I'm making it very simplistic, but that's
Speaker 3: kind of you know here in.
Speaker 4: The US, the safeguards that are put on by the
Speaker 4: companies versus in China, and how the Chinese companies or
Speaker 4: are required or at least what they do when it
Speaker 4: comes to the content on the platforms. Yeah, that watch.
Speaker 4: Check out the film exactly.
Speaker 3: Check it out. You can find it on Bloomberg platforms.
Speaker 3: It's definitely a must watch if you have kids. Schools
Speaker 3: are watching it, they're doing viewing sessions if you will. Anyway,
Speaker 3: it's really something that is a must viewing, all right,
Speaker 3: you're listening to Bloomberg Business Week. Coming up from junk
Speaker 3: on social media to junk on supermarket shelves. Another addiction
Speaker 3: worth paying attention to ultra processed foods.
Speaker 4: People want to avoid them, but experts are struggling to
Speaker 4: define them. That's next. This is Bloomberg.
Speaker 2: This is Theloomberg Business Week Daily Podcast. Listen live each
Speaker 2: weekday starting at two pm Eastern on Apple car Play
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Speaker 2: York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 4: Here's a stat that may shock you. Americans get more
Speaker 4: than half of their daily calories from ultra processed foods,
Speaker 4: with salty and sugary items accounting for an even bigger
Speaker 4: portion of kids plates. This according to a government study
Speaker 4: that was released back in August. This government study ran
Speaker 4: from two thousand and one twenty twenty one to twenty
Speaker 4: twenty three, and it said that about sixty two percent
Speaker 4: of childhood diets come from highly processed foods think burgers, pastries, snacks,
Speaker 4: and pizza. This according to the US Centers for Disease
Speaker 4: Control and Preventions. Nutrition study, the same foods have a
Speaker 4: similar grip on adults, making up about fifty three percent
Speaker 4: of the calories that they consumed.
Speaker 3: That's a lot.
Speaker 6: Yeah.
Speaker 4: The question I have is whether or not Health and
Speaker 4: Human Services Secretary Robert F. Kennedy can actually make some
Speaker 4: headway on this. He said that the u US food
Speaker 4: supplies poisoning children. It's a question that I'll post to.
Speaker 4: Doctor Juliet Wolfson, Associate Professor in the International Health Department
Speaker 4: at the Johns Hopkins Bloomberg School of Public Health. The
Speaker 4: research focuses on how ultra process food affects our bodies.
Speaker 4: The Johns Hopkins Bloomberg School of Public Health is supported
Speaker 4: by Michael our Bloomberg, founder and majority owner of Bloomberg LP,
Speaker 4: parent company of Bloomberg TV and Radio. Doctor Wolfson, good
Speaker 4: to have you back with us. It's been about a
Speaker 4: year since we last spoke. I just want to start
Speaker 4: with the definition of ultra process foods. I was kind
Speaker 4: of surprised to see pizza and burgers on that list.
Speaker 4: How do you define it?
Speaker 13: Yeah, so thanks for having me back.
Speaker 12: And ultra processed foods are defined by the list of
Speaker 12: ingredients that are included in them. So these are foods
Speaker 12: and beverages that are industrial produced using processes that you
Speaker 12: wouldn't have in a home kitchen, and ingredients that you
Speaker 12: also wouldn't have in a home kitchen. So these are,
Speaker 12: you know, industrial produced products used by processing techniques like
Speaker 12: extrusion fractioning where you break on the pieces of the
Speaker 12: food into different things and then put it back together again,
Speaker 12: and they contain things like additives, emulsifiers, sweeteners, thickeners, artificial
Speaker 12: flavors and colorings, and other kinds of substances again that
Speaker 12: you wouldn't use in a home kitchen.
Speaker 13: And so the most common.
Speaker 12: Definition we have is called the NOVA classification system, which
Speaker 12: actually uses the ingredient list on a product to look
Speaker 12: for these kinds of ingredients that signal that a food
Speaker 12: or beverage has been through this industrial processed thing.
Speaker 3: So if we turn around, which I think increasingly we
Speaker 3: have a population that is doing that, and especially I've
Speaker 3: got a daughter who's twenty two, younger generation looking at stuff.
Speaker 3: But if there are a ton of ingredients and ingredients
Speaker 3: you don't understand, should you assume that that's ultra processed.
Speaker 12: Yeah, that is what we recommend as the way to
Speaker 12: know if a food or beverage you're considering purchasing or
Speaker 12: eating ultra process you flip over that package and if
Speaker 12: you look at that ingredient list and you see even one,
Speaker 12: but certainly a bunch of ingredients where you think, I
Speaker 12: don't know what that is. That's not something I would
Speaker 12: cook with. I don't even know how to pronounce that.
Speaker 12: That's a signal that's an ultraprocessed food.
Speaker 3: So do we fix it by just infusing everything with protein?
Speaker 3: And then it's all.
Speaker 4: Open, but it's still ultra processed, like like even a.
Speaker 3: Protein Are you picking on the pop tart?
Speaker 11: Yeah?
Speaker 4: Protein packed a cop tart. We talked about this on
Speaker 4: our editorial call this morning. Sounds great, protein, doctor, I'm
Speaker 4: gonna let you weigh in.
Speaker 12: Yeah, So I mean thinking about what are That's a
Speaker 12: strategy the food industry uses, maybe to signal that something
Speaker 12: is healthier for us by you know, saying, oh, this
Speaker 12: is protein rich or whole grain rich, or this has
Speaker 12: vitamins or minerals.
Speaker 13: Right, But if it still has these other.
Speaker 12: Ingredients, it's still an ultraprocessed food. And so you know
Speaker 12: the addition of you know, other nutrients that we might
Speaker 12: think are beneficial does not change that food.
Speaker 13: Into something that is not an ultra process food. It's
Speaker 13: still ultra process.
Speaker 4: So just really shocking to see sixty two percent of
Speaker 4: childhood diets come from highly processed foods. That was wild
Speaker 4: to see. But at the same time, I'm thinking about
Speaker 4: my own family and how difficult it is to get
Speaker 4: my kids who are six and two to eat food
Speaker 4: that we would consider not ultra processed. What is the
Speaker 4: best way to do that. What are strategies that work
Speaker 4: for kids? I think a lot of parents struggle with this.
Speaker 12: Yeah, I mean, I think it's a struggle for all
Speaker 12: of us, right, you know, it's not just kids, it's
Speaker 12: adults as well.
Speaker 13: You know, it's over half of adult diets.
Speaker 12: And I think there's a lot of reasons for that,
Speaker 12: and it's you know, our taste preferences are shaped very early,
Speaker 12: and there's a lot of marketing, particularly the children, for
Speaker 12: these products.
Speaker 13: And they're easier to they're easier to grab and go.
Speaker 12: There, a lot of them are ready to eat, and
Speaker 12: you know, they're snacks. They save time, and a lot
Speaker 12: of them are more affordable too, So that's something to consider.
Speaker 12: I think it is the more snacks that you can
Speaker 12: have out that are not processed, that are easy to
Speaker 12: grab and go that you know, that is one strategy
Speaker 12: to help kids have more say fresh fruits and vegetables
Speaker 12: to snack on, or healthy snacks that are made ahead
Speaker 12: so that they can reach for easily. But again that
Speaker 12: is extra work for parents and sometimes extra cost for
Speaker 12: parents as well.
Speaker 13: So it's there.
Speaker 12: There are really good and intractable reasons why these foods
Speaker 12: comprise so much of our diets, and particularly our children's diets.
Speaker 3: So you know, what's interesting the stat that Tim mentioned
Speaker 3: from US Centers for Disease Control and Prevention their nutrition survey,
Speaker 3: when they talked about highly processed food, they said pizza.
Speaker 6: So this is not the pizza that you get and
Speaker 6: I get on Friday nights.
Speaker 3: That's what I want to ask you. So, like, I
Speaker 3: go to a place where I know they are making
Speaker 3: their homemade crust from special weed.
Speaker 4: It's been featured in the New York Times, you.
Speaker 3: Know, and it's no, no, no, I hear you have fun
Speaker 3: but he but I mean it's like, you know, fresh tomatoes,
Speaker 3: fresh basil. I guess maybe there's obviously some like homemade
Speaker 3: cheese there, but like what like how do we distinguish
Speaker 3: really really bad processed food versus stuff that maybe isn't
Speaker 3: so bad.
Speaker 12: Yeah, I think that, you know, that kind of pizza
Speaker 12: that you're describing, or let's think about bread, even pizza
Speaker 12: or bread that might make at home, Like you're combining
Speaker 12: wheat and you know, flour and salt and yeast, and
Speaker 12: you know, you have your fresh tomato sauce.
Speaker 13: That's not an ultraprocessed food.
Speaker 12: So that but that is not the majority of the
Speaker 12: pizza that people are eating.
Speaker 13: So when we talk about things like pizza.
Speaker 12: It really could be those frozen pizzas that you get
Speaker 12: in the grocery store, or maybe more mass produced pizzas
Speaker 12: that are made at scale and therefore have some sorts
Speaker 12: of preservatives or other kinds of ingredients that you know,
Speaker 12: change the say, the softness of the dough or something
Speaker 12: like that.
Speaker 13: Those are the ultra process things.
Speaker 12: So not all all ultra processed foods, though, are equally concerning.
Speaker 12: I would say, you know, I mentioned bread, so you know,
Speaker 12: the bread that we might make by ourselves at home,
Speaker 12: like if we were some of the people who started
Speaker 12: making sour oaught bread during COVID, for example, Yeah, that's
Speaker 12: not ut processed bread you might get at the bakery
Speaker 12: in your neighborhood that is made by scratch is not
Speaker 12: ultra processed. But most of the bread that we see
Speaker 12: on our supermarket shelves is ultra process that sliced bread
Speaker 12: that you see and so, but that includes even whole
Speaker 12: wheat bread. So you know, there are some ultraprocessed products
Speaker 12: that are by definition ultra process because they might contain
Speaker 12: right those alifuyers or things that turn them into that product,
Speaker 12: but they might still be Some are less of a
Speaker 12: concern than others.
Speaker 4: I would say, so just in the last two minutes
Speaker 4: that we have with you that Health and even Service
Speaker 4: As Secretary, Robert F. Kennedy Junior has vowed to go
Speaker 4: after these food companies so Americans do eat healthier.
Speaker 6: Thus far, how is he doing well?
Speaker 12: I mean, I think it's good that he's focusing on
Speaker 12: this as an issue. I think there are, as I mentioned,
Speaker 12: you know, there's a lot of reasons why we eat
Speaker 12: these foods, and one of them, a big one is
Speaker 12: they're more affordable. They tend to be more affordable than
Speaker 12: scratch ingredients. They save time, and they're more accessible.
Speaker 13: And so.
Speaker 12: I think some of the policies of the administration say
Speaker 12: cutting or even eliminating snap benefits is not helpful for
Speaker 12: people to be able to avoid ultraprocessed foods. But thinking
Speaker 12: about labeling or getting ultra processed foods out of schools
Speaker 12: in a way that also balances with giving schools the
Speaker 12: resources they need to source and prepare less processed foods
Speaker 12: would be a step in the right direction.
Speaker 3: Why do we just real quickly thirty forty seconds here,
Speaker 3: why do we have so much ultraprocessed food? Is it
Speaker 3: about keeping shelf life or like, what is it? Or
Speaker 3: is it just cheaper mass production food?
Speaker 12: I don't know, just quickly, yeah, I mean it's the
Speaker 12: majority of the foods in our grocery store shelves. Right.
Speaker 12: They make food large, shelf stable, they're oftentimes more affordable,
Speaker 12: and they're in high demand because they save people time
Speaker 12: and they save people.
Speaker 13: Mental energy as well.
Speaker 12: You know, it's a lot easier to say, have a
Speaker 12: frozen dinner than it is to make all the components
Speaker 12: of the frozen dinner yourself. So there's demand for it,
Speaker 12: and you know, they've really dominated our food supply for
Speaker 12: decades now, so it will be really difficult to make
Speaker 12: that switch at a large scale, but it's worth considering
Speaker 12: how we can do it well.
Speaker 3: L's quick question twenty five seconds. Can we eat too
Speaker 3: much protein?
Speaker 12: I think it is possible to eat too much protein,
Speaker 12: and Americans do eat a lot of protein, so we
Speaker 12: are not suffering from a shortage of protein in the.
Speaker 4: US as a whole our Thanks to doctor Julia Wolfson,
Speaker 4: Associate Professor in the International Health Department at the Johns
Speaker 4: Hopkins Bloomberg School of Public Health, Her research focuses on
Speaker 4: how ultra processed foods affect our bodies.
Speaker 3: All right, so you have little kids, My daughter's older.
Speaker 3: I know we were obsessed. I know you are too
Speaker 3: with organic and yeah.
Speaker 4: But I mean I can only do so much. Truly,
Speaker 4: it's hard. You know, it's really hard for us what
Speaker 4: what they eat when they're out of the house.
Speaker 3: I was just going to say, like when they go elsewhere, right.
Speaker 4: Yeah, and you know it's I'll tell you, New York
Speaker 4: City public schools do not make it easy. Grateful that
Speaker 4: they offer food at these schools breakfast, lunch, and dinner
Speaker 4: at this point, which is a little crazy. Yeah, it's
Speaker 4: not the healthiest stuff though, I know, granted they do have.
Speaker 4: You know, my kids love apples, and they have like
Speaker 4: New York apples, which we love, but it's the other stuff.
Speaker 4: And oftentimes in the after school programs, he comes home
Speaker 4: and he's like, oh, yeah, I got you know, Dorito's
Speaker 4: or whatever, I got, you know, candy from this after school,
Speaker 4: and it's like, oh, you can only do so much.
Speaker 3: I remember in high school, like we used to take
Speaker 3: our own lunches in grade school, and I live close
Speaker 3: enough in grade school that we could go home for
Speaker 3: lunch and stuff. But I remember in high school you couldn't.
Speaker 3: And I remember like you could eat some fruit, or
Speaker 3: there was this like great cake and we would all
Speaker 3: like get it. And it's like that was the choice
Speaker 3: we made. And I'm sure it was.
Speaker 4: Ultimately I was gonna say, was it in like a
Speaker 4: package or was it Actually it.
Speaker 3: Wasn't in a package, so maybe they had a bakery
Speaker 3: that maybe they were making it in their kitchen, but
Speaker 3: I don't know.
Speaker 4: You got to go home for lunch.
Speaker 3: In grade school. We lived really close. It was like
Speaker 3: a little town, and it was.
Speaker 4: Like pretty cool that the teachers just like let the
Speaker 4: kids walk home by themselves.
Speaker 3: Yeah, I mean I was literally a couple of minutes away,
Speaker 3: so I can really cool. I could go home and
Speaker 3: make dinner, not dinner.
Speaker 4: But make Did you make the lunch yourself or was
Speaker 4: I did?
Speaker 3: I made it for myself and my little brother. No,
Speaker 3: my mom was working.
Speaker 4: That's pretty cool, especially when we.
Speaker 3: Got a little bit older. Different that was through eighth grade.
Speaker 4: Different world, it is, right, Yeah, that's pretty cool.
Speaker 3: But high school wasn't like we had it.
Speaker 6: That's the opposite.
Speaker 3: Were you closer in your high school?
Speaker 4: Well, I went to boarding school, so it kind of
Speaker 4: that was impossible to really relate here.
Speaker 3: But was boarding school healthy?
Speaker 8: Yeah?
Speaker 4: I mean it was real food, which is good. We
Speaker 4: did have one thing we did have, what well, two
Speaker 4: things that we had which were crazy. One chocolate milk okay,
Speaker 4: so that was pretty good. Two milk are used to
Speaker 4: a frozen yogurt machine.
Speaker 3: And do you have a cappuccino maker?
Speaker 11: No?
Speaker 8: No, no.
Speaker 4: So we could just go into the dining halloga whenever
Speaker 4: we wanted, which was a little nuts. I don't know
Speaker 4: if they still have that. And one thing you do
Speaker 4: as as seniors, you were allowed to like be out late. Well,
Speaker 4: we'd all break into the dining hall and just eat
Speaker 4: whatever we wanted there late at night. It's kind of
Speaker 4: it's kind of like, I'm sorry you allowed to do that.
Speaker 3: You broke in.
Speaker 8: Yeah, a lock on the door.
Speaker 4: The locks that were meant to be like those big
Speaker 4: like things were just like little like I don't know,
Speaker 4: like U shaped things that they put over, like horseshoe
Speaker 4: kind of things.
Speaker 3: You know, those things you learn on your about your
Speaker 3: co host. Yep, very very interesting. Hey, we shouldn't point
Speaker 3: out that as a one little I.
Speaker 4: Wasn't a bad kid. Okay, I didn't get sway.
Speaker 3: I'm going to bring it back to the news.
Speaker 4: It was kind of a bad kick.
Speaker 3: We do also want to mention a story that has
Speaker 3: come out and kind of associated if you want, the
Speaker 3: Trump administrations deal with Eli Lilly and Novo Nordisks to
Speaker 3: lower the cash price of weight loss drugs is putt
Speaker 3: pressure on employers and insurance to negotiate better costs. But
Speaker 3: let's just talk about the GLP ones are no doubt
Speaker 3: about it. People are eating less. There's kind of this
Speaker 3: healthier thing going on. I don't know if you want
Speaker 3: to call it healthy, but it is making people lose
Speaker 3: a lot of weight, and so you do wonder how
Speaker 3: this plays into food consumption and what they really want
Speaker 3: to eat. So just kind of out there.
Speaker 4: Also on the GLP once, did you see the news
Speaker 4: this week, Eli Lilly dropping CVS's drug benefit plan no employers, Okay,
Speaker 4: this after CVS stopped covering it's blockbuster weight loss drug
Speaker 4: in favor of Arrival medication from Novo Nordisk. This according
Speaker 4: to people familiar with the matter, So, oh my god.
Speaker 4: Eli Lily was like, We're not going to use CVS's
Speaker 4: drug plan because you guys are not actually covering our product.
Speaker 3: Sounds like a negotiating tactic. I mean they're dropping the
Speaker 3: whole plan, hey' costume right? All right? All right, A
Speaker 3: lot of stuff this week. Ky still ahead on Bloomberg
Speaker 3: Business Week, how one family left the London suburbs for
Speaker 3: a small village in France actually Provence. All for the
Speaker 3: love of wine.
Speaker 4: More on the other side with the owner of Maison Mirabo.
Speaker 9: This is going.
Speaker 2: You're listening to the Bloomberg Business Weekdaily podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern Listen
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube. It's the stuff of fantasies.
Speaker 3: Carol, We've talked about this.
Speaker 4: Yeah, you quit your corporate job in London, you move
Speaker 4: to the south of France with your three kids, your wife,
Speaker 4: you make rose.
Speaker 6: It sounds magical, it does well.
Speaker 4: It wasn't a fantasy for Stephen Kronk, the founder and
Speaker 4: CEO of Maison Mirabo. He and his wife did exactly that.
Speaker 4: It was sixteen, sixteen years ago. It was yeah, wow,
Speaker 4: at the height of the global financial crisis.
Speaker 3: Talk about timing.
Speaker 4: Steven's with us right now here in the Bloomberg Interactive
Speaker 4: Brokers studio and.
Speaker 6: He brought Rose.
Speaker 4: First of all, it's been a little while since we
Speaker 4: last spoke to here, at least two years.
Speaker 6: Yes, how's business been since then?
Speaker 9: It's well, it's interesting question.
Speaker 14: It's been up, and I would say, I mean, I
Speaker 14: think Province Rose is still the benchmark for rose around
Speaker 14: the world, so we're very lucky we've got that.
Speaker 9: But there's been a lot of headwinds, as I'm srure
Speaker 9: you're aware.
Speaker 4: Yeah it Look, there's the climate change headwind but there's
Speaker 4: also the changing consumer tastes headwinds, as.
Speaker 6: Well as tariffs exactly, which is the thing that is
Speaker 6: the biggest headwind.
Speaker 9: They all combine together, this is the perfect storm.
Speaker 14: So there's the health kick, there's the cannabis movement, there's
Speaker 14: the no and low alcohol movement, there's the zimpic movement
Speaker 14: because that suppresses people's desire to have a drink. So
Speaker 14: it's like everything and then you load on top of
Speaker 14: that the tariffs. It's like, yeah, what has happened?
Speaker 3: So what does that mean for you guys? Like how
Speaker 3: do you pivot? How do you adjust around that?
Speaker 14: Well, there's a lot of things we can't change. But
Speaker 14: what we try and do is is with the tariffs,
Speaker 14: for example, we've tried to swallow as much as we can.
Speaker 14: We don't want mirror Bau to be much more expensive
Speaker 14: in the store, so we've tried to swallow that, which
Speaker 14: is it's hard, but we're keeping our fingers crossed that
Speaker 14: maybe this is going to change.
Speaker 4: Remind everybody the price range from the United States, so
Speaker 4: you don't want the price to go up in the US.
Speaker 14: So yeah, so we have generally between twenty and thirty dollars, okay,
Speaker 14: and we want to try and.
Speaker 9: Keep below thirty dollars because that's a price point.
Speaker 6: So then how does that hit your margins.
Speaker 9: Yeah, it's not great, but you.
Speaker 14: Know, I'd rather build a brand, and you know, i'd
Speaker 14: rather people carry on drinking Mirbo, especially. You know, we're
Speaker 14: coming out of Thanksgiving and Provence Rose is just so
Speaker 14: good with Turkey, So you know, I'm just trying to
Speaker 14: hope this goes away and just carry on pushing my
Speaker 14: wines here.
Speaker 12: Yeah.
Speaker 3: Well, you know, and I've said I wasn't a big
Speaker 3: Rose drinker, but I've got to say yours is pretty
Speaker 3: pretty magical and I've really enjoyed it, and we're going
Speaker 3: to taste it and know Tim is sniffing it out.
Speaker 3: You're in the United States, talk to us about the
Speaker 3: US market specifically.
Speaker 14: So I've started farming regeneratively for some of my wines, right,
Speaker 14: and the regenerative movement seems to be centered many around California. Now, yeah, so,
Speaker 14: I mean, I'm selling my wines in forty countries, but
Speaker 14: California is the epicenter of the regenerative movement. The California
Speaker 14: Department of Food and Agriculture has been the first state
Speaker 14: to to define the words regenerative agriculture. And meanwhile, we've
Speaker 14: got you know, the wine resions there, so pazoobils, Nappers,
Speaker 14: and Oma. They are the most regenerative wine areas in
Speaker 14: the world.
Speaker 6: So what does that mean for one of County.
Speaker 3: I know where t is from, but what does that
Speaker 3: mean that you would you do more here in the
Speaker 3: United States?
Speaker 14: I'm just trying to sell more wine here. And so
Speaker 14: the retailers say, like air One and Sprouts and Bristol
Speaker 14: Farms and Hagen's, they're really getting behind the regenerative movement
Speaker 14: that they're looking to seek out regenerative.
Speaker 3: Farmer because there's an awareness of it, right, because they.
Speaker 9: Know what it means for farmers, they know what it
Speaker 9: means for people to.
Speaker 4: Not everybody knows what regenerative farming means, and especially how
Speaker 4: that is applied to farming the grapes that go into wine,
Speaker 4: that go into rose. So for for people who don't
Speaker 4: know what it is, explain regenerative farming in the context
Speaker 4: of viniculture.
Speaker 14: So regenerative, as the name suggested, is about regenerating soil, fertility,
Speaker 14: and regenerating nature in simple terms, So you know, it's
Speaker 14: the if you think about it, what was organic farming.
Speaker 9: Called before the First World War?
Speaker 6: Farming?
Speaker 9: Right, But then there was a huge amount of pressure here.
Speaker 14: Everyone's so worried about industrial farming, so the heavy tillage
Speaker 14: and in particular heavy use of chemicals.
Speaker 9: So there's been a move certainly since the First World
Speaker 9: War and the Second World War as well.
Speaker 14: We've seen a lot of nitrogen being used in farms
Speaker 14: and a lot of heavy tillage, a lot of chemicals,
Speaker 14: pesticide and so on, and that's just been killing our soils.
Speaker 9: This is a catastrophe.
Speaker 14: You know, we were worried about famine at the end
Speaker 14: of the Second World War, so rightfully we were worried
Speaker 14: about feeding our population, but we haven't been measuring food
Speaker 14: in the right value. It's been measured by calories rather
Speaker 14: than nutrient density.
Speaker 3: So I didn't mean to interrupt, but it was just interesting.
Speaker 3: We just came off a discussion of talking about the
Speaker 3: cost of meat and just what's going on in that world.
Speaker 3: But I do think about, like is our soil globally,
Speaker 3: how tortured is it or how bad is it because
Speaker 3: of the industrial farming.
Speaker 14: A lot of it, most of it, I would say,
Speaker 14: is on life support. It's really it's catastroph So when
Speaker 14: I was gonna say, when I drive up from NA
Speaker 14: to Pazzoobils, which is one of the most regeneritive regions.
Speaker 9: In wine up the I five and you see.
Speaker 14: Thousands of acres of fruit trees and nut trees that
Speaker 14: are on life support. It's like the moon's surface, and
Speaker 14: so it's kept they're kept live by these extern inputs
Speaker 14: and what you end up with a product, but they're
Speaker 14: not very tasty and they're not very nutritionally dense. So
Speaker 14: we need to actually start restoring soil health globally, and
Speaker 14: regenerative is a way of doing that.
Speaker 3: So you can do that in terms of all that soil.
Speaker 3: How long does it take the process of getting it back, It.
Speaker 14: Can happen quite quickly, and that's one reason why we
Speaker 14: so I run a nonprofit as well called the Regenerative
Speaker 14: Viticulture Foundation. So viticulture is agriculture for vines, and we're
Speaker 14: launching these initiatives called one block challenges. So we did
Speaker 14: one in Paso, we've done one, we're doing one in
Speaker 14: Napo Opus one in fact a great winery winery, so
Speaker 14: we're doing one there on the eighteenth of November, and
Speaker 14: we're challenging the growers in Napa and as we did
Speaker 14: in Pazo, to just transition one block of their vineyard
Speaker 14: to re for a year and then come back and
Speaker 14: see the difference. It's incredible how generous Mother Nature is
Speaker 14: coming back.
Speaker 4: You said, you've driven up California on the five, but
Speaker 4: if you go a little west, you could drive up
Speaker 4: on Highway one or the one oh one and then
Speaker 4: go on San Marcos pass through Los of Libos where
Speaker 4: there is a lot of agriculture and a lot of
Speaker 4: vineyards as well. Is the movement expanding throughout the state
Speaker 4: of California and beyond the state of California.
Speaker 9: Yeah.
Speaker 14: Absolutely, And that's the point of my nonprofit is to
Speaker 14: really encourage farmers, give them the reasons to do it.
Speaker 14: Everything around region, as far as we're concerned, is using science.
Speaker 9: So you know, if we can.
Speaker 14: Rebuild soils and rebuild the soil organic matter, rebuild soil carbon,
Speaker 14: they end up with much better tasting wines. But also
Speaker 14: you see nature coming back. My mother Nature owes us
Speaker 14: no favors, but she'll come back. But you've got to
Speaker 14: create that right environment. Getting wean yourself off the synthetics
Speaker 14: and get yourself back.
Speaker 3: Into natural you know, it's kind of I always think
Speaker 3: about Stephen what happened during the pandemic, and the sky's
Speaker 3: got bluer, and the animals came out and quickly, and
Speaker 3: it's just a reminder when we see the impact of
Speaker 3: climate change and it feels so devastating, it feels like
Speaker 3: there's no way back. I always go back to the
Speaker 3: pandemic and how the world seemed so much better, so
Speaker 3: we can do better. How expensive is it to do
Speaker 3: regenerative farming and the ROI on something like that, the
Speaker 3: return on investment.
Speaker 14: Well, we're working a little bit with UC Davis and
Speaker 14: we're working with other growers to see the data points
Speaker 14: coming out of it, because basically we think, and certainly
Speaker 14: evidence to my farm is once you've made that transition,
Speaker 14: your input costs drop, so you're not buying as many
Speaker 14: external inputs, fewer tractor passes. You're letting nature kind of
Speaker 14: get everything back into balance. So we think actually costs
Speaker 14: will be more or less the same as they are
Speaker 14: with regular farming.
Speaker 3: All right, So we're talking with Stephen Kronk. He's founder
Speaker 3: and chief executive officer of Maison Mirabow. He's here in
Speaker 3: our Bloomberg Interactive Broker's studio. So that leads us to
Speaker 3: your product. There's three bottles that I'm looking at in
Speaker 3: front of me, and there's one that we know we've
Speaker 3: opened up up. Tell me what we're going to sample here?
Speaker 14: So this is one day by mirror both. This is new.
Speaker 14: This is why I'm here. This is this the bottles Miraboa.
Speaker 9: So we're the.
Speaker 14: First certified regenerative organic winery in France soon and I.
Speaker 3: Are competing for the bottles.
Speaker 14: Well, this is no, no, no, So one day, one
Speaker 14: day by Mirabeau. We call it one day because one
Speaker 14: day all vineyards will be found like this.
Speaker 3: Oh I love that.
Speaker 14: And it's the first regenerative certified wine to come out
Speaker 14: of France, to come out of Provence, and it's something
Speaker 14: that we're really really proud of because rather like our
Speaker 14: state wine, which is also the first certified regenda organic wine,
Speaker 14: this is this is, this is us certifying our growers.
Speaker 14: So we have to make this work at scale. You know,
Speaker 14: you can't just have little niche boutique wineries enjoying the
Speaker 14: benefits of.
Speaker 3: Regent and it can be done at scale.
Speaker 14: It can be done at scale, and migrowers in Provence
Speaker 14: are just absolutely crazy about getting involved, you know, because
Speaker 14: organic is I would say flat growth, but you know
Speaker 14: a lot of basic organic isn't also for soil, you know,
Speaker 14: so so we have to use common Why is that?
Speaker 3: So that makes me nervous because I think there's an assumption.
Speaker 14: Well, so organic is the best kind of farming you
Speaker 14: can you can do when you're doing it properly, when
Speaker 14: you're doing it regeneratively, so regendat ive organic is the
Speaker 14: gold standard. Okay, But if you are a lot of
Speaker 14: a lot of organic farms, certainly in the wine world,
Speaker 14: can still be monocultures.
Speaker 9: So you don't want any weeds in the vineyard.
Speaker 14: You wanted to look immaculate, so if the weeds come in,
Speaker 14: then you know, plow them away. Yeah, but actually that's wrong.
Speaker 14: You know, you need to let nature into the vineyard.
Speaker 14: You can't have these these monocultures.
Speaker 9: It's funny.
Speaker 14: I was with somebody the other day and they were saying, yeah,
Speaker 14: my husband's a real germophobe, and it's sanitizing his hands
Speaker 14: and everything is just so so I.
Speaker 3: Do I know this one?
Speaker 14: I said, Okay, tell me how often does he get sick?
Speaker 14: And she said all the time, you know, And we
Speaker 14: need to we need to rough rummage around of the dirt.
Speaker 14: We need we need to have those bugs, and we
Speaker 14: need to be healthy and build out resilience. And that's
Speaker 14: what regenerative does you know monoculture is the same thing
Speaker 14: as sanitizing a farm.
Speaker 3: Well, I will say with kids, they say, like introduce
Speaker 3: pets and dogs. It's a good thing for them to
Speaker 3: be around germs and stuff. So Stephen, cheers, thanks for
Speaker 3: having me in.
Speaker 4: Carol's drinking the wine as we speak.
Speaker 9: That's what it's for.
Speaker 8: The rose.
Speaker 3: That's nice. So this is the one day.
Speaker 9: This is one day.
Speaker 3: Yeah, and rose, I mean it varies, right like it varies.
Speaker 14: But the good thing about Provence roses it's always dry.
Speaker 14: So because you can get some roses that are quite
Speaker 14: high and residual sugar and you can that's not very
Speaker 14: food friendly and yeah, very healthy, but Provence roses always
Speaker 14: always being dry.
Speaker 4: So I always associate rose with warm weather in the summer.
Speaker 4: But you argue that it's the perfect thing to drink
Speaker 4: at Thanksgiving dinner, right, Why is that?
Speaker 9: Because it's just such a food versatile wine.
Speaker 6: It's great.
Speaker 9: It's got a little bit.
Speaker 14: Of a city that cuts through the sort of the
Speaker 14: sweet flavors of the cranberry sauce or but it cuts
Speaker 14: through the gravy. It's just a refreshing mouthfeel once you've
Speaker 14: had a great, big, you know.
Speaker 4: Fork of potato or something that's Stephen Kronk, the owner
Speaker 4: of me Son Mirabeau.
Speaker 3: I have to say, this is the second time that
Speaker 3: we've talked with Steven, and we're hoping actually to get
Speaker 3: his wife back soon because they have a book out
Speaker 3: too about their experience and it's all about food and
Speaker 3: recipes and cooking. I mean, Provence is a very very
Speaker 3: special place. But it's interesting what he's trying to do
Speaker 3: with regenerative farming. We have done several segments on this,
Speaker 3: this concept where you basically don't strip the soil, and
Speaker 3: I think farmers used to kind of try and do
Speaker 3: that way back when of maybe like rotating crops and
Speaker 3: so on and so forth.
Speaker 4: But yeah, pre the Great Wars, pre the Great.
Speaker 3: Wars, but like the what we do now in terms
Speaker 3: of industrial farming and chemicals, it's a whole different ballgame.
Speaker 4: But it's such a big story because you know, post
Speaker 4: World War Two, as Stephen explained to us, there was
Speaker 4: such a demand for feeding a growing number of people
Speaker 4: here in the US and around the world. You also
Speaker 4: had industrialization, so you had fewer people actually living on
Speaker 4: farms farming for themselves and farming for a great number
Speaker 4: of people, so you had to figure out how to
Speaker 4: do more with us. And I wonder if the regenerative
Speaker 4: movement will grow beyond sort of a niche or small
Speaker 4: number of players that don't cater to a whole host
Speaker 4: of people.
Speaker 3: I mean, took a Chipotle's history way back when when
Speaker 3: the original founder was there, Steve El's, but like that
Speaker 3: was kind of their mission of trying to do regenerative
Speaker 3: farming farming responsibly. The other thing I would say, Tim
Speaker 3: that's always crazy is when you and I do any
Speaker 3: kind of food story and we talk about how difficult
Speaker 3: it is to kind of move beyond industrial farming. How
Speaker 3: much food is wasted and ultimately thrown out at the
Speaker 3: same time, so many people who don't have food. But
Speaker 3: this idea of if we were maybe smarter in our
Speaker 3: food production and consumption, maybe we wouldn't have we could
Speaker 3: regenerative farming could be easier to do.
Speaker 4: I don't know, We're a little guilty of it at times.
Speaker 4: I know you end up finding something in the back
Speaker 4: of the fridge. It's like a little shriveled up and
Speaker 4: you're like, I can't eat this.
Speaker 3: Now, smaller fridge, smaller. You know, refrigerators are smaller. I
Speaker 3: have heard now over in Europe and stuff like they
Speaker 3: shop every day. I listen. I had two refrigerators and
Speaker 3: a freezer growing up.
Speaker 4: Yeah, but there were how many of you nine?
Speaker 3: I know, but still it was a lot of space.
Speaker 3: I'm just saying, no judge, all.
Speaker 4: Right, how'd we get there from wine?
Speaker 3: I don't know the wine was good. I'm going to
Speaker 3: just put that out there. Full disclosure. Hey, that wraps
Speaker 3: up the weekend edition of Bloomberg Business Week from Bloomberg Radio.
Speaker 3: Thank you so much for joining us.
Speaker 4: We shure to tune into Bloomberg Business Week daily Monday
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Speaker 3: I'm Tim Stenebeck and I'm Carol Masser. Have a good
Speaker 3: and safe weekend everyone.
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