1 00:00:00,240 --> 00:00:04,160 Speaker 1: This is Bloomberg Wall Street Week. Market shrug of higher 2 00:00:04,160 --> 00:00:07,080 Speaker 1: consumer prizes. The economy is in the process of rebounding. 3 00:00:07,120 --> 00:00:09,440 Speaker 1: Will the utter reserve have its own digital currency? The 4 00:00:09,440 --> 00:00:12,440 Speaker 1: financial stories that cheap hard work. Many people think the 5 00:00:12,480 --> 00:00:14,320 Speaker 1: eels are just going to keep marching out. We have 6 00:00:14,440 --> 00:00:16,680 Speaker 1: more spending coming out of Congress. One of the big 7 00:00:16,760 --> 00:00:19,600 Speaker 1: questions I think on investor's mind inflation through the eyes 8 00:00:19,640 --> 00:00:22,720 Speaker 1: of the most influential voices. Larry Summer is the former 9 00:00:22,760 --> 00:00:26,160 Speaker 1: Treasury Secretary, Bryan wynhand back of America, Will sar Ceo, 10 00:00:26,360 --> 00:00:30,479 Speaker 1: Charlie Sharp. Bloomberg wool Street Week with David Weston from 11 00:00:30,560 --> 00:00:35,120 Speaker 1: Bloomberg Radio. One step forward and one step back, Final 12 00:00:35,120 --> 00:00:38,839 Speaker 1: approval for Fliser's vaccine. Congress moves forward on spending, but 13 00:00:39,440 --> 00:00:43,440 Speaker 1: tragedy mars An already difficult pull out from Afghanistan. This 14 00:00:43,560 --> 00:00:47,560 Speaker 1: is Bloomberg Wall Street Week. I'm David Weston. We begin 15 00:00:47,640 --> 00:00:49,600 Speaker 1: this week with the Fed. In his remarks to the 16 00:00:49,680 --> 00:00:52,960 Speaker 1: Jackson Whole Symposium, Chapal did nothing to get in the 17 00:00:52,960 --> 00:00:55,639 Speaker 1: way of some tapering of the Fed's bond buying by 18 00:00:55,680 --> 00:01:00,200 Speaker 1: the end of the year. At the FMCS recent July eating, 19 00:01:00,680 --> 00:01:03,960 Speaker 1: I was of the view, as were most participants, that 20 00:01:04,040 --> 00:01:07,640 Speaker 1: if the economy evolved broadly as anticipated, it could be 21 00:01:07,680 --> 00:01:11,319 Speaker 1: appropriate to start reducing the pace of asset purchases this year. 22 00:01:11,680 --> 00:01:14,840 Speaker 1: For more on what chair Pal said and it didn't say, 23 00:01:15,000 --> 00:01:18,880 Speaker 1: we check in with former Treasury Secretary Larry Summers. I 24 00:01:19,000 --> 00:01:22,200 Speaker 1: was struck, for example, that he didn't say anything about 25 00:01:22,240 --> 00:01:26,240 Speaker 1: the housing sector that's the largest part of the consumer 26 00:01:26,280 --> 00:01:30,280 Speaker 1: price indices. I saw a statistic Bloomberg actually had it 27 00:01:30,400 --> 00:01:33,920 Speaker 1: the other day that said, on average, when a new 28 00:01:34,000 --> 00:01:40,000 Speaker 1: tenant moves into a rented residents, they're paying seventeen percent 29 00:01:40,080 --> 00:01:43,280 Speaker 1: more than the old tenant. That suggests a lot of 30 00:01:43,360 --> 00:01:47,720 Speaker 1: rental price inflation. If you look at owner occupied houses, 31 00:01:48,120 --> 00:01:51,840 Speaker 1: the prices are taking off. Uh. None of that has 32 00:01:51,880 --> 00:01:55,720 Speaker 1: been reflected yet in our price indsease. And yet on 33 00:01:55,800 --> 00:02:00,840 Speaker 1: any common sense definition, that's surely inflation. And so my 34 00:02:00,960 --> 00:02:05,200 Speaker 1: guesses you'll start to see the housing component of inflation 35 00:02:05,920 --> 00:02:09,680 Speaker 1: show up as rising pretty rapidly, or if you don't, 36 00:02:10,160 --> 00:02:14,480 Speaker 1: it will reflect defects in the way we create Uh, 37 00:02:14,560 --> 00:02:20,160 Speaker 1: the price indusease. I the chairman mentioned rightly, uh that 38 00:02:20,200 --> 00:02:24,639 Speaker 1: we've got record levels of job openings and workers are 39 00:02:24,680 --> 00:02:29,160 Speaker 1: turning over very fast workers are quitting UH their jobs. 40 00:02:29,960 --> 00:02:32,520 Speaker 1: I'd have thought that all of that would be a 41 00:02:32,560 --> 00:02:36,280 Speaker 1: signal than in a labor shortage economy, you'd still be 42 00:02:36,400 --> 00:02:40,079 Speaker 1: starting to see much more rapid wage increases then you've 43 00:02:40,160 --> 00:02:43,360 Speaker 1: seen historically, but that that was a process that would 44 00:02:43,360 --> 00:02:46,639 Speaker 1: take a certain amount of time. He was more serene 45 00:02:47,320 --> 00:02:53,760 Speaker 1: um about all of that. He was referencing that we 46 00:02:54,120 --> 00:03:00,360 Speaker 1: had had four percent unemployment um before COVID without apidly 47 00:03:00,360 --> 00:03:04,239 Speaker 1: accelerating inflation, and he was right about that, of course. 48 00:03:04,880 --> 00:03:09,359 Speaker 1: But I see that we're having far more structural change 49 00:03:09,360 --> 00:03:13,480 Speaker 1: in the economy, as businesses rethink their business models, when 50 00:03:13,520 --> 00:03:15,600 Speaker 1: people aren't going to be coming to the office, as 51 00:03:15,639 --> 00:03:22,000 Speaker 1: people rethink their lives after a year without commuting, as 52 00:03:22,040 --> 00:03:26,040 Speaker 1: the whole structure of the economy changes. And I think 53 00:03:26,080 --> 00:03:29,680 Speaker 1: with all that structural change, you're likely to see some 54 00:03:29,919 --> 00:03:34,600 Speaker 1: substantial increase in the level of unemployment that the economy 55 00:03:34,680 --> 00:03:42,080 Speaker 1: can sustain without excessive inflation. So there's no certainties, but 56 00:03:42,360 --> 00:03:49,160 Speaker 1: I think the inflation risks are graver than those that 57 00:03:49,240 --> 00:03:56,320 Speaker 1: the chairman UH recognized. I think that the toxic side 58 00:03:56,360 --> 00:04:03,080 Speaker 1: effects of q E are rather greater then the chairman recognized. 59 00:04:03,640 --> 00:04:07,440 Speaker 1: So in the range of places where this speech seemed 60 00:04:07,480 --> 00:04:10,520 Speaker 1: likely to come down. I think that came down in 61 00:04:10,600 --> 00:04:14,680 Speaker 1: a relatively uh good place from my point of view, 62 00:04:15,200 --> 00:04:20,320 Speaker 1: pointing towards a taper uh this year. But in terms 63 00:04:20,440 --> 00:04:24,520 Speaker 1: of the issues I've been concerned about for quite some time, 64 00:04:25,120 --> 00:04:28,480 Speaker 1: that we're kind of making a bit of a paradigm 65 00:04:28,760 --> 00:04:33,200 Speaker 1: uh error. Uh. I didn't expect that the speech was 66 00:04:33,240 --> 00:04:37,159 Speaker 1: going to represent a deviation from the paradigm, and I 67 00:04:37,200 --> 00:04:40,679 Speaker 1: don't think it did. Hilary, the day before J. Powell 68 00:04:40,720 --> 00:04:43,360 Speaker 1: came in speech, you wrote an essay in the Washington 69 00:04:43,440 --> 00:04:45,520 Speaker 1: Post and which you really took on the question of 70 00:04:45,600 --> 00:04:48,400 Speaker 1: quantity of easy. You mentioned inflation what you just talked about, 71 00:04:48,520 --> 00:04:51,400 Speaker 1: but also some of those toxic effects, which included things 72 00:04:51,440 --> 00:04:53,159 Speaker 1: like the tenor of the debt, something you've talked on 73 00:04:53,200 --> 00:04:55,920 Speaker 1: this program before that overall the federal debt, we're actually 74 00:04:55,920 --> 00:04:57,719 Speaker 1: going into the short side. We should be going to 75 00:04:57,760 --> 00:05:01,159 Speaker 1: the long end. And also asked bubbles and pumping money 76 00:05:01,160 --> 00:05:04,240 Speaker 1: in the economy by getting it into financial assets. Tell 77 00:05:04,320 --> 00:05:06,440 Speaker 1: us about why you think that would be wrong, and 78 00:05:06,480 --> 00:05:09,839 Speaker 1: maybe as important, do you think QUI should go to zero? Yeah? 79 00:05:09,839 --> 00:05:14,120 Speaker 1: I think, Hue. I think the question is like, as 80 00:05:14,200 --> 00:05:17,000 Speaker 1: I used the analogy in the column, it's like withdrawing 81 00:05:17,040 --> 00:05:21,480 Speaker 1: from Afghanistan. Uh, it's pretty clear that after twenty years, 82 00:05:22,040 --> 00:05:26,159 Speaker 1: the right thing was for the United States not to 83 00:05:26,279 --> 00:05:31,840 Speaker 1: be uh continuing in a war fighting mode in Afghanistan. 84 00:05:32,360 --> 00:05:37,320 Speaker 1: But you can't do You can't get there necessarily overnight, 85 00:05:37,520 --> 00:05:40,680 Speaker 1: as we're learning painfully. And in the same way, I 86 00:05:40,720 --> 00:05:45,840 Speaker 1: think we clearly should have zero que which doesn't mean 87 00:05:45,920 --> 00:05:49,760 Speaker 1: we can get there overnight or we can get there 88 00:05:49,839 --> 00:05:56,039 Speaker 1: with a uh drastic lurch. Why uh, every homeowner in 89 00:05:56,080 --> 00:05:59,120 Speaker 1: America is trying to lock in a long term mortgage 90 00:05:59,480 --> 00:06:02,919 Speaker 1: rather than moving towards the floating rate mortgage. The government 91 00:06:02,920 --> 00:06:07,360 Speaker 1: should think the same way and be chterming out the debt. 92 00:06:07,720 --> 00:06:12,120 Speaker 1: What quee does by having the Fed issue interest bearing 93 00:06:12,160 --> 00:06:16,320 Speaker 1: bank reserves to buy up longer term debt when those 94 00:06:16,360 --> 00:06:21,400 Speaker 1: interest reserves can float upwards, it's shortening the maturity of 95 00:06:21,440 --> 00:06:24,560 Speaker 1: the debt. Given the epic levels of debt we have, 96 00:06:24,680 --> 00:06:27,719 Speaker 1: and given the very high levels of fiscal uncertainty we have, 97 00:06:28,360 --> 00:06:33,400 Speaker 1: why would we want to be charming in the debt 98 00:06:33,600 --> 00:06:35,919 Speaker 1: right now? Thank you so much. That's our special contry 99 00:06:36,000 --> 00:06:38,800 Speaker 1: to Wall Street Week. He's Larry Summers of Harvard coming up. 100 00:06:38,920 --> 00:06:41,320 Speaker 1: We talked with former Fed Governor Dan to Rule of 101 00:06:41,400 --> 00:06:45,000 Speaker 1: Harvard about the politics of reappointing J. Powe and whether 102 00:06:45,040 --> 00:06:49,120 Speaker 1: there should be more coordination between the Fed and the Treasury. 103 00:06:49,320 --> 00:06:58,200 Speaker 1: That's next on Wall Street Week on Bloomberg. This is 104 00:06:58,240 --> 00:07:02,599 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 105 00:07:03,080 --> 00:07:06,200 Speaker 1: It was a big week for Banks Central and Otherwise 106 00:07:06,400 --> 00:07:09,679 Speaker 1: as BECA America's longtime head of Investment Banking and CEO, 107 00:07:09,920 --> 00:07:13,320 Speaker 1: Tom Monteg announced his retirement, leaving a big hole and 108 00:07:13,400 --> 00:07:16,200 Speaker 1: raising questions about succession at the bank. And FED chair 109 00:07:16,320 --> 00:07:19,440 Speaker 1: J Pale appeared at the Jackson Whole Symposium amid speculation 110 00:07:19,440 --> 00:07:22,320 Speaker 1: about his future as well. We spend most of our 111 00:07:22,360 --> 00:07:24,760 Speaker 1: time worrying about the independence of the FED from all 112 00:07:24,760 --> 00:07:27,800 Speaker 1: political influence. But is that realistic? And if it were possible, 113 00:07:27,920 --> 00:07:30,600 Speaker 1: would it be the right thing? Given the enormous influence 114 00:07:30,640 --> 00:07:33,239 Speaker 1: the Fed can have over the economy and our lives. 115 00:07:33,640 --> 00:07:36,000 Speaker 1: Dan's Rullo served on the Federal Reserve Board with J. 116 00:07:36,120 --> 00:07:38,760 Speaker 1: Pal He is now a professor at the Harvard Law School. So, Dan, 117 00:07:38,760 --> 00:07:40,560 Speaker 1: thank you so much for being with us. So address 118 00:07:40,600 --> 00:07:42,840 Speaker 1: that question. I mean, we have a lot of influence 119 00:07:42,880 --> 00:07:44,480 Speaker 1: of the FED right now on our day to day 120 00:07:44,520 --> 00:07:46,920 Speaker 1: lives as well as the economy. Is there a role 121 00:07:47,040 --> 00:07:49,760 Speaker 1: for some sort of a political factor here and is 122 00:07:49,800 --> 00:07:52,160 Speaker 1: it possibly healthy for j Pale to be thinking, You know, 123 00:07:52,280 --> 00:07:55,720 Speaker 1: I do need to think about reappointment. Well, David, you know, 124 00:07:56,040 --> 00:08:00,720 Speaker 1: um Bil martin U, one of the famous past chairs 125 00:08:00,720 --> 00:08:02,640 Speaker 1: of the FED, for whom one of the FED board 126 00:08:02,680 --> 00:08:06,920 Speaker 1: buildings is named, characterize the position of the FED as 127 00:08:07,560 --> 00:08:11,520 Speaker 1: at the Federal Reserve was in the government. It was 128 00:08:11,560 --> 00:08:14,880 Speaker 1: independent in the government. It was not independent of the government. 129 00:08:15,520 --> 00:08:18,400 Speaker 1: And what that is that that means is that the 130 00:08:18,480 --> 00:08:23,960 Speaker 1: relationship between the FED and democratically accountable branches of government, 131 00:08:24,000 --> 00:08:28,960 Speaker 1: the President and the Congress, is an issue of ongoing importance. 132 00:08:29,840 --> 00:08:32,360 Speaker 1: So if you had a system whereby the FED we're 133 00:08:32,360 --> 00:08:36,479 Speaker 1: self perpetuating and each chair chose his or her successor, 134 00:08:36,840 --> 00:08:40,040 Speaker 1: that might make some monetary policy people happy, but it 135 00:08:40,080 --> 00:08:44,000 Speaker 1: would really strain any notion of the FED being accountable 136 00:08:44,080 --> 00:08:47,680 Speaker 1: ultimately to the Congress. And as you know, Congress has 137 00:08:48,120 --> 00:08:50,839 Speaker 1: the powers and Article one of the Constitution that allow 138 00:08:50,960 --> 00:08:53,320 Speaker 1: the creation of the FED. So I think what we 139 00:08:53,440 --> 00:08:57,080 Speaker 1: see with the four year appointment term, what we see 140 00:08:57,120 --> 00:09:01,200 Speaker 1: with the requirements for testimony are way reason which Congress 141 00:09:01,240 --> 00:09:06,920 Speaker 1: has tried to provide some political responsiveness, some political accountability, 142 00:09:06,960 --> 00:09:12,280 Speaker 1: without making the Fed adhere to the day by day 143 00:09:12,320 --> 00:09:15,440 Speaker 1: wishes of the administration. Instance, it's not being short of 144 00:09:15,440 --> 00:09:18,199 Speaker 1: a day to day coordination administration apart from Congress and 145 00:09:18,240 --> 00:09:20,600 Speaker 1: the Fed, what about the Treasury and the Fed. We 146 00:09:20,679 --> 00:09:23,040 Speaker 1: had Larry summers On earlier in this program saying there's 147 00:09:23,040 --> 00:09:24,640 Speaker 1: an issue of the tenor of the debt right now 148 00:09:24,800 --> 00:09:27,040 Speaker 1: given what they're doing with bond buying, in fact, we're 149 00:09:27,040 --> 00:09:29,160 Speaker 1: sort of going more short term of the debt. Doesn't 150 00:09:29,160 --> 00:09:32,239 Speaker 1: make sense. Should there be some mechanism for more coordination, 151 00:09:32,440 --> 00:09:36,040 Speaker 1: not control, but coordination? Well, I mean in fact, and 152 00:09:36,960 --> 00:09:39,480 Speaker 1: I assume that this is going on between Janet Yellen 153 00:09:39,600 --> 00:09:43,600 Speaker 1: and Jay Powell. There's there's always been a weekly lunch 154 00:09:43,720 --> 00:09:46,920 Speaker 1: usually sometimes breakfast between the Fed chair and the Treasury 155 00:09:46,960 --> 00:09:50,640 Speaker 1: Secretary where they go over a range of issues. Uh. 156 00:09:50,720 --> 00:09:54,080 Speaker 1: Those meetings can be more frequent in periods of stress, obviously, 157 00:09:54,400 --> 00:09:59,720 Speaker 1: but even in normal times, fiscal policy and monetary policy 158 00:10:00,080 --> 00:10:04,360 Speaker 1: dependent on one another, and in less normal times or 159 00:10:04,600 --> 00:10:08,400 Speaker 1: or new kinds of times, the relationships between the two 160 00:10:08,480 --> 00:10:11,960 Speaker 1: are probably sometimes harder to parse, and so it does 161 00:10:12,040 --> 00:10:16,080 Speaker 1: call for at least more communication between Treasury and the FED. 162 00:10:16,320 --> 00:10:19,160 Speaker 1: I mean, something that people may have forgotten is that 163 00:10:19,200 --> 00:10:21,520 Speaker 1: from most of the good part of the history of 164 00:10:21,520 --> 00:10:25,760 Speaker 1: the FED there was a kind of subordination to the 165 00:10:25,800 --> 00:10:31,520 Speaker 1: Treasury Department that formally ended in ninety one. But the 166 00:10:31,640 --> 00:10:35,000 Speaker 1: interest of the administration and often of Congress and keeping 167 00:10:35,040 --> 00:10:39,679 Speaker 1: interest rates low is an ongoing interest, uh and the 168 00:10:39,720 --> 00:10:43,599 Speaker 1: FED always needs to be in a position of deciding 169 00:10:43,800 --> 00:10:47,280 Speaker 1: what its posture is visa the current fiscal policy dan. 170 00:10:47,400 --> 00:10:50,040 Speaker 1: We all heard from the current chair J. Pile, part 171 00:10:50,040 --> 00:10:54,520 Speaker 1: of this uh uh Jackson Holes symposium a year ago. 172 00:10:54,600 --> 00:10:57,600 Speaker 1: At this same symposium, as I recall, the Chair announced 173 00:10:57,600 --> 00:11:00,800 Speaker 1: the new framework for determining monetary policy based on really 174 00:11:00,800 --> 00:11:04,640 Speaker 1: being willing to go above the two percent number on inflation. 175 00:11:04,920 --> 00:11:07,080 Speaker 1: Some people now, including Larry Summers, are saying, you know, 176 00:11:07,120 --> 00:11:09,000 Speaker 1: that framework maybe was never a good idea, but it 177 00:11:09,080 --> 00:11:10,840 Speaker 1: sure isn't now because it was a dealing with the 178 00:11:10,920 --> 00:11:13,480 Speaker 1: demand side issue and now it was applies side. Is 179 00:11:13,480 --> 00:11:15,280 Speaker 1: it possible I FED is sort of painting uself in 180 00:11:15,320 --> 00:11:17,320 Speaker 1: a bit of a corner at corner and gotten too 181 00:11:17,360 --> 00:11:20,839 Speaker 1: stubborn on its monetary policy by having that framework. I 182 00:11:21,160 --> 00:11:23,560 Speaker 1: don't think so. I mean, look, there are issues in 183 00:11:23,600 --> 00:11:25,440 Speaker 1: the execution of the framework, which I get to in 184 00:11:25,440 --> 00:11:29,079 Speaker 1: a moment, but it seemed pretty clear to a lot 185 00:11:29,120 --> 00:11:32,319 Speaker 1: of people, including people who were worried about secular stagnation, 186 00:11:32,880 --> 00:11:35,960 Speaker 1: that the FED framework, which had prevailed in the pre 187 00:11:36,040 --> 00:11:39,800 Speaker 1: global financial crisis period, needed to be changed. And what 188 00:11:39,920 --> 00:11:42,040 Speaker 1: I think you saw last year was not really a 189 00:11:42,120 --> 00:11:46,719 Speaker 1: radical break, but instead the culmination of an evolution of 190 00:11:46,760 --> 00:11:50,640 Speaker 1: the FEDS thinking about the relationship between employment and inflation. 191 00:11:51,200 --> 00:11:54,719 Speaker 1: I think that difficulty has been that the FED at 192 00:11:54,760 --> 00:11:58,760 Speaker 1: that time expected that it was going to have a 193 00:11:58,760 --> 00:12:02,959 Speaker 1: period of somewhat sluggish growth in which it could fill 194 00:12:03,000 --> 00:12:07,640 Speaker 1: out it's meaning to maximum employment and how long inflation 195 00:12:07,679 --> 00:12:10,360 Speaker 1: had to be above two percent, and with this, with 196 00:12:10,520 --> 00:12:13,520 Speaker 1: the amount of fiscal stimulus, would have the quick recovery 197 00:12:13,520 --> 00:12:16,800 Speaker 1: in the economy. I think the FED was back footed 198 00:12:16,840 --> 00:12:21,920 Speaker 1: a bit, and it's perhaps been a little less um 199 00:12:22,200 --> 00:12:26,960 Speaker 1: nimble in adapting to the new circumstances and describing what 200 00:12:27,200 --> 00:12:31,960 Speaker 1: those metrics mean under these circumstances. But I don't I 201 00:12:32,000 --> 00:12:35,400 Speaker 1: actually don't think it's the framework itself that's the problem, 202 00:12:35,640 --> 00:12:38,000 Speaker 1: and Indeed, I tend to agree with those who think 203 00:12:38,080 --> 00:12:42,440 Speaker 1: that periodically the FED should revisit its framework, not because 204 00:12:42,480 --> 00:12:46,000 Speaker 1: the framework sets monetary policy, but because it sets the 205 00:12:46,040 --> 00:12:49,920 Speaker 1: framework for discussing monetary policy. So Dan, just briefly here 206 00:12:49,960 --> 00:12:52,680 Speaker 1: at the end, I wonder whether j Palal would have 207 00:12:52,720 --> 00:12:55,439 Speaker 1: picked this time to give a major address that all 208 00:12:55,480 --> 00:12:57,000 Speaker 1: the markets and all the pundits were paying attention for 209 00:12:57,080 --> 00:12:59,800 Speaker 1: monetary policy if there weren't Jackson hole. And that leads 210 00:12:59,840 --> 00:13:03,640 Speaker 1: to why does Jackson Hole exist? Well, I mean the 211 00:13:03,880 --> 00:13:08,320 Speaker 1: historically answer is the former Federal Reserve Bank of Kansas 212 00:13:08,360 --> 00:13:12,400 Speaker 1: City president started it in one invited Paul Woker, and 213 00:13:12,559 --> 00:13:15,959 Speaker 1: Paul Voker came, and since then it it's been kind 214 00:13:15,960 --> 00:13:21,000 Speaker 1: of the centerpiece of the summer for for monetary policy. UM. 215 00:13:21,040 --> 00:13:23,560 Speaker 1: I think that, you know, the traditional issues people have 216 00:13:23,640 --> 00:13:25,840 Speaker 1: raised around that, David one, you know, should you have 217 00:13:25,880 --> 00:13:28,040 Speaker 1: it in a vacation spot. I mean it's a national park, 218 00:13:28,040 --> 00:13:32,559 Speaker 1: it's still a vacation spot. To the preferential access that 219 00:13:32,880 --> 00:13:38,400 Speaker 1: some reporters and some academics and some even market actors get. Um, 220 00:13:38,800 --> 00:13:40,959 Speaker 1: I don't think people would be at all worried about 221 00:13:41,000 --> 00:13:43,840 Speaker 1: that if the chair were not there. For two and 222 00:13:43,880 --> 00:13:46,560 Speaker 1: I not wasn't this year, of course because it was virtual, 223 00:13:46,600 --> 00:13:48,920 Speaker 1: but normally the chairs there for two and a half days. 224 00:13:49,360 --> 00:13:51,200 Speaker 1: And that's you know, that's the big light in the 225 00:13:51,240 --> 00:13:54,560 Speaker 1: backyard that attracts the moths. Uh And and so the 226 00:13:54,640 --> 00:13:59,040 Speaker 1: question really does become, should there be something like that 227 00:13:59,040 --> 00:14:01,520 Speaker 1: that does give the pre ferential access. Let me just 228 00:14:01,559 --> 00:14:04,920 Speaker 1: add one thing from the board, the Federal Reserve Board's 229 00:14:04,920 --> 00:14:08,880 Speaker 1: own position. It's a mixed blessing. It's a nice um 230 00:14:09,200 --> 00:14:12,959 Speaker 1: vehicle for getting across a big message when you want to. 231 00:14:13,440 --> 00:14:17,200 Speaker 1: But oftentimes the FED chairs doesn't particularly want to get 232 00:14:17,240 --> 00:14:20,000 Speaker 1: a big message and doesn't want a lot of anticipation, 233 00:14:20,520 --> 00:14:22,800 Speaker 1: and to the degree that the feel they have to go, 234 00:14:22,840 --> 00:14:24,280 Speaker 1: it kind of puts them on the spot. And Dan 235 00:14:24,400 --> 00:14:26,640 Speaker 1: could have another vacation. Thank you so much to dant 236 00:14:26,720 --> 00:14:29,840 Speaker 1: Roll of Harvard, the former FED governor. Coming up, the 237 00:14:29,960 --> 00:14:33,240 Speaker 1: revolution that's coming to the auto industry with all the 238 00:14:33,320 --> 00:14:36,720 Speaker 1: challenges and all the opportunities with Mary Barr, a chair 239 00:14:36,800 --> 00:14:40,360 Speaker 1: and CEO of General Motors. That's next on Wall Street 240 00:14:40,400 --> 00:14:52,680 Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with 241 00:14:52,840 --> 00:14:56,120 Speaker 1: David Weston from Bloomberg Radio. We were in Detroit this 242 00:14:56,160 --> 00:14:59,200 Speaker 1: week and had the opportunity to visit General Motors headquarters 243 00:14:59,200 --> 00:15:02,120 Speaker 1: and sit down with a company's chair and CEO, Mary Barrow. 244 00:15:02,480 --> 00:15:05,120 Speaker 1: In a few minutes you'll hear our discussion about electric 245 00:15:05,200 --> 00:15:08,040 Speaker 1: vehicles in the future of GM. But first, as the 246 00:15:08,080 --> 00:15:10,680 Speaker 1: Delta variant spread across the country, I asked her about 247 00:15:10,720 --> 00:15:13,840 Speaker 1: the steps she is taking to keep her employees safe. 248 00:15:14,200 --> 00:15:18,080 Speaker 1: We've been following the safety protocols of the appropriate social distancing, wearing, 249 00:15:18,160 --> 00:15:22,840 Speaker 1: mass screening and has worked quite well. Because of the 250 00:15:22,920 --> 00:15:25,640 Speaker 1: outbreak of the delta variant, we are now back into 251 00:15:25,680 --> 00:15:27,880 Speaker 1: wearing masks in the US, and it varies around the 252 00:15:27,920 --> 00:15:30,600 Speaker 1: world based on what's happening, and our employees have just 253 00:15:30,640 --> 00:15:34,200 Speaker 1: done a phenomenal job of following our safety protocols. So 254 00:15:34,240 --> 00:15:37,840 Speaker 1: we continue to evaluate all options of what we can 255 00:15:37,880 --> 00:15:41,320 Speaker 1: do because we know getting everyone vaccinated is going to 256 00:15:41,400 --> 00:15:44,359 Speaker 1: be critical to stopping the you know, the different variants 257 00:15:44,400 --> 00:15:47,160 Speaker 1: of the disease. Right now, we're also very much focused 258 00:15:47,160 --> 00:15:49,360 Speaker 1: on education because you know, there's a lot of myths 259 00:15:49,400 --> 00:15:53,360 Speaker 1: out there or or a misinformation where people are making 260 00:15:53,360 --> 00:15:56,800 Speaker 1: decisions to not get the vaccine based on bad information. 261 00:15:56,920 --> 00:15:59,520 Speaker 1: So we also are running an education campaign as well. 262 00:16:00,120 --> 00:16:02,840 Speaker 1: So to be clear, do you know the vaccination status 263 00:16:02,920 --> 00:16:04,920 Speaker 1: of your employees? Are you asking that question? Are you 264 00:16:05,000 --> 00:16:07,400 Speaker 1: asking them to tell you if they're vaccinated? We are 265 00:16:08,120 --> 00:16:10,800 Speaker 1: requesting in the United States, and we're working to do 266 00:16:10,840 --> 00:16:13,680 Speaker 1: that around the globe, obviously following the local laws or 267 00:16:13,720 --> 00:16:16,480 Speaker 1: country laws, and so we are working on that right 268 00:16:16,520 --> 00:16:18,800 Speaker 1: now and that will inform the decisions that we make 269 00:16:18,840 --> 00:16:22,680 Speaker 1: as we move forward. And masks. We wear masks in 270 00:16:22,720 --> 00:16:27,200 Speaker 1: our facilities, whether it's our manufacturing plants, warehouses, offices, mass 271 00:16:27,240 --> 00:16:30,560 Speaker 1: are required whether you're vaccinated or not. So I talked 272 00:16:30,560 --> 00:16:32,960 Speaker 1: to us also about unions and the role of unions 273 00:16:32,960 --> 00:16:35,120 Speaker 1: and all this. First of all, is it okay to 274 00:16:35,200 --> 00:16:38,480 Speaker 1: require vaccinations with the u A W Are they resisting that? 275 00:16:38,560 --> 00:16:41,480 Speaker 1: Are they with that? Are they united with you in this? Well, 276 00:16:41,600 --> 00:16:44,080 Speaker 1: you know, first of all, I would say, in working 277 00:16:44,120 --> 00:16:46,920 Speaker 1: to make sure our workforce is safe, the UAW has 278 00:16:46,960 --> 00:16:51,360 Speaker 1: been a absolute fantastic partner on being data driven, following 279 00:16:51,360 --> 00:16:54,080 Speaker 1: the advice from the CDC, and that's you know, really 280 00:16:54,080 --> 00:16:55,840 Speaker 1: I think what has allowed us to have the very 281 00:16:55,880 --> 00:16:59,920 Speaker 1: successful protocols to not only protect lives, but to protect livelihood. 282 00:17:00,600 --> 00:17:02,720 Speaker 1: And so you know, as we look at what the 283 00:17:02,840 --> 00:17:04,920 Speaker 1: right thing to do as it relates to the vaccine 284 00:17:05,200 --> 00:17:07,639 Speaker 1: will work with the unions and and that will be 285 00:17:07,680 --> 00:17:10,040 Speaker 1: something that we negotiate with them or work with them 286 00:17:10,080 --> 00:17:11,760 Speaker 1: to decide what the right thing to do is. Do 287 00:17:11,800 --> 00:17:13,560 Speaker 1: you try to have the same rules for the our 288 00:17:13,680 --> 00:17:16,800 Speaker 1: employees as for the salary. We we do, but we 289 00:17:16,880 --> 00:17:20,119 Speaker 1: also really respect the fact that some of our workforces 290 00:17:20,160 --> 00:17:22,240 Speaker 1: represented not only by the U a W, but with 291 00:17:22,280 --> 00:17:24,800 Speaker 1: other unions around the globe, and it's an important part 292 00:17:24,800 --> 00:17:28,200 Speaker 1: to have that dialogue as part of the contractual process. 293 00:17:28,200 --> 00:17:30,399 Speaker 1: Where's GM on bringing people back into the office. This 294 00:17:30,480 --> 00:17:33,119 Speaker 1: is a hot topic all through US industries, certainly in 295 00:17:33,119 --> 00:17:35,360 Speaker 1: New York. There's a whole debate by banks, for example, 296 00:17:35,560 --> 00:17:37,679 Speaker 1: where are you in bringing your people back to the office. Well, 297 00:17:37,720 --> 00:17:39,680 Speaker 1: several months ago we rolled out what we call work 298 00:17:39,720 --> 00:17:43,480 Speaker 1: appropriately and for those who don't necessarily have to be 299 00:17:43,520 --> 00:17:45,119 Speaker 1: at work to do their jobs. First, I want to 300 00:17:45,119 --> 00:17:47,240 Speaker 1: give a big shout out to all the people, whether 301 00:17:47,240 --> 00:17:53,120 Speaker 1: they're in our our manufacturing, fertilities, warehouses, R and D labs, design, 302 00:17:53,560 --> 00:17:55,880 Speaker 1: thank you for coming to work every day and following 303 00:17:55,880 --> 00:17:58,280 Speaker 1: the protocol so you can do your work safely. For 304 00:17:58,359 --> 00:18:01,919 Speaker 1: the portion of our workforce that UM doesn't necessarily always 305 00:18:01,920 --> 00:18:04,480 Speaker 1: have to be in the office. It's work appropriately and 306 00:18:04,520 --> 00:18:07,280 Speaker 1: we're leaving it to the individual and their leader decide 307 00:18:07,520 --> 00:18:09,760 Speaker 1: where can you do your best work, and so far 308 00:18:09,800 --> 00:18:13,120 Speaker 1: it's been very well received by our employees. Going back 309 00:18:13,119 --> 00:18:14,760 Speaker 1: to the unions for a moment, let me ask a 310 00:18:14,760 --> 00:18:18,040 Speaker 1: broader question about electric vehicles. We saw President Biden again 311 00:18:18,119 --> 00:18:20,359 Speaker 1: with you at the White House and ahead of the 312 00:18:20,440 --> 00:18:22,480 Speaker 1: u a W was there very specificly involved in The 313 00:18:22,480 --> 00:18:24,639 Speaker 1: President talked a fair amount about the world of union 314 00:18:24,680 --> 00:18:28,800 Speaker 1: workers in this process. Uh, it's the union help in 315 00:18:28,880 --> 00:18:31,560 Speaker 1: moving faster evs or can it be a hindrance? How 316 00:18:31,640 --> 00:18:34,760 Speaker 1: is it working? Because sometimes unions have not always been 317 00:18:34,760 --> 00:18:38,399 Speaker 1: progressive in adopting new technologies. Well, I can only speak 318 00:18:38,400 --> 00:18:40,200 Speaker 1: to the relationship that we have with the U a 319 00:18:40,440 --> 00:18:43,720 Speaker 1: W and talking about the technology and frankly, it's opportunities 320 00:18:43,760 --> 00:18:46,520 Speaker 1: for growth and its opportunities to make sure that the 321 00:18:46,600 --> 00:18:50,960 Speaker 1: workforce that they represent, our workforce, that they have these opportunities. 322 00:18:50,960 --> 00:18:53,960 Speaker 1: We go forward and with what we're doing at Factory zero, 323 00:18:54,240 --> 00:18:56,800 Speaker 1: UM and other plants around the world are and and 324 00:18:56,840 --> 00:19:00,320 Speaker 1: specifically in the US, we're making sure we provide the means, 325 00:19:00,320 --> 00:19:02,720 Speaker 1: so they'll be part of our all electric future. So 326 00:19:02,800 --> 00:19:05,479 Speaker 1: I think it's very positive right now. So as you 327 00:19:05,520 --> 00:19:08,320 Speaker 1: look forward to this future that you clearly have crafted 328 00:19:08,359 --> 00:19:10,920 Speaker 1: and you've laid on detail, and let's be honest, it's 329 00:19:10,960 --> 00:19:13,760 Speaker 1: it's going well into the future in success, it's gonna 330 00:19:13,880 --> 00:19:16,440 Speaker 1: last well passed you and me. As a practic matter, 331 00:19:16,920 --> 00:19:18,600 Speaker 1: as you look at what is the thing that you 332 00:19:18,640 --> 00:19:21,800 Speaker 1: worry the most about, what could be a potential hindrance 333 00:19:21,880 --> 00:19:24,879 Speaker 1: to achieving what needs to be achieved. Well, one of 334 00:19:24,880 --> 00:19:26,879 Speaker 1: the things I talked about, I feel very confident we 335 00:19:26,920 --> 00:19:29,720 Speaker 1: have the right strategy and we have the adaptability that 336 00:19:29,760 --> 00:19:31,760 Speaker 1: if we have to make changes in tweaks here and there, 337 00:19:31,800 --> 00:19:34,720 Speaker 1: we will. But it's speed, speed of execution, and that's 338 00:19:34,720 --> 00:19:37,520 Speaker 1: what I talk about to our our team all the time, 339 00:19:37,760 --> 00:19:39,920 Speaker 1: and making sure we're getting out of our own way 340 00:19:40,280 --> 00:19:42,959 Speaker 1: and getting rid of bureaucracy so we can move quickly 341 00:19:43,000 --> 00:19:47,240 Speaker 1: to achieve this vision. Uh. So, you have had a 342 00:19:47,280 --> 00:19:50,520 Speaker 1: wonderful run at General Motors. Tell me about your team, 343 00:19:50,560 --> 00:19:52,320 Speaker 1: because one of the things that it's always trucking about 344 00:19:52,320 --> 00:19:54,679 Speaker 1: you as a CEO, you always say it's the team effort. 345 00:19:54,720 --> 00:19:57,320 Speaker 1: It's not just me. Tell me about who you've got 346 00:19:57,320 --> 00:20:00,520 Speaker 1: on your team you particularly rely upon. Well, there's several 347 00:20:00,560 --> 00:20:03,240 Speaker 1: members of the senior leadership team that are just phenomenal. 348 00:20:03,320 --> 00:20:05,480 Speaker 1: I mean Mark Races, our president, and he is the 349 00:20:05,480 --> 00:20:08,840 Speaker 1: most one of the most knowledgeable you know, car people, 350 00:20:09,280 --> 00:20:12,240 Speaker 1: I think on the globe in the globe, So he 351 00:20:12,600 --> 00:20:15,320 Speaker 1: does a phenomenal job. And then, um, you know, we 352 00:20:15,400 --> 00:20:18,119 Speaker 1: have people who have been at the company many years, 353 00:20:18,160 --> 00:20:21,560 Speaker 1: like myself and Mark, Steve Carlisle who runs North America. 354 00:20:21,760 --> 00:20:23,640 Speaker 1: But then we have people who have just recently joined 355 00:20:23,640 --> 00:20:27,199 Speaker 1: the company like Paul Jacobson, our CEO, Alan Wexler, who 356 00:20:27,280 --> 00:20:30,920 Speaker 1: came from Sapient. And really the benefit of having all 357 00:20:30,920 --> 00:20:34,240 Speaker 1: these diverse experiences and being from different industries, but also 358 00:20:34,280 --> 00:20:36,600 Speaker 1: the deep knowledge of our industry I think is what 359 00:20:36,680 --> 00:20:39,640 Speaker 1: makes General Motors Leadership team special and why we're able 360 00:20:39,640 --> 00:20:41,919 Speaker 1: to move so quickly. That was Mary Barr, Chair and 361 00:20:42,040 --> 00:20:46,359 Speaker 1: CEO of GM. Coming up more with GM's Mary bar 362 00:20:46,640 --> 00:20:50,000 Speaker 1: on the electric future of her company. That's next on 363 00:20:50,040 --> 00:20:59,520 Speaker 1: Wall Street Week on Bloomberg. This is Bloomberg Wall Street Week. 364 00:20:59,720 --> 00:21:03,720 Speaker 1: We've David Weston from Bloomberg Radio. It was only a 365 00:21:03,760 --> 00:21:06,639 Speaker 1: dozen years ago that the American Auto industry stood on 366 00:21:06,680 --> 00:21:10,040 Speaker 1: the brink of collapse during the Great Financial Crisis, something 367 00:21:10,040 --> 00:21:13,800 Speaker 1: President Obama said he could not let happen. We cannot 368 00:21:13,840 --> 00:21:17,879 Speaker 1: and must not and we will not let our auto 369 00:21:17,960 --> 00:21:21,560 Speaker 1: industry simply vanish. And so the industry went through a 370 00:21:21,600 --> 00:21:26,200 Speaker 1: painful restructuring to emerge smaller, more efficient, and more profitable. 371 00:21:26,680 --> 00:21:29,280 Speaker 1: And no sooner did he get through all that than 372 00:21:29,320 --> 00:21:32,000 Speaker 1: it has to reinvent itself all over again. As the 373 00:21:32,080 --> 00:21:35,199 Speaker 1: nation and the world moved to electric vehicles. There are 374 00:21:35,200 --> 00:21:38,320 Speaker 1: a vision of the future that is now beginning to happen, 375 00:21:38,880 --> 00:21:43,840 Speaker 1: a future of the automobile industry that is electric, battery, electric, 376 00:21:43,880 --> 00:21:49,000 Speaker 1: plug in hybrid, electric, fuel cell electric. It's electric and 377 00:21:49,200 --> 00:21:52,199 Speaker 1: there's no turning back. Is the industry up to this 378 00:21:52,240 --> 00:21:54,679 Speaker 1: new challenge? And if it is, will it be the 379 00:21:54,680 --> 00:21:57,600 Speaker 1: traditional car companies who lead the way or will they 380 00:21:57,640 --> 00:22:00,399 Speaker 1: have to make room for the pure play electric vehicle 381 00:22:00,440 --> 00:22:03,880 Speaker 1: makers like Tesla and Rivian dan Ives of web Bush 382 00:22:03,880 --> 00:22:07,360 Speaker 1: says President Biden is creating a huge new market. This 383 00:22:07,440 --> 00:22:09,520 Speaker 1: is the start of what I believe is a five 384 00:22:09,600 --> 00:22:13,080 Speaker 1: trillion dollar market with definitely Biden kicking off the green 385 00:22:13,119 --> 00:22:16,639 Speaker 1: tide away from the US, which is underperformed when we 386 00:22:16,640 --> 00:22:19,560 Speaker 1: look compared to China in Europe, and i've says GM 387 00:22:19,680 --> 00:22:23,119 Speaker 1: is well positioned that as GM proves out its e 388 00:22:23,240 --> 00:22:25,840 Speaker 1: V vision over the coming years, the stock will be 389 00:22:25,880 --> 00:22:29,240 Speaker 1: re rated more as a disruptive technology and EV play 390 00:22:29,359 --> 00:22:33,800 Speaker 1: rather than its traditional auto valuation. Cathy would have our investments. 391 00:22:33,840 --> 00:22:36,679 Speaker 1: On the other hand, says the traditional automakers are just 392 00:22:36,920 --> 00:22:41,280 Speaker 1: too far behind to catch up. The traditional auto manufacturer. 393 00:22:41,280 --> 00:22:42,720 Speaker 1: If you look at their R and D budgets, So 394 00:22:42,760 --> 00:22:47,520 Speaker 1: you look at GMS of it's R and D dollars 395 00:22:47,560 --> 00:22:53,280 Speaker 1: and I'm sorry, uh, capital spending is allocated to electric 396 00:22:53,680 --> 00:22:56,160 Speaker 1: they should be at almost a hundred now given what's 397 00:22:56,160 --> 00:22:59,600 Speaker 1: about to happen. They have just gotten started and what 398 00:22:59,720 --> 00:23:06,840 Speaker 1: they delivered our cars that don't even meet whether it's 399 00:23:07,080 --> 00:23:12,760 Speaker 1: range or other metrics, um the model esque circuit two 400 00:23:12,760 --> 00:23:15,640 Speaker 1: thousand twelves. But in the end it may not be 401 00:23:15,720 --> 00:23:19,320 Speaker 1: just electric cars that decide who wins and loses. It 402 00:23:19,440 --> 00:23:22,480 Speaker 1: may be a cluster of different tech innovations that come 403 00:23:22,560 --> 00:23:26,760 Speaker 1: with those evs, or so, says Adam Jonas of Morgan Stanley. 404 00:23:26,960 --> 00:23:32,359 Speaker 1: Ford is showing a bit of a bitter urgency to 405 00:23:32,680 --> 00:23:35,479 Speaker 1: it's better late than never, but General Motors is are 406 00:23:35,480 --> 00:23:37,720 Speaker 1: picked under the leadership of Mary Barret, who's executing a 407 00:23:37,720 --> 00:23:42,000 Speaker 1: phenomenal turnaround here with real action. This company is starting 408 00:23:42,000 --> 00:23:45,879 Speaker 1: to present itself as a viable let's say, pre spac 409 00:23:46,600 --> 00:23:49,680 Speaker 1: um e t F of auto two point unicorns. To 410 00:23:49,720 --> 00:23:51,720 Speaker 1: get the view from the inside, we went to Mary 411 00:23:51,720 --> 00:23:55,600 Speaker 1: bar herself, chair and CEO of General Motors. I asked 412 00:23:55,600 --> 00:23:58,440 Speaker 1: her if GM is turning into a tech company? Well, 413 00:23:58,480 --> 00:24:00,960 Speaker 1: I really think the autom of real is becoming a 414 00:24:01,000 --> 00:24:05,760 Speaker 1: software platform. So by definition, with all the software services 415 00:24:05,840 --> 00:24:08,879 Speaker 1: subscriptions that we can do, we really are becoming a 416 00:24:08,920 --> 00:24:11,000 Speaker 1: software company. And I guess if you want to describe 417 00:24:11,000 --> 00:24:13,080 Speaker 1: that as tech. But the thing that I think is 418 00:24:13,119 --> 00:24:16,199 Speaker 1: important for General Motors is we only open up that 419 00:24:16,240 --> 00:24:19,040 Speaker 1: opportunity when we sell the hardware, which is a vehicle. 420 00:24:19,080 --> 00:24:21,080 Speaker 1: But that's why we're so excited, because we think we 421 00:24:21,119 --> 00:24:23,719 Speaker 1: have tremendous growth in front of us. So what does 422 00:24:23,760 --> 00:24:26,840 Speaker 1: it take to take this time honored company as a 423 00:24:26,880 --> 00:24:29,159 Speaker 1: manufacturing company and really make it a software company? Use 424 00:24:29,200 --> 00:24:31,880 Speaker 1: your word software rather than tech. Yeah, Well, I think 425 00:24:31,880 --> 00:24:34,320 Speaker 1: it's First of all, it's we've redesigned many parts of 426 00:24:34,359 --> 00:24:38,600 Speaker 1: the company. The way we are fundamentally designed. Vehicles has changed. 427 00:24:38,640 --> 00:24:41,840 Speaker 1: We have all of the software to UH engineers and 428 00:24:41,840 --> 00:24:44,760 Speaker 1: that technology all in one group, because on a vehicle 429 00:24:44,800 --> 00:24:47,479 Speaker 1: there's hundreds of millions of lines of code. And with 430 00:24:47,560 --> 00:24:52,639 Speaker 1: the vehicle Intelligent Platform, which is the electrical infrastructure in 431 00:24:52,640 --> 00:24:55,159 Speaker 1: the vehicle, we are now able to do over the 432 00:24:55,200 --> 00:24:58,280 Speaker 1: air updates and that is giving us this platform to 433 00:24:58,440 --> 00:25:01,760 Speaker 1: just do all new types of services for customers and 434 00:25:01,800 --> 00:25:04,239 Speaker 1: it's it's really an exciting time in the industry. So 435 00:25:04,280 --> 00:25:06,479 Speaker 1: you have this vision for your company as a software company, 436 00:25:06,680 --> 00:25:09,760 Speaker 1: did the young software engineers coming up agree with that vision? 437 00:25:09,800 --> 00:25:11,760 Speaker 1: There are a lot of other big tech companies out there, 438 00:25:11,760 --> 00:25:14,320 Speaker 1: and it can be Amazon, it can be Netflix, it 439 00:25:14,359 --> 00:25:15,920 Speaker 1: can even be a car company that starts with the 440 00:25:16,000 --> 00:25:18,640 Speaker 1: t that start as a tech company. Can you compete 441 00:25:18,640 --> 00:25:21,720 Speaker 1: for the best and the brightest among the software engineers, Well, 442 00:25:21,920 --> 00:25:23,960 Speaker 1: we can and we are. I mean, we have hired 443 00:25:24,040 --> 00:25:27,880 Speaker 1: over eight thousand UM employees to General Motors just this year, 444 00:25:28,400 --> 00:25:31,920 Speaker 1: and most of them are our software talent and they're 445 00:25:31,920 --> 00:25:34,120 Speaker 1: coming to GM, I think for a couple of reasons, 446 00:25:34,200 --> 00:25:36,240 Speaker 1: but one because they want to be part of creating 447 00:25:36,240 --> 00:25:39,080 Speaker 1: a world with zero crashes, zero missions and zero congestion, 448 00:25:39,640 --> 00:25:43,120 Speaker 1: and so the transformation that's happening at General Motors they 449 00:25:43,119 --> 00:25:44,800 Speaker 1: want to be a part of. And then once we 450 00:25:44,880 --> 00:25:47,880 Speaker 1: get once they come to General Motors, we're working really 451 00:25:47,920 --> 00:25:50,879 Speaker 1: hard to make sure they see the opportunity, uh that 452 00:25:51,000 --> 00:25:54,399 Speaker 1: it truly is an environment where they feel engaged and 453 00:25:54,480 --> 00:25:59,080 Speaker 1: there's inclusions. So we're seeing fairly low attrition and again 454 00:25:59,200 --> 00:26:02,960 Speaker 1: we're bringing in um thousands of engineers. If I'm an investor, 455 00:26:03,280 --> 00:26:05,360 Speaker 1: how do I think about General Motors today? I mean 456 00:26:05,400 --> 00:26:08,399 Speaker 1: there's sort of time honored traditions like price earnings ratios 457 00:26:08,400 --> 00:26:10,800 Speaker 1: for example, that apply to tech and for example, General 458 00:26:10,800 --> 00:26:13,840 Speaker 1: Motors check was in the six to seven times earnings, right, 459 00:26:14,119 --> 00:26:17,160 Speaker 1: tech is trading up in the seven uh something like that. 460 00:26:17,400 --> 00:26:20,800 Speaker 1: Are you going to move towards that? The multiple, Well, 461 00:26:21,200 --> 00:26:24,240 Speaker 1: we definitely think there's a huge opportunity um from a 462 00:26:24,320 --> 00:26:27,520 Speaker 1: multiple perspective, because a lot of times people in the 463 00:26:27,560 --> 00:26:29,720 Speaker 1: past have thought about the auto industry is a very 464 00:26:29,720 --> 00:26:32,760 Speaker 1: cyclical business. But when you think about the fact that 465 00:26:32,800 --> 00:26:35,800 Speaker 1: General Motors we have the opportunity to grow with our 466 00:26:36,080 --> 00:26:39,359 Speaker 1: our franchises from an ICE perspective. But then the e 467 00:26:39,480 --> 00:26:42,280 Speaker 1: V part is complete growth and the software and services. 468 00:26:42,400 --> 00:26:44,720 Speaker 1: On top of that our growth as well. And then 469 00:26:44,760 --> 00:26:47,520 Speaker 1: when you look at expanding into new businesses, whether it's 470 00:26:47,800 --> 00:26:50,800 Speaker 1: on Star insurance or what we're doing with bright Drop, 471 00:26:50,880 --> 00:26:53,520 Speaker 1: that is more than just an electric light commercial vehicle, 472 00:26:53,840 --> 00:26:56,359 Speaker 1: but it's a whole ecosystem of how we can move 473 00:26:56,480 --> 00:26:59,439 Speaker 1: goods better and make those deliveries. And with partners like 474 00:26:59,480 --> 00:27:02,480 Speaker 1: Fedexit Spress, you know they're seeing the efficiency of the 475 00:27:02,520 --> 00:27:04,959 Speaker 1: systems that we're putting in place. So, Mary, take us 476 00:27:04,960 --> 00:27:08,080 Speaker 1: forward ten or even fifteen years, and let's assume everything 477 00:27:08,119 --> 00:27:10,840 Speaker 1: you want comes to pass. What does GM look like. 478 00:27:10,880 --> 00:27:12,960 Speaker 1: I mean, for example, you've mentioned it as a software 479 00:27:13,000 --> 00:27:16,520 Speaker 1: platform with other services they're attached to it. What percentage 480 00:27:16,520 --> 00:27:18,720 Speaker 1: of the revenue will come from actually selling the vehicles 481 00:27:18,720 --> 00:27:22,200 Speaker 1: as opposed to the services. I actually think that we 482 00:27:22,320 --> 00:27:26,400 Speaker 1: if we fast forward ten years, I think the software, services, 483 00:27:26,440 --> 00:27:30,480 Speaker 1: subscriptions and the other adjacent businesses that we can grow 484 00:27:30,520 --> 00:27:33,720 Speaker 1: into because of the technology that we have will be 485 00:27:34,359 --> 00:27:37,719 Speaker 1: equal or greater than what we'll have from uh, you know, 486 00:27:37,800 --> 00:27:40,520 Speaker 1: from selling the vehicle. That that's my vision and I 487 00:27:40,560 --> 00:27:43,840 Speaker 1: think that's well, um, well within reach. When we look 488 00:27:43,880 --> 00:27:46,439 Speaker 1: at the different total addressable markets and the businesses that 489 00:27:46,480 --> 00:27:48,560 Speaker 1: we're entering. What does that you to margins? Do you 490 00:27:48,600 --> 00:27:51,119 Speaker 1: expect higher margins on the services than you would normally 491 00:27:51,119 --> 00:27:53,280 Speaker 1: get on a manufactured product. Well, we see it today 492 00:27:53,440 --> 00:27:55,760 Speaker 1: on our businesses like on Star, we see you know, 493 00:27:55,960 --> 00:27:59,680 Speaker 1: a higher margin profile than we do on the actual 494 00:27:59,800 --> 00:28:02,280 Speaker 1: v iCal But let's not forget you've got to sell 495 00:28:02,280 --> 00:28:04,920 Speaker 1: that vehicle to to have access to that. And that's 496 00:28:04,920 --> 00:28:07,680 Speaker 1: where General Motors also, we have a reason that people 497 00:28:07,680 --> 00:28:10,359 Speaker 1: should believe that we're going to lead because we already 498 00:28:10,359 --> 00:28:13,320 Speaker 1: sell more vehicles in this country than anyone else on 499 00:28:13,359 --> 00:28:16,320 Speaker 1: sending to side some of the limitations with semiconductors right now, 500 00:28:16,600 --> 00:28:18,480 Speaker 1: and we have the highest loyalty. So when you look 501 00:28:18,480 --> 00:28:20,840 Speaker 1: at the scale that we have and then the software 502 00:28:20,880 --> 00:28:24,040 Speaker 1: platform that we can we can access because of that scale, 503 00:28:24,280 --> 00:28:26,560 Speaker 1: that's where the growth I really think is a huge 504 00:28:26,600 --> 00:28:29,080 Speaker 1: opportunity for us. As you say, you have some experience 505 00:28:29,119 --> 00:28:31,240 Speaker 1: in the marketplace with this already with on Star for example, 506 00:28:31,320 --> 00:28:33,480 Speaker 1: you mentioned what does the experience tell you about that 507 00:28:33,560 --> 00:28:35,600 Speaker 1: consumer demand? I mean, it's one thing to be able 508 00:28:35,600 --> 00:28:37,440 Speaker 1: to provide something it's a good idea, it's another thing 509 00:28:37,440 --> 00:28:41,000 Speaker 1: for consumers really don't want it. Well, we're seeing growth 510 00:28:41,080 --> 00:28:43,080 Speaker 1: with on Star and you know on Star we have 511 00:28:43,280 --> 00:28:46,960 Speaker 1: over twelve million active connected vehicles. We've been in the 512 00:28:47,000 --> 00:28:48,840 Speaker 1: business for twenty five years and we have a lot 513 00:28:48,880 --> 00:28:52,720 Speaker 1: of learnings. We actually have over a twillion trillion connected 514 00:28:52,760 --> 00:28:55,480 Speaker 1: miles on the road, and today people can buy a 515 00:28:55,520 --> 00:28:58,800 Speaker 1: safety and security package, they can buy the connectivity package, 516 00:28:58,840 --> 00:29:02,080 Speaker 1: they can buy both. We're seeing growth in both both 517 00:29:02,160 --> 00:29:05,120 Speaker 1: types of subscriptions. Uh, and really the vehicle. You know, 518 00:29:05,240 --> 00:29:08,600 Speaker 1: there's many people's stories throughout the pandemic where their vehicle 519 00:29:08,680 --> 00:29:11,920 Speaker 1: became their office because of the connectivity we provide. So 520 00:29:12,040 --> 00:29:14,680 Speaker 1: these are potentially exciting opportunities. Do they also bring some 521 00:29:14,760 --> 00:29:17,600 Speaker 1: challenges and let me name one specifically cybersecurity. What are 522 00:29:17,640 --> 00:29:21,120 Speaker 1: you doing as GM to protect this from cybersecurity? Well, 523 00:29:21,160 --> 00:29:23,960 Speaker 1: with the Vehicle Intelligent platform that we rolled out starting 524 00:29:23,960 --> 00:29:27,120 Speaker 1: in nineteen, a big part of the way we redesigned 525 00:29:27,160 --> 00:29:30,160 Speaker 1: that was with a focus on cybersecurity. We have some 526 00:29:30,240 --> 00:29:34,200 Speaker 1: of the leading cybersecurity experts in the company from an 527 00:29:34,200 --> 00:29:37,440 Speaker 1: auto perspective, because we recognize how important it is. So 528 00:29:37,560 --> 00:29:39,920 Speaker 1: it's it's built on layers of defense and we've had 529 00:29:40,000 --> 00:29:42,920 Speaker 1: learnings from other industries, but that's now core to our 530 00:29:43,000 --> 00:29:46,040 Speaker 1: vehicle with the vehicle intelligent platform. So in this world, again, 531 00:29:46,040 --> 00:29:48,880 Speaker 1: go forward ten years, I understand you're going to have 532 00:29:48,920 --> 00:29:51,840 Speaker 1: a lot more services, maybe even more service revenue than 533 00:29:52,160 --> 00:29:55,000 Speaker 1: vehicle revenue. Uh what does that do in terms of 534 00:29:55,040 --> 00:29:57,080 Speaker 1: the overall number of vehicles sold? Are you envisioning a 535 00:29:57,080 --> 00:30:01,080 Speaker 1: world in which GM sells fewer vehicles but perhaps returns 536 00:30:01,160 --> 00:30:03,840 Speaker 1: higher profits. Now I'm I'm looking for a world where 537 00:30:03,880 --> 00:30:06,480 Speaker 1: we continue to grow share and that just continues to 538 00:30:06,520 --> 00:30:09,320 Speaker 1: expand the growth opportunities with the software. And I think 539 00:30:09,360 --> 00:30:11,800 Speaker 1: when I look at the Ultium platform that we're putting 540 00:30:11,880 --> 00:30:15,720 Speaker 1: into market this fall, you know many other traditional O 541 00:30:15,800 --> 00:30:18,240 Speaker 1: E M s are just thinking about or starting to 542 00:30:18,320 --> 00:30:21,880 Speaker 1: work on dedicated electric vehicle platforms. We have one, so 543 00:30:21,920 --> 00:30:23,960 Speaker 1: we can go all the way from a small crossover 544 00:30:24,040 --> 00:30:26,600 Speaker 1: all the way to a SuperTruck like the Hummer EV 545 00:30:26,840 --> 00:30:30,640 Speaker 1: That was Mary bar Chair and CEO of GM. Finally, 546 00:30:30,760 --> 00:30:34,200 Speaker 1: one more thought, having it both ways. It's what all 547 00:30:34,200 --> 00:30:37,160 Speaker 1: of us really want, right not to have to choose 548 00:30:37,200 --> 00:30:40,000 Speaker 1: between two things when we really want them both, like 549 00:30:40,080 --> 00:30:43,080 Speaker 1: getting everyone back to the office without risking more COVID 550 00:30:43,120 --> 00:30:48,480 Speaker 1: infections or having the FED taper without causing a tantrum. 551 00:30:48,520 --> 00:30:51,040 Speaker 1: But now the Wall Street Journal brings us news about 552 00:30:51,040 --> 00:30:53,520 Speaker 1: thirty six year old mother of three from upstate New 553 00:30:53,600 --> 00:30:56,880 Speaker 1: York who has given us all hope or maybe just 554 00:30:56,960 --> 00:30:59,560 Speaker 1: put us all the shame as she does something any 555 00:30:59,640 --> 00:31:01,520 Speaker 1: of us who have ever picked up a golf club 556 00:31:01,520 --> 00:31:06,000 Speaker 1: would think was impossible. Play golf extraordinarily well, and play 557 00:31:06,000 --> 00:31:09,320 Speaker 1: it really fast. Lauren Cup is the head coach of 558 00:31:09,360 --> 00:31:12,280 Speaker 1: the men's and women's golf teams at Hamilton College, and 559 00:31:12,360 --> 00:31:15,520 Speaker 1: she took up the sport of speed golf just after 560 00:31:15,560 --> 00:31:18,320 Speaker 1: she had her first child. The idea of speed golf 561 00:31:18,400 --> 00:31:20,600 Speaker 1: is to play as well as you can and as 562 00:31:20,640 --> 00:31:23,080 Speaker 1: fast as you can, to give you some sense of 563 00:31:23,200 --> 00:31:26,320 Speaker 1: just how well and just how fast. This Cup just 564 00:31:26,360 --> 00:31:28,920 Speaker 1: set a new record by shooting one under par for 565 00:31:29,040 --> 00:31:32,760 Speaker 1: eighteen holes in fifty minutes. Yes, that's five oh minutes 566 00:31:32,960 --> 00:31:35,760 Speaker 1: for eighteen holes. That's what takes most of us three 567 00:31:35,920 --> 00:31:38,760 Speaker 1: or even four hours, and that's on a good day. 568 00:31:38,800 --> 00:31:40,760 Speaker 1: So how does she do it well? She carries only 569 00:31:40,760 --> 00:31:43,320 Speaker 1: five clubs, a driver, a putter, a six iron, a 570 00:31:43,400 --> 00:31:46,080 Speaker 1: nine iron and a wedge, and whenever she can, she 571 00:31:46,200 --> 00:31:49,720 Speaker 1: runs right through water hazards like creeks and oh yes, 572 00:31:49,880 --> 00:31:53,120 Speaker 1: she never ever takes more than twenty seconds to look 573 00:31:53,120 --> 00:31:55,800 Speaker 1: for a ball. Something that you might want to suggest 574 00:31:55,800 --> 00:31:57,840 Speaker 1: to that member of your foursome who hits the ball 575 00:31:57,880 --> 00:32:00,640 Speaker 1: into the woods and then insists on trying to find it. 576 00:32:01,240 --> 00:32:03,920 Speaker 1: But first and foremost, there is one key rule for 577 00:32:04,000 --> 00:32:08,560 Speaker 1: speed golf. Above all, hit it straight, and at least 578 00:32:08,600 --> 00:32:11,680 Speaker 1: in that one way, Lauren Cupp's approach to speed golf 579 00:32:11,800 --> 00:32:15,560 Speaker 1: might serve us all in good stead. That does it 580 00:32:15,680 --> 00:32:17,880 Speaker 1: for this episode of Wall Street Week. I'm David Weston. 581 00:32:17,960 --> 00:32:20,840 Speaker 1: This is Bloomberg. See you next week.