Speaker 1: This is Bloomberg Wall Street Week. Market shrug of higher
Speaker 1: consumer prizes. The economy is in the process of rebounding.
Speaker 1: Will the utter reserve have its own digital currency? The
Speaker 1: financial stories that cheap hard work. Many people think the
Speaker 1: eels are just going to keep marching out. We have
Speaker 1: more spending coming out of Congress. One of the big
Speaker 1: questions I think on investor's mind inflation through the eyes
Speaker 1: of the most influential voices. Larry Summer is the former
Speaker 1: Treasury Secretary, Bryan wynhand back of America, Will sar Ceo,
Speaker 1: Charlie Sharp. Bloomberg wool Street Week with David Weston from
Speaker 1: Bloomberg Radio. One step forward and one step back, Final
Speaker 1: approval for Fliser's vaccine. Congress moves forward on spending, but
Speaker 1: tragedy mars An already difficult pull out from Afghanistan. This
Speaker 1: is Bloomberg Wall Street Week. I'm David Weston. We begin
Speaker 1: this week with the Fed. In his remarks to the
Speaker 1: Jackson Whole Symposium, Chapal did nothing to get in the
Speaker 1: way of some tapering of the Fed's bond buying by
Speaker 1: the end of the year. At the FMCS recent July eating,
Speaker 1: I was of the view, as were most participants, that
Speaker 1: if the economy evolved broadly as anticipated, it could be
Speaker 1: appropriate to start reducing the pace of asset purchases this year.
Speaker 1: For more on what chair Pal said and it didn't say,
Speaker 1: we check in with former Treasury Secretary Larry Summers. I
Speaker 1: was struck, for example, that he didn't say anything about
Speaker 1: the housing sector that's the largest part of the consumer
Speaker 1: price indices. I saw a statistic Bloomberg actually had it
Speaker 1: the other day that said, on average, when a new
Speaker 1: tenant moves into a rented residents, they're paying seventeen percent
Speaker 1: more than the old tenant. That suggests a lot of
Speaker 1: rental price inflation. If you look at owner occupied houses,
Speaker 1: the prices are taking off. Uh. None of that has
Speaker 1: been reflected yet in our price indsease. And yet on
Speaker 1: any common sense definition, that's surely inflation. And so my
Speaker 1: guesses you'll start to see the housing component of inflation
Speaker 1: show up as rising pretty rapidly, or if you don't,
Speaker 1: it will reflect defects in the way we create Uh,
Speaker 1: the price indusease. I the chairman mentioned rightly, uh that
Speaker 1: we've got record levels of job openings and workers are
Speaker 1: turning over very fast workers are quitting UH their jobs.
Speaker 1: I'd have thought that all of that would be a
Speaker 1: signal than in a labor shortage economy, you'd still be
Speaker 1: starting to see much more rapid wage increases then you've
Speaker 1: seen historically, but that that was a process that would
Speaker 1: take a certain amount of time. He was more serene
Speaker 1: um about all of that. He was referencing that we
Speaker 1: had had four percent unemployment um before COVID without apidly
Speaker 1: accelerating inflation, and he was right about that, of course.
Speaker 1: But I see that we're having far more structural change
Speaker 1: in the economy, as businesses rethink their business models, when
Speaker 1: people aren't going to be coming to the office, as
Speaker 1: people rethink their lives after a year without commuting, as
Speaker 1: the whole structure of the economy changes. And I think
Speaker 1: with all that structural change, you're likely to see some
Speaker 1: substantial increase in the level of unemployment that the economy
Speaker 1: can sustain without excessive inflation. So there's no certainties, but
Speaker 1: I think the inflation risks are graver than those that
Speaker 1: the chairman UH recognized. I think that the toxic side
Speaker 1: effects of q E are rather greater then the chairman recognized.
Speaker 1: So in the range of places where this speech seemed
Speaker 1: likely to come down. I think that came down in
Speaker 1: a relatively uh good place from my point of view,
Speaker 1: pointing towards a taper uh this year. But in terms
Speaker 1: of the issues I've been concerned about for quite some time,
Speaker 1: that we're kind of making a bit of a paradigm
Speaker 1: uh error. Uh. I didn't expect that the speech was
Speaker 1: going to represent a deviation from the paradigm, and I
Speaker 1: don't think it did. Hilary, the day before J. Powell
Speaker 1: came in speech, you wrote an essay in the Washington
Speaker 1: Post and which you really took on the question of
Speaker 1: quantity of easy. You mentioned inflation what you just talked about,
Speaker 1: but also some of those toxic effects, which included things
Speaker 1: like the tenor of the debt, something you've talked on
Speaker 1: this program before that overall the federal debt, we're actually
Speaker 1: going into the short side. We should be going to
Speaker 1: the long end. And also asked bubbles and pumping money
Speaker 1: in the economy by getting it into financial assets. Tell
Speaker 1: us about why you think that would be wrong, and
Speaker 1: maybe as important, do you think QUI should go to zero? Yeah?
Speaker 1: I think, Hue. I think the question is like, as
Speaker 1: I used the analogy in the column, it's like withdrawing
Speaker 1: from Afghanistan. Uh, it's pretty clear that after twenty years,
Speaker 1: the right thing was for the United States not to
Speaker 1: be uh continuing in a war fighting mode in Afghanistan.
Speaker 1: But you can't do You can't get there necessarily overnight,
Speaker 1: as we're learning painfully. And in the same way, I
Speaker 1: think we clearly should have zero que which doesn't mean
Speaker 1: we can get there overnight or we can get there
Speaker 1: with a uh drastic lurch. Why uh, every homeowner in
Speaker 1: America is trying to lock in a long term mortgage
Speaker 1: rather than moving towards the floating rate mortgage. The government
Speaker 1: should think the same way and be chterming out the debt.
Speaker 1: What quee does by having the Fed issue interest bearing
Speaker 1: bank reserves to buy up longer term debt when those
Speaker 1: interest reserves can float upwards, it's shortening the maturity of
Speaker 1: the debt. Given the epic levels of debt we have,
Speaker 1: and given the very high levels of fiscal uncertainty we have,
Speaker 1: why would we want to be charming in the debt
Speaker 1: right now? Thank you so much. That's our special contry
Speaker 1: to Wall Street Week. He's Larry Summers of Harvard coming up.
Speaker 1: We talked with former Fed Governor Dan to Rule of
Speaker 1: Harvard about the politics of reappointing J. Powe and whether
Speaker 1: there should be more coordination between the Fed and the Treasury.
Speaker 1: That's next on Wall Street Week on Bloomberg. This is
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 1: It was a big week for Banks Central and Otherwise
Speaker 1: as BECA America's longtime head of Investment Banking and CEO,
Speaker 1: Tom Monteg announced his retirement, leaving a big hole and
Speaker 1: raising questions about succession at the bank. And FED chair
Speaker 1: J Pale appeared at the Jackson Whole Symposium amid speculation
Speaker 1: about his future as well. We spend most of our
Speaker 1: time worrying about the independence of the FED from all
Speaker 1: political influence. But is that realistic? And if it were possible,
Speaker 1: would it be the right thing? Given the enormous influence
Speaker 1: the Fed can have over the economy and our lives.
Speaker 1: Dan's Rullo served on the Federal Reserve Board with J.
Speaker 1: Pal He is now a professor at the Harvard Law School. So, Dan,
Speaker 1: thank you so much for being with us. So address
Speaker 1: that question. I mean, we have a lot of influence
Speaker 1: of the FED right now on our day to day
Speaker 1: lives as well as the economy. Is there a role
Speaker 1: for some sort of a political factor here and is
Speaker 1: it possibly healthy for j Pale to be thinking, You know,
Speaker 1: I do need to think about reappointment. Well, David, you know,
Speaker 1: um Bil martin U, one of the famous past chairs
Speaker 1: of the FED, for whom one of the FED board
Speaker 1: buildings is named, characterize the position of the FED as
Speaker 1: at the Federal Reserve was in the government. It was
Speaker 1: independent in the government. It was not independent of the government.
Speaker 1: And what that is that that means is that the
Speaker 1: relationship between the FED and democratically accountable branches of government,
Speaker 1: the President and the Congress, is an issue of ongoing importance.
Speaker 1: So if you had a system whereby the FED we're
Speaker 1: self perpetuating and each chair chose his or her successor,
Speaker 1: that might make some monetary policy people happy, but it
Speaker 1: would really strain any notion of the FED being accountable
Speaker 1: ultimately to the Congress. And as you know, Congress has
Speaker 1: the powers and Article one of the Constitution that allow
Speaker 1: the creation of the FED. So I think what we
Speaker 1: see with the four year appointment term, what we see
Speaker 1: with the requirements for testimony are way reason which Congress
Speaker 1: has tried to provide some political responsiveness, some political accountability,
Speaker 1: without making the Fed adhere to the day by day
Speaker 1: wishes of the administration. Instance, it's not being short of
Speaker 1: a day to day coordination administration apart from Congress and
Speaker 1: the Fed, what about the Treasury and the Fed. We
Speaker 1: had Larry summers On earlier in this program saying there's
Speaker 1: an issue of the tenor of the debt right now
Speaker 1: given what they're doing with bond buying, in fact, we're
Speaker 1: sort of going more short term of the debt. Doesn't
Speaker 1: make sense. Should there be some mechanism for more coordination,
Speaker 1: not control, but coordination? Well, I mean in fact, and
Speaker 1: I assume that this is going on between Janet Yellen
Speaker 1: and Jay Powell. There's there's always been a weekly lunch
Speaker 1: usually sometimes breakfast between the Fed chair and the Treasury
Speaker 1: Secretary where they go over a range of issues. Uh.
Speaker 1: Those meetings can be more frequent in periods of stress, obviously,
Speaker 1: but even in normal times, fiscal policy and monetary policy
Speaker 1: dependent on one another, and in less normal times or
Speaker 1: or new kinds of times, the relationships between the two
Speaker 1: are probably sometimes harder to parse, and so it does
Speaker 1: call for at least more communication between Treasury and the FED.
Speaker 1: I mean, something that people may have forgotten is that
Speaker 1: from most of the good part of the history of
Speaker 1: the FED there was a kind of subordination to the
Speaker 1: Treasury Department that formally ended in ninety one. But the
Speaker 1: interest of the administration and often of Congress and keeping
Speaker 1: interest rates low is an ongoing interest, uh and the
Speaker 1: FED always needs to be in a position of deciding
Speaker 1: what its posture is visa the current fiscal policy dan.
Speaker 1: We all heard from the current chair J. Pile, part
Speaker 1: of this uh uh Jackson Holes symposium a year ago.
Speaker 1: At this same symposium, as I recall, the Chair announced
Speaker 1: the new framework for determining monetary policy based on really
Speaker 1: being willing to go above the two percent number on inflation.
Speaker 1: Some people now, including Larry Summers, are saying, you know,
Speaker 1: that framework maybe was never a good idea, but it
Speaker 1: sure isn't now because it was a dealing with the
Speaker 1: demand side issue and now it was applies side. Is
Speaker 1: it possible I FED is sort of painting uself in
Speaker 1: a bit of a corner at corner and gotten too
Speaker 1: stubborn on its monetary policy by having that framework. I
Speaker 1: don't think so. I mean, look, there are issues in
Speaker 1: the execution of the framework, which I get to in
Speaker 1: a moment, but it seemed pretty clear to a lot
Speaker 1: of people, including people who were worried about secular stagnation,
Speaker 1: that the FED framework, which had prevailed in the pre
Speaker 1: global financial crisis period, needed to be changed. And what
Speaker 1: I think you saw last year was not really a
Speaker 1: radical break, but instead the culmination of an evolution of
Speaker 1: the FEDS thinking about the relationship between employment and inflation.
Speaker 1: I think that difficulty has been that the FED at
Speaker 1: that time expected that it was going to have a
Speaker 1: period of somewhat sluggish growth in which it could fill
Speaker 1: out it's meaning to maximum employment and how long inflation
Speaker 1: had to be above two percent, and with this, with
Speaker 1: the amount of fiscal stimulus, would have the quick recovery
Speaker 1: in the economy. I think the FED was back footed
Speaker 1: a bit, and it's perhaps been a little less um
Speaker 1: nimble in adapting to the new circumstances and describing what
Speaker 1: those metrics mean under these circumstances. But I don't I
Speaker 1: actually don't think it's the framework itself that's the problem,
Speaker 1: and Indeed, I tend to agree with those who think
Speaker 1: that periodically the FED should revisit its framework, not because
Speaker 1: the framework sets monetary policy, but because it sets the
Speaker 1: framework for discussing monetary policy. So Dan, just briefly here
Speaker 1: at the end, I wonder whether j Palal would have
Speaker 1: picked this time to give a major address that all
Speaker 1: the markets and all the pundits were paying attention for
Speaker 1: monetary policy if there weren't Jackson hole. And that leads
Speaker 1: to why does Jackson Hole exist? Well, I mean the
Speaker 1: historically answer is the former Federal Reserve Bank of Kansas
Speaker 1: City president started it in one invited Paul Woker, and
Speaker 1: Paul Voker came, and since then it it's been kind
Speaker 1: of the centerpiece of the summer for for monetary policy. UM.
Speaker 1: I think that, you know, the traditional issues people have
Speaker 1: raised around that, David one, you know, should you have
Speaker 1: it in a vacation spot. I mean it's a national park,
Speaker 1: it's still a vacation spot. To the preferential access that
Speaker 1: some reporters and some academics and some even market actors get. Um,
Speaker 1: I don't think people would be at all worried about
Speaker 1: that if the chair were not there. For two and
Speaker 1: I not wasn't this year, of course because it was virtual,
Speaker 1: but normally the chairs there for two and a half days.
Speaker 1: And that's you know, that's the big light in the
Speaker 1: backyard that attracts the moths. Uh And and so the
Speaker 1: question really does become, should there be something like that
Speaker 1: that does give the pre ferential access. Let me just
Speaker 1: add one thing from the board, the Federal Reserve Board's
Speaker 1: own position. It's a mixed blessing. It's a nice um
Speaker 1: vehicle for getting across a big message when you want to.
Speaker 1: But oftentimes the FED chairs doesn't particularly want to get
Speaker 1: a big message and doesn't want a lot of anticipation,
Speaker 1: and to the degree that the feel they have to go,
Speaker 1: it kind of puts them on the spot. And Dan
Speaker 1: could have another vacation. Thank you so much to dant
Speaker 1: Roll of Harvard, the former FED governor. Coming up, the
Speaker 1: revolution that's coming to the auto industry with all the
Speaker 1: challenges and all the opportunities with Mary Barr, a chair
Speaker 1: and CEO of General Motors. That's next on Wall Street
Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with
Speaker 1: David Weston from Bloomberg Radio. We were in Detroit this
Speaker 1: week and had the opportunity to visit General Motors headquarters
Speaker 1: and sit down with a company's chair and CEO, Mary Barrow.
Speaker 1: In a few minutes you'll hear our discussion about electric
Speaker 1: vehicles in the future of GM. But first, as the
Speaker 1: Delta variant spread across the country, I asked her about
Speaker 1: the steps she is taking to keep her employees safe.
Speaker 1: We've been following the safety protocols of the appropriate social distancing, wearing,
Speaker 1: mass screening and has worked quite well. Because of the
Speaker 1: outbreak of the delta variant, we are now back into
Speaker 1: wearing masks in the US, and it varies around the
Speaker 1: world based on what's happening, and our employees have just
Speaker 1: done a phenomenal job of following our safety protocols. So
Speaker 1: we continue to evaluate all options of what we can
Speaker 1: do because we know getting everyone vaccinated is going to
Speaker 1: be critical to stopping the you know, the different variants
Speaker 1: of the disease. Right now, we're also very much focused
Speaker 1: on education because you know, there's a lot of myths
Speaker 1: out there or or a misinformation where people are making
Speaker 1: decisions to not get the vaccine based on bad information.
Speaker 1: So we also are running an education campaign as well.
Speaker 1: So to be clear, do you know the vaccination status
Speaker 1: of your employees? Are you asking that question? Are you
Speaker 1: asking them to tell you if they're vaccinated? We are
Speaker 1: requesting in the United States, and we're working to do
Speaker 1: that around the globe, obviously following the local laws or
Speaker 1: country laws, and so we are working on that right
Speaker 1: now and that will inform the decisions that we make
Speaker 1: as we move forward. And masks. We wear masks in
Speaker 1: our facilities, whether it's our manufacturing plants, warehouses, offices, mass
Speaker 1: are required whether you're vaccinated or not. So I talked
Speaker 1: to us also about unions and the role of unions
Speaker 1: and all this. First of all, is it okay to
Speaker 1: require vaccinations with the u A W Are they resisting that?
Speaker 1: Are they with that? Are they united with you in this? Well,
Speaker 1: you know, first of all, I would say, in working
Speaker 1: to make sure our workforce is safe, the UAW has
Speaker 1: been a absolute fantastic partner on being data driven, following
Speaker 1: the advice from the CDC, and that's you know, really
Speaker 1: I think what has allowed us to have the very
Speaker 1: successful protocols to not only protect lives, but to protect livelihood.
Speaker 1: And so you know, as we look at what the
Speaker 1: right thing to do as it relates to the vaccine
Speaker 1: will work with the unions and and that will be
Speaker 1: something that we negotiate with them or work with them
Speaker 1: to decide what the right thing to do is. Do
Speaker 1: you try to have the same rules for the our
Speaker 1: employees as for the salary. We we do, but we
Speaker 1: also really respect the fact that some of our workforces
Speaker 1: represented not only by the U a W, but with
Speaker 1: other unions around the globe, and it's an important part
Speaker 1: to have that dialogue as part of the contractual process.
Speaker 1: Where's GM on bringing people back into the office. This
Speaker 1: is a hot topic all through US industries, certainly in
Speaker 1: New York. There's a whole debate by banks, for example,
Speaker 1: where are you in bringing your people back to the office. Well,
Speaker 1: several months ago we rolled out what we call work
Speaker 1: appropriately and for those who don't necessarily have to be
Speaker 1: at work to do their jobs. First, I want to
Speaker 1: give a big shout out to all the people, whether
Speaker 1: they're in our our manufacturing, fertilities, warehouses, R and D labs, design,
Speaker 1: thank you for coming to work every day and following
Speaker 1: the protocol so you can do your work safely. For
Speaker 1: the portion of our workforce that UM doesn't necessarily always
Speaker 1: have to be in the office. It's work appropriately and
Speaker 1: we're leaving it to the individual and their leader decide
Speaker 1: where can you do your best work, and so far
Speaker 1: it's been very well received by our employees. Going back
Speaker 1: to the unions for a moment, let me ask a
Speaker 1: broader question about electric vehicles. We saw President Biden again
Speaker 1: with you at the White House and ahead of the
Speaker 1: u a W was there very specificly involved in The
Speaker 1: President talked a fair amount about the world of union
Speaker 1: workers in this process. Uh, it's the union help in
Speaker 1: moving faster evs or can it be a hindrance? How
Speaker 1: is it working? Because sometimes unions have not always been
Speaker 1: progressive in adopting new technologies. Well, I can only speak
Speaker 1: to the relationship that we have with the U a
Speaker 1: W and talking about the technology and frankly, it's opportunities
Speaker 1: for growth and its opportunities to make sure that the
Speaker 1: workforce that they represent, our workforce, that they have these opportunities.
Speaker 1: We go forward and with what we're doing at Factory zero,
Speaker 1: UM and other plants around the world are and and
Speaker 1: specifically in the US, we're making sure we provide the means,
Speaker 1: so they'll be part of our all electric future. So
Speaker 1: I think it's very positive right now. So as you
Speaker 1: look forward to this future that you clearly have crafted
Speaker 1: and you've laid on detail, and let's be honest, it's
Speaker 1: it's going well into the future in success, it's gonna
Speaker 1: last well passed you and me. As a practic matter,
Speaker 1: as you look at what is the thing that you
Speaker 1: worry the most about, what could be a potential hindrance
Speaker 1: to achieving what needs to be achieved. Well, one of
Speaker 1: the things I talked about, I feel very confident we
Speaker 1: have the right strategy and we have the adaptability that
Speaker 1: if we have to make changes in tweaks here and there,
Speaker 1: we will. But it's speed, speed of execution, and that's
Speaker 1: what I talk about to our our team all the time,
Speaker 1: and making sure we're getting out of our own way
Speaker 1: and getting rid of bureaucracy so we can move quickly
Speaker 1: to achieve this vision. Uh. So, you have had a
Speaker 1: wonderful run at General Motors. Tell me about your team,
Speaker 1: because one of the things that it's always trucking about
Speaker 1: you as a CEO, you always say it's the team effort.
Speaker 1: It's not just me. Tell me about who you've got
Speaker 1: on your team you particularly rely upon. Well, there's several
Speaker 1: members of the senior leadership team that are just phenomenal.
Speaker 1: I mean Mark Races, our president, and he is the
Speaker 1: most one of the most knowledgeable you know, car people,
Speaker 1: I think on the globe in the globe, So he
Speaker 1: does a phenomenal job. And then, um, you know, we
Speaker 1: have people who have been at the company many years,
Speaker 1: like myself and Mark, Steve Carlisle who runs North America.
Speaker 1: But then we have people who have just recently joined
Speaker 1: the company like Paul Jacobson, our CEO, Alan Wexler, who
Speaker 1: came from Sapient. And really the benefit of having all
Speaker 1: these diverse experiences and being from different industries, but also
Speaker 1: the deep knowledge of our industry I think is what
Speaker 1: makes General Motors Leadership team special and why we're able
Speaker 1: to move so quickly. That was Mary Barr, Chair and
Speaker 1: CEO of GM. Coming up more with GM's Mary bar
Speaker 1: on the electric future of her company. That's next on
Speaker 1: Wall Street Week on Bloomberg. This is Bloomberg Wall Street Week.
Speaker 1: We've David Weston from Bloomberg Radio. It was only a
Speaker 1: dozen years ago that the American Auto industry stood on
Speaker 1: the brink of collapse during the Great Financial Crisis, something
Speaker 1: President Obama said he could not let happen. We cannot
Speaker 1: and must not and we will not let our auto
Speaker 1: industry simply vanish. And so the industry went through a
Speaker 1: painful restructuring to emerge smaller, more efficient, and more profitable.
Speaker 1: And no sooner did he get through all that than
Speaker 1: it has to reinvent itself all over again. As the
Speaker 1: nation and the world moved to electric vehicles. There are
Speaker 1: a vision of the future that is now beginning to happen,
Speaker 1: a future of the automobile industry that is electric, battery, electric,
Speaker 1: plug in hybrid, electric, fuel cell electric. It's electric and
Speaker 1: there's no turning back. Is the industry up to this
Speaker 1: new challenge? And if it is, will it be the
Speaker 1: traditional car companies who lead the way or will they
Speaker 1: have to make room for the pure play electric vehicle
Speaker 1: makers like Tesla and Rivian dan Ives of web Bush
Speaker 1: says President Biden is creating a huge new market. This
Speaker 1: is the start of what I believe is a five
Speaker 1: trillion dollar market with definitely Biden kicking off the green
Speaker 1: tide away from the US, which is underperformed when we
Speaker 1: look compared to China in Europe, and i've says GM
Speaker 1: is well positioned that as GM proves out its e
Speaker 1: V vision over the coming years, the stock will be
Speaker 1: re rated more as a disruptive technology and EV play
Speaker 1: rather than its traditional auto valuation. Cathy would have our investments.
Speaker 1: On the other hand, says the traditional automakers are just
Speaker 1: too far behind to catch up. The traditional auto manufacturer.
Speaker 1: If you look at their R and D budgets, So
Speaker 1: you look at GMS of it's R and D dollars
Speaker 1: and I'm sorry, uh, capital spending is allocated to electric
Speaker 1: they should be at almost a hundred now given what's
Speaker 1: about to happen. They have just gotten started and what
Speaker 1: they delivered our cars that don't even meet whether it's
Speaker 1: range or other metrics, um the model esque circuit two
Speaker 1: thousand twelves. But in the end it may not be
Speaker 1: just electric cars that decide who wins and loses. It
Speaker 1: may be a cluster of different tech innovations that come
Speaker 1: with those evs, or so, says Adam Jonas of Morgan Stanley.
Speaker 1: Ford is showing a bit of a bitter urgency to
Speaker 1: it's better late than never, but General Motors is are
Speaker 1: picked under the leadership of Mary Barret, who's executing a
Speaker 1: phenomenal turnaround here with real action. This company is starting
Speaker 1: to present itself as a viable let's say, pre spac
Speaker 1: um e t F of auto two point unicorns. To
Speaker 1: get the view from the inside, we went to Mary
Speaker 1: bar herself, chair and CEO of General Motors. I asked
Speaker 1: her if GM is turning into a tech company? Well,
Speaker 1: I really think the autom of real is becoming a
Speaker 1: software platform. So by definition, with all the software services
Speaker 1: subscriptions that we can do, we really are becoming a
Speaker 1: software company. And I guess if you want to describe
Speaker 1: that as tech. But the thing that I think is
Speaker 1: important for General Motors is we only open up that
Speaker 1: opportunity when we sell the hardware, which is a vehicle.
Speaker 1: But that's why we're so excited, because we think we
Speaker 1: have tremendous growth in front of us. So what does
Speaker 1: it take to take this time honored company as a
Speaker 1: manufacturing company and really make it a software company? Use
Speaker 1: your word software rather than tech. Yeah, Well, I think
Speaker 1: it's First of all, it's we've redesigned many parts of
Speaker 1: the company. The way we are fundamentally designed. Vehicles has changed.
Speaker 1: We have all of the software to UH engineers and
Speaker 1: that technology all in one group, because on a vehicle
Speaker 1: there's hundreds of millions of lines of code. And with
Speaker 1: the vehicle Intelligent Platform, which is the electrical infrastructure in
Speaker 1: the vehicle, we are now able to do over the
Speaker 1: air updates and that is giving us this platform to
Speaker 1: just do all new types of services for customers and
Speaker 1: it's it's really an exciting time in the industry. So
Speaker 1: you have this vision for your company as a software company,
Speaker 1: did the young software engineers coming up agree with that vision?
Speaker 1: There are a lot of other big tech companies out there,
Speaker 1: and it can be Amazon, it can be Netflix, it
Speaker 1: can even be a car company that starts with the
Speaker 1: t that start as a tech company. Can you compete
Speaker 1: for the best and the brightest among the software engineers, Well,
Speaker 1: we can and we are. I mean, we have hired
Speaker 1: over eight thousand UM employees to General Motors just this year,
Speaker 1: and most of them are our software talent and they're
Speaker 1: coming to GM, I think for a couple of reasons,
Speaker 1: but one because they want to be part of creating
Speaker 1: a world with zero crashes, zero missions and zero congestion,
Speaker 1: and so the transformation that's happening at General Motors they
Speaker 1: want to be a part of. And then once we
Speaker 1: get once they come to General Motors, we're working really
Speaker 1: hard to make sure they see the opportunity, uh that
Speaker 1: it truly is an environment where they feel engaged and
Speaker 1: there's inclusions. So we're seeing fairly low attrition and again
Speaker 1: we're bringing in um thousands of engineers. If I'm an investor,
Speaker 1: how do I think about General Motors today? I mean
Speaker 1: there's sort of time honored traditions like price earnings ratios
Speaker 1: for example, that apply to tech and for example, General
Speaker 1: Motors check was in the six to seven times earnings, right,
Speaker 1: tech is trading up in the seven uh something like that.
Speaker 1: Are you going to move towards that? The multiple, Well,
Speaker 1: we definitely think there's a huge opportunity um from a
Speaker 1: multiple perspective, because a lot of times people in the
Speaker 1: past have thought about the auto industry is a very
Speaker 1: cyclical business. But when you think about the fact that
Speaker 1: General Motors we have the opportunity to grow with our
Speaker 1: our franchises from an ICE perspective. But then the e
Speaker 1: V part is complete growth and the software and services.
Speaker 1: On top of that our growth as well. And then
Speaker 1: when you look at expanding into new businesses, whether it's
Speaker 1: on Star insurance or what we're doing with bright Drop,
Speaker 1: that is more than just an electric light commercial vehicle,
Speaker 1: but it's a whole ecosystem of how we can move
Speaker 1: goods better and make those deliveries. And with partners like
Speaker 1: Fedexit Spress, you know they're seeing the efficiency of the
Speaker 1: systems that we're putting in place. So, Mary, take us
Speaker 1: forward ten or even fifteen years, and let's assume everything
Speaker 1: you want comes to pass. What does GM look like.
Speaker 1: I mean, for example, you've mentioned it as a software
Speaker 1: platform with other services they're attached to it. What percentage
Speaker 1: of the revenue will come from actually selling the vehicles
Speaker 1: as opposed to the services. I actually think that we
Speaker 1: if we fast forward ten years, I think the software, services,
Speaker 1: subscriptions and the other adjacent businesses that we can grow
Speaker 1: into because of the technology that we have will be
Speaker 1: equal or greater than what we'll have from uh, you know,
Speaker 1: from selling the vehicle. That that's my vision and I
Speaker 1: think that's well, um, well within reach. When we look
Speaker 1: at the different total addressable markets and the businesses that
Speaker 1: we're entering. What does that you to margins? Do you
Speaker 1: expect higher margins on the services than you would normally
Speaker 1: get on a manufactured product. Well, we see it today
Speaker 1: on our businesses like on Star, we see you know,
Speaker 1: a higher margin profile than we do on the actual
Speaker 1: v iCal But let's not forget you've got to sell
Speaker 1: that vehicle to to have access to that. And that's
Speaker 1: where General Motors also, we have a reason that people
Speaker 1: should believe that we're going to lead because we already
Speaker 1: sell more vehicles in this country than anyone else on
Speaker 1: sending to side some of the limitations with semiconductors right now,
Speaker 1: and we have the highest loyalty. So when you look
Speaker 1: at the scale that we have and then the software
Speaker 1: platform that we can we can access because of that scale,
Speaker 1: that's where the growth I really think is a huge
Speaker 1: opportunity for us. As you say, you have some experience
Speaker 1: in the marketplace with this already with on Star for example,
Speaker 1: you mentioned what does the experience tell you about that
Speaker 1: consumer demand? I mean, it's one thing to be able
Speaker 1: to provide something it's a good idea, it's another thing
Speaker 1: for consumers really don't want it. Well, we're seeing growth
Speaker 1: with on Star and you know on Star we have
Speaker 1: over twelve million active connected vehicles. We've been in the
Speaker 1: business for twenty five years and we have a lot
Speaker 1: of learnings. We actually have over a twillion trillion connected
Speaker 1: miles on the road, and today people can buy a
Speaker 1: safety and security package, they can buy the connectivity package,
Speaker 1: they can buy both. We're seeing growth in both both
Speaker 1: types of subscriptions. Uh, and really the vehicle. You know,
Speaker 1: there's many people's stories throughout the pandemic where their vehicle
Speaker 1: became their office because of the connectivity we provide. So
Speaker 1: these are potentially exciting opportunities. Do they also bring some
Speaker 1: challenges and let me name one specifically cybersecurity. What are
Speaker 1: you doing as GM to protect this from cybersecurity? Well,
Speaker 1: with the Vehicle Intelligent platform that we rolled out starting
Speaker 1: in nineteen, a big part of the way we redesigned
Speaker 1: that was with a focus on cybersecurity. We have some
Speaker 1: of the leading cybersecurity experts in the company from an
Speaker 1: auto perspective, because we recognize how important it is. So
Speaker 1: it's it's built on layers of defense and we've had
Speaker 1: learnings from other industries, but that's now core to our
Speaker 1: vehicle with the vehicle intelligent platform. So in this world, again,
Speaker 1: go forward ten years, I understand you're going to have
Speaker 1: a lot more services, maybe even more service revenue than
Speaker 1: vehicle revenue. Uh what does that do in terms of
Speaker 1: the overall number of vehicles sold? Are you envisioning a
Speaker 1: world in which GM sells fewer vehicles but perhaps returns
Speaker 1: higher profits. Now I'm I'm looking for a world where
Speaker 1: we continue to grow share and that just continues to
Speaker 1: expand the growth opportunities with the software. And I think
Speaker 1: when I look at the Ultium platform that we're putting
Speaker 1: into market this fall, you know many other traditional O
Speaker 1: E M s are just thinking about or starting to
Speaker 1: work on dedicated electric vehicle platforms. We have one, so
Speaker 1: we can go all the way from a small crossover
Speaker 1: all the way to a SuperTruck like the Hummer EV
Speaker 1: That was Mary bar Chair and CEO of GM. Finally,
Speaker 1: one more thought, having it both ways. It's what all
Speaker 1: of us really want, right not to have to choose
Speaker 1: between two things when we really want them both, like
Speaker 1: getting everyone back to the office without risking more COVID
Speaker 1: infections or having the FED taper without causing a tantrum.
Speaker 1: But now the Wall Street Journal brings us news about
Speaker 1: thirty six year old mother of three from upstate New
Speaker 1: York who has given us all hope or maybe just
Speaker 1: put us all the shame as she does something any
Speaker 1: of us who have ever picked up a golf club
Speaker 1: would think was impossible. Play golf extraordinarily well, and play
Speaker 1: it really fast. Lauren Cup is the head coach of
Speaker 1: the men's and women's golf teams at Hamilton College, and
Speaker 1: she took up the sport of speed golf just after
Speaker 1: she had her first child. The idea of speed golf
Speaker 1: is to play as well as you can and as
Speaker 1: fast as you can, to give you some sense of
Speaker 1: just how well and just how fast. This Cup just
Speaker 1: set a new record by shooting one under par for
Speaker 1: eighteen holes in fifty minutes. Yes, that's five oh minutes
Speaker 1: for eighteen holes. That's what takes most of us three
Speaker 1: or even four hours, and that's on a good day.
Speaker 1: So how does she do it well? She carries only
Speaker 1: five clubs, a driver, a putter, a six iron, a
Speaker 1: nine iron and a wedge, and whenever she can, she
Speaker 1: runs right through water hazards like creeks and oh yes,
Speaker 1: she never ever takes more than twenty seconds to look
Speaker 1: for a ball. Something that you might want to suggest
Speaker 1: to that member of your foursome who hits the ball
Speaker 1: into the woods and then insists on trying to find it.
Speaker 1: But first and foremost, there is one key rule for
Speaker 1: speed golf. Above all, hit it straight, and at least
Speaker 1: in that one way, Lauren Cupp's approach to speed golf
Speaker 1: might serve us all in good stead. That does it
Speaker 1: for this episode of Wall Street Week. I'm David Weston.
Speaker 1: This is Bloomberg. See you next week.