Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg business Week inside from the reporters and
Speaker 2: editors who bring you America's most trusted business magazine, plus
Speaker 2: global business, finance and tech news. The Bloomberg Business Week
Speaker 2: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 3: There's another interesting data point when it comes to US
Speaker 3: economic activity. We love this with more and a look
Speaker 3: at the broader macro backdrop, we head to Washington, DC.
Speaker 3: That's where we find Bloomberg News Global Economy reporter and
Speaker 3: a current and a good to have you here. We
Speaker 3: do want to get to that interesting data point. Tim,
Speaker 3: and I've been talking about this a lot. First up though,
Speaker 3: the economic data today, the clues that we've got throughout
Speaker 3: this week, the retail sales data, which is what we're
Speaker 3: going to get into with you a little bit more,
Speaker 3: anything that we need to know about the bigger, broader
Speaker 3: kind of data set that we got this week.
Speaker 4: Well, I think on the housing data that you mentioned there,
Speaker 4: it just reinforces the idea that the housing market continues
Speaker 4: to be broken. It's kind of stuck in this state
Speaker 4: of high interest rates, surging strong demand for houses but
Speaker 4: high interest rates and a low stock turnover, so it's
Speaker 4: kind of stuck in a root there, Carol. But more broadly,
Speaker 4: I think the mix of data this week it sends
Speaker 4: mixed signals, but the broad takeaways that the economy is
Speaker 4: continuing to slow at a reasonable pace, not a crash
Speaker 4: landing or hard landing or anything like that. But I
Speaker 4: think every week we seem to get a new with
Speaker 4: data points suggesting things are coming off the ball a
Speaker 4: little bit the way policemakers want it. But the big
Speaker 4: question going to the second half of the year is
Speaker 4: how much slower will things get?
Speaker 5: Okay, well, speaking of things getting slower, it's the Business
Speaker 5: Week newsletter that came out just yesterday, and we can't
Speaker 5: stop talking about it, enda because we talk a lot
Speaker 5: about different data points in the economic data that I
Speaker 5: think it's fair to say kind of rules our lives
Speaker 5: here at Bloomberg in a good way. But there's also
Speaker 5: the anecdotal data that's really helpful that our reporters around
Speaker 5: the world go and gather talk a little bit about
Speaker 5: what convenience what one convenience store CEO is telling us
Speaker 5: about the state of the US economy.
Speaker 4: Yeah, to your point, This was a bit of a
Speaker 4: step away from the raw numbers I interviewed. I spoke
Speaker 4: with the CEO of one of America's biggest convenience store operators, ARCO.
Speaker 4: Core Ary Cutler is the CEO there, so I had
Speaker 4: to chat with him, you know, for context. He runs
Speaker 4: what he calls stores in real American These are small towns,
Speaker 4: main street, sometimes in border areas, so he's on the
Speaker 4: front line of the trends. And what he's seeing among
Speaker 4: his shoppers, his consumers, is that they're spending less. In particular,
Speaker 4: they're spending less on cigarettes and spending less on gasoline.
Speaker 4: Now that reflects he reckons, it reflects the high interest rates,
Speaker 4: the mix of inflation, and of course fluctuating gasoline prices.
Speaker 4: But it's you know, again, he's not saying this is
Speaker 4: a crash landing ground, but he's saying it's different to
Speaker 4: what it was last year. Consumers are coming to his
Speaker 4: stores are being a bit pickier, a bit schoosier. They
Speaker 4: want bargains, they want value. He's seeing promotions for his
Speaker 4: hot and its pizzas enticing customers to go to that
Speaker 4: direction because they're watching their sense and their dollars. So
Speaker 4: you know, it's a tail from the ground. And when
Speaker 4: you speak to people like that, it kind of adds
Speaker 4: the idea that what the official data is telling us
Speaker 4: that things are cooling from that big boom last year.
Speaker 4: And this is what I was trying to say earlier
Speaker 4: on that things are cooling, okay, But the big question
Speaker 4: is just where will it go from here? Will this
Speaker 4: glide path continue the second half a year, or will
Speaker 4: it be something bumpier. But people who seem to be
Speaker 4: people seem to be getting more careful with their money,
Speaker 4: that's for sure.
Speaker 3: Yeah, And it feels like it mirrors so many of
Speaker 3: the conversations that we have around the newsroom or with
Speaker 3: colleagues or with friends and family about just you know,
Speaker 3: making choices about where they're purchasing or just still kind
Speaker 3: of cringing at some of the costs of different items.
Speaker 3: Having said that, it does feel like this momentum around
Speaker 3: sluggish slow down. You know, it's not like everything's falling
Speaker 3: off a cliff. And I don't hear a lot of
Speaker 3: people talking recession here in the US, No.
Speaker 4: And that's because the job's market is so strong. And
Speaker 4: as long as long as the job's market is strong,
Speaker 4: people have money, they will pay back their mortgage and
Speaker 4: it will go and spend. Of course, it might be
Speaker 4: a bit more careful how to spend. But it's when
Speaker 4: you have unemployment and free fall when things change dramatically.
Speaker 4: But again, the labor market we see some cooling. Even
Speaker 4: the CEO I spoke to, he made the point that,
Speaker 4: you know, a year ago he was really struggling with
Speaker 4: either filling positions and turnover. He still is struggling to
Speaker 4: fill positions, but he has noticed things are better than
Speaker 4: a year ago. Staff aren't walking out the door the
Speaker 4: way they were. They're hanging around, and he thinks that's
Speaker 4: a sign. That's a sign they have fewer options.
Speaker 5: Yeah, that's a really interesting data point as well. I
Speaker 5: want to get back to this one comment that I
Speaker 5: had to read a few times and in your piece,
Speaker 5: it's that people are moving to more valuable items and
Speaker 5: just not spending the money they did in the past.
Speaker 5: What did he mean by more valuable items?
Speaker 4: What he's talking with there is looking for value. He reckons.
Speaker 4: He's never seen his money promotions, he said, by the way,
Speaker 4: in his time, he's he's been in his business twenty
Speaker 4: years and you know, obviously he's running his own promotions,
Speaker 4: but the people that he buys products and goods off,
Speaker 4: they all want to promotion promotion as well, because everyone's
Speaker 4: looking for a bargain. Remember the backstory, Household debt is
Speaker 4: at a record level, delinquencies and credit cards are picking up,
Speaker 4: so people are feeling some strain out there, and that's
Speaker 4: why he thinks it's all fulling into When you walk
Speaker 4: into a store, you're just not splashing the way you
Speaker 4: wore last year. You're being a bit more careful about it.
Speaker 5: It's interesting to read your piece and also think about
Speaker 5: what we've seen from companies like Celsius Holdings in Monster Beverage.
Speaker 5: In recent weeks, there have been some channel checks by
Speaker 5: the folks over at Nielsen that said there's been some
Speaker 5: softness in that category. And if I think of something
Speaker 5: that's sold in convenience stores that is kind of pricey,
Speaker 5: it's energy drinks that you know have been so hot
Speaker 5: in recent years, and if people are pulling back on
Speaker 5: that end, that could be a signal.
Speaker 4: Yeah, for sure. The products. By the way, one of
Speaker 4: the other products that are identified was cigarettes, and that's
Speaker 4: one of his biggest sources of revenue and sales in
Speaker 4: the convenience stores, but people are buying cheaper tobacco products
Speaker 4: rather than buying cigarettes. It's a clear trend that he's noticed,
Speaker 4: and he says, when you see that, that's when he
Speaker 4: knows things have changed, and that's why he's making the
Speaker 4: commons that he is.
Speaker 3: I have to say, I'm not a smoker, but I
Speaker 3: didn't realize a carton is between like thirty to sixty
Speaker 3: bucks in the United States.
Speaker 5: But it ends like where you live because the taxes
Speaker 5: are such a big part of it. Like New York City,
Speaker 5: they're extremely expensive.
Speaker 6: They're crazy crazy.
Speaker 3: I feel like this also though, and it kind of
Speaker 3: fits with what we've been talking about McDonald's, like bringing
Speaker 3: back the value meal. We're seeing kind of a little
Speaker 3: bit of a kind of price war, if you will,
Speaker 3: among some of the fast food restaurants real quickly though.
Speaker 6: Twenty twenty five seconds.
Speaker 3: The US economy versus the rest of the world still
Speaker 3: doing fairly well.
Speaker 4: Still doing very well. Wages going up, people have jobs.
Speaker 4: The recovery has been so much stronger here than the
Speaker 4: rest of the world. No hard lending. But as I say,
Speaker 4: let's see how it all plays out in the second half.
Speaker 4: Of the year.
Speaker 3: All Right, I love metrics like this great love it,
Speaker 3: love it, love it, and thank you so much. Have
Speaker 3: a great weekend and a current. He's our global economy
Speaker 3: reporter at Bloomberg News, joining us there from our Washington,
Speaker 3: DC bureau. I do feel like it's it's like when
Speaker 3: we get the Beige Book, right, anecdotes and so and
Speaker 3: so forth. I think these are things that tell you
Speaker 3: so much about what's going on in the economy.
Speaker 5: Yeah, really really cool stuff. Also, it's the company has
Speaker 5: brands like one Stop, Admiral, Breadbox, corner Mark, Dixie Mart,
Speaker 5: easy Mark, Flash Market, Handymark, Jets, Jiffy Stopping more. Yeah,
Speaker 5: so they got their.
Speaker 3: Hand on everything and they see a lot, right, and
Speaker 3: this this dude has been doing this for like twenty years.
Speaker 3: If he sees a lot, you might not call himself
Speaker 3: with the do I call him a dude?
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 6: It is tripled by switching Friday. We love to say
Speaker 6: it a lot.
Speaker 5: It feels a little spooky, isn't it.
Speaker 3: I don't know, is it really you know what it's
Speaker 3: all about. Let me have derivatives, contracts tied to equities
Speaker 3: and deex.
Speaker 6: Options and futures, all mature. Easy for you to say, yeah, okay.
Speaker 3: So it's a reminder to you that we are almost
Speaker 3: halfway through the treating year, which is kind of a
Speaker 3: phenomenal a year when we constantly debate over when the
Speaker 3: FED may cut rates on as the FED reminds us constantly,
Speaker 3: we are data dependent.
Speaker 6: We talk about it.
Speaker 3: Nancy Tangler says, don't focus on that here with what
Speaker 3: we believe, or what she believes we should be keeping
Speaker 3: our eye on. Is the chief investment officer at Laffer
Speaker 3: Tangler Investments, Nancy Tangler back in our studio.
Speaker 6: It is nice to have you back with us. How
Speaker 6: are you.
Speaker 1: I'm well, thank you, thanks for having me.
Speaker 7: Well, thanks for being here.
Speaker 3: Because we do talk about we kind of as a joke,
Speaker 3: we'll be like, but we're data dependent.
Speaker 6: You said, maybe don't be so focused on that.
Speaker 1: Yeah. I think for me, Carol was when Christine Legard
Speaker 1: at the ECB came out and said we're raising our
Speaker 1: inflation estimate. We didn't hit our wage criteria, which was
Speaker 1: wages rolling over. They actually went up in the EU,
Speaker 1: and we're cutting interest rates. And then you follow that
Speaker 1: on the heels with Chairman Powell, and maybe I was
Speaker 1: over listening, but you know, he said a few things.
Speaker 1: I mean, previous meeting. He was like, well, we'll react
Speaker 1: to weak labor, and I do think the labor market
Speaker 1: is softening. And then on top of that, he said, well,
Speaker 1: you know, if you're at two point six or two
Speaker 1: point seven percent, that's a pretty good place to be.
Speaker 1: That's a direct quote. And so I'm wondering if the
Speaker 1: FED is kind of preparing at least themselves, if not
Speaker 1: the market, and they raise their inflation estimates for the year,
Speaker 1: and we're going to get a cut, and we're going
Speaker 1: to get a cut.
Speaker 6: We were all talking about that.
Speaker 3: Mike mckaie was talking about it, like what changes FED
Speaker 3: share j Powell at the end of the year. You know,
Speaker 3: if you think it's going to be okay, time to cut.
Speaker 3: And yet we're pretty much in the same economic scenario right, Yes, absolutely, And.
Speaker 1: I think one of the reasons that they are eager
Speaker 1: to cut. Do you have the treasury funding this massive
Speaker 1: amount of debt. Now it's over fifty percent at the
Speaker 1: short end of the curve, and so the weighted average
Speaker 1: cost of the debt has gone from one point eight
Speaker 1: percent last January, not this one the previous year, to
Speaker 1: over three like three point three percent, And the net
Speaker 1: payments this year are going to be eight hundred and
Speaker 1: seventy billion according to CBO, which is always wrong, So
Speaker 1: count that as one trillion in just in trist payments.
Speaker 1: Something's got to change.
Speaker 5: You don't actually hear politicians talking about that right now.
Speaker 5: Interestingly enough, it's like a sort of a lonely chorus
Speaker 5: of folks who are talking about the risk that exists there.
Speaker 5: How big of a risk do you think that is?
Speaker 1: I think it's significant because if you're you know, the
Speaker 1: CBO quotes debt as net debt, so they say we're
Speaker 1: at eighty percent of GDP, but they don't count the
Speaker 1: debt on the Fed's balance sheet, so we're really at
Speaker 1: one hundred and thirty And that's third world country issue.
Speaker 1: In the growing economy with a really tight labor market,
Speaker 1: we should be reducing the deficit, not exploding it. And
Speaker 1: so stocks don't care yet so we're still pretty bullet bullish.
Speaker 5: Yeah, when will they care? I don't know what will
Speaker 5: make them pay?
Speaker 6: What's the hissy fit that happens in stocks as a result.
Speaker 1: Well, you keep hearing the will it be a Liz
Speaker 1: Trust moment. I do think that's a risk that the
Speaker 1: markets do. The bond vigilantes just come in and say enough,
Speaker 1: and then there's all even more volatility. I mean, I've
Speaker 1: been doing this for forty years. I've never seen see
Speaker 1: so much volatility in the bond market.
Speaker 6: I will say, it's really interesting.
Speaker 3: I do feel like investment professionals like yourself are talking.
Speaker 6: A lot about it.
Speaker 3: And at some point, you know, the government has just
Speaker 3: so much money to play with, and so where do
Speaker 3: they cut back? And then how does that impact the economy.
Speaker 3: I feel like that's when maybe citizens start to sit
Speaker 3: up and take notice.
Speaker 1: Perhaps I think they're starting to, because what I think
Speaker 1: the average person knows is that all of this fiscal
Speaker 1: spending has driven inflation. And you know, there's only as
Speaker 1: critical as I've been of the Fed, there's only so
Speaker 1: much they can do. I mean, they've got one hand
Speaker 1: tied behind their back because the spending just continues and
Speaker 1: you know, we still have a lot of appropriated but
Speaker 1: unspent funds, you know, in the trillions of dollars that
Speaker 1: the administration is going to try to get as much
Speaker 1: of that spent this year as they can. I don't
Speaker 1: know how much that will be.
Speaker 5: You've been critical of the FED, but one thing that
Speaker 5: we've heard from fedher J. Powell several times in recent
Speaker 5: months has been talking about the Fed's independence and his
Speaker 5: own independence. And there have been some questions about what
Speaker 5: happens if President Trump wins in November to the independence
Speaker 5: of the FED. How are you thinking about that? So?
Speaker 1: I know, I think he doth protests too much. I
Speaker 1: think he waited a long time to raise rates, and
Speaker 1: I was at a dinner with.
Speaker 5: I think JAYE. Powell protests too much or try.
Speaker 1: About his independence, because I don't think he acted very independent.
Speaker 1: I think it was a pretty political move to hold
Speaker 1: off on raising rates as long as he did, and
Speaker 1: that really allowed inflation to get out of control. Was
Speaker 1: at dinner with a prominent senator and he basically said
Speaker 1: we all know that he was waiting, and I've never
Speaker 1: heard anybody say that out loud. So I think they
Speaker 1: should be independent. I don't think there's anything Trump can
Speaker 1: do if he is elected except go on X and
Speaker 1: beerate him.
Speaker 5: Right, Well, I do want to point out that maybe
Speaker 5: perhaps if J. Powell were sitting here right now, he
Speaker 5: would push back and say, oh, well, you know, at
Speaker 5: that point, we thought that inflation was indeed transitory, it
Speaker 5: was supply train given. We didn't think it would becomes
Speaker 5: entrenched as it did in American in the American economy
Speaker 5: at that point.
Speaker 1: But yes, he would say that, and I would say,
Speaker 1: you were still way too late. You know, the rest
Speaker 1: of the world saw it, and they waited way too long.
Speaker 1: And you know, we didn't see a hike until March,
Speaker 1: when inflation had been really bubbling up pretty dramatically since
Speaker 1: previous year, and we were writing about the fiscal spending.
Speaker 1: Back then, it was very lonely. But back in twenty
Speaker 1: twenty one.
Speaker 6: Yeah.
Speaker 3: The other thing, like, I think it's also fair, right,
Speaker 3: there's been so much liquidity thrown into global markets right
Speaker 3: because of the pandemic, and we're still kind of figuring
Speaker 3: out how it all plays out right and keeping up
Speaker 3: with it, right, And that's what we're talking about.
Speaker 6: There's still a lot more liquidity out there yeah.
Speaker 1: And it's interesting because if you just think about all
Speaker 1: the old rules, like what did everyone think when rates
Speaker 1: went up? They thought it would hurt technology stocks. They've
Speaker 1: been the biggest beneficiary because they had fortress balance sheets.
Speaker 1: They'd already refinance their debt and they've their interest income. No,
Speaker 1: it's exploded, and so they're making money on all that
Speaker 1: money that's right on their balance a lot of money.
Speaker 8: Care.
Speaker 7: Yeah, exactly, all right.
Speaker 3: Having said that, the thing you say we should though,
Speaker 3: is listen to companies have to say, we get I
Speaker 3: get excited about earnings because I do feel like I
Speaker 3: feel like it's a gut check.
Speaker 5: We get, we love it.
Speaker 7: We peel back a little bit of the layer, right.
Speaker 3: We hear from companies about how things really are and
Speaker 3: whether the narrative, the valuations, whether or not they make sense.
Speaker 6: So that's important.
Speaker 3: Yes, we've got a great chart, I think if we
Speaker 3: can bring it up, but it just talks about, you know,
Speaker 3: what we've seen in terms of earnings expectations blended forward EPs,
Speaker 3: which is the blue line and the orange line is
Speaker 3: the S and P five hundred. You can see how
Speaker 3: they've been tracking really well together. But the outlook for
Speaker 3: earnings continues to rise. That's important that what we see
Speaker 3: and what we hear from companies.
Speaker 1: Yeah, it's it's it's everything. I mean, that is ultimately
Speaker 1: what stocks trade off of. That's why I you know,
Speaker 1: I think you ignore at this point what the FED
Speaker 1: is saying, what data they're depending on this next meeting,
Speaker 1: because the trend line in corporate earnings is positive and
Speaker 1: margins are expanding. Now not every company. We saw it
Speaker 1: last quarter. If you missed on any metric, you got clobbered.
Speaker 1: But if you just look generally speaking, like our twelve
Speaker 1: Best Ideas portfolio, we had a number of what Bespoke
Speaker 1: calls triple plays, beat, beat, and raise, and that that's sustainable.
Speaker 1: It's it's frequently in you know, the area that we've
Speaker 1: been talking about at nauseum, which is gendered a cloud computing,
Speaker 1: but but also in our investing theme of old economy
Speaker 1: companies that are embracing those technologies. Think Walmart, I think Chipotle,
Speaker 1: which is one of our twelve Best Ideas. Those are
Speaker 1: companies that are benefited from utilizing digitization and all of
Speaker 1: these technologies.
Speaker 5: Auto Kado anyone ado. It's a machine that takes care
Speaker 5: of the avocados for guacamali a Chipotle.
Speaker 7: Because they're all fresh and.
Speaker 6: Such time and takes so much time to make guacamal avocado.
Speaker 5: Yeah, Brian Nicchol tells us about it all the time, and.
Speaker 1: The pretty polt lanes and yeah, they've got their own language.
Speaker 6: They absolutely do. Nancy, thanks so much, Have a good trip, Hoeman,
Speaker 6: a good weekend.
Speaker 3: Thanks Nancy Tangler, chief investment Officer at Laffar Tanglar Investments.
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Speaker 3: A mob.
Speaker 4: What a louis saying?
Speaker 9: How much love?
Speaker 3: Here's some somebody's had a lot of babies?
Speaker 4: Yeah we do.
Speaker 5: Here's the numbers you need to know about Elon musk six.
Speaker 5: It's the number of companies that Elon runs, two hundred
Speaker 5: and six. Then I remember of billions of dollars Elon
Speaker 5: is worth, according to the latest calculation by the Bloomberg
Speaker 5: Billionaires Index and twelve. It's the number of kids Elon has,
Speaker 5: at least that we know of.
Speaker 3: No question, Elon is doing what he can to contribute
Speaker 3: to the world's population, which makes sense if you've paid
Speaker 3: attention to what he's said in recent years. In Musk's mind,
Speaker 3: global fertility rates are not just a crisis but the crisis.
Speaker 3: And someone who has paid a lot of attention to
Speaker 3: what Elon says about this is our own Dana Hall.
Speaker 5: Yeah, she, along with Sophie Alexander, right about how Elon
Speaker 5: wants you to have more babies. That's in the forthcoming
Speaker 5: issue of Bloomberg BusinessWeek. Read the story now though on
Speaker 5: the Bloomberg terminal at Bloomberg dot com slash BusinessWeek. Dana
Speaker 5: Hall is Bloomberg News senior technology reporter. She joins us
Speaker 5: from our San Francisco bureau. Danny, you and Sophy make
Speaker 5: the point in your piece that despite Elon's alarmism, the
Speaker 5: world's population is not declining yet. Musk is correct that
Speaker 5: the overall rate of growth is slowing. Why is Elon
Speaker 5: so concerned about us not having enough babies?
Speaker 8: Well, to be clear, Elon did not comment for this story, so,
Speaker 8: but I think that I mean He's been sort of
Speaker 8: ringing the alarm bell about this for quite some time.
Speaker 8: If you look at his tweets, at all of his
Speaker 8: public appearances at the Milkene conference last month, you know,
Speaker 8: he really sees this as a big crisis. And I
Speaker 8: think it has a lot to do with the changing
Speaker 8: demography of the United States and frankly, his like interest
Speaker 8: in colonizing Mars, and and you know, he's looking at
Speaker 8: trends and his own goals, and you know, he really
Speaker 8: is encouraging people to have at least three children. But
Speaker 8: I think that the sort of deeper thing here is
Speaker 8: that he's not just tweeting about this on x the
Speaker 8: platform that he owns. He's really putting money behind it
Speaker 8: and he so so there's really like sort of an
Speaker 8: influence campaign going on here.
Speaker 5: Well, if I would say, as a recent father, if
Speaker 5: he wants people to have more kids, he should talk
Speaker 5: to the folks in Washington about child care costs and
Speaker 5: the difficulty in raising kids.
Speaker 6: Says the father of two young kids.
Speaker 5: I'm serious, though, I mean, if if he wants people
Speaker 5: to have at least three, there's a reason why people
Speaker 5: don't have as many kids as they used to.
Speaker 6: It's expensive.
Speaker 5: It's very expensive. I know, Dan, and that's not what
Speaker 5: you know we're here to talk about.
Speaker 8: But Peel, I mean totally, I totally agree. I have
Speaker 8: one child and I live in the Bay Area, and
Speaker 8: it's incredibly expensive. And you know, there are a lot
Speaker 8: of reasons why the fertility rate has fallen. Women are
Speaker 8: having children later in life. It is incredibly expensive. We
Speaker 8: don't have the nuclear families we used to. People are
Speaker 8: thinking about things like just the cost of childcare and
Speaker 8: the cost of college, and the cost of just living
Speaker 8: and the cost of housing. And there's a lot of
Speaker 8: reasons why in a lot of industrialized countries, not just
Speaker 8: the United States, but in Scandinavia and Japan and South
Speaker 8: Korea and elsewhere, that the fertility rate has fallen. But
Speaker 8: you know, there's a lot of policy levers that you
Speaker 8: can push if you want to encourage families. And you know, instead,
Speaker 8: Elon has quietly donated ten million dollars to the University
Speaker 8: of Texas at Austin, his largest donation to higher education
Speaker 8: to date, and he's also funding a documentary film that
Speaker 8: will feature like the professor that he's funding. And so
Speaker 8: it's just super curious to me how on the one hand,
Speaker 8: you know, Elon is very public about his intentions, and
Speaker 8: yet seeing him get involved in academia this way is
Speaker 8: sort of a new realm for him.
Speaker 3: That's what I wanted to ask you, Dana, I was
Speaker 3: listening to you. You know, is Elon mostly talking his
Speaker 3: book here, you know, about wanting to you know, develop
Speaker 3: Mars and all that good stuff. What do the academics
Speaker 3: say when it comes to what's going on with fertility
Speaker 3: rates and perhaps populations more broadly, what does academia who
Speaker 3: study this actually say about what the problem is or
Speaker 3: lack thereof.
Speaker 8: Yeah, so the field of demography is a super fascinating one,
Speaker 8: and my colleague Sophia Alexander really did a heroic job
Speaker 8: like talking to all the experts here, and they are
Speaker 8: very worried that Musk and his megaphone and his money
Speaker 8: are kind of now influencing the debate, if you will,
Speaker 8: within the field about just how serious this crisis is.
Speaker 8: I mean, you know, there are simultaneously we're seeing a
Speaker 8: lot of talk about no fault divorce and abortion rights,
Speaker 8: and we're seeing like women's reproductive freedom being scaled back
Speaker 8: in state after state. And if you so there's just
Speaker 8: a lot of history here that is that is very
Speaker 8: concerning for people that have been in the field for
Speaker 8: a long time.
Speaker 5: I think one important part of the conversation, at least
Speaker 5: here in the US that Carol and I have talked
Speaker 5: about Dana is even though Americans are not having as
Speaker 5: many kids as they used to, a lot of the
Speaker 5: jobs that were are that need to be filled, are
Speaker 5: being filled by immigrants right now. And that's really important
Speaker 5: when you talk about the economic context here in terms
Speaker 5: of population growth and aging population and who's actually doing jobs?
Speaker 8: Oh absolutely, I mean, who is growing the food in
Speaker 8: the United States, who is working in our meat packing facilities,
Speaker 8: who is taking care of your elderly parent. I mean,
Speaker 8: so when you talk about declining birth rates and fertility rates,
Speaker 8: you have to if you look at the world population
Speaker 8: as a whole, to be clear, like we are still
Speaker 8: we are still seeing population growth. You know, there are
Speaker 8: different projections, and projections are often wrong. I mean, you know,
Speaker 8: we know that people have fewer children during the recession.
Speaker 8: So what's actually happening now is that there were fewer
Speaker 8: babies born in like two thousand and seven, two thousand
Speaker 8: and eight, two thousand and nine when we were in
Speaker 8: the depths of the last recession in the United States.
Speaker 8: Now all those kids are about to graduate from high
Speaker 8: school and you're seeing like a drop off in college enrollment.
Speaker 8: So I mean, there are definitely real world impacts to
Speaker 8: population changes. But when you include immigration and you include
Speaker 8: the world as a whole and not just the West,
Speaker 8: you know we are still on track to be growing people.
Speaker 8: That is a fact. And so it's just very interesting
Speaker 8: to sort of look at how, you know, this kind
Speaker 8: of fringe movement called natalism has increasingly entered the mainstream.
Speaker 3: Dana does the world at large? Does the Bloomberg audience
Speaker 3: kind of need to keep the head of PWI Dean Spears.
Speaker 5: The Population Well Being Initiative exactly?
Speaker 6: Do they need to keep him on their radar?
Speaker 8: Yes, he's coming out with a book in the Fall
Speaker 8: by Simon and Schuster, six figure advance. I mean, it's
Speaker 8: called After the Spike. It's kind of you know, it'll
Speaker 8: be like a mainstream book kind of espousing. I think
Speaker 8: a lot of what is in aligne with with musks
Speaker 8: thinking that we need to really be paying attention to
Speaker 8: fertility trends. And I think it's just important you know too.
Speaker 8: You know, billionaires have a lot of ways to spend
Speaker 8: their money. Musk has a foundation, you know, his foundation
Speaker 8: is now donating to academia. I think that that's really
Speaker 8: significant and something that investors and customers and people in
Speaker 8: general should be watching.
Speaker 3: And it also said that one of his right is
Speaker 3: researchers are going to be joining I think President Biden's
Speaker 3: counsel of Economic Advisors.
Speaker 6: Right, So yeah, it's kind of spreading out.
Speaker 7: Ye, not saying it's bad.
Speaker 6: I'm not making a judgment, but I'm just saying right, Yeah.
Speaker 5: But Danna, this is also a story about Elon's businesses,
Speaker 5: because he has had kids with people at his ut
Speaker 5: at least one of his companies in the past. So
Speaker 5: we should note that even though we're talking about what
Speaker 5: could be his personal views that he's increasingly talking about
Speaker 5: on on X and on on Spotify. I was gonna
Speaker 5: say Spotify, but on podcasts doesn't own that yet. He
Speaker 5: doesn't on that yet. On on podcasts, he's this, this
Speaker 5: is coming out and is in the work that he
Speaker 5: does too.
Speaker 8: Yeah, I mean, and there are a lot of you know,
Speaker 8: I mean, to be clear, these are consenting adults, but
Speaker 8: like one of them is currently like his employee. I mean,
Speaker 8: she's an executive at Neuralink, and so, uh, you know,
Speaker 8: obviously a couple of years ago, Business Insider broke the
Speaker 8: news that Musk and chevon chevon Zillis, the executive at Neuralink,
Speaker 8: had twins together. In our story today, like they also
Speaker 8: had they had they had another another child that was
Speaker 8: previously unreported. So this is definitely like a pattern of his.
Speaker 8: You know, it's it's it's it's kind of amazing. I mean,
Speaker 8: it's just sort of unheard of, uh that you would
Speaker 8: have that going on, I think in most quarters. But
Speaker 8: it's it's a pattern that's been established and it seems
Speaker 8: to be continuing.
Speaker 3: Well, it's an incredible story, and I think a really
Speaker 3: smart one and just kind of getting into it and
Speaker 3: explaining it and doing the research and giving us the
Speaker 3: facts when it comes to fertility and what's going on.
Speaker 5: Gloss also its Carol reminded me some incredible animations on
Speaker 5: the terminal.
Speaker 3: That actually made me kind of loud. Check it out, everyone, Dana,
Speaker 3: have a great weekend. Bloomberg News Senior Tech reporter, Dana.
Speaker 2: Hall, you're listening to the Bloomberg Business Week podcast. Catch
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Speaker 5: A dealership in Phoenix's handwriting paper contracts engaging credit worthiness
Speaker 5: using guesswork.
Speaker 6: Carol, Wait, what is this the nineteen fifteen.
Speaker 5: Yeah geep owner in Alabama keeps calling about when a
Speaker 5: replacement part will be in stock. A family in New
Speaker 5: Jersey is waiting for word on when they can take
Speaker 5: delivery of their new Audi.
Speaker 6: Yeah.
Speaker 3: Such as life for auto retailers and their customers across
Speaker 3: the United States and Canada. This after CDK Global we
Speaker 3: talked about this this week. It's a software provider to
Speaker 3: some fifteen thousand dealers was waylaid by debilitating cyber attacks
Speaker 3: the barrage beginning June nineteenth, costing US dealers a burst
Speaker 3: business on a federal holiday. CDK has warned that a
Speaker 3: second incident yesterday likely to keep its systems down for
Speaker 3: several more days. I mean, this is pretty serious. This
Speaker 3: is kind of like putting it, like just stopping it.
Speaker 4: Yeah.
Speaker 5: Keith Aughton over in Detroit on our program yesterday, called
Speaker 5: this program the spine of the automotive industry, how they
Speaker 5: do it, so to understand how something like this can
Speaker 5: happen in this day and age. We're joined by Wendy Whitmore,
Speaker 5: Senior VPN head of Unit forty two at the publicly
Speaker 5: traded cybersecurity from Palo Alto Networks. Wendy, before we get
Speaker 5: to the most recent and prominent hack that we were
Speaker 5: just talking about, explain what exactly goes on it. You
Speaker 5: need forty two at Palo Alto Networks. It's described as
Speaker 5: your team as a special forces unit at the company.
Speaker 5: What are you guys up to there?
Speaker 7: That's accurate.
Speaker 9: So we're really the eyes and ears and the feed
Speaker 9: on the ground bringing to life the work that Palo
Speaker 9: Alta Networks does as a whole right, which is providing
Speaker 9: solutions for our clients in their most troubling times.
Speaker 7: And so our.
Speaker 9: Team do you respond to attacks?
Speaker 5: Ironically, some problems, not a cyber attack. Cyber attack, I
Speaker 5: think with Wendy's Wendy's connection, they're going to get it fixed.
Speaker 5: Over there, we're talking to Wendy Whitmore, Senior VPN head
Speaker 5: of Unit forty two over at Palo Outdome Networks. I
Speaker 5: got to tell you. But a good reminder that are
Speaker 5: the infrastructure that so much of this economy relies on
Speaker 5: is so fragile.
Speaker 3: Yeah, it doesn't take much. We've seen it, you know,
Speaker 3: over the years, hospital systems. You know, we talked about
Speaker 3: ransomware for a long time and that's certainly an issue.
Speaker 3: But the cyber attacks and what it can do for
Speaker 3: an industry. I mean, this is a one point two
Speaker 3: trillion dollar industry. That was the sales last year, and
Speaker 3: you know this is when it's at the end of
Speaker 3: a quarter. There's a sales push. There's a lot of
Speaker 3: stuff going out. We've talked about how we're almost halfway
Speaker 3: through in terms of the trading year. But for companies
Speaker 3: often they're looking at the end of quarter and that
Speaker 3: is certainly something right, you know it from an auto
Speaker 3: dealer when they're looking to do dealer. So this is
Speaker 3: an important time and you wonder what it means, what
Speaker 3: impact it has.
Speaker 5: Holiday is big for going and chopping for a new car.
Speaker 6: Absolutely, yeah, I've done it.
Speaker 5: Yeah, people are off, the stores are open, get the
Speaker 5: family together, go and look at that new minivan, right,
Speaker 5: make sure everybody fits in there. Go to sign the
Speaker 5: paper work. Oh sorry, the paperwork's not working because of
Speaker 5: this hack, Like it just slows things down.
Speaker 3: And then do you like kind of maybe think, well,
Speaker 3: maybe I don't want to do this right now, or
Speaker 3: maybe I'm going to wait for a better offer. Representatives
Speaker 3: for Ford, VW, Mercedes, Benz, and BMW all confirm some
Speaker 3: of their dealers U s DK and said they're working
Speaker 3: with those affected by the disruption. Other car companies didn't
Speaker 3: immediately respond to requests for comments, So we've been reaching
Speaker 3: out to get an ideal of kind of the size
Speaker 3: and scope of this impact.
Speaker 5: Okay, let's go back to Wendy Whitmore over at Palelto Network,
Speaker 5: senior VP and head of Unit forty two. Wendy, you
Speaker 5: were explaining what Unit forty two does. I do want
Speaker 5: to get an idea from you about how companies and
Speaker 5: industries really can stay safe when critical infrastructs sure such
Speaker 5: as this can be taken down by a hack.
Speaker 7: Yeah.
Speaker 9: So, I think the reality is attacks like these and
Speaker 9: the recent attacks we've seen throughout the globe really underscore
Speaker 9: how interconnected all the systems are, and so in order
Speaker 9: to be more prepared for these type of attacks, the
Speaker 9: work we do proactively to help organizations test their defenses
Speaker 9: and advance to be able to have holistic and comprehensive detections.
Speaker 9: At the endpoint, the cloud, the network is critically important,
Speaker 9: and more so now than ever. We're also leading into
Speaker 9: a year where we've got Olympics, we've got major US elections,
Speaker 9: and we're anticipating that attackers are really observing the playbooks
Speaker 9: and seeing what works and are going to continue to
Speaker 9: try to disrupt more and more businesses.
Speaker 3: Wendy, we always talk about, you know, when it comes
Speaker 3: to cybersecurity, it's like a little bit of a whack
Speaker 3: them mole, and so I'm just curious how you guys
Speaker 3: are thinking about it.
Speaker 6: How do you stay ahead? Are we ever really going
Speaker 6: to be ahead?
Speaker 3: Because as soon as companies like yourselves you figure stuff out,
Speaker 3: you know, those who are doing cybersecurity attacks, they figure
Speaker 3: out a different method.
Speaker 9: Well, you know, it's like the old you know question
Speaker 9: of why do robbers attack banks? Right, And it's because
Speaker 9: that's where the money is, and so unfortunately or fortunately today,
Speaker 9: the data is where the money is. So that said,
Speaker 9: I take a pretty optimistic view. I've seen our defenses
Speaker 9: continue to increase, and I think with AI even though
Speaker 9: there are challenges that the attackers are leveraging, the reality
Speaker 9: is that businesses have a tremendous amount of opportunity to
Speaker 9: leverage AI as a defense mechanism, to accelerate processes that
Speaker 9: previously were manual, and to really be able to identify
Speaker 9: these attacks in real time, which is the key to
Speaker 9: limiting their impact.
Speaker 5: Hey, Wendy, you know, we've talked a lot in recent
Speaker 5: weeks about the shift in spending in the C suite
Speaker 5: this year as we've seen some of the SaaS companies
Speaker 5: fall out of fashion and their shares fall this year
Speaker 5: as a result of companies saying, okay, well, you know,
Speaker 5: we've been spending for years on the cloud, for years
Speaker 5: in cybersecurity, and for years on sas. We want to
Speaker 5: start getting into AI, we want to start getting into
Speaker 5: the hardware side of things, and they're shifting that spending
Speaker 5: to the hardware, to servers, to chips, and look, we've
Speaker 5: seen that play out with shares rise of companies that
Speaker 5: are in that space. How concerned are you that companies
Speaker 5: are taking their eye off the ball with the shift
Speaker 5: and spending.
Speaker 7: You know, I think it's a great question, but not concerned.
Speaker 9: And the reason I say that is because the reality is,
Speaker 9: especially when we look at current attacks right, what we're
Speaker 9: seeing is by and large, cyber criminal actors who have
Speaker 9: invested pretty closely and significantly in understanding how business to
Speaker 9: business transactions and relationships work and realizing that if they
Speaker 9: disrupt those components, in some cases, it's actually much more
Speaker 9: disruptive to organizations than just destroying consumer confidence in them.
Speaker 9: So as a result, the businesses across the globe are
Speaker 9: also understanding, they're observing that, and they're certainly investing in
Speaker 9: mechanisms to make sure that we continue to secure those
Speaker 9: trans actions so they can continue to go on about
Speaker 9: their operations.
Speaker 6: Wendy, where do you guys see is the most vulnerable.
Speaker 7: In terms of an industry or a technology.
Speaker 3: I am kind of interested in industries, like I'm thinking
Speaker 3: about the Bloomberg audience, right, Obviously, you know, an investing
Speaker 3: audience in a big way. But obviously investments go to
Speaker 3: all different types of industries, So.
Speaker 6: I'm curious where you see.
Speaker 3: I think we all talk about kind of as a joke,
Speaker 3: but not really as a joke, that the financial community,
Speaker 3: you know, we are so nervous that you know, something
Speaker 3: kind of really big happens in that regard. But I
Speaker 3: do wonder where you think what industries are the most
Speaker 3: vulnerable here.
Speaker 6: We actually saw something with lending Tree. We talked about
Speaker 6: it last night.
Speaker 9: Yeah, that's right, right, So we continue to see from
Speaker 9: a targeting perspective, financial services, manufacturing, and then government actually
Speaker 9: on the rise. And so manufacturing and financial services have
Speaker 9: long been in the crosshairs of these type of attackers.
Speaker 9: But what you're seeing from a recent healthcare, hospitality or
Speaker 9: manufacturing component, is it any industry that relies on these
Speaker 9: business to business transactions where they have a vendor and
Speaker 9: a supplier network related to being able to do their business.
Speaker 9: If attackers can disrupt that chain, then what they're thinking
Speaker 9: is that these organizations are more likely than to pay
Speaker 9: a ransom. And so I think that reality is that
Speaker 9: means every industry is pretty vulnerable right now.
Speaker 7: The more that we can prepare in.
Speaker 9: Advance for these type of attack scenarios, obviously close as
Speaker 9: many of these open windows as possible in advance of
Speaker 9: an attack is really critical key and there are organizations
Speaker 9: that are doing that on a daily basis that you're
Speaker 9: not hearing about in the news.
Speaker 5: Interesting. Okay, So I'd always like to end conversations when
Speaker 5: I talk to folks like you.
Speaker 6: About an upbeat note.
Speaker 5: Yeah, well truly, like you know, you see the dangers
Speaker 5: that are lurking out there each and every day. On
Speaker 5: a company level, what are you doing to protect yourself online?
Speaker 5: And like, what's one thing you can leave us with?
Speaker 9: Yes, I think as an individual consumer, everyone has heard
Speaker 9: do not have the same password in every account.
Speaker 7: That has never been more true.
Speaker 9: Use multi factor authentication and pass keys as much as
Speaker 9: possible to protect your critical information. Make it make yourself
Speaker 9: a much harder victim to compromise than people around you,
Speaker 9: and that is certainly a good piece of advice for
Speaker 9: your individual protection.
Speaker 3: Amen, a multi factor I like that a lot and
Speaker 3: I'm you know when they're like, can we suggest you
Speaker 3: know that you know, and it's like the different letters
Speaker 3: different Yeah, go for it. Yeah yeah, oh yeah, I
Speaker 3: hate it.
Speaker 6: And it's really hard when you're sharing, like you know,
Speaker 6: streaming service.
Speaker 5: I would know what you're talking about.
Speaker 3: I have no ideas the innocent tim stead of it. Yeah, Wendy,
Speaker 3: thank you so much of a great week. And Wendy
Speaker 3: went More, Senior VP, head of Unit forty two over
Speaker 3: at Palo Alto Network.
Speaker 5: Do you have any streaming services that I don't subscribe
Speaker 5: to that I can get the password?
Speaker 3: No, I have enough people on it, but denty it act.
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