WEBVTT - Dimon Sees ‘Storm Clouds’ Over the US Economy 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanibek. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.599 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:31.680 YouTube search Bloomberg Global News. Well this week, man, we 0:00:31.760 --> 0:00:34.040 get reads on a lot of economic data points new 0:00:34.080 --> 0:00:37.040 home sales, durable goods, GDP, core PC E f O 0:00:37.200 --> 0:00:41.519 MC minutes or something coming steady say that five times 0:00:41.600 --> 0:00:45.720 fast not gonna happen. What really tell us about the economy? 0:00:45.720 --> 0:00:48.199 Peak inflation? More so? Many questions, So we're gonna put 0:00:48.200 --> 0:00:50.000 a few of them to our next guest. Peter Atwater 0:00:50.120 --> 0:00:52.880 is adjunct professor of economics at william and Mary. Peter 0:00:52.960 --> 0:00:55.640 joins us on the phone from Pennsylvania. You may recall 0:00:55.680 --> 0:00:57.200 that Peter is the one who came up with the 0:00:57.240 --> 0:00:59.440 idea of the K shape recovery, something that we've been 0:00:59.440 --> 0:01:01.720 talking about for the last two years. Peter, good to 0:01:01.760 --> 0:01:03.960 have you with us. How are you. I'm doing well. Tim, 0:01:04.000 --> 0:01:06.000 thanks so much for having me. Well. We love having 0:01:06.000 --> 0:01:08.320 you on because what you focus on is sentiment, the 0:01:08.360 --> 0:01:10.080 way that people are feeling, and you connect that to 0:01:10.120 --> 0:01:12.880 the market. So so give us an idea, you know, 0:01:12.920 --> 0:01:15.360 on a day where it seems like we're coming back 0:01:15.400 --> 0:01:18.840 from touching a bear market in the what sentiment is 0:01:18.920 --> 0:01:22.840 like out there? So depends on where you look. Um. 0:01:22.880 --> 0:01:26.440 You know, within the economy, I am very concerned about 0:01:26.480 --> 0:01:32.160 the sentiment of those at the very low end socio economically. UM. 0:01:32.200 --> 0:01:36.399 They have been hit by a barrage of really difficult 0:01:37.080 --> 0:01:43.280 um actions because of the inflation, whether it's food, energy, housing, childcare. 0:01:43.880 --> 0:01:49.040 They're really facing um enormous challenge in every direction they face. 0:01:50.160 --> 0:01:52.080 On the other hand, I look at the sentiment in 0:01:52.120 --> 0:01:57.320 the market and I laugh with everyone looking for a 0:01:57.400 --> 0:02:01.960 bottom because at Loews and sentiment, nobody can anticipate there 0:02:02.040 --> 0:02:05.800 being a possible bottom. I I feel like the investors 0:02:05.840 --> 0:02:09.280 today are like kids on a long vacation car ride. 0:02:09.280 --> 0:02:12.720 All going are we there yet, and that doesn't mark 0:02:13.400 --> 0:02:15.880 a market low. You know, later on we're gonna play 0:02:16.080 --> 0:02:18.920 um a clip of an interview are Bloomberg Surveillance and 0:02:18.960 --> 0:02:23.400 TV team did with Clembia University professor and Nobel Prize 0:02:23.440 --> 0:02:26.760 winning economist Joe Stiglets, and he talked about Peter saying 0:02:26.840 --> 0:02:29.720 raising interest rates is not going to solve the problem inflation. 0:02:29.919 --> 0:02:32.480 It's not going to create more food. It's going to 0:02:32.520 --> 0:02:34.920 make it more difficult because you aren't able to be 0:02:35.000 --> 0:02:38.320 able to make the investment. Um. Tim talks about this 0:02:38.360 --> 0:02:40.080 all the time. We all talk about this, that this 0:02:40.320 --> 0:02:42.520 whole idea of the Fed raising interest rates isn't going 0:02:42.560 --> 0:02:46.280 to fix supply chains, certainly not overdight. Maybe it reduces 0:02:46.320 --> 0:02:50.000 demand perhaps a little bit, but you know, that's not 0:02:50.080 --> 0:02:53.000 going to fix all of our supply chain challenges and 0:02:53.040 --> 0:02:56.280 certainly not help those who are probably being hit the hardest. 0:02:56.320 --> 0:02:59.359 Like you talk about, Yeah, and I and I worry 0:02:59.400 --> 0:03:03.760 is that, Um, you know, the FEDS activity, particularly when 0:03:03.800 --> 0:03:06.760 it ripples through to things like used car loans and 0:03:07.040 --> 0:03:12.360 to you know home, you know the cost of a mortgage. Um, 0:03:12.480 --> 0:03:15.440 that's really setting a barrier for those at the at 0:03:15.480 --> 0:03:19.360 the low end. So what's the FED to do? And 0:03:19.400 --> 0:03:21.720 I know, you know you're not advising the FED right now, 0:03:21.760 --> 0:03:24.280 but you know the FED FED Chief J. Powell has 0:03:24.360 --> 0:03:27.360 has talked about the blunt instruments that it has to 0:03:27.360 --> 0:03:30.400 to tame inflation, It needs to tame inflation. Is it 0:03:30.440 --> 0:03:33.880 not doing it the right way? So I have some 0:03:33.960 --> 0:03:36.840 sympathy for the folks and at the FED, because you know, 0:03:37.240 --> 0:03:40.920 their tools are not designed for this sort of a 0:03:41.200 --> 0:03:45.000 the supply shock. But at the same time, I think 0:03:45.040 --> 0:03:49.280 we need to be careful in terms of overreacting to 0:03:49.440 --> 0:03:53.320 an overreaction in the first place. So if you go 0:03:53.400 --> 0:03:59.160 back to March, we pushed all of the stimulus onto 0:03:59.160 --> 0:04:03.320 the economy and and folks were not paying attention to 0:04:03.400 --> 0:04:07.480 the likely bullwhip effect that then manifested. And so I 0:04:07.920 --> 0:04:12.360 feel like the FED is constantly now chasing the last 0:04:12.640 --> 0:04:19.000 impactful moment in trying to um respond to what is 0:04:19.360 --> 0:04:25.480 already a very impulsive um consumer. And I think we're 0:04:25.520 --> 0:04:32.279 in this environment sentiment wise, where we we tend to overreact. 0:04:33.160 --> 0:04:35.040 You know, there's there's not a lot of certainty that 0:04:35.080 --> 0:04:37.760 people feel, there's not a lot of control people feel, 0:04:38.160 --> 0:04:41.400 and so there's a high level of impulsivity, and I 0:04:41.440 --> 0:04:44.840 get concerned that the FED is now trying to to 0:04:45.560 --> 0:04:50.480 play in that same impulsive manner because we the population 0:04:50.520 --> 0:04:55.159 are being very impulsive at the same time that I 0:04:55.200 --> 0:04:57.560 feel like sums up so much of what's going on. Peter, 0:04:57.839 --> 0:04:59.960 I keep talking about, I don't know what they're really 0:05:00.000 --> 0:05:02.520 economy is, to be quite honest, because we did have 0:05:02.600 --> 0:05:07.719 so much stimulus globally pumped into it, and now we're 0:05:07.800 --> 0:05:10.479 kind of trying to find our way back. And I 0:05:10.520 --> 0:05:13.840 feel like data points don't necessarily indicate that one thing 0:05:13.880 --> 0:05:16.400 that really jumped out along those lines from the research 0:05:16.440 --> 0:05:20.360 you shared with us and our producer Paul, you noted below, 0:05:20.400 --> 0:05:22.680 the service of today's record low unemployment rate is a 0:05:22.720 --> 0:05:26.400 crisis that has the potential disrupt to disrupt the broader 0:05:26.480 --> 0:05:29.159 economy just got about a minute left. So what do 0:05:29.240 --> 0:05:31.680 we need to kind of have on our radar along 0:05:31.720 --> 0:05:34.760 those lines? So I think we need to be very 0:05:34.839 --> 0:05:39.599 aware of the stacked inequities that exist the bottom and 0:05:39.800 --> 0:05:45.400 that you know, you have an environment where sentive negative 0:05:45.440 --> 0:05:50.039 sentiment upon negative sentiment upon negative sentiment, and I think 0:05:50.400 --> 0:05:52.719 we need to be careful that we don't reach a 0:05:52.760 --> 0:05:57.880 tipping point, particularly because we have an economy today that 0:05:58.080 --> 0:06:02.279 is so dependent on those at the bottom because everything 0:06:02.400 --> 0:06:06.200 is being delivered to us, and that that chain of 0:06:06.279 --> 0:06:09.280 individuals at the low end of the of the system 0:06:09.440 --> 0:06:12.560 are keeping those who are working from home of flu. 0:06:13.160 --> 0:06:15.320 All right, well, a good point, and um, wish we 0:06:15.320 --> 0:06:17.320 had more time. We will have you back very soon. 0:06:17.360 --> 0:06:19.960 Peter Atwater, he's adjunct professor of economics. That will Eave 0:06:20.000 --> 0:06:22.280 and Mary on the phone from Pennsylvania. I have to 0:06:22.320 --> 0:06:24.320 tell you one thing. One of the panels I did 0:06:24.520 --> 0:06:26.760 and Panama was on the global food crisis. And in 0:06:26.839 --> 0:06:28.600 some of the research I did that it talked about 0:06:28.920 --> 0:06:31.920 rising food prices often lead to political instability, and so 0:06:32.279 --> 0:06:35.119 there are repercussions of this type of environment the longer 0:06:35.160 --> 0:06:37.520 it goes on. Yeah, people allude, you know, people talk 0:06:37.520 --> 0:06:40.440 about what happened back in the Middle East in the 0:06:40.480 --> 0:06:43.720 early two thousand tens Arab spring. Exactly. It's exactly right. 0:06:43.760 --> 0:06:45.440 All right, So much to talk to you, and we've 0:06:45.440 --> 0:06:47.560 got lots more to come. You're listening to Bloomberg Business Week. 0:06:47.600 --> 0:06:52.479 Cow Master Tom Stenovik were Bloomberg Radio. You're listening to 0:06:52.600 --> 0:06:56.559 Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes 0:06:56.640 --> 0:07:01.240 Tim Stenovic on Bloomberg Radio. Yeah, Jimmy Diamond talks. We 0:07:01.240 --> 0:07:04.039 all listen. And as Charlie mentioned, talking about some storm clouds. 0:07:04.080 --> 0:07:06.400 As you said, here's a meteorologist now at him. Yeah, 0:07:06.400 --> 0:07:10.600 strong clouds over the US economy. They may dissipate, may dissipate. 0:07:11.280 --> 0:07:14.480 That would be good. Yes, indeed, let's bring in Sally 0:07:14.520 --> 0:07:17.240 bake Well, finance team leader for Bloomberg News. Sally joins 0:07:17.280 --> 0:07:20.080 us via zoom from New York City. Sally, good to 0:07:20.120 --> 0:07:21.720 have you with us. We got our live blog going 0:07:21.840 --> 0:07:24.320 right now about JP Morgan's investor Day. Just give us 0:07:24.360 --> 0:07:27.240 the highlights of what's happened thus far. That'st of all. 0:07:27.280 --> 0:07:29.080 I really like the idea of Jamie dian And as 0:07:29.120 --> 0:07:32.000 a meteorologic. If it doesn't, if this whole banking thing 0:07:32.000 --> 0:07:34.840 doesn't work out for you, Jamie, we got something else 0:07:35.080 --> 0:07:37.600 you know where to go. Um. Well, Diamond has been 0:07:37.600 --> 0:07:39.480 a big champion of the U s economy, and he 0:07:39.560 --> 0:07:42.400 struck that note again today. Um. You know, it's robust 0:07:42.480 --> 0:07:44.920 because of all the stimulus that has been pumped into it. 0:07:45.160 --> 0:07:48.200 But of course he nodded to this very unusual cocktail 0:07:48.240 --> 0:07:51.280 we have at the moment of surging instation quantitative tightening 0:07:51.320 --> 0:07:53.560 by the Fed. He also nodded to the volatile market 0:07:53.640 --> 0:07:56.880 and lots of liquidity out there, but overall he we 0:07:57.000 --> 0:08:00.920 got no sense that any recession is in an and um, 0:08:00.960 --> 0:08:03.560 he has previously in recent weeks sort of made the 0:08:03.560 --> 0:08:06.800 prediction that there is a thirty percent or so chance 0:08:06.840 --> 0:08:09.760 of recession, much like the Goldman Sax CEO David Solomon, 0:08:09.800 --> 0:08:13.440 who made a similar forecast. But you know, with Diamond's 0:08:13.440 --> 0:08:16.400 words today and with projections by the Bank, we've got 0:08:16.480 --> 0:08:20.480 the kind of this this relatively politic positive picture with yeah, 0:08:20.640 --> 0:08:24.320 there's no real imminent recession on the horizon. We we 0:08:24.360 --> 0:08:29.200 saw new higher guidance for net interest income, accelerating loan growth, 0:08:29.520 --> 0:08:31.960 strong credit quality. In fact, Diamond said that he had 0:08:32.000 --> 0:08:35.360 never seen credit looks so good. Um, no particular changes 0:08:35.360 --> 0:08:39.920 in consumer behavior and at least flat, if not up deposits. 0:08:39.960 --> 0:08:43.480 So it's not a particularly negative. You know, there's not 0:08:43.559 --> 0:08:46.280 too many negatives to take away. I guess the ominous 0:08:46.320 --> 0:08:49.240 thing is, you know, it's hard and as Diamond said, 0:08:49.240 --> 0:08:51.480 it's very hard to predict what any recession, if it 0:08:51.520 --> 0:08:54.480 did happen, would look like, because this cocktail is so 0:08:54.520 --> 0:08:57.800 unusual and um, sort of precedented. I gotta say, Sally too. 0:08:57.880 --> 0:09:00.000 He said they may dissipate me in those storm cloud 0:09:00.000 --> 0:09:01.680 It's like if you said, of course, folks, they're going 0:09:01.720 --> 0:09:03.800 to dissipate, just might take a little while. But he 0:09:03.800 --> 0:09:06.480 said they may dissipate. So I agree with you, right, 0:09:06.640 --> 0:09:08.400 It is hard to predict, and I think that's the 0:09:08.480 --> 0:09:12.240 dilemma that so many CEOs and leaders find themselves in. 0:09:12.559 --> 0:09:17.280 Having said that wasn't part of the update about their 0:09:17.320 --> 0:09:20.920 growth and movement increasingly into the wealth management side of 0:09:20.920 --> 0:09:22.400 the business, and I feel like I want to bring 0:09:22.400 --> 0:09:24.880 that up because it plays to a very specific sector 0:09:24.920 --> 0:09:29.560 of our economy. Yeah, they want to have ten percent 0:09:29.920 --> 0:09:34.240 of wealth market share. They're hiring some one thousand, three 0:09:34.320 --> 0:09:40.800 hundred advisers as they doubled down in in that area. UM, 0:09:40.840 --> 0:09:43.440 so it's definitely a big focus for them. I mean, 0:09:43.480 --> 0:09:46.520 they gave a lot of updates on some of the 0:09:46.640 --> 0:09:50.319 you know, the company's plans. They're expanding by product, there 0:09:50.400 --> 0:09:54.760 is expanding by country. They're entering seven new markets. Um. 0:09:54.800 --> 0:09:58.079 They've announced plans to introduce an interest free paying for 0:09:58.280 --> 0:10:01.280 option for debit card customers, which is, you know, to 0:10:01.360 --> 0:10:04.520 compete with the likes of Klana and after pay you know, 0:10:04.559 --> 0:10:08.800 the buy now, pay later. UM. They're investing in building 0:10:08.800 --> 0:10:13.200 out their international commercial bank, so they're they're expanding in 0:10:13.240 --> 0:10:16.120 a in a lot of places, and what they had 0:10:16.160 --> 0:10:20.600 to balance maybe today was UM the idea of assuaging 0:10:20.760 --> 0:10:24.840 investors who had been slightly worried about the bank's higher 0:10:24.880 --> 0:10:29.160 expenses in forecasts and eight point six increase in expenses 0:10:29.720 --> 0:10:33.360 versus the need to show where they're expanding and investing 0:10:33.720 --> 0:10:36.640 UM to capture you know, hopefully something that feeds into 0:10:36.679 --> 0:10:39.040 the bottom line. But they seem to do that pretty 0:10:39.040 --> 0:10:42.079 well today because the shares were UM at one point 0:10:42.160 --> 0:10:44.920 about seven point five pc and lifted, as you mentioned 0:10:44.960 --> 0:10:47.560 at the beginning, UM lifted the whole of the sector. Well. 0:10:47.600 --> 0:10:49.760 These expenses also have to do with the money that 0:10:49.880 --> 0:10:52.679 Jamie Diamond is paid, specifically because there was recently some 0:10:52.720 --> 0:10:58.360 pushback right against that in terms of shareholders support UM. 0:10:58.600 --> 0:11:00.480 I wonder if that's part of it, Like Jamie coming 0:11:00.480 --> 0:11:03.280 out and saying, hey, here's what you're getting for the money. 0:11:03.800 --> 0:11:06.240 I think he probably did feel that pressure. It was 0:11:06.280 --> 0:11:10.600 a really unusual rebuke for the CEO to have such 0:11:10.760 --> 0:11:14.440 little support for his executive pay package. He got about 0:11:15.120 --> 0:11:19.520 support for his compensation which did include some sort of 0:11:19.559 --> 0:11:23.400 special perk, special bonuses to entice him and other senior 0:11:23.440 --> 0:11:26.920 executives to stay on at the bank. UM, And I 0:11:26.960 --> 0:11:29.720 think going into the investor day that was That's why 0:11:29.760 --> 0:11:32.040 this one was particularly significant, not only because it was 0:11:32.080 --> 0:11:34.920 the first one since before COVID, but they had to 0:11:35.240 --> 0:11:38.240 kind of win back investors who had allowed the stock 0:11:38.320 --> 0:11:41.680 to tank UM over the past well so far this 0:11:41.760 --> 0:11:44.880 year it was the worst performing among all all Wall 0:11:45.160 --> 0:11:47.600 Wall Street banks, so they did have to kind of 0:11:47.640 --> 0:11:51.240 win back some some shareholders. But in terms of whether 0:11:51.320 --> 0:11:55.120 that UM that those expenses were a link directly to 0:11:55.400 --> 0:11:59.920 his you know conversation package, UM, certainly within the court. 0:12:00.000 --> 0:12:02.880 At an investment bank, they have about three point eight 0:12:02.920 --> 0:12:05.640 billion of expenses for this year. I think some three 0:12:05.880 --> 0:12:08.959 one billion goes technology. UM. So that's the I think 0:12:08.960 --> 0:12:11.640 the bulk of it is, you know, technology investment. All Right, 0:12:11.679 --> 0:12:13.880 Sally got a round Sally bake Well, she is finance 0:12:13.920 --> 0:12:18.400 team leader here at Bloomberg News. This is Bloomberg Business 0:12:18.520 --> 0:12:22.280 Week with Carol Masser and Bloomberg Quick Takes. Tim Stinovic 0:12:22.760 --> 0:12:25.400 on Bloomberg Radio. Well, with everything going on in the world, 0:12:25.440 --> 0:12:27.960 I love love when our Bloomberg team draws our attention 0:12:28.000 --> 0:12:30.160 to innovation going on around the world, and I definitely 0:12:30.160 --> 0:12:32.320 saw that last week in Panama, Panama, some of the 0:12:32.600 --> 0:12:36.600 Unicorn startups in Latin America. Now, it's Ashley Vance's turn 0:12:36.679 --> 0:12:39.120 in a story in this week's new upcoming issue of 0:12:39.160 --> 0:12:42.000 Bloomberg Business Week out later on this week. Timmy's introducing 0:12:42.040 --> 0:12:44.960 us to a company that discussed its business with the 0:12:44.960 --> 0:12:47.720 news media Bloomberg for the first time. Yeah, I had 0:12:47.760 --> 0:12:50.160 never heard of it before reading this story. The company 0:12:50.240 --> 0:12:52.360 is called Meter, It's founded by two brothers, and it's 0:12:52.360 --> 0:12:55.160 got a new way to get workplaces online, as well 0:12:55.200 --> 0:12:58.079 as some noteworthy backers as well. Join us now is 0:12:58.120 --> 0:13:01.040 Ashley Vance, features writer for Bloomberg Business Week. Actually is 0:13:01.040 --> 0:13:03.520 also the author of Elon Musk, Tesla, SpaceX and The 0:13:03.600 --> 0:13:06.719 Quest for a Fantastic Future. Actually joins us on the 0:13:06.720 --> 0:13:09.240 phone from Palo Alto, California. Joel Webber is the editor 0:13:09.280 --> 0:13:11.640 of Bloomberg Business Week. He's with us in the Bloomberg 0:13:11.640 --> 0:13:17.000 Interactive Broker's studio. Joel is actually writes a couple of brothers. Uh, 0:13:17.280 --> 0:13:19.680 you know, such as these would could go off and 0:13:19.679 --> 0:13:22.800 they'd graduate college early. They could go off and they 0:13:22.840 --> 0:13:25.440 could basically do anything. They could go work at a 0:13:25.440 --> 0:13:28.440 crypto startup or start their own, you know, crypto company. 0:13:28.760 --> 0:13:31.839 They choose to solve a problem that many people would say, 0:13:31.840 --> 0:13:33.920 Wait a second, that's not necessarily the you know, for 0:13:34.000 --> 0:13:35.720 lack of a better term, sexy thing to be doing 0:13:35.800 --> 0:13:39.600 right now. That's right, um, although maybe maybe starting another 0:13:39.600 --> 0:13:42.319 crypto company wouldn't be the right call right now either. Um. 0:13:43.320 --> 0:13:45.440 What I what I liked about the story was just 0:13:45.679 --> 0:13:48.880 you know, when we think about the way the world works, Uh, 0:13:48.920 --> 0:13:52.000 there are things that just the world seems to maybe 0:13:52.040 --> 0:13:54.600 have forgotten. And have you tried turning off the router 0:13:54.920 --> 0:13:57.760 that have bad WiFi is one of them? Um, And 0:13:57.800 --> 0:13:59.880 I've done that at home many times. I've turned it on, 0:14:00.040 --> 0:14:04.040 turn it off during the pandemic. It worked sometimes. The 0:14:04.080 --> 0:14:06.640 other place that that happens is in offices. And what 0:14:06.640 --> 0:14:09.600 what makes makes these brothers interesting is this whole startup 0:14:09.920 --> 0:14:12.840 is about bringing better WiFi to the office, which, hey, 0:14:12.840 --> 0:14:15.920 in these times of r t O, anything counts, right Ashley. 0:14:16.040 --> 0:14:19.960 So where did this idea come from? Yeah? Well, these 0:14:20.040 --> 0:14:22.760 the brothers are fascinating. I mean to your point. There 0:14:24.360 --> 0:14:28.520 a Neil and Sunil VARNSONI are their names, and and uh, 0:14:28.600 --> 0:14:31.560 I mean they're kind of throwbacks to me. They they 0:14:31.600 --> 0:14:35.680 had this business in college installing networking equipment at offices 0:14:35.720 --> 0:14:38.680 and they realized it was just too hard, and so 0:14:38.720 --> 0:14:41.240 they decided to go fix the problem build all this 0:14:41.360 --> 0:14:45.480 new networking hardware and software themselves. But the big idea 0:14:45.560 --> 0:14:48.560 here is you're a company, you move into a new 0:14:48.600 --> 0:14:51.520 office space, you want to set up the Internet. It's 0:14:51.560 --> 0:14:54.160 still this kind of archaic process where you have to 0:14:54.200 --> 0:14:57.880 call about five different companies to make that happen. And 0:14:57.960 --> 0:15:00.400 so they wanted to be more like I think up 0:15:00.440 --> 0:15:03.160 your telephone or your water in your office, where you 0:15:03.200 --> 0:15:05.800 essentially just kind of click a button or a button 0:15:05.800 --> 0:15:09.880 on a website and and it appears, and so you know, 0:15:09.920 --> 0:15:11.560 it's one thing just for you and I to have 0:15:11.600 --> 0:15:14.240 this idea. Um, and I'll tell you were like getting 0:15:14.240 --> 0:15:18.200 yourself there. Actually, uh, but they actually have have an 0:15:18.200 --> 0:15:20.520 interesting role index and they were able to get some 0:15:20.640 --> 0:15:23.200 interesting backers. Who who did they who did they call 0:15:23.240 --> 0:15:26.520 and who put money behind them? Yeah, the backers is 0:15:26.600 --> 0:15:29.240 kind of like a who's who, But you can imagine 0:15:29.320 --> 0:15:33.200 in Silicon Valley you've got the Collinson brothers who started Stripe, 0:15:33.400 --> 0:15:37.280 Diane Green who started gm ware, Egan Durbin who runs 0:15:37.320 --> 0:15:40.960 silver Lake, Sam Altman, and open A. I mean, the 0:15:40.960 --> 0:15:44.200 funny thing about this story is the list of investors 0:15:44.480 --> 0:15:47.640 is incredibly impressive. But this company is operated for about 0:15:47.760 --> 0:15:51.840 six years in almost complete secrecy UM and so all 0:15:51.880 --> 0:15:54.560 these people somehow kept kept as a secret. And this 0:15:54.600 --> 0:15:57.440 is the first time, you know, the founders ever talked 0:15:57.440 --> 0:16:01.200 that anyone's written a single story about this company called Meter. 0:16:02.080 --> 0:16:04.720 It's so interesting actually because these guys, you know, you 0:16:04.760 --> 0:16:07.280 could try to solve a problem from Silicon Valley or 0:16:07.320 --> 0:16:10.440 you know, from Virginia or from New York City, but 0:16:11.160 --> 0:16:14.840 these guys actually moved to Shenzen because the hardware in 0:16:14.840 --> 0:16:17.120 this they really wanted to understand the hardware. Here talk 0:16:17.160 --> 0:16:19.520 about what they did in order to to really make 0:16:19.560 --> 0:16:23.600 it so they understood the ins and out of the business. Yeah, 0:16:23.640 --> 0:16:26.080 I thought this was this is when I started to 0:16:26.080 --> 0:16:29.480 think they were the real deal. Uh. They had this 0:16:29.560 --> 0:16:32.360 previous networking business that they started in college, and they 0:16:32.400 --> 0:16:35.320 took all that money and they just flew on a 0:16:35.360 --> 0:16:39.120 whim almost to Shenzen and and decided they were going 0:16:39.160 --> 0:16:43.280 to manufacture their online of routers and switchers and access points. 0:16:43.280 --> 0:16:45.200 But they had to talk their way into it. And 0:16:45.280 --> 0:16:49.160 so they lived in a hospital for eighteen months, and 0:16:49.160 --> 0:16:53.000 and and did manage to talk their way into a factory. 0:16:53.040 --> 0:16:56.880 They would sleep on the factory floor, and they had 0:16:57.000 --> 0:16:59.280 their beds. They had no beds even in their hospital. 0:16:59.360 --> 0:17:01.880 It was awful of their networking gear. And so these 0:17:01.920 --> 0:17:05.600 were two kids that you know, they believe in themselves, 0:17:05.680 --> 0:17:07.919 and then they wanted to know every little piece of 0:17:07.960 --> 0:17:09.879 how this works, and so they fund it, you know, 0:17:09.920 --> 0:17:12.320 before they got all these big name backers. They funded 0:17:12.440 --> 0:17:16.520 all of that themselves and lived through it. So I 0:17:16.600 --> 0:17:19.400 get it, and I could see and as you report 0:17:19.480 --> 0:17:21.800 that a lot of companies, they've already got a lot 0:17:21.800 --> 0:17:24.880 of clients out there, some larger ones. But is there 0:17:24.920 --> 0:17:29.720 success based on really lining up massive companies who already 0:17:29.760 --> 0:17:33.280 have invested so much in their own networks at this 0:17:33.320 --> 0:17:37.359 point they want to get there, but it's obviously a 0:17:37.359 --> 0:17:40.280 harder sell. You know. Traditionally, what you do is you're 0:17:40.280 --> 0:17:42.800 in a building. You've bought a ton of equipment, probably 0:17:42.800 --> 0:17:46.880 from Cisco. Um. You probably have people on staff who 0:17:46.960 --> 0:17:50.600 manage all that stuff. You've invested millions of dollars to 0:17:50.680 --> 0:17:53.600 have the internet working at your office and so to 0:17:53.600 --> 0:17:55.119 to rip all of that out and bet on a 0:17:55.160 --> 0:17:57.720 startup is a little bit harder. But if you're a company, 0:17:58.600 --> 0:18:01.080 you could be a large company that's moving into a 0:18:01.119 --> 0:18:03.040 new office that you don't want to go through all 0:18:03.080 --> 0:18:05.800 that pain. Again, the idea as you called meter and 0:18:05.840 --> 0:18:09.720 they set everything up for you and they bill you 0:18:09.840 --> 0:18:14.120 per month like UM, and so I think that's the 0:18:14.119 --> 0:18:17.800 the easier cell right now is started larger companies moving 0:18:17.920 --> 0:18:21.639 to a new spot and once you're in the cloud, 0:18:22.200 --> 0:18:24.920 everything goes great, right like what else could go what 0:18:24.920 --> 0:18:29.240 else could go wrong? Here? Though? Actually I mean they 0:18:29.359 --> 0:18:31.760 you know, they've got serious challenges ahead of them, which 0:18:31.800 --> 0:18:34.240 is like you know, the network. If your WiFi is 0:18:34.359 --> 0:18:37.160 not working at the office, you're gonna hear about it. 0:18:37.480 --> 0:18:41.000 If there's some security disaster, you're gonna you're gonna hear 0:18:41.000 --> 0:18:43.400 about that and possibly get egg on your face publicly. 0:18:43.400 --> 0:18:45.359 And so so it's a young company. They have to 0:18:45.400 --> 0:18:48.280 prove that their networking gear is as good as they 0:18:48.400 --> 0:18:51.440 say it is. So this is gonna be it's gonna 0:18:51.480 --> 0:18:55.879 be a long march. That said, they reminded me a 0:18:55.920 --> 0:18:58.360 lot of kind of like a young vm Ware. Um, 0:18:58.840 --> 0:19:03.800 just it's it's potentially this huge infrastructure play if they 0:19:03.840 --> 0:19:06.200 get it right. And so it's a it's a big deal. 0:19:06.760 --> 0:19:09.240 Does a company like this Ashley and like, I don't 0:19:09.240 --> 0:19:10.720 want to put the card too much before the horse, 0:19:10.760 --> 0:19:12.560 but it's got some big name backers and they're looking 0:19:12.600 --> 0:19:14.520 for an exit here. Is this the type of company 0:19:14.520 --> 0:19:16.480 that I p O s or gets it gets acquired 0:19:16.680 --> 0:19:20.400 by an established player like a Cisco. Yeah, exactly. Yeah, 0:19:20.480 --> 0:19:22.880 this is a conserved Cisco through the years, as they're 0:19:23.000 --> 0:19:26.840 one of the most inquisitive companies ever. And what generally 0:19:26.880 --> 0:19:29.200 happens is as soon as you're doing well in networking, 0:19:29.359 --> 0:19:32.920 Cisco buys you or Juniper buys you, and and there's 0:19:32.920 --> 0:19:37.000 a tendency for the technology to languish. Of course, these founders, 0:19:37.000 --> 0:19:39.239 as they always say, you know, promise me, they're not 0:19:39.280 --> 0:19:41.680 going to do that. They're in this for the long haul. 0:19:41.760 --> 0:19:44.480 They're going to be the ones who stick it out 0:19:44.960 --> 0:19:47.920 there will see if if history is our guy, Cisco 0:19:48.119 --> 0:19:50.760 tends to end up with this stuff. But but these 0:19:50.800 --> 0:19:53.919 brothers seem quite determined to go to make make their 0:19:54.000 --> 0:19:56.800 name for themselves. Well, definitely an interesting model that makes 0:19:56.800 --> 0:20:00.000 sense certainly in today's environment. Um, actually, thank you so much. 0:20:00.040 --> 0:20:02.920 Ashley Vance, features writer of Bloomberg Business Week, also author 0:20:02.960 --> 0:20:05.199 of Elon must Tesla, SpaceX, and The Quest for a 0:20:05.240 --> 0:20:08.240 Fantastic Future. This story, by the way, in the upcoming 0:20:08.280 --> 0:20:11.000 new issue of Bloomberg Business Week do out later this week, 0:20:11.000 --> 0:20:12.719 and of course our thanks to Joe Webber. He is 0:20:12.760 --> 0:20:16.120 the editor of Bloomberg Business Week. You're listening to Bloomberg Radio. 0:20:17.880 --> 0:20:21.480 You're listening to Bloomberg Business Week with Carol Messer and 0:20:21.560 --> 0:20:25.879 Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. All right, 0:20:25.920 --> 0:20:28.400 this is gonna be a tale of where reporting out 0:20:28.440 --> 0:20:33.080 the story is probably even more interesting in the story itself. 0:20:33.119 --> 0:20:36.119 Excuse me, everyone, it's a market moving store. It's totally 0:20:36.160 --> 0:20:38.960 market moving story. Intrigue behind the scenes is pretty good too, 0:20:39.080 --> 0:20:40.800 So should we get to it. Yeah. Lenna Baker is 0:20:40.880 --> 0:20:43.000 Deal's team leader for Bloomberg News. She's with us in 0:20:43.040 --> 0:20:45.840 the Bloomberg Interactive Broker studio. Leona and her colleague for 0:20:45.840 --> 0:20:48.800 Busy Yesterday breaking the news that Broadcom is said to 0:20:48.800 --> 0:20:51.239 be in talks to buy vm Ware. Uh, we do 0:20:51.440 --> 0:20:56.880 see Broadcom lower vm Ware surging on this story. Uh 0:20:57.240 --> 0:20:59.440 good to have you with us. Can you take us 0:20:59.480 --> 0:21:02.120 through your weekend and just what happened when this news 0:21:02.119 --> 0:21:05.840 broke because you broke this story yesterday. Sure, so on 0:21:05.880 --> 0:21:08.520 our team, we usually have someone on the weekend shift, 0:21:08.600 --> 0:21:10.439 but I took off this weekend because it was my 0:21:10.520 --> 0:21:13.920 bridal shower. I'm getting graduation, thank you. Um So, I 0:21:14.000 --> 0:21:16.359 thought the coast was clear, but I had my phone 0:21:16.359 --> 0:21:18.520 in my hand to take some photos, you know, it's 0:21:18.560 --> 0:21:20.360 with my future mother in law. And the call came 0:21:20.400 --> 0:21:23.439 in that this deal was in the work. So luckily 0:21:23.480 --> 0:21:26.160 I cleaned up quickly, you know, send people on their way. 0:21:26.200 --> 0:21:29.159 Luckily things were dying down by then and we started 0:21:29.160 --> 0:21:31.400 working the phones, and luckily, around seven o'clock we did 0:21:31.400 --> 0:21:33.359 break the story of the broad commas and talks about 0:21:33.440 --> 0:21:36.800