WEBVTT - The CEO Radar: Behind the Tariff Headlines (Sponsored Content)

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<v Speaker 1>Because you're a subscriber to this Bloomberg podcast, we thought

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<v Speaker 1>you'd be interested in a sponsored podcast called CEO Radar,

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<v Speaker 1>produced by BCG and Bloomberg Media Studios. It analyzes almost

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<v Speaker 1>forty nine hundred earnings calls worldwide to assess what topics

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<v Speaker 1>merit a CEO's time and attention. Here's a recent episode.

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<v Speaker 1>Rich and Michael, Welcome to the CEO Radar podcast.

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<v Speaker 2>It's great to be here with you.

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<v Speaker 3>Thanks for having us.

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<v Speaker 1>During the first quarter. The analysts who are on these calls,

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<v Speaker 1>who function really as a proxy for the market in

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<v Speaker 1>our approach, we're talking about tariff sixty two percent more

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<v Speaker 1>often than we're CEOs. Even though obviously CEOs talk far

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<v Speaker 1>more on these calls than do analysts, the fact that

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<v Speaker 1>they were mentioning tariff so much more surprised me a bit.

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<v Speaker 1>I thought that we would see CEOs talking more about that,

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<v Speaker 1>talking about how they were preparing for what seemed to be,

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<v Speaker 1>at least to a lot of experts and inevitability. Rich,

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<v Speaker 1>what was your take on why they weren't discussing it

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<v Speaker 1>more in first quarter?

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<v Speaker 2>I was thinking the same thing as I read through

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<v Speaker 2>the survey, and as I reflected I think there were

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<v Speaker 2>two totally separate things going on here. One is, if

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<v Speaker 2>you go back to the president's first term in office,

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<v Speaker 2>there was a saying, well, two observations. One is it

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<v Speaker 2>became frequent to say take him very seriously, but not literally.

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<v Speaker 2>And a second was that he will be very responsive

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<v Speaker 2>to how the market dynamics evolve in adjusting the actions

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<v Speaker 2>and announcements. And I think in many CEO's minds, the

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<v Speaker 2>combination of those two statements. They had heard all the

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<v Speaker 2>comments about tariffs. The President was quite good at both

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<v Speaker 2>on the campaign trail and after the campaign ended about that,

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<v Speaker 2>but I think they were still probably underestimating the magnitude

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<v Speaker 2>of what he was prepared to do. And I think

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<v Speaker 2>the second thing is the CEOs that I speak with

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<v Speaker 2>generally have a view that it's best not to be

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<v Speaker 2>too commenting in public about the worries you have or

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<v Speaker 2>what you think the administration maybe doing right or doing wrong,

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<v Speaker 2>and it's much better to engage directly, whether that was

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<v Speaker 2>going to Marrow Lago before the inauguration or going to

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<v Speaker 2>Washington since the inauguration.

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<v Speaker 1>But wouldn't they have been in a safe zone if

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<v Speaker 1>they had talked about we're in case there are tariffs,

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<v Speaker 1>we have prepared in the following ways for that so

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<v Speaker 1>that they could reassure the market that they wouldn't be

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<v Speaker 1>as effected perhaps as other companies are.

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<v Speaker 2>I don't think there's an easy near term response on

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<v Speaker 2>how to do that, and I think the last thing

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<v Speaker 2>CEOs want to talk about. Some of that response will

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<v Speaker 2>be passing price through to their customers or through to consumers,

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<v Speaker 2>or things that you really don't want to be saying

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<v Speaker 2>unless you have to, unless it's there.

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<v Speaker 1>Michael, we saw some regional differences here in the discussion

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<v Speaker 1>of tariffs in the first quarter. Globally, the mentions of

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<v Speaker 1>tariffs by CEOs did increase in the first quarter. Certainly,

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<v Speaker 1>it's not as if they were totally line to the topic.

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<v Speaker 1>It went up five hundred and thirty seven percent around

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<v Speaker 1>the world, but in the US it went up about

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<v Speaker 1>one thousand percent. In Europe, where you're from, about five

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<v Speaker 1>hundred percent increase, and less than a one hundred percent

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<v Speaker 1>of an increase by CEOs in Asia talking about tariffs.

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<v Speaker 1>That last bit surprised me, given that that's where many

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<v Speaker 1>of the global supply chains began and certainly would be

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<v Speaker 1>affected by a US set of tariffs. What should take

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<v Speaker 1>on why those numbers are different around the world.

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<v Speaker 3>I mean, if I look at the European numbers, the

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<v Speaker 3>five time increase to the last quarter, I'd say we

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<v Speaker 3>should not make the conclusion that the numbers are not

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<v Speaker 3>as high as in the US. Therefore the European CEOs

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<v Speaker 3>are less well prepared. I think most CEOs have really

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<v Speaker 3>done their homework, and what we've seen when speaking with

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<v Speaker 3>the CEOs were a couple of things. I mean, they

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<v Speaker 3>were really working on building this geopolitical muscle. We've seen

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<v Speaker 3>a lot of scenarios being played through, and I think

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<v Speaker 3>what we've seen over time rich a bit like to

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<v Speaker 3>your point that this is not happening overnight. I think

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<v Speaker 3>many of the businesses have already started a couple of

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<v Speaker 3>years ago to think through what should my localization strategy

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<v Speaker 3>actually look like. And we've seen that, particularly if we

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<v Speaker 3>look at the automotive manufacturers, the big German OEMs. I mean,

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<v Speaker 3>they have started over time actually to build up international

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<v Speaker 3>footprint and more and more localization strategies. And I think

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<v Speaker 3>what we were going what we are going to see

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<v Speaker 3>over over time. I think that this strategy is going

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<v Speaker 3>to intensify.

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<v Speaker 2>And if I just pick upon the Asia part of

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<v Speaker 2>your question, I also think and again the first term

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<v Speaker 2>of the president, we saw Japan and India, both leaders

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<v Speaker 2>of both countries, Prime Minister Motive, Prime Minister Abbe do

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<v Speaker 2>a really excellent job of building relationships with the White

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<v Speaker 2>House with the President, and I think there was probably

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<v Speaker 2>some optimism, whereas in Europe, obviously, coming out of Dava's

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<v Speaker 2>the Munich Security Conference, it was pretty clear it was

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<v Speaker 2>going to be a quite tense relationship. So the fact

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<v Speaker 2>that Asia or Asian business leaders may have underestimated the

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<v Speaker 2>impacts of tariffs, and I think obviously I think Chinese leadership,

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<v Speaker 2>whether it's companies or political leadership, was really keeping relatively

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<v Speaker 2>quiet about what the US would do. So I'm not

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<v Speaker 2>actually surprised that this didn't get as big a visible

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<v Speaker 2>play in these conversations in Asia as we saw in Europe,

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<v Speaker 2>and then certainly the US was much more front and center.

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<v Speaker 1>As your data suggests, these tariffs were initially announced and

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<v Speaker 1>then were put on hold for a period of time.

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<v Speaker 1>I think that's just indicative of a level of uncertainty

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<v Speaker 1>that the business community is going through at this point.

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<v Speaker 1>Is there any way that people can profit from that

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<v Speaker 1>is there somebody who wins in a climate of uncertainty.

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<v Speaker 2>So I just want to start with your comment around

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<v Speaker 2>uncertainty because it is the comment I hear the most

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<v Speaker 2>right now in the business community. You know, every investment

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<v Speaker 2>is a function of risk and reward and returns associated

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<v Speaker 2>with it. Right now, the level of uncertainty has really

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<v Speaker 2>heightened the risk associated with investments. So I think what

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<v Speaker 2>we're seeing first and foremost is a level of caution

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<v Speaker 2>around investing, certainly in physical assets. I think the second

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<v Speaker 2>thing is in terms of where you can build advantage. Look,

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<v Speaker 2>some people will take bets on where things go, and

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<v Speaker 2>some of those will be right. The challenges we don't

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<v Speaker 2>know which bets will turn out to be right. And

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<v Speaker 2>the second thing is once this settles, and I think

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<v Speaker 2>all business leaders, whatever their views of what the level

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<v Speaker 2>of tariffs they want, I think will hope for clarity

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<v Speaker 2>that at least you know where you stand. And once

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<v Speaker 2>it does settle, there will certainly be competitive advantage to

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<v Speaker 2>some companies relative to others, because even if your cost

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<v Speaker 2>go up to tariffs, if your main competitor faces even

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<v Speaker 2>higher tariffs, you've built some advantage even if you may

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<v Speaker 2>have reduced overall demand, because some price will flow through

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<v Speaker 2>to the end market.

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<v Speaker 1>So in the near term, nobody really wins from uncertainty.

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<v Speaker 1>I think it's get frozen in place.

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<v Speaker 2>Uncertainty. I used to describe it as deer in headlights

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<v Speaker 2>when you looked at the Great Financial Crisis or post

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<v Speaker 2>on it. And I don't think we're at that magnitude,

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<v Speaker 2>to be clear. But I do think that when there's

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<v Speaker 2>massive uncertainty that enters the environment, the first thing people

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<v Speaker 2>do say, Okay, let's hold on, let's see, and that

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<v Speaker 2>means planned investments don't go forward because people don't know

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<v Speaker 2>in this case where to invest. Even if they know

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<v Speaker 2>how they want to invest in how much they want

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<v Speaker 2>to invest. The where question is really tricky right now.

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<v Speaker 3>But even though Rich, even though we have also from

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<v Speaker 3>a European point of view, we have this uncertainty as well.

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<v Speaker 3>I think the clarity what's going to happen now going forward,

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<v Speaker 3>with how obviously the administration is going to interact with

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<v Speaker 3>the different regions, I think brings at least a new

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<v Speaker 3>perspective for CEOs how to think about their business models,

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<v Speaker 3>how to think around Okay, how do I need to

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<v Speaker 3>set up my opera model. And I think from a

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<v Speaker 3>European point of view, this has been probably the final

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<v Speaker 3>wake up call to think through how how can we

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<v Speaker 3>future prove our operating models in order to be competitive

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<v Speaker 3>in this in this new competitive world that is that

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<v Speaker 3>is going to be set up because again, if I

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<v Speaker 3>look at my home market at Germany, the German model

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<v Speaker 3>was based on a full export driven model, fully globalized

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<v Speaker 3>global supply chains right and and and and that model

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<v Speaker 3>was serving the economy the businesses super well. I think

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<v Speaker 3>while we have uncertainty, I think we have clarity that

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<v Speaker 3>this model was not going to work.

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<v Speaker 1>Let's turn now to the topic of costs. One of

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<v Speaker 1>the things we did in this report was we gathered

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<v Speaker 1>together similar topics and sort of combine them to gauge

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<v Speaker 1>sort of how some of these megatopics are playing out

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<v Speaker 1>over time. One of them was costs. So we combined

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<v Speaker 1>things like the topic of write downs or job cuts

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<v Speaker 1>or an economic slowdown and saw, sort of, on average,

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<v Speaker 1>where did those topics rank amongst the most mentioned topics

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<v Speaker 1>both by CEOs globally as well as by analysts. What

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<v Speaker 1>we found on costs was a divergence there that the

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<v Speaker 1>analysts were mentioning those on average about thirty four in

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<v Speaker 1>their rank of topics, whereas for CEOs they were down

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<v Speaker 1>in sixty sixth place, talking about them much less. What's

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<v Speaker 1>your take on why analysts are so focused on this

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<v Speaker 1>and CEOs for whatever reason at least so far or not.

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<v Speaker 2>I think when we repeat it in this upcoming quarter,

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<v Speaker 2>if I were guessing, I think the cost and productivity

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<v Speaker 2>issue is going to come much more to the four.

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<v Speaker 1>Just to give you a little bit more data here,

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<v Speaker 1>in both Europe and the US, discussions of growth outweighed

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<v Speaker 1>discussions of costs, whereas an Asia it was flipped. They

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<v Speaker 1>were talking CEOs were talking more about costs less about

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<v Speaker 1>growth in this first quarter.

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<v Speaker 2>That is right, and so if I come to the

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<v Speaker 2>Asia question, then we'll go to you. Yeah, I think

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<v Speaker 2>that when I go. I've been traveling around Asia a

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<v Speaker 2>lot over the last few months, and I talked to

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<v Speaker 2>my colleagues as well, and the consistent discussion is the

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<v Speaker 2>intensity of competition in Asia. First, in China itself, it's

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<v Speaker 2>massively competitive because there's lots of overcapacity and the battles

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<v Speaker 2>are fierce to be able to once to survive as

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<v Speaker 2>these industries are growing. But second that over capacity is

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<v Speaker 2>also pushing intense cost competition toward Japan, towards Southeast Asia,

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<v Speaker 2>toward India. It's also spilling out to other parts of

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<v Speaker 2>the world, but just given proximity, given the volume of

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<v Speaker 2>trade activity, there is an enormous competitive intensity on cost

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<v Speaker 2>as companies are not just competing locally, but they're often

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<v Speaker 2>competing against really strong Chinese competitors who are playing in

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<v Speaker 2>those markets as well. So it did not surprise me

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<v Speaker 2>at all that when you talk to Asian CEOs that

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<v Speaker 2>intensity of cost competition was very high up in Europe.

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<v Speaker 3>I think while the cost topic was not the top

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<v Speaker 3>concern of the CEOs, I think it always was over

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<v Speaker 3>the last couple of years at least in the top

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<v Speaker 3>three or four topics. I think the cost topic will

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<v Speaker 3>be impacted by technology, and I think what Jenna I

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<v Speaker 3>will do on the productivity and how it will drive

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<v Speaker 3>cost curves down I think will will soon be implemented.

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<v Speaker 3>I think by CEOs.

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<v Speaker 1>Let's go deeper on technology, particularly in Europe. One of

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<v Speaker 1>the things we found this quarter was that mentions of

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<v Speaker 1>AI generative AI automation all increased one hundred percent or

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<v Speaker 1>more in Europe. Among European CEOs, they're still not talking

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<v Speaker 1>about it quite as much as their colleagues are in

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<v Speaker 1>North America and in Asia, but they're it's clearly on

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<v Speaker 1>the rise. It's almost as if they're trying to catch

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<v Speaker 1>up what's behind that trend.

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<v Speaker 3>So if we look at technology and if you look

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<v Speaker 3>at the competitiveness of European companies, we're far behind the US.

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<v Speaker 3>We're also far behind China, and I think we need

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<v Speaker 3>to catch up. An area where we see where Europe

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<v Speaker 3>is starting to catch up and actually holding leadership position

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<v Speaker 3>is everything industrial AI. I've just been to the hanofha

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<v Speaker 3>Messe couple of weeks back. It's one of the biggest

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<v Speaker 3>European trade first on the industrial automation. It's great to

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<v Speaker 3>see how strong European companies are in this field.

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<v Speaker 1>I want to talk about environmental and climate change topics,

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<v Speaker 1>and Rich I'd like you to address what we're seeing

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<v Speaker 1>in the US. The US CEOs are running away from

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<v Speaker 1>that topic as quickly as they can. Hardly anybody has

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<v Speaker 1>mentioned anymore on these earnings calls. Is that because they're

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<v Speaker 1>really trying to simply not discuss stuff that is still

0:12:38.800 --> 0:12:41.640
<v Speaker 1>going on behind the scenes, or have they ratcheted back

0:12:41.679 --> 0:12:44.400
<v Speaker 1>on those climate change initiatives that they had made so

0:12:44.480 --> 0:12:47.320
<v Speaker 1>prominent in their calls and say a year or two ago.

0:12:47.800 --> 0:12:49.880
<v Speaker 2>I think there are three things going on right now.

0:12:50.000 --> 0:12:54.000
<v Speaker 2>I think first, business leaders, and I would say centered

0:12:54.040 --> 0:12:56.640
<v Speaker 2>in North America, but other parts of the world as well,

0:12:57.400 --> 0:13:00.199
<v Speaker 2>are much more focused on making sure that the investment

0:13:00.320 --> 0:13:04.120
<v Speaker 2>that they make in climate and sustainability bring business value

0:13:04.520 --> 0:13:07.679
<v Speaker 2>as well as planetary value, if you put it that way,

0:13:08.559 --> 0:13:12.880
<v Speaker 2>And therefore they are being careful to think about what

0:13:12.920 --> 0:13:16.360
<v Speaker 2>initiatives they are undertaking. Can they defend them as driving

0:13:16.360 --> 0:13:19.320
<v Speaker 2>greater productivity. If you take on a circularity effort, you

0:13:19.480 --> 0:13:22.319
<v Speaker 2>often addressing the environment, but you're actually taking cost out

0:13:22.360 --> 0:13:25.000
<v Speaker 2>of the system. If you're building a new green business,

0:13:25.280 --> 0:13:27.480
<v Speaker 2>you may be helping the planet, but you're also creating

0:13:27.520 --> 0:13:31.360
<v Speaker 2>the next generation of growth in a world even separate

0:13:31.360 --> 0:13:33.120
<v Speaker 2>from what the US will do that will be spending

0:13:33.160 --> 0:13:36.160
<v Speaker 2>trillions of dollars a year on investing to address climate

0:13:36.240 --> 0:13:39.720
<v Speaker 2>change over the coming decades. You need a win win,

0:13:39.920 --> 0:13:43.280
<v Speaker 2>not just do something that feels right for the climate

0:13:43.320 --> 0:13:45.800
<v Speaker 2>but is costly to the business. I think there's a

0:13:45.840 --> 0:13:50.079
<v Speaker 2>second thing that most companies in that context are still

0:13:50.080 --> 0:13:53.920
<v Speaker 2>trying to keep with the commitments that they've made where

0:13:53.960 --> 0:13:57.480
<v Speaker 2>they can make that work. Most companies haven't been walking

0:13:57.480 --> 0:13:59.880
<v Speaker 2>away from their commitments, but they're being much more cautious

0:14:00.280 --> 0:14:02.959
<v Speaker 2>new commitments. There was a time period where every month

0:14:03.200 --> 0:14:05.199
<v Speaker 2>you look and see how many new commitments have come

0:14:05.240 --> 0:14:08.640
<v Speaker 2>out in the US, and that is really quite few

0:14:08.720 --> 0:14:11.520
<v Speaker 2>right now. And then the third point is I do

0:14:11.600 --> 0:14:13.800
<v Speaker 2>think that there's a lot of green hushing going on.

0:14:14.320 --> 0:14:16.920
<v Speaker 2>It's become a very political topic. They don't want to

0:14:16.920 --> 0:14:19.040
<v Speaker 2>be caught in the politics of it, and that's why

0:14:19.040 --> 0:14:21.240
<v Speaker 2>I think the analysts and the US actually gave it

0:14:21.280 --> 0:14:24.080
<v Speaker 2>more attention than business leaders gave it.

0:14:24.120 --> 0:14:27.480
<v Speaker 1>And Michael and Europe, as you know, there is a

0:14:27.520 --> 0:14:30.440
<v Speaker 1>real bastion of discussion of climate change. In fact, the

0:14:30.480 --> 0:14:35.280
<v Speaker 1>discussion of climate change, climate exposure, greenhouse gas emissions all

0:14:35.400 --> 0:14:39.120
<v Speaker 1>rose by one hundred percent or more among European CEOs

0:14:39.120 --> 0:14:39.960
<v Speaker 1>in the last quarter.

0:14:40.360 --> 0:14:43.120
<v Speaker 3>I think the business cases that we're seeing on circularity

0:14:43.640 --> 0:14:47.760
<v Speaker 3>they are starting to work. They will unlock by twenty thirty.

0:14:47.760 --> 0:14:50.840
<v Speaker 3>There are studies out there they will unlock trillions of

0:14:51.200 --> 0:14:54.200
<v Speaker 3>dollars of GDP growth. And I think there is another

0:14:54.240 --> 0:14:58.600
<v Speaker 3>aspect now coming to it. If there is a sovereignty aspect.

0:14:58.680 --> 0:15:02.520
<v Speaker 3>If you look about dramati real circularity and keeping the

0:15:02.920 --> 0:15:06.440
<v Speaker 3>raw material in certain circle of flows within a certain

0:15:06.480 --> 0:15:11.120
<v Speaker 3>region is also a second aspect. I think that is

0:15:11.200 --> 0:15:14.680
<v Speaker 3>driving that dynamic why climate topics stay on the agenda

0:15:14.720 --> 0:15:15.200
<v Speaker 3>in Europe.

0:15:15.280 --> 0:15:18.680
<v Speaker 2>What I think was encouraging on the European side from

0:15:18.760 --> 0:15:22.040
<v Speaker 2>a government point of view is so many business leaders

0:15:22.080 --> 0:15:25.200
<v Speaker 2>have been frustrated at the amount of bureaucracy and overhead

0:15:25.520 --> 0:15:29.440
<v Speaker 2>that comes with the environmental goals in Europe, even if

0:15:29.440 --> 0:15:32.400
<v Speaker 2>they fully agree with the ambition, the way it's done

0:15:32.440 --> 0:15:36.920
<v Speaker 2>has felt so cumbersome, and I do think the recognition

0:15:37.280 --> 0:15:41.120
<v Speaker 2>in the EU that you can keep the ambition, but

0:15:41.160 --> 0:15:43.080
<v Speaker 2>you have to make it easier for companies if they're

0:15:43.080 --> 0:15:44.480
<v Speaker 2>able to if they're going to be able to be

0:15:44.520 --> 0:15:49.160
<v Speaker 2>globally competitive. This model isn't working the way it should.

0:15:49.000 --> 0:15:51.920
<v Speaker 3>But there is progress we're starting to see. Particularly there's

0:15:51.920 --> 0:15:54.360
<v Speaker 3>a beautiful Cherman word, the lever of ket and sock falsk.

0:15:54.480 --> 0:15:56.120
<v Speaker 2>Is it okay? What does that work?

0:15:56.560 --> 0:15:59.200
<v Speaker 3>This is about how you need to report on your

0:15:59.240 --> 0:16:03.120
<v Speaker 3>supply chain that this is actually going to be stopped now,

0:16:03.440 --> 0:16:06.200
<v Speaker 3>so we're starting to see progress on the on the

0:16:06.200 --> 0:16:07.080
<v Speaker 3>bureaucracy side.

0:16:07.240 --> 0:16:10.160
<v Speaker 2>Good for all of us. Yes.

0:16:10.200 --> 0:16:15.120
<v Speaker 1>Indeed, in late twenty twenty four we had all expected

0:16:15.160 --> 0:16:18.240
<v Speaker 1>to see a huge search in murders and acquisitions. We

0:16:18.360 --> 0:16:21.680
<v Speaker 1>haven't seen that yet. Is that really just a function

0:16:21.760 --> 0:16:24.320
<v Speaker 1>of the uncertainty that's in the environment now and could

0:16:24.440 --> 0:16:26.360
<v Speaker 1>self correct by the end of the year, or is

0:16:26.400 --> 0:16:28.200
<v Speaker 1>this something that's going to be a little more long term.

0:16:28.320 --> 0:16:32.080
<v Speaker 3>I think we won't see deals over the next couple

0:16:32.080 --> 0:16:36.600
<v Speaker 3>of months because the problem is you cannot underwrite a

0:16:36.640 --> 0:16:40.960
<v Speaker 3>business case in this environment. Everything that is that is global,

0:16:41.000 --> 0:16:44.520
<v Speaker 3>that has global supply chains. You can't take a bet

0:16:45.320 --> 0:16:48.880
<v Speaker 3>on on these business cases. And hence what we're actually

0:16:48.880 --> 0:16:52.400
<v Speaker 3>seeing is we see quite a dramatic slowdown in the pipeline.

0:16:52.520 --> 0:16:55.040
<v Speaker 2>As one of my colleagues here in New York is

0:16:55.120 --> 0:16:57.640
<v Speaker 2>very involved in that world, said to me, you can't

0:16:57.640 --> 0:16:59.400
<v Speaker 2>do a deal if you can't do a two to

0:16:59.440 --> 0:17:03.360
<v Speaker 2>three year but tough forecast. And right now people don't

0:17:03.400 --> 0:17:05.719
<v Speaker 2>feel confident that they have any but tough forecast they

0:17:05.720 --> 0:17:08.320
<v Speaker 2>can rely on, and so it's hard to do a deal.

0:17:08.480 --> 0:17:11.200
<v Speaker 1>So uncertainty can certainly dampen the m and a environment.

0:17:11.400 --> 0:17:15.159
<v Speaker 1>Is there anything that uncertainty does permits a CEO to

0:17:15.200 --> 0:17:17.520
<v Speaker 1>do that he or she otherwise might not be able

0:17:17.520 --> 0:17:21.040
<v Speaker 1>to accomplish. Does it give you some space to be

0:17:21.080 --> 0:17:25.080
<v Speaker 1>able to focus on something that in a more growth

0:17:25.119 --> 0:17:27.280
<v Speaker 1>oriented period of time you wouldn't be able to.

0:17:27.600 --> 0:17:29.440
<v Speaker 2>Well, you know there's this old especially never let a

0:17:29.480 --> 0:17:33.119
<v Speaker 2>crisis go to waste. I think where that will apply

0:17:34.000 --> 0:17:38.439
<v Speaker 2>is less around the deployment of capital for deals or

0:17:38.480 --> 0:17:44.879
<v Speaker 2>new plants, but absolutely to drive productivity, deeper customer relationships,

0:17:45.200 --> 0:17:49.680
<v Speaker 2>investment of innovation into the business. I think people will

0:17:49.680 --> 0:17:52.640
<v Speaker 2>realize that the world may only get harder.

0:17:52.920 --> 0:17:57.040
<v Speaker 1>Is there anything that this current situation reminds you of historically?

0:17:57.280 --> 0:17:59.640
<v Speaker 2>Okay, so first I want to be careful about trying

0:17:59.640 --> 0:18:02.159
<v Speaker 2>the NUN because there's no health impacts here. But if

0:18:02.200 --> 0:18:05.040
<v Speaker 2>you think about those first few months of COVID, we

0:18:05.040 --> 0:18:07.840
<v Speaker 2>were all living with so much uncertainty. It's only looking

0:18:07.880 --> 0:18:11.320
<v Speaker 2>back that vaccines came along faster that we were able

0:18:11.320 --> 0:18:13.800
<v Speaker 2>to get past that in a less tramatic way. But

0:18:13.960 --> 0:18:17.160
<v Speaker 2>in April of twenty twenty, just five years ago, we

0:18:17.160 --> 0:18:21.359
<v Speaker 2>were sitting with incredible amounts of uncertainty. Companies were really

0:18:22.080 --> 0:18:24.720
<v Speaker 2>anxious about what was going to happen. There were talks

0:18:24.760 --> 0:18:28.399
<v Speaker 2>about traumatic economic impacts. I would say that uncertainty was

0:18:28.440 --> 0:18:31.439
<v Speaker 2>even higher than the uncertainty we're living with, and we

0:18:31.480 --> 0:18:35.080
<v Speaker 2>only don't remember it because it got resolved so quickly.

0:18:35.160 --> 0:18:38.160
<v Speaker 2>To me, it feels more like that, not the same degree,

0:18:38.160 --> 0:18:40.600
<v Speaker 2>and certainly without people losing their lives or anything of

0:18:40.640 --> 0:18:42.879
<v Speaker 2>that nature. But it feels a little bit more in

0:18:42.920 --> 0:18:46.320
<v Speaker 2>that direction than it felt like the challenges of past

0:18:46.400 --> 0:18:48.560
<v Speaker 2>recessions or challenges.

0:18:49.480 --> 0:18:52.440
<v Speaker 3>But I would actually on that point, Rich, I would

0:18:52.440 --> 0:18:55.199
<v Speaker 3>actually say that even though we have a lot of uncertainty,

0:18:55.280 --> 0:18:57.840
<v Speaker 3>I think some things are becoming clear. And again from

0:18:57.880 --> 0:19:03.359
<v Speaker 3>a European perspective for us returning to our old operating model,

0:19:03.800 --> 0:19:09.080
<v Speaker 3>fully globalized world supply chains globally set up, I don't

0:19:09.119 --> 0:19:10.560
<v Speaker 3>think we will return to that world.

0:19:10.680 --> 0:19:13.600
<v Speaker 2>I totally agree. I think you're right. In the longer term,

0:19:13.680 --> 0:19:17.639
<v Speaker 2>I would I think Michael was exactly right that companies

0:19:17.680 --> 0:19:20.720
<v Speaker 2>need to understand we're in a new political reality moving forward,

0:19:20.760 --> 0:19:23.400
<v Speaker 2>even if the tariffs resolve in a more benign way,

0:19:23.480 --> 0:19:27.879
<v Speaker 2>which is not obvious that they will, and being more localized,

0:19:27.920 --> 0:19:30.879
<v Speaker 2>more understanding dynamics in different parts of the world, and

0:19:30.920 --> 0:19:33.920
<v Speaker 2>I would argue this technology topic is the one secular

0:19:33.960 --> 0:19:39.080
<v Speaker 2>trend that's coming. We can do whatever we want around politics, tariffs,

0:19:39.119 --> 0:19:42.920
<v Speaker 2>geopolitical dynamics, AI and a whole set of other related

0:19:42.960 --> 0:19:46.919
<v Speaker 2>technologies are coming fast. And as it relates to innovation, productivity,

0:19:47.240 --> 0:19:51.880
<v Speaker 2>changes to business models, changes to building deeper customer relationships

0:19:51.920 --> 0:19:54.080
<v Speaker 2>like those things are coming. And if you let all

0:19:54.119 --> 0:19:57.800
<v Speaker 2>these short term challenges get in the way of embracing that,

0:19:58.280 --> 0:20:01.239
<v Speaker 2>then I think you're really losing ground competitively, even if

0:20:01.280 --> 0:20:03.080
<v Speaker 2>it seems like you're navigating the short term.

0:20:03.080 --> 0:20:04.720
<v Speaker 1>Okay, I'm going to go out on a limb here

0:20:04.760 --> 0:20:06.600
<v Speaker 1>that if the three of us are around this table

0:20:06.720 --> 0:20:09.680
<v Speaker 1>three months from now, high likelihood we're going to be

0:20:09.720 --> 0:20:13.479
<v Speaker 1>talking about uncertainty in the economy even then, Rich and Michael,

0:20:13.800 --> 0:20:15.119
<v Speaker 1>thanks for your insights today.

0:20:15.440 --> 0:20:16.439
<v Speaker 2>It's great to be with you.

0:20:16.880 --> 0:20:19.280
<v Speaker 1>Thank you, Ed, and great to have you. For those

0:20:19.320 --> 0:20:21.800
<v Speaker 1>of you who'd like to learn more about the CEO Radar,

0:20:21.920 --> 0:20:24.119
<v Speaker 1>you can read the full report at Bloomberg dot com

0:20:24.160 --> 0:20:27.679
<v Speaker 1>slash CEO Radar. If you like what you hear, we

0:20:27.760 --> 0:20:30.479
<v Speaker 1>encourage you to subscribe to this podcast, either on YouTube

0:20:30.560 --> 0:20:33.720
<v Speaker 1>or any of the podcasting platforms that you use, we'll

0:20:33.760 --> 0:20:36.919
<v Speaker 1>have our next episode drop in early Q three with

0:20:37.200 --> 0:20:40.640
<v Speaker 1>entirely new batch of data. I'm Edward Adams of Bloomberg

0:20:40.640 --> 0:20:42.560
<v Speaker 1>Media Studios. Thanks for listening.