Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: listen to our radio show weekdays at two pm Eastern
Speaker 1: only on Bloomberg Radio the last few hours of the week.
Speaker 1: They are going to be interesting when it comes to
Speaker 1: the markets, because we're talking about the virus. We're talking
Speaker 1: about jobs Day. We've got a couple of experts, some
Speaker 1: of our favorites, who really weigh on on the job's report,
Speaker 1: but we're gonna be asking them how the virus is
Speaker 1: affecting employment as well. Those numbers not reflected in the
Speaker 1: latest report very much, but we know they're thinking. And
Speaker 1: one of the things you're gonna hear me say a
Speaker 1: lot over the next few hours is what was important
Speaker 1: about the strength going into the virus concerns that's what
Speaker 1: that labor market or labor report shows us, and that's
Speaker 1: why it's really important. But I look forward to hearing
Speaker 1: you say that. Okay, yeah, try many times. All right,
Speaker 1: wa and wait uh all I said wait, you know
Speaker 1: you said wait what wait, wait what? Yeah, exactly, let's
Speaker 1: try that again. Um. When I read in this morning
Speaker 1: Jamie Diamond emergency heart surgery, I was like, what's going on?
Speaker 1: I know. Yeah, when that headline crossed last night certainly
Speaker 1: sent people scurrying for their Bloomberg churnals to try and
Speaker 1: figure out. Look at that bench once again. Obviously, the
Speaker 1: first concern is Jamie. Okay, he appears to be but
Speaker 1: it was emergency surgery, emergency heart surgery. Uh, one of
Speaker 1: the best known and uh most watch names on Wall Street.
Speaker 1: For sure. We'll get into what the implications of that
Speaker 1: are for him and obviously for the band, and talk
Speaker 1: about that bench. Honoring women. International Women's Day. Check your calendars, folks,
Speaker 1: it's not only about pushing your clocks ahead one hour,
Speaker 1: but it's International Women's Day on Sunday, right, and we're
Speaker 1: going to catch up with a couple of c e
Speaker 1: o s, several of whom have been on this show before,
Speaker 1: including Jillian meet see over at Kd's and Jessica Haniger
Speaker 1: one of our faiths. She used to see you at noonday,
Speaker 1: and and wrap it up with Kate Crater, one of
Speaker 1: our favorite just people overall, going to talk about the
Speaker 1: climate and a little bit about noodles. I think we're
Speaker 1: gonna ask about that. I had some delicious noodles for lunch.
Speaker 1: All Right, we gotta talk about the markets. I'm happy
Speaker 1: about your noodles, but let's talk about the markets. Let's
Speaker 1: set the business week agenda. Vildonna high Rick is with
Speaker 1: us Cross that's a reporter at Bloomberg News in our
Speaker 1: interactive broker studio, along with Dave Wilson, our stocks editor
Speaker 1: here at Bloomberg News. All Right, Dave, talk us through
Speaker 1: this market. What are we seeing? You know, I gotta
Speaker 1: tell you. Here's the comparison that really kind of blows
Speaker 1: my mind. Okay, if you look at the price of
Speaker 1: the thirty year treasury bond. Now we usually focus on yield,
Speaker 1: and obviously we got record blow yields in the thirty year,
Speaker 1: the ten year pretty much across the board. The price
Speaker 1: of the thirty year bond is up six point three
Speaker 1: percent today. That's up more than all but one stock
Speaker 1: in the SMP five hundred. So it just goes to
Speaker 1: show you what's going on today is really as much
Speaker 1: as anything of function of what's happening in the bond
Speaker 1: more market as much as the stock market. I mean,
Speaker 1: you look at you know, why is it that financial
Speaker 1: shares are doing as badly as they are the biggest banks.
Speaker 1: I mean, it's not just Jamie Diamond, and that's part
Speaker 1: of it, because JP Morgan's down more than its peers,
Speaker 1: It's off by almost six percent. But you look at
Speaker 1: Bank of America, City Group, Wells Fargo declines more than
Speaker 1: four percent for all of them, and you know it's
Speaker 1: tied into the idea. You know, yields going down means
Speaker 1: interest rates are going down, means it gets harder for
Speaker 1: the banks to make money. We've seen this story before
Speaker 1: in Europe and Japan where they had negative rates. I mean,
Speaker 1: it is really something to watch, especially with what's happening
Speaker 1: in treasuries. All Right, vill Dona Hier, coming in here
Speaker 1: looking across assets with your team here at Bloomberg, what's
Speaker 1: the one thing that's really standing out as you talk
Speaker 1: to investors and you talk to your colleagues. Well, I
Speaker 1: was hoping to look back at this entire week with
Speaker 1: you guys, because if we think about what's driven markets
Speaker 1: this week, at one point it was Joe Biden. At
Speaker 1: another point it was tomism over the Fed, then it
Speaker 1: was pessimism over the Fed. Then it was optimism over
Speaker 1: the government's response, then pessimism over the government's response. And
Speaker 1: so what investors have been telling me really is nobody
Speaker 1: really knows what's going on. It's really really hard to
Speaker 1: try to price in what exactly is going to be
Speaker 1: happening in terms of the coronavirus impact, which is why
Speaker 1: you have investors shrugging off the job support this morning,
Speaker 1: something that would typically move markets. Yeah, exactly. And you
Speaker 1: know what's interesting, I think was it yesterday that we
Speaker 1: were looking at the weekly tally and or the day
Speaker 1: before we're still seeing gains for the week overall, But
Speaker 1: that's not the case now because of another day of
Speaker 1: selling today. Well, it's also a reminder, and I'm glad
Speaker 1: you brought up that sort of back in forth Fieldana,
Speaker 1: because you know John Author's when he was on with
Speaker 1: David Weston just a few minutes ago, made a really important,
Speaker 1: but you know seemingly obvious point, which is it's a
Speaker 1: reminder this week feels like that the markets ultimately are
Speaker 1: the reflection of humans in many ways, and there is
Speaker 1: a legitimate uncertainty and there's a legitimate dare I say
Speaker 1: fear that is driving a lot of this with little
Speaker 1: doses of optimism, little spites of optimism coming through. So
Speaker 1: Monday we have an update, and then we have a
Speaker 1: down date, then we have an update, then we have
Speaker 1: a down date. So it's really hard and speaking for
Speaker 1: me in speaking with people, I asked them, is it
Speaker 1: time to buy the dip? It's really really hard for
Speaker 1: for anybody to to make that case right now, just
Speaker 1: because you're maybe a value guy like pot because people
Speaker 1: have been so out of favor that I mean, there
Speaker 1: are some partifying correct and talking with John Thompson yesterday,
Speaker 1: if I was a capital manament, yeah, but you have
Speaker 1: to be okay with the idea that you are not
Speaker 1: going to get the low necessary right because things are
Speaker 1: going to be that violatile. I mean, you look at
Speaker 1: the travel stocks today. It's a perfect example. They were
Speaker 1: beaten up earlier today now you're seeing more of a
Speaker 1: mixed bag I mean, you've actually got airlines higher United
Speaker 1: It's up three and a half percent, and yet the
Speaker 1: cruise lines are down, the hotels are down. You know,
Speaker 1: booking holdings in online travel is down. So you know,
Speaker 1: this is a market that really is is kind of
Speaker 1: trying to figure out where we go from here as
Speaker 1: much as anything, and struggling to do it with the
Speaker 1: fluctuations that we're seeing in share prices. And I think
Speaker 1: the problem is we don't have any clarity still about
Speaker 1: the virus, Like just the conversations that we have around
Speaker 1: the newsroom, it's like, wow, did you hear about this?
Speaker 1: Did you hear about this? And then every saying but
Speaker 1: we still haven't done a lot of testing, like we
Speaker 1: don't know. Other folks are saying, I think it's overblown.
Speaker 1: I think we're going to be okay, And I do
Speaker 1: think this is something that you will be able to
Speaker 1: at some point book end. Here was the start, and
Speaker 1: we're starting to see less cases. It's being contained, and
Speaker 1: I do think there is the potential for a v
Speaker 1: shaped recovery where when people start to see the end
Speaker 1: of this. But that's the problem. We just don't know
Speaker 1: where the end As far as book ending goes. I mean,
Speaker 1: one sort of detail that comes to mind. Starbucks has
Speaker 1: reopened of the Chinese coffee shops that were closed because
Speaker 1: of the coronavirus. So it's already starting to happen there.
Speaker 1: Of course, it's gonna be a while before you see
Speaker 1: a similar sort of recovery around you know what we're
Speaker 1: talking about it yesterday we've seen a lot of the
Speaker 1: ones from that company, and so that's you can see
Speaker 1: that we know in terms of what China's doing and
Speaker 1: book ending again, all right, thank you both so much. Phil,
Speaker 1: Donna Hyrick, cross set reporter for Bloomberg. A busy week,
Speaker 1: we know. Dave Wilson, stocks editor, Uh, that is so true.
Speaker 1: Charlie Pellet is dancing in the studio and that's exactly
Speaker 1: how we fail feel. Um. We did get the monthly
Speaker 1: jobs report US hiring surges. It was the biggest game
Speaker 1: since May of twenty eight. But keep in mind, yes
Speaker 1: it shows a labor market on solid footing, but it's
Speaker 1: all before the spread of the virus and the concerns.
Speaker 1: So as we've been staying around here at Bloomberg, it's
Speaker 1: stale data. So what do you need to know about
Speaker 1: the labor market and the economy. Joining us once again
Speaker 1: is Sendet Caffezi, chief economist at Lending Tree, here back
Speaker 1: in our Bloomberg Interactor Broker studio. Really really nice to
Speaker 1: be here with you once again. So it is whoops,
Speaker 1: my mic just felt it is still data, stay stale data, right, Yeah,
Speaker 1: I mean it's uh, it's irrelevant in a way, but
Speaker 1: it's important that we have a strong label market going
Speaker 1: into this crisis. Uh So it does, you know, give
Speaker 1: us some room or some uh some cushion, uh, you know,
Speaker 1: as we deal with this health crisis that's affecting the economy. Alright,
Speaker 1: So knowing all that going into it, what jumped out
Speaker 1: at you in terms of specific pockets of strength it
Speaker 1: we always count on you and you always deliver to
Speaker 1: really sort of take us down the level. What do
Speaker 1: you see? Yeah, So before coronavirus, the big story of
Speaker 1: the economy was that we were having a really mild
Speaker 1: winter that was boosting a lot of weather sensitive sectors,
Speaker 1: particularly the housing markets. We've seen big jumps in housing
Speaker 1: starts and in this report and January's report both had
Speaker 1: construction jobs over forty tho. So that was kind of
Speaker 1: the detail that stood out to me. Well, and I
Speaker 1: want to go back to this whole idea of that
Speaker 1: we went into the virus on rather strong footing, and
Speaker 1: how much better than if we said you were going
Speaker 1: to bring it up a lot, because I think it's
Speaker 1: a solid point and I heard it this morning, like
Speaker 1: listening into Bloomberg Radio, this whole idea that if we
Speaker 1: had gone into it on a weaker footing, this could
Speaker 1: be potentially more problematic. It would probably hear the R
Speaker 1: word talked about a lot more recession. So how do
Speaker 1: you see that going into this virus on strong footing,
Speaker 1: perhaps more solid foundation, How does that help us perhaps
Speaker 1: on the other side when we get out of the virus. Yeah,
Speaker 1: So I one, I don't actually have like a recession
Speaker 1: probability for this particular crisis, but I don't, But I
Speaker 1: would say it would be higher if we were going
Speaker 1: in on week of footing, right, um, and then coming
Speaker 1: out the other side. It's really difficult to say. It
Speaker 1: really depends on the persistence, uh, and how widespread the
Speaker 1: crisis gets. But you know, certainly strong housing demand which
Speaker 1: is probably going to continue because rates are now even
Speaker 1: lower than they were before, so that should be something
Speaker 1: that supports the economy depending on how much this this
Speaker 1: health scares spreads like wanting at each other. Such an
Speaker 1: important point, well, I said to Jason, and I tweeted
Speaker 1: out because I was listening to Surveillance this morning. They
Speaker 1: had a guest on it and they said, you know,
Speaker 1: the financial folks want to talk about the markets and
Speaker 1: what's going on. Doctors want to talk about refinancing their mortgages,
Speaker 1: which I find it's such a great way of summing
Speaker 1: up what's going on. I mean, there is a reality
Speaker 1: and upside to this low rate environment, especially if you
Speaker 1: own a home. Yeah, I mean it's the greatest time
Speaker 1: in history ever to refinance a mortgage. Rates are down,
Speaker 1: you know, forty basis points from just three months ago,
Speaker 1: and really with the moves yesterday and today are probably
Speaker 1: going to be down fifties sixty basis points, which means
Speaker 1: even if you refinance three months ago, you can save
Speaker 1: even more money by refinancing again today. For each hundred
Speaker 1: thousand dollars that you've borrowed versus three months ago, say
Speaker 1: forty fifty basis points decline in rates, you can save
Speaker 1: an extra ten thousand dollars over the life of the loan,
Speaker 1: which is big money. Yeah, and so what are you here?
Speaker 1: I mean, you guys do an amazing amount of research.
Speaker 1: I know you also have a window. One of the
Speaker 1: reasons and one of the other reasons we love talking
Speaker 1: to you other than you'd be very smart, is you
Speaker 1: have so much data at your fingertips through your platform
Speaker 1: to understand customer behavior. Given what we know about the
Speaker 1: uncertainty the economy right now, what are you hearing what's
Speaker 1: sort of bubbling up through that data? Yeah, so our
Speaker 1: data is mortgage data, A lot of it is refinance data.
Speaker 1: So I'll say our data is actually um kind of
Speaker 1: not telling us what's really going on in the acroning, right,
Speaker 1: because we're seeing volumes up just for this week compared
Speaker 1: to a week the same week last year, up six percent, right,
Speaker 1: and it's because of the fallen rates. Uh. And even
Speaker 1: January and February were already up to so it's already
Speaker 1: a very strong time for like mortgage and refinancing, and
Speaker 1: it's gotten even stronger, which is, you know, probably the
Speaker 1: opposite of what's happening in most of the economy. Well,
Speaker 1: but I do have to ask you, like synthesize that
Speaker 1: with the fear candidly that's out there. At some point,
Speaker 1: do you anticipate paid that some of that enthusiasm to
Speaker 1: refinance wears off a little bit because people are more
Speaker 1: for lack of better terms, sort of existentially worried about
Speaker 1: like civilization, for you know, not to be too over
Speaker 1: the top about it. I mean, yeah, I think that's
Speaker 1: a that's a fair point. Uh, what I will say,
Speaker 1: I think because when you refinance one, you don't really
Speaker 1: have to interact with anybody. You can just sit at
Speaker 1: home and do it. It's one of the few economic
Speaker 1: actions that you can already say the house. So it's
Speaker 1: not like you're having out and buying you know, you're
Speaker 1: not sort of putting a lot of money to work.
Speaker 1: In fact, you're probably saving a little money ultimately. Yeah, yeah,
Speaker 1: you're saving a good amount of money. Um. The bigger
Speaker 1: risk is on actually on like home sales where you
Speaker 1: know one you know, I was originally the whole week
Speaker 1: I've been talking about, Hey, people won't want to go
Speaker 1: out and like look at homes, uh, you know, social distancing.
Speaker 1: But the other interesting thing that I've picked up the
Speaker 1: past couple of days is that people who are selling
Speaker 1: their houses don't want. Stranger is walking through the house
Speaker 1: touching everything. Um, so there's actually going to be both
Speaker 1: a demand and a supply constraint on home sales if
Speaker 1: this continues and gets bigger and bass right, So somebody
Speaker 1: who wants to make a first time purchase, like there
Speaker 1: might not be the inventory because people are like, I
Speaker 1: don't want it my home. Yeah, totally. Yeah, it's interesting.
Speaker 1: I just saw a stat about how much attendance at
Speaker 1: open houses has fallen in New York City. Already, all
Speaker 1: right to die, kept feezy. Always great to catch up
Speaker 1: with you, chief economists. The sweatshirt, I know you look great.
Speaker 1: We're making it casual Friday for somewhere. Mike Bloomberg, another
Speaker 1: alum of Johns Hopkins, is smiling. Thank you so much
Speaker 1: and great to see you. You are listening to Bloomberg
Speaker 1: Business Week. Well, let's move to one of the most
Speaker 1: read stories of the day, and that has to do
Speaker 1: with Jamie Diamond, the CEO and chairman of Morgan Morgan
Speaker 1: JP Morgan Cheapers. It's been a crazy week. Michael Moore
Speaker 1: is with this US finance team leader. Uh, tell us
Speaker 1: what happened with Jamie? I mean, this was a shock.
Speaker 1: I mean they the bank had their investor day last
Speaker 1: week and he was on stage as always holding fourth
Speaker 1: but yesterday before work, had some chest pains and took
Speaker 1: himself straight to the hospital rather than going into the office.
Speaker 1: And that probably saved him because this is a very
Speaker 1: acute condition. Um. And you know a lot of people
Speaker 1: die before they even make it to the hospital if
Speaker 1: they don't think it's something serious. Uh. But luckily doctors
Speaker 1: were able to catch it early and uh repair it.
Speaker 1: Has he had any heart problems before, or heart related problems,
Speaker 1: not that they were aware of. He had broke cancer
Speaker 1: several years ago and had to take some time away,
Speaker 1: but this seemed to be an acute thing, right, Um,
Speaker 1: So happily he seems to be recovering and is doing okay. Uh. Meanwhile,
Speaker 1: it has brought to the four one of the most
Speaker 1: probably talked about succession issues on Wall Street, maybe across
Speaker 1: all of corporate and mayor Rika. You know, it's been
Speaker 1: a running joke, as you know better than I that
Speaker 1: every time he's asked when he's gonna retire, he says
Speaker 1: in five years. He said that, I believe over the
Speaker 1: last six years. Uh, but what does this mean, what
Speaker 1: are people talking about now in the wake of this,
Speaker 1: UH of the surgery. Yeah, I think you know, they
Speaker 1: are talking about kind of on two tracks. There's the
Speaker 1: short term, which is Gordon Smith and Daniel Pinto or
Speaker 1: the co presidents. They're kind of stepping in and running
Speaker 1: day to day while he's out. UM. You know, the
Speaker 1: expectation right now is that he'll be back and that
Speaker 1: he UH. Typically it takes a month of recovery, according
Speaker 1: to the doctors we talked to. UH. But you know,
Speaker 1: you never know someone's state of mind or you know,
Speaker 1: how how things progress, so UH in the short term,
Speaker 1: it's those two. Longer term there has been the succession
Speaker 1: plan of UH and as you mentioned, with Jamie always
Speaker 1: saying five years, you never really know when that's real
Speaker 1: and when it's not. UM. So Marian Ake and Gen
Speaker 1: peep Sack, we're seen as too that we're being groomed.
Speaker 1: In that longer term. They both have served as chief
Speaker 1: financial Officer. They somewhat swapped roles last year to try
Speaker 1: to get them both broader experiences. But they're, you know,
Speaker 1: both less than a year into that swap and UH
Speaker 1: and are seen perhaps needing a little more time so
Speaker 1: younger than Smith and Pinto right right by about a decade.
Speaker 1: So uh so that does seem like there are kind
Speaker 1: of two tracks here, the short term issue and what
Speaker 1: this means for the long term timing. Like you do
Speaker 1: wonder too, if you know, you know, Jamie Diamond comes
Speaker 1: back and kind of you know, maybe I'm reading too
Speaker 1: much into it, but I've seen enough individuals where they
Speaker 1: go through, you know, an illness or something and they
Speaker 1: kind of rethink, you know, how do I want to
Speaker 1: spend the rest of my life? And I do wonder this.
Speaker 1: You know, he has been with what fifteen years with
Speaker 1: JP Morgan. You think about what he did and steering
Speaker 1: the firm through the crisis and and really you know,
Speaker 1: the financial community looks to him for Q when we're
Speaker 1: in a state of financial uncertainty. But I do wonder
Speaker 1: you know, what's to come. Yeah, you do wonder that. Um,
Speaker 1: you know, everyone reacts to it differently. For Lloyd Blank
Speaker 1: find joking that you know, when he went through cancer,
Speaker 1: he said, I think you're supposed to learn something from this,
Speaker 1: But I didn't get that moment. Well on some double
Speaker 1: down because they're like I love this job. I'm just
Speaker 1: know or whatever, and Diamond has always expressed that he
Speaker 1: loves that perch. It's a very powerful seat. He has
Speaker 1: in the last five years moved two more kind of
Speaker 1: like a policy focus of you know, expressing not just
Speaker 1: what's good for banking, but you know, his ideas for
Speaker 1: fixing America or politics, like you do wonder right constantly
Speaker 1: whether he would run for president um and it's because
Speaker 1: he's been out there publicly on some issues, so he
Speaker 1: does seem to like that perch, right, And even if
Speaker 1: we do see a change in administration, you do wonder
Speaker 1: whether he, you know, does take some sort of job
Speaker 1: in a Biden or probably not a Sanders, but you know,
Speaker 1: potential a Biden administration. Uh so what happens next sort
Speaker 1: of wait and see. At this point, right, a month,
Speaker 1: you said, is the typical recovery, Yeah, I mean, and
Speaker 1: you know, this is of course complicated by the fact
Speaker 1: that you have this huge logistical problem of the coronavirus
Speaker 1: and people and JP Morgan splitting up trading times and
Speaker 1: having people work from home. So certainly that does complicate
Speaker 1: things at the moment. But yes, the typical recovery is
Speaker 1: at least a month, and you know, after that it's not,
Speaker 1: you know, fully in the clear. You have to monitor
Speaker 1: your blood sure and so forth, and these are not easy,
Speaker 1: low stress jobs to say the least. All right, Michael Moore,
Speaker 1: thank you so much, US finance team leader looking after
Speaker 1: all things Wall Street for us here at Bloomberg. Some
Speaker 1: great context on Jamie Dimond, and I should say we
Speaker 1: wish Jamie, oh absolutely what a titan in this business.
Speaker 1: And you know someone who has been at the four
Speaker 1: recovery you alluded to during one of the most uh
Speaker 1: difficult times in financial market. Yeah, Chippy Morgan chairs by
Speaker 1: the way, down a seven point at their lows today,
Speaker 1: still down about six point three percent, but they've bounced
Speaker 1: off a little bit off of that low level. Thanks Sex.
Speaker 1: All right, well, that's up for debate. But farmers definitely
Speaker 1: fighting our fixes a thank you anything. Tractors are alright, well,
Speaker 1: farmers are definitely fighting over fixes when it comes to UM,
Speaker 1: the company that makes so many of them. John Dear
Speaker 1: that story in our Bloomberg Business Week magazine, currently on
Speaker 1: newstands on the Terminal and at Bloomberg dot com. Let's
Speaker 1: get into it with Bloomberg News Projects and Investigations. Reporter
Speaker 1: Peter Waldman. He is in our San Francisco bureau along
Speaker 1: with our Bloomberg Business Week editor Jill Webber. He's in
Speaker 1: our Interactor Broker studio right here in New York. Um, Peter,
Speaker 1: fascinating story set the scene. What exactly is going on? Sure? Um, Well,
Speaker 1: across the Midwest, you've got farmers who are accustomed to
Speaker 1: repairing their own machines for deck, It's in decades and decades. Um.
Speaker 1: They're quite manually inclined and like to do their own
Speaker 1: mechanical work. Nowadays, with computers digitization UM, software controls literally
Speaker 1: modem under the farmers tractors seat. Uh, it's much harder
Speaker 1: to work on a John Dear or any of the
Speaker 1: big manufacturers stuff. It's all software driven and they can't
Speaker 1: fix their own stuff. And the right to repair has
Speaker 1: become the catchphrase here, Peter. It's also become a political issue,
Speaker 1: and some of the candidates. Democratic candidate candidates have have
Speaker 1: really um prioritized it. Um. Why why does it have
Speaker 1: such political undertones? Well, Elizabeth Warren in particular, a former
Speaker 1: candidate she last year campaigning in Iowa, which she did
Speaker 1: for quite a bit, UM, was smitten with the issue.
Speaker 1: She talked to farmers. She heard that the right to
Speaker 1: repair their own farm equipment was meaningful to them, that
Speaker 1: they were concerned that the big equipment manufacturers were monopolizing
Speaker 1: parts and services, that they couldn't just hire an independent
Speaker 1: mechanic to fix their tractor, and that they always had
Speaker 1: to get someone from a dealership to come out with
Speaker 1: software to reflash and recalibrate, and it was very expensive
Speaker 1: and time consuming. So there was a real kind of
Speaker 1: grassroots interest and effort. And in that case, Elizabeth Warren
Speaker 1: caught on and she said, there ought to be a
Speaker 1: national law that allows independent mechanics and farmers to have
Speaker 1: all the same software that the dealerships have. And the
Speaker 1: big equipment manufacturers and their dealerships, most of whom are independent, disagree.
Speaker 1: They have rejected that idea. And why why does John
Speaker 1: Dear want to keep it this way? Well, there are
Speaker 1: multiple reasons. The one that they talk about the most
Speaker 1: is they cite safety concerns that these up to twenty
Speaker 1: ton combines and megatractors are dangerous if people go meddling
Speaker 1: with the software, uh hacker or even a well intended
Speaker 1: farmer or independent mechanic could do something wrong and the
Speaker 1: next thing, you know, a big harvester is harvesting a
Speaker 1: house or a bunch of farm workers in a field
Speaker 1: when it goes awry. So they're very concerned about that.
Speaker 1: The second concern they frequently site is the interest of
Speaker 1: some farmers and some of their consultants and software providers
Speaker 1: and mechanics perhaps in modifying things such as a mission controls,
Speaker 1: which is a big deal. There are strict E p
Speaker 1: A emission requirements on these big diesel systems and UM
Speaker 1: and therefore a lot of things equivalent to our catalytic converters,
Speaker 1: but even larger that really sap power and UH and
Speaker 1: energy efficiency or mileage so to speak. And there's a
Speaker 1: big farmer interest in in delete eating that stuff through software,
Speaker 1: and the big companies don't want them to do that.
Speaker 1: There's also a third reason, of course, which is money.
Speaker 1: Um these are virtual monopolies. Well and and Peter, it
Speaker 1: does feel like part of the reason this is caught
Speaker 1: on the way to did that this has and you
Speaker 1: alluded to this through the political discussion as well, is
Speaker 1: this is such an iconic company in so many ways,
Speaker 1: and it's one of these things that it's one of
Speaker 1: these issues. Rather that feels relatively straightforward, in part because
Speaker 1: everybody knows John Deer. You know, I mean, we just
Speaker 1: played the song. There are many country songs we could
Speaker 1: have played that reference John Deer. The public profile and
Speaker 1: the iconography of this company shouldn't be overlooked here. It
Speaker 1: sounds like absolutely not. It's literally a nineteenth century company
Speaker 1: founded by someone who forged one of the early plows
Speaker 1: um of that era. Anyway, and uh and then has
Speaker 1: increasingly automated things for the next hundred and fifty years.
Speaker 1: And they're at the point now that they're automateding them
Speaker 1: sort of out of the hands of farmers, and that's
Speaker 1: what's upsetting people. At the same time, you can ask,
Speaker 1: you know, across the farm belt and even on the
Speaker 1: coasts where they farm a bit differently and usually smaller scale,
Speaker 1: But you can ask people, well, you know, are you
Speaker 1: loyal to Deer? How do you feel about their systems?
Speaker 1: And they'll they're they're common refrain as well. We bleed
Speaker 1: green around here. They love those green machines. So there's
Speaker 1: a great deal of loyalty to John dear right, and
Speaker 1: this is sort of causing some some tension. Paul Paul
Speaker 1: rather um Peter, you know, what I want to ask
Speaker 1: you is that these machines and the amount of data
Speaker 1: flow that's being accumulated sent up into the cloud, and
Speaker 1: I guess letting John, dear you know, figure out how
Speaker 1: to make everything better has made these farmers much more productive.
Speaker 1: And so do they have a case, dear being, you know,
Speaker 1: have a case in saying that will wait a minute,
Speaker 1: we really need to be in control of this data
Speaker 1: and you farmers are benefiting as a result of it. Yeah,
Speaker 1: you're right. It cuts both ways. Absolutely that we all
Speaker 1: know automation computers really improve efficiency or in this case,
Speaker 1: harvest and yields, So there's no question that they've benefited
Speaker 1: as well. On the software side, I'd say it's probably
Speaker 1: a mix. I mean, they do certainly have a case
Speaker 1: that they cannot repair their systems, and there's some really
Speaker 1: debilitating situations. I mean, it's very often these complex emission
Speaker 1: control devices on the newer systems that will go bad
Speaker 1: on a very cold day and that takes a few
Speaker 1: hours for someone to come out from the dealer with
Speaker 1: a ten or fifteen minute software fixed. It's ridiculous how
Speaker 1: simple it is. So there probably is a compromise. It's
Speaker 1: reachable here where they can make available a lot more
Speaker 1: diagnostic and repair software and limit the modification side of things,
Speaker 1: which the companies certainly want to do. Peter, when you
Speaker 1: think about where Big Deaton guess kind of headed, where
Speaker 1: where do you think, uh, where do you think the
Speaker 1: puck could go here? Um? I think that the tide
Speaker 1: is is inevitable right, that there are people mechanically minded,
Speaker 1: and we profile one very very closely in this magazine piece.
Speaker 1: His name is Kevin Kenny, and and he's a very
Speaker 1: firm believer that, uh as he call it, hot riding
Speaker 1: is a national birthright. That he ought to be able
Speaker 1: to work on a system, or a farmer who pays
Speaker 1: six or eight hundred thousand dollars for a combine ought
Speaker 1: to be able to get in there and fix it
Speaker 1: him or sometimes herself. But the companies disagree. I think
Speaker 1: the companies are gonna are gonna have their way on
Speaker 1: this one. There's just too much embedded software, too many,
Speaker 1: too many safety considerations, and too much efficiency efficiency gain. So,
Speaker 1: as I said, you're going to see an increasing amount
Speaker 1: of digitization in the whole farming agricultural field, literally down
Speaker 1: to the point where you'll get these prescriptions and software
Speaker 1: messages that will literally drive these things and control the
Speaker 1: steering wheels in the field down to a quarter inch
Speaker 1: where they where they plant it. It's believes that incredible.
Speaker 1: It's amazing, and it's a great read, and there's so
Speaker 1: much in that story. I'm Peter. Thank you so much.
Speaker 1: Peter Waldan Projects and Investigations reporter, joining us from our
Speaker 1: bureau in San Francisco. Joe Weber, Do Not Touch It editor,
Speaker 1: a Bloomberg Business Thanks for listening to Bloomberg Business Week.
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