Speaker 1: This is Bloomberg Business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebec from Bloomberg Radio.
Speaker 1: As we all know, we're nearing that one year mark
Speaker 1: since the Russian invasion of Ukraine and as Ukrainians continue
Speaker 1: to fight to defend their country. The continued war requires
Speaker 1: tapping into a vast donor network that's blossomed over the
Speaker 1: plast twelve months to supply soldiers with everything from boots
Speaker 1: to battle tanks. Carol, Yeah, we're talking crowdfunding. Who knew well?
Speaker 1: Our Mark Champion knew This story, By the way, is
Speaker 1: Today's Bloomberg Big Take. It is one of our most
Speaker 1: read stories on the Bloomberg. As we said, it is
Speaker 1: also Today's Big Take podcast, which you can find up
Speaker 1: Bloomberg dot com or wherever you get your podcasts, and
Speaker 1: be sure to not miss the Big Take on Bloomberg Radio.
Speaker 1: That's weeknights at eleven pm Wall Street Time. Mark Champion,
Speaker 1: Bloomberg News Senior reporter for Internet National Affairs, who wrote
Speaker 1: the story. He is in London. Mark incredible story. Like
Speaker 1: I said, who knew it? It's kind of a form
Speaker 1: of crowdfunding. Tell us what exactly is going on? Yes, well,
Speaker 1: I've been going in and out of Ukraine for the
Speaker 1: last year and it really struck me every time I
Speaker 1: went the amount of just stuff that was getting uh
Speaker 1: you know, provided to the front. Wherever you were, you
Speaker 1: went into a company, they had a warehouse full of
Speaker 1: stuff and it was all donated. And the more I
Speaker 1: know was there, the more it became clear that this
Speaker 1: isn't just you know, the normal stuff you'd expect about,
Speaker 1: you know, food for refugees and so, but it was
Speaker 1: also weapons for the front, cars for the front, everything
Speaker 1: that you can imagine that. You know, people just all
Speaker 1: have relatives there, Their sons and brothers and fathers are
Speaker 1: all at the front and they were trying to find
Speaker 1: the stuff that they said they needed and so they're
Speaker 1: filling all the gaps. But the scale has become really enormous. So,
Speaker 1: you know, the one fund in particular that I talked
Speaker 1: to call come Back Alive, they raised one hundred and
Speaker 1: sixty million in the last dollars in the last year.
Speaker 1: You know, there's others of similar scale. The Central Bank
Speaker 1: if you want to just give extra money, the Defense
Speaker 1: Ministry Central Bank has raised six hundred and fifty million dollars.
Speaker 1: And you know that beyond those funds which they are
Speaker 1: funding sort of expensive million dollar drones and mortars and
Speaker 1: all sorts of things like that. But beyond those funds,
Speaker 1: you just have the tiniest little operations all over the place.
Speaker 1: You know. One place I went to was a guy
Speaker 1: as a former graffiti artist who decided he was just
Speaker 1: going to help all his friends who were going to
Speaker 1: the front, and they were taking their cars and he
Speaker 1: camouflaged them, so he cannot now as camouflage you know,
Speaker 1: around you know, eighty hundred vehicles and then or also
Speaker 1: rifles and all sorts of things. That's so, that's such
Speaker 1: an interesting point. I wonder if that means that there's
Speaker 1: a sense on the ground that the folks who are
Speaker 1: responsible for the crowdfunding understand the needs of civilians in
Speaker 1: the area in a way that maybe the big players
Speaker 1: like the US funders don't necessarily understand. Was that your impression, Mark, Yeah,
Speaker 1: I think that's true. I mean, there's just a lot
Speaker 1: of you know, gaps to fill, and you know, the
Speaker 1: US can't be on top of all of that. The
Speaker 1: Ukrainian defense ministry, you know, for reasons of money, of
Speaker 1: bureaucracy or whatever, it can't do everything. And you know,
Speaker 1: these is this something that Ukrainian has become very used to.
Speaker 1: They because they had very sort of inefficient and corrupt governments,
Speaker 1: they became uh, you know, over more than a decade,
Speaker 1: they've built up this sort of instinct to crowdfund no
Speaker 1: matter what it is, you know, a popular uprising like
Speaker 1: the Maidan protests in twenty fourteen. Well then when the
Speaker 1: war began in the donbas in twenty fourteen fifteen, immediately
Speaker 1: the first instinct is not to ask the government, you know,
Speaker 1: because you don't think you'll get anything the government. If
Speaker 1: you give anything that the government, you think it will disappear.
Speaker 1: So people have just become used to do stuff themselves.
Speaker 1: They just instantly do it, and they just instantly begin
Speaker 1: Facebook groups and so on to say, let's get a
Speaker 1: car for so and so so that he can go
Speaker 1: to the front. So it's it's just really ingrained, and
Speaker 1: I think it is actually more important than the dollar value,
Speaker 1: simply because it says to every soldier at the front.
Speaker 1: You know, I've got an entire society behind me. Talk
Speaker 1: to us about some of the people behind some of
Speaker 1: these Crown crowdfunding efforts. We're talking about what Hollywood celebrities,
Speaker 1: We're talking about, oligarchs, We're talking about everybody. Yeah, absolutely. So,
Speaker 1: you know the fund that was set up by the president,
Speaker 1: President Celenski, he has one called United twenty four and
Speaker 1: they've raised two hundred and eighty seven million dollars. And
Speaker 1: for that fund, he has really reached out and he's
Speaker 1: persuaded by b Streisan to be an ambassador the fund.
Speaker 1: There's a number of other celebrities that have become attached
Speaker 1: to the fund in one way or another, and so
Speaker 1: they raise money. And then you have others who are
Speaker 1: as you mentioned, the oligarchs. You know, some of the
Speaker 1: oligarchs who are not very popular, and we're even seen,
Speaker 1: you know, some years ago as being kind of pro
Speaker 1: Russian because they've supported the party that former President Janakovic
Speaker 1: used to you know, represent So you know Arite who's
Speaker 1: the richest man in Ukraine. He has a big steel
Speaker 1: company called met in Best. They owned Azostyle in Mariupol,
Speaker 1: the steel plant where they were the last stand was
Speaker 1: made in Mariupol. They've lost a lot of their assets,
Speaker 1: but he has actually provided one hundred and fifty thousand
Speaker 1: sets of bulletproof best which they've made in his factories,
Speaker 1: you know, eighty thousand tank traps, all kinds of stuff
Speaker 1: which really does mount up. Well, Carol, you bring up
Speaker 1: a great question about the people who fund this effort
Speaker 1: and who have kind of been the leaders behind it.
Speaker 1: I wonder, Mark, if you can talk about the people
Speaker 1: who are most impacted by it? Is civilians? Is it
Speaker 1: folks who are actually fighting? Who is most benefiting from
Speaker 1: this extra cash? Well, it really is everybody, but the
Speaker 1: Ukrainians are focused very much, you know, on people who
Speaker 1: remain in areas that are either at the front or
Speaker 1: they're in areas that were occupied and were then retaken
Speaker 1: by the Ukrainians, and services there has sort of broken down,
Speaker 1: medical services, you know, food is difficult to sort of
Speaker 1: distribute all those sorts of things. So, you know, as
Speaker 1: I say, it's it's the great strength of this is
Speaker 1: that it's incredibly flexible. It just kind of responds because
Speaker 1: everybody knows somebody, and they then move into these areas
Speaker 1: and provide services that the government is just you know,
Speaker 1: incapable or too slow or you know, doesn't have the
Speaker 1: resources to do. And it really is a kind of
Speaker 1: life saver in these areas. It is for civilians, it's
Speaker 1: but a lot of it is for the front, for
Speaker 1: the soldiers. Um. What's interesting too, and it's funny, you know, Mark,
Speaker 1: as we were getting ready and talking about your story
Speaker 1: in the newsroom, one of the things that came up
Speaker 1: from one of our producers, Aria Gami, he said, you know,
Speaker 1: wait a minute, I understand the US is sending billions
Speaker 1: of dollars in equipment and providing support. We know other
Speaker 1: nations and allies of the US are certainly and of
Speaker 1: Ukraine are providing support. Why is this ultimately necessary? Because
Speaker 1: nothing is enough. I mean, this is a big war.
Speaker 1: We haven't seen a war like this since World War
Speaker 1: Two in terms of pure intensity. I mean they have
Speaker 1: been other very intense wars, but not like this. And
Speaker 1: you know, the Russian side in particular is very well armed.
Speaker 1: It has the entires, you know, not the entire stop.
Speaker 1: It the predominant part of the stocks of the former
Speaker 1: Soviet Union that it built up for the Cold War.
Speaker 1: And in many ways this is you know, they're running
Speaker 1: down through the Cold War stocks of the former Soviet Union.
Speaker 1: The Ukrainians on the other side, you know, they're still
Speaker 1: It starts at this war with around sixteen your tanks.
Speaker 1: You know, Germany has three hundred. You know, Britain has
Speaker 1: two hundred and twenty. So it's you know, they they
Speaker 1: it's not like they had nothing, but you need so
Speaker 1: much in order to pursue a warline there. It just
Speaker 1: eats resources at an incredible rate, and you need a
Speaker 1: lot of everything because it gets destroyed. You know, the
Speaker 1: ninety percent of drones get destroyed. A lot. You know,
Speaker 1: pickup trucks that people bring they get destroyed, either you know,
Speaker 1: because they get hit or they just you know, in
Speaker 1: an accidents, or they just you know, get stuck in
Speaker 1: mud or whatever. That it just eats through resources at
Speaker 1: an incredible rate. And to be fair, we've talked about
Speaker 1: the new double issue Bloomberg Business Week gets out cover
Speaker 1: story is of course marking the one year Russian invasion
Speaker 1: into Ukraine, but talks about, you know, specifically, Maddie, the
Speaker 1: shortage of ammunition on both sides. I mean, both sides
Speaker 1: are going through a lot when it comes to any
Speaker 1: kind of defense equipment and they're just kind of running
Speaker 1: through it. Yeah, and it's it's so critical. I wonder Mark,
Speaker 1: in our final kind of thirty second with you here,
Speaker 1: if you can talk about you mentioned the intensity of
Speaker 1: the war. What is something that you understand about the
Speaker 1: situation on the ground that folks who haven't been in
Speaker 1: Ukraine might be missing about the story. Well, I think
Speaker 1: when you hear that the war has slowed down in
Speaker 1: the East and yet you hit then the casualty rates
Speaker 1: are really high, that is simply about intensity. So they
Speaker 1: may not be moving, but there is a lot of
Speaker 1: artillery shells that are just being exchanged on either side
Speaker 1: and bodies now at this part of the war, just
Speaker 1: bodies on the Russian side being thrown at the war.
Speaker 1: So when you hear that things are nothing's moved or slow,
Speaker 1: it doesn't mean that the war has itself has slowed
Speaker 1: down in terms of intensity, and it hasn't at all. Yeah.
Speaker 1: It's pretty amazing though, and to think about it was
Speaker 1: just a year ago that it all started, but you
Speaker 1: look at how much devastation and how many resources are
Speaker 1: still needed to continue on. Mark Champion, incredible story. Marks
Speaker 1: Senior reporter for International Affairs at Bloomberg News, joining us
Speaker 1: on the phone from London. Be sure to check out
Speaker 1: his bloom Big Take. You can also find it on
Speaker 1: the Bloomberg terminal. Of course, check out the Bloomberg Big
Speaker 1: Take on Bloomberg Radio weeknights at eleven pm Wall Street Time.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekdays from two to five pm Eastern on Bloomberg Radio,
Speaker 1: the Bloomberg Business app band you Doo. You can also
Speaker 1: listen live to our flagship New York station, Just Say Alexa,
Speaker 1: play Bloomberg, Eleve and Dirty on our radar. Chinese president
Speaker 1: she urging his country to accelerate fundamental scientific research so
Speaker 1: it can become self reliant in critical technologies. Basically really
Speaker 1: kind of countering Washington sanctions on everything from semis to software.
Speaker 1: You've also got a Chinese top diplomat calling for peace
Speaker 1: talks to resolve the Russian war in Ukraine. And then
Speaker 1: there is a fascinating Bloomberg opinion piece today that talks
Speaker 1: about if American intelligence is right and China really is
Speaker 1: about to arm Russia in its genocidal war against Ukraine,
Speaker 1: we may be entering a new era in international relations,
Speaker 1: asking if it may be an even more dangerous one
Speaker 1: to dress it all. We've got ed Price principle for
Speaker 1: the geopolitical forecasting firm, or he is principle, I should say,
Speaker 1: of geopolitical forecasting at Ergo, which is a global intelligence
Speaker 1: consulting in forecasting firm. By the way, Ed a former
Speaker 1: British trade official his work with members of the European
Speaker 1: and British parliaments. We are so delighted to have him
Speaker 1: here with Maddie and myself. Ed, there is so much
Speaker 1: going on. How do you separate out the week from
Speaker 1: the chaff when it comes to what's going on in
Speaker 1: foreign affairs and geopolitics? Hi, Caroline, I hope you guys
Speaker 1: very well. It's difficult, right, It's really hard right now
Speaker 1: to separate the signal from the noise. My firm was
Speaker 1: previously very successful at doing that at the start of
Speaker 1: this war, if you remember, we very successfully called it.
Speaker 1: You know, we said they were going in with the
Speaker 1: seventy eight percent confidence a year ago. Today, a year later,
Speaker 1: it does seem that the war in Ukraine is harder
Speaker 1: to read. I would suggest, although there are probably a
Speaker 1: few a few themes that we can point to that
Speaker 1: might help One of them, Carol, is that just at
Speaker 1: the moment that it seems that Russian mistakes are compounding.
Speaker 1: And by Russian mistakes, I mean the sort of strategic
Speaker 1: tomfoolery of using your best troops, the Spectsnaz, your naval infantry,
Speaker 1: your parachute paratroopers at the start of the conflict and
Speaker 1: getting them essentially killed disproportionate to other troops. Strategic mistakes
Speaker 1: like that are compounding at just the time that the
Speaker 1: Ukrainians are getting new vehicles, new equipment, and the morale
Speaker 1: is very high. So I think that's maybe one thing.
Speaker 1: So when we zoom out from the Russia Ukraine situation
Speaker 1: and look a little bit more broadly at all of
Speaker 1: the global geopolitical tensions right now, Ukraine, China, the global
Speaker 1: economy is spy balloons. What is your biggest concern and
Speaker 1: situation to watch for the year ahead? Right? I mean,
Speaker 1: I would be very clear that my biggest concern is
Speaker 1: not necessarily the most likely concern. The biggest concern, of course,
Speaker 1: should be that this low called war in Ukraine, and
Speaker 1: that the threat of conflict over or in Taiwan become
Speaker 1: the same thing, and that there is a general confluence
Speaker 1: of the sorts of trends that we're seeing with regard
Speaker 1: to great power competition right now, I don't think that
Speaker 1: that's likely. That must remain the biggest concern. But within that,
Speaker 1: I mean, you guys just mentioned the fact that the
Speaker 1: Chinese might be thinking about arming the Russians, is helping
Speaker 1: with material, that is a concern because, of course, you know,
Speaker 1: ridiculous spy blooms are one thing, but sending arms, sending
Speaker 1: lethal aid to Europe from China, you know, when you
Speaker 1: think about it, that's that's very concerning. You know, it's
Speaker 1: interesting in this opinion piece too, it says Chinese military
Speaker 1: support for Russia. Again it's an opinion piece by Andrea's Cloth,
Speaker 1: said Chinese military support for Russia would finally turn the
Speaker 1: Ukrainian conflict into a proxy war between two hostile blocks
Speaker 1: with a third trying to stay out of the fray.
Speaker 1: And it does, I do wondered, do we need to
Speaker 1: be thinking that this is where we're going. We've talked
Speaker 1: about kind of a technology war and different things going on,
Speaker 1: but is this what happened? We're dividing the world up
Speaker 1: into maybe three key blocks here. I think that the
Speaker 1: essence of the problem is that Uncle Sam did half
Speaker 1: a job after the Second World War. And by that
Speaker 1: I mean he conquered three countries Germany, Japan, and the
Speaker 1: United Kingdom. I wouldn't necessarily put it like that to
Speaker 1: my friends, but he did and filled those three countries
Speaker 1: with two things, democracy and free markets. For then some
Speaker 1: unknown reason after that, Uncle Sam decided that the two
Speaker 1: big naughty countries China and Russia. And again I wouldn't
Speaker 1: necessarily call them naughty to their faces, but the two
Speaker 1: big naughty countries were only given access to markets, right
Speaker 1: and not. There wasn't a conservative effort to export democracy
Speaker 1: to Russia and China. So in a way, we Americans
Speaker 1: are American now. We Americans have done half a job
Speaker 1: after the Second World War. And the big question is
Speaker 1: can you get away with that? Is it okay that
Speaker 1: democracy only really went halfway around the world when the
Speaker 1: means of markets and capitalism went all the way around?
Speaker 1: That's that's so interesting. I love the way you put that.
Speaker 1: My question with China in the US specifically is always
Speaker 1: like it's a symbiotic relationship, right, if we need each
Speaker 1: other can China really afford to risk interacting with Russia
Speaker 1: on the war when it's economy just reopened. I wonder,
Speaker 1: in the context of what you just mentioned about China
Speaker 1: embracing free markets but not democracy, how you think about
Speaker 1: that relationship. Well, I don't want to get too deep
Speaker 1: and dark here, but if you if you think about
Speaker 1: the Chinese ability as an autocracy, as a totalitarian regime
Speaker 1: to absorb the sort of punishment that a future sanctions
Speaker 1: or blockade regime might impose on it, it doesn't care
Speaker 1: about human life in the same way that that Americans do,
Speaker 1: right and so, and that Europeans do. That's not to
Speaker 1: say that your average Chinese individual or Chinese household doesn't
Speaker 1: care about if I'm talking about the government, to be
Speaker 1: clear and so PRC, I think we'll be able to
Speaker 1: pull things out of the bag in a future confrontation
Speaker 1: that look more like and feel more like an autarchy,
Speaker 1: a strategical autarchy for which I suspect Belton Road has
Speaker 1: a pretty good preparation in many ways that probably surprise us.
Speaker 1: And so really the question is to what extent can
Speaker 1: European economies and the American economy withstand a direct economic confrontation.
Speaker 1: I mean, I've said it before, maybe we need some
Speaker 1: sort of strategic garden furniture reserve. You know, it's a
Speaker 1: silly way of putting it, but we're on the hook. No,
Speaker 1: that is a really, really good point, and it's interesting.
Speaker 1: You know, we had a great story out from our
Speaker 1: Bloomberg team about what the UK government basically was doing
Speaker 1: and kind of doing a disaster scenario if China invaded
Speaker 1: Taiwan and TSMC was shut down or impacted the global
Speaker 1: supply chain, as we know that they produce so many
Speaker 1: what is it, ninety percent of the chips used in
Speaker 1: the world. So I guess I always think about what's
Speaker 1: the constructive conversation as all this stuff is going on,
Speaker 1: where investment strategist ed continue to say that the big
Speaker 1: concerns this year are geopolitical. You know, we're seeing that.
Speaker 1: So what is the constructive And we've only got about
Speaker 1: forty five seconds left here. The constructive answer on Taiwan
Speaker 1: is don't worry about it right now. Ergo's best sources
Speaker 1: have the prospect of an invasion at a very very
Speaker 1: low chance. That's all sorts of reasons that we can
Speaker 1: get into another day. But do expect some kind of disruption,
Speaker 1: something stopping short of a blockade, because of course that's
Speaker 1: an act of war. But do expect that the PRC
Speaker 1: and the Communist Party in China are going to make
Speaker 1: life more difficult in that region. Twenty seconds left, Still
Speaker 1: worried about Russia. I'm always worried about Russia. Yes' always
Speaker 1: worried about Ussia. But I think we're on top and
Speaker 1: I think Ukrainians will win. All right, listen, great to
Speaker 1: check in with you. I know it's busy on your
Speaker 1: end as well, so thanks for carving out some time.
Speaker 1: Ed Price, his principal at Urga, former British trade official,
Speaker 1: and of course joining us via zoom here. I believe
Speaker 1: it is in New York City. All right. You're listening
Speaker 1: and watching Bloomberg Business Week Carol Masser along with Madison Mills.
Speaker 1: A lot to think about, but I do feel like
Speaker 1: this is a year that once again to your political
Speaker 1: front center, and really interesting to hear him saying the
Speaker 1: positive thing at the end there he thinks Ukraine's gonna win. Yeah,
Speaker 1: fascinating right, all right, folks, will continue to cover an
Speaker 1: update on the markets coming your way in just a moment.
Speaker 1: This is Bloomberg Radio. This is Bloomberg business Week inside
Speaker 1: from the reporters and editors who bring you America's most
Speaker 1: trusted business magazine, plus global business, finance and tech news.
Speaker 1: The Bloomberg Business Week Podcast with Carol Messer and Tim
Speaker 1: Stenebeck from Bloomberg Radio. So we're talking about the last
Speaker 1: jobs report where we had about more than half a
Speaker 1: million jobs in January created. I mean, it was just massive.
Speaker 1: You all sad the unemployment rate unexpectedly retreating to its
Speaker 1: lois since nineteen sixty nine. We know, Maddie, that the
Speaker 1: tight labor market persists for many types of workers, including blacksmiths,
Speaker 1: enter robots. Such a cool story we've got here. With
Speaker 1: more on this story, you can find it online at
Speaker 1: Bloomberg dot com, Slash business Week, and on the Bloomberg
Speaker 1: But let's get to it with Ashley Vans. Bloomberg BusinessWeek
Speaker 1: features writer and author of Elon Musk, test Less, SpaceX,
Speaker 1: and The Quest for Fantastic Future. Ashley joins us via
Speaker 1: zoom from Palo Alto, California. Actually great to speak with you.
Speaker 1: I think we are all incredibly jealous of you because
Speaker 1: you have the coolest job in the world. You get
Speaker 1: to try all of this cool stuff. Tell me about
Speaker 1: this latest cool technology that you tried out. Yeah, well,
Speaker 1: a few months ago I went to this company called
Speaker 1: Macana Labs. They're based in southern California, near Los Angeles,
Speaker 1: and they've developed these robots but really some software and
Speaker 1: a lot of sensors to go along with it that
Speaker 1: allows them to bend sheet metal to shape metal in
Speaker 1: ways that would have been done well, that has been
Speaker 1: done for centuries by by blacksmiths, and and you know,
Speaker 1: it's it's just this kind of radical new form of manufacturing,
Speaker 1: automated manufacturing that could be a huge boon to industry overall.
Speaker 1: Is this ultimately actually something that can really scale up,
Speaker 1: ramp up at some point in the future. Yeah, you know,
Speaker 1: right now, this company Makina, they're working with what they're
Speaker 1: working with NASA, the Air Force. They're building in some
Speaker 1: cases kind of spare parts for a fighter jet that's
Speaker 1: really hard to source, or body panels for a rocket
Speaker 1: or something like that. So so not quite mass manufacturing yet.
Speaker 1: The plan, you know, is if all things work out,
Speaker 1: is to have tons of these robots and have them
Speaker 1: going at this on a larger scale and so so
Speaker 1: it could be. But you know, in general, mass manufacturing
Speaker 1: with dyes where you're stamping out parts will probably be
Speaker 1: cheaper for a long time. But this still has a
Speaker 1: big role, all right. Actually, I'm waiting for everybody on
Speaker 1: Twitter to be like, see, we were right, robots are
Speaker 1: going to replace our jobs. I mean, but that's not
Speaker 1: kind of what this is about. This is I mean,
Speaker 1: we don't have a lot of folks necessarily going into
Speaker 1: wanting to be blacksmiths or metal working, right, and we
Speaker 1: have a tight labor market, but there's even a bigger
Speaker 1: thing of people not wanting to go into what many
Speaker 1: would call the trades. But yeah, exactly, I mean, if
Speaker 1: you go talk you know, I spend my time talking
Speaker 1: to manufacturing companies and customers. And the biggest problem right
Speaker 1: now is we had tons, especially in the US, lots
Speaker 1: of kind of mom and pop shops that got kind
Speaker 1: of big, but they would do a lot of this
Speaker 1: metal work. Even for companies like SpaceX. It still happens
Speaker 1: today and in a lot of cases, you know, the
Speaker 1: kids have not ended up wanting to go take over
Speaker 1: the company. Other younger people haven't pursued these trades and
Speaker 1: so right now we have this huge delays in getting
Speaker 1: spare parts in manufacturing writ large, and so it's not
Speaker 1: really replacing jobs as much as it's filling jobs that
Speaker 1: just are not kind of existing right now. So what
Speaker 1: is the economic impact then for the consumer at the
Speaker 1: end of this whole chain? Selfishly? Does this make anything
Speaker 1: cheaper for us? It could make big things cheaper. One
Speaker 1: of the most exciting parts of what Macada is doing
Speaker 1: is that these robots can kind of do things really
Speaker 1: that humans can't. And because you don't have to if
Speaker 1: you're a company, if you're a maker of cars, you
Speaker 1: don't have to put this huge investment. The dyes that
Speaker 1: they used to stamp out body parts cost hundreds of
Speaker 1: millions of dollars when all of a sudden done. So
Speaker 1: if you want a customized car, you want something that's unique,
Speaker 1: these robots could do that cost effectively. And so there's
Speaker 1: this idea that we might have, you know, much more
Speaker 1: choice and variety in some of these things that we buy.
Speaker 1: How much are these puppies cost? While the starter pack
Speaker 1: for the robots, there's a starter pack about two point
Speaker 1: five million dollars. You get two of these robots. They
Speaker 1: look like the ones that people might have seen on
Speaker 1: an automaker's line. A big arm that does stuff at
Speaker 1: the end, and then there's this big contraption that holds
Speaker 1: the sheet metal. And you know, the real trick here
Speaker 1: is that metal behaves really strangely when you bend it
Speaker 1: and start working with it, and it does odd things.
Speaker 1: And that's why we have blacksmiths that have learned this
Speaker 1: stuff over centuries. And so these robots with their software
Speaker 1: that comes in the package, actually know how to do
Speaker 1: these techniques, and they use AI software to get better
Speaker 1: over time. And so but you're kind of starting at
Speaker 1: about two point five million, Well, I want to pick
Speaker 1: up on what you're mentioning that it takes like this
Speaker 1: intense mastery of the craft. How surprised were you that
Speaker 1: a robot was able to successfully do this? I was
Speaker 1: pretty shocked. So for the story, very quickly, I had
Speaker 1: my face digitized. It was scanned by a laser and
Speaker 1: turned into this three D image that the computer could
Speaker 1: feed into the robots. And I expected something really crude,
Speaker 1: no effect to myself to come out on me on
Speaker 1: the other side. I just didn't think the robot would.
Speaker 1: Would you know when you see these arms. They're huge.
Speaker 1: I didn't think it would be able to get all
Speaker 1: the contours of my face and it did you know,
Speaker 1: it created this this kind of four foot large bust
Speaker 1: of me and it's very lifelike. It scares my children.
Speaker 1: I put it by them to keep watch on them
Speaker 1: when I'm not around somewhere. It is it is. I
Speaker 1: got to keep this this souvenir and uh and so
Speaker 1: set over it. You know you're hiding from the kid.
Speaker 1: It's no goad it well, and so I was. I
Speaker 1: was kind of shocked because I was thinking I could
Speaker 1: see like a body panel for a car, just just
Speaker 1: sort of shaping metal into a curve. But this this
Speaker 1: has my nose, my nostrils, my lips, everything, and so
Speaker 1: you know, when you see this giant robot doing this,
Speaker 1: they have these the small tools at the end. It
Speaker 1: was it was quite remarkable. I love this lone in
Speaker 1: your story. How you say that March and his robots
Speaker 1: are still too slow to replace the mass production portion,
Speaker 1: I guess of you know, manufacturing if you will, But
Speaker 1: you say they are ideal for the earlier stages of
Speaker 1: the process, helping companies test their ideas before they commit
Speaker 1: money to final production. It allows companies right to kind
Speaker 1: of play around a little bit, and when we think
Speaker 1: about an innovation or disruption, this is a pretty cool thing. Yeah,
Speaker 1: Because if you're a car company and you want to
Speaker 1: make a new door for a new model, you have
Speaker 1: to pay for the dyes to stay about them, the
Speaker 1: molds to produce all the doors along the way till
Speaker 1: you find the one that fits just writer, that's shaped
Speaker 1: just right. And so that's millions of dollars every time
Speaker 1: you're making an iteration where this robot can actually do
Speaker 1: these these one offs, these five offs at the beginning
Speaker 1: of the process, and then it's only when you figure
Speaker 1: out exactly what you want that you then send it
Speaker 1: to the mass manufacturing process. I think what's fun about
Speaker 1: the story. It takes me back to a job I
Speaker 1: had in high school and a little bit in college,
Speaker 1: and they made plastic parts like sprockets and belts, and
Speaker 1: it was all manufacturing, no, and they had mold and
Speaker 1: like those molds were expensive. So, like you think about
Speaker 1: how these things are made, and this really plays into it.
Speaker 1: Having said that, Ashley, you do have this great vantage
Speaker 1: point when it comes to what's going on in manufacturing,
Speaker 1: and even though we're such a service led economy, a
Speaker 1: lot of stuff still gets made. What are kind of
Speaker 1: some of the big trends that you continue to see
Speaker 1: when it comes to manufacturing. Well, yeah, we've got tools
Speaker 1: like three D printing to go along with this. It's
Speaker 1: bringing this sort of automation and these machines and software
Speaker 1: into this puzzle. But the coolest thing I would say
Speaker 1: is that so much of this is happening in Los Angeles.
Speaker 1: There's probably you know, twelve to twenty manufacturing startups that
Speaker 1: I could roll off and they they're all in LA.
Speaker 1: It's kind of this it's a knock on effect from
Speaker 1: the aerospace industry and the automotive industry, but to the
Speaker 1: extent that there is maybe a modernized leap forward in
Speaker 1: manu factor, LA is probably the single point in the
Speaker 1: entire world where you see the most encouraging signs that
Speaker 1: this could happen to thunk, I know, LA, I would
Speaker 1: think by you more than LA. Right, it's a little counterintuitive,
Speaker 1: but absolutely when it comes to the stuff, it's happening
Speaker 1: in Los Angeles. All Right, this was a lot of fun.
Speaker 1: Love your stories always always, and you just kind of
Speaker 1: open up our mind to so many different things that
Speaker 1: are out there. So Ashley, thank you so much. Take
Speaker 1: care Ashley Vance There guys. He's Bloomberg business Week, features
Speaker 1: writer and author of Elon Musk, Tesla, SpaceX, and The
Speaker 1: Quest for a Fantastic Future. Joining us via zoom from
Speaker 1: Palo Alto, California, you're listening to the Bloomberg Business Week Podcast.
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Speaker 1: journal now. But you let me drive? Oh no, no,
Speaker 1: no no, who's going to honey please? I'll do the
Speaker 1: riding gravels. I don't want to drive. Good question. This
Speaker 1: is the drive to the Globe. Conimul thing Well, Brier up,
Speaker 1: Jo down on Bloomberg Radio. All right, everybody, we've got
Speaker 1: just about sixteen and a half minutes left in today's
Speaker 1: trading session bouncing around here. But we are nearer lows
Speaker 1: as you heard from Charlie when it comes to the
Speaker 1: equity trade, and we definitely have seen some movement in
Speaker 1: the yields off of those FOMC minutes, but we're up
Speaker 1: near just off our highs on that two year at
Speaker 1: four point sixty nine. We do want to talk about
Speaker 1: the markets. We've got Bryant Van Cronkite with us. He's
Speaker 1: senior portfolio manager co team leader for the Special Global
Speaker 1: Equity team at all Spring Global Investments. They've got roughly
Speaker 1: four hundred and sixty three billion in assets under management.
Speaker 1: He is co manager of the All Springs Special MidCap
Speaker 1: Value Fund, which has returned on average about nine percent
Speaker 1: annually over the past five years, putting it in the
Speaker 1: eighty seventh percent dile according to Bloomberg Data. That fund,
Speaker 1: by the way, Maddie, it's up about four percent year
Speaker 1: to date. Brian joining us from Anonymy Falls, Wisconsin. Brian,
Speaker 1: good to have you here on this. We're calling it
Speaker 1: a FED Wednesday and FOMC Wednesday, if you will. What
Speaker 1: do you think about most when you're trying to assess
Speaker 1: what's the smartest strategy in this particular financial market environment?
Speaker 1: I care, I'll be with you again. Yeah, I think
Speaker 1: there's two things to think about. I think we need
Speaker 1: to think about the mackerel, right, what's the FED doing
Speaker 1: and how is that going to drive demand dynamics for
Speaker 1: individual companies. So with that in mind, I'm very focused
Speaker 1: on the paradigm ship that's taking place. The idea of
Speaker 1: the FED can hop into the market and use lower
Speaker 1: rates and quantity of easy to support the economy, I
Speaker 1: think is the paradigm of the last thirty years, not
Speaker 1: the paradigm of the next ten years. And the focus
Speaker 1: now is on inflation, and their resolve is being questioned,
Speaker 1: but I don't think it should be questioned. I think
Speaker 1: they're going to continue to push higher on rates and
Speaker 1: push the into a slowing pattern. And what that said,
Speaker 1: from a slowing pattern or just slowing pattern, I think
Speaker 1: recession is the most likely outcome. Now, the deepness of
Speaker 1: that recession we have to debate, and that depends on
Speaker 1: the manitude of the decisions from here. But the reality
Speaker 1: is h the symptom is inflation, the disease is employment.
Speaker 1: And the tools they have are very blunt. They don't
Speaker 1: have a lot of precision with with their with their
Speaker 1: options here, and so we'll have to see how long
Speaker 1: they stick with the higher for longer, but my guess
Speaker 1: is it'll be longer than people are piking today, which
Speaker 1: drives me to the idea that when picking stocks, we
Speaker 1: don't want to own companies that are reliant or dependent
Speaker 1: on a generous shuttle reserve. So identify companies that have
Speaker 1: unique secular demand drivers for their volume, have unique pricing
Speaker 1: power from a company's standpoint, and have great balance sheets.
Speaker 1: It's those balance sheets that allow companies the optionality to
Speaker 1: drive their own destiny, whether it's through acquisitions, buying stock,
Speaker 1: organic investments. I think the combination of those three elements
Speaker 1: really can allow you to outperform both absolute and relative
Speaker 1: independent of the seat. Bryan, I always think about we
Speaker 1: work when I think about the impact of a zero
Speaker 1: interest rate environment. So I want to get your take
Speaker 1: on tech here. I know that in your note you
Speaker 1: say that you favor you know, quality over low quality
Speaker 1: non earners. What does that mean for tech because they
Speaker 1: love to grow and not necessarily to have a lot
Speaker 1: of cash. Yeah, the biggest beneficiaries from a generous seat,
Speaker 1: as I've been saying for the last ten plus years,
Speaker 1: are the companies that need the most, the ones who
Speaker 1: aren't standing on their own two feet yet, who they're
Speaker 1: not creating their own cash flow, the ones that have
Speaker 1: the most levered balance sheets because they benefit from lower
Speaker 1: cost of capital, and some of those companies show up
Speaker 1: in the tech space. There's value in tech, though I
Speaker 1: think some of the software names that do produce stable
Speaker 1: cash flows are potentially being under value today as rates
Speaker 1: of higher pushing multiples down in that regard. But for us,
Speaker 1: focus is going to be on which companies within tech
Speaker 1: are producing casual to data can be used to cycle
Speaker 1: through through value creating investments like acquisitions or additional organic growth.
Speaker 1: So let's get to names. As we mentioned, your fun
Speaker 1: has beating most of its peers over the past five years,
Speaker 1: annually returning about nine percent according to our Bloomberg data.
Speaker 1: One of the names that you like is Jacob's Solutions.
Speaker 1: The ticker is j I'm looking at the stock. It's
Speaker 1: just down about half a percent so far this year.
Speaker 1: It's a fifteen billion dollar market cap company that is
Speaker 1: involved in engineering and construction. What is it that jumps
Speaker 1: out for you on this one? What we like about
Speaker 1: Jacobs is the transformation they've gone over the last five years.
Speaker 1: They used to be a business that had end market
Speaker 1: exposure to oil and gas and other cychnical end markets,
Speaker 1: and they sold those assets which we deemed non core
Speaker 1: and have reinvested through a streets of acquisition and businesses
Speaker 1: that put them at the center of the consulting advisory
Speaker 1: services that are going to solve. The most complex is
Speaker 1: that our economy faces in the future, things like climate
Speaker 1: change and demographic shifts. And as they've done that shift
Speaker 1: with their asset base, they've now stabilized their cash flow
Speaker 1: production profile going forward. It's far less cyclical, far more stable,
Speaker 1: and along the way, that increases the amount of capital
Speaker 1: they can use for productive growth in the future. So
Speaker 1: today the company is, as an undelivered balance sheet, is
Speaker 1: in the crosshairs of secular demand. With the problems they're solving,
Speaker 1: it has the ability to play offense if the world
Speaker 1: does play defense. If the economy slows down, look for
Speaker 1: them to acquire competitors, look for them to buy back
Speaker 1: their stock. We think that combination allows them to compound
Speaker 1: value in the face of a challenging economy in the future.
Speaker 1: I know that you also like Vulcan, and one of
Speaker 1: the reasons is because of its pricing power. To what
Speaker 1: extent is pricing power one of the key decision factors
Speaker 1: for you when you're figuring out where to put your money.
Speaker 1: I think pricing power is perhaps the most significant indicator
Speaker 1: of a company having a competitive advantage. If you can
Speaker 1: raise your prices when you want to and when you
Speaker 1: need to, that to me shows that your asset base
Speaker 1: is unique. And in the case of Vulcan, they play
Speaker 1: in the aggregate space. There's really only a few areate
Speaker 1: players in the US, and aggregates are the components that
Speaker 1: go into cement and concrete that I'll play, build the bridge,
Speaker 1: that build the buildings in the roads that we all
Speaker 1: rely on every day. And because of the uniqueness of
Speaker 1: this asset base, this industry has seen pricing and go
Speaker 1: up almost every year for the last fifty years, the
Speaker 1: only exception being the Great Financial Crisis, which indicates to
Speaker 1: me these unique assets. And in last year we're seeing
Speaker 1: double digit pricing and again I think we'll see that
Speaker 1: in twenty twenty three. Now from a volume standpoint, it
Speaker 1: can be a little cycnical, right, they are exposed to
Speaker 1: commercial real estates, but they also had influcher spending, right.
Speaker 1: I think of all the bills we passed during the
Speaker 1: pandemic that are now just coming into funding stage. So
Speaker 1: I actually see demand more stable pricing rising while their
Speaker 1: baskets falling. All right, gotta run. Brian good to talk
Speaker 1: names with you and get your view. Brian van Kroncrite.
Speaker 1: He is portfolio managed at all Spring Global Investments. Joining
Speaker 1: us on the phone from a Nominee Falls, Wisconsin. You
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