WEBVTT - Bloomberg Wall Street Week: Mnuchin, Rattner, Summers 0:00:00.240 --> 0:00:05.000 This is Bloomberg Wall Street Week. Market shruggle, higher consumer prices, 0:00:05.040 --> 0:00:07.400 the economy is in the process of rebounding. Will the 0:00:07.400 --> 0:00:10.479 flutter reserve have its own digital currency? The financial stories 0:00:10.520 --> 0:00:12.879 that cheap hard work. Many people think the eels are 0:00:12.880 --> 0:00:15.080 just going to keep marching up. We have more spending 0:00:15.120 --> 0:00:17.200 coming out of Congress. One of the big questions I 0:00:17.200 --> 0:00:19.880 think on investor's minds inflations through the eyes of the 0:00:19.920 --> 0:00:23.840 most influential voices, Larry Summers, the former Treasury Secretary, Bryan 0:00:23.920 --> 0:00:27.240 Wynahan back of America, Will Smart, CEO of Charlie Sharp. 0:00:27.360 --> 0:00:31.560 Bloomberg wool Street Week with David Weston from Bloomberg Radio. 0:00:32.080 --> 0:00:34.840 It was the dog that didn't bark, at least not yet, 0:00:35.400 --> 0:00:39.199 as natural gas prices, a Chinese property collapse, and a 0:00:39.360 --> 0:00:43.000 US debt default all reared their ugly heads and then 0:00:43.159 --> 0:00:46.040 went back to sleep. This is Bloomberg Wall Street Week. 0:00:46.240 --> 0:00:50.120 I'm David Weston. Despite those disappointing jobs numbers of Volatile 0:00:50.200 --> 0:00:53.120 Week and equities showed a modest gain for the week overall, 0:00:53.159 --> 0:00:55.840 with the SMP up a bit under one percent in 0:00:55.920 --> 0:00:57.960 the Dow up a bit more than one percent, But 0:00:58.000 --> 0:01:00.560 there was more action with the ten year tree as 0:01:00.640 --> 0:01:03.400 yields went up for the seventh straight week, ending up 0:01:03.440 --> 0:01:06.080 over one point six percent. To take us through the 0:01:06.120 --> 0:01:08.600 week and the longer term prospects for investors, Welcome to 0:01:08.720 --> 0:01:11.280 Stephen Ratner. He's chairman and CEO of Will and Advisors, 0:01:11.400 --> 0:01:14.560 which invests the personal and philanthropic assets of Michael Bloomberg. 0:01:14.640 --> 0:01:17.039 He's the founder majority owner of our parent company, and 0:01:17.120 --> 0:01:20.280 Joe Anne Feenie, partner in Advisors Capital Management. Joe, and 0:01:20.400 --> 0:01:22.000 let me start with you. As I said, there were 0:01:22.000 --> 0:01:24.399 a lot of little spooks this week. We're a little 0:01:24.440 --> 0:01:27.440 nervous about things. Are there real risks out there that 0:01:27.600 --> 0:01:29.200 just happen to go away for the time being, or 0:01:29.640 --> 0:01:32.240 did we overreact? You know, David, it's as if investors 0:01:32.280 --> 0:01:34.400 just woke up and realized that the stock market is 0:01:34.440 --> 0:01:38.440 a risky place. You know, you see COVID having surged 0:01:38.480 --> 0:01:41.120 for a while, You see a slowdown economic growth because 0:01:41.160 --> 0:01:43.440 of all the shortages we're having. You know, people are 0:01:43.520 --> 0:01:46.480 now paying more attention to inflation and recognizing that interest 0:01:46.520 --> 0:01:49.080 rates will eventually have to move higher, and you know 0:01:49.160 --> 0:01:52.240 that that has created a bit of volatility. It's volatility 0:01:52.280 --> 0:01:55.920 that you know, if we think back is actually pretty normal. Uh, 0:01:55.960 --> 0:01:58.640 And so you know, yes, investors got a little bit nervous. 0:01:58.880 --> 0:02:01.080 We saw also volatile little we've seen you know, growth 0:02:01.080 --> 0:02:04.280 Bow continuing to outperform as investors run to some of 0:02:04.320 --> 0:02:07.160 the bigger cap stocks that appear to have a longer 0:02:07.240 --> 0:02:09.960 runway of secular growth ahead of them. So, Steve, what 0:02:10.000 --> 0:02:12.800 about you, you're a longer term investor, as you sort 0:02:12.880 --> 0:02:16.000 through this, which are the false negatives and which are 0:02:16.000 --> 0:02:18.079 the ones that you're really worried about in the longer term. 0:02:18.240 --> 0:02:20.079 Let me start with the ones that I worry about. 0:02:20.120 --> 0:02:25.120 The thing I worry most about is inflation transmitting itself 0:02:25.160 --> 0:02:28.120 into higher interest rates, interest higher interest rates being the 0:02:28.240 --> 0:02:31.000 enemy of the stock market and of investing in general, 0:02:31.639 --> 0:02:34.320 and that, to me is the singular biggest risk. There 0:02:34.360 --> 0:02:36.640 plenty of other risks, but I do think for the 0:02:36.680 --> 0:02:40.120 foreseeable future we're on a positive growth growth trajectory. Is 0:02:40.120 --> 0:02:43.520 still an enormous amount of excell calling you can call 0:02:43.520 --> 0:02:45.640 it access or surplus or whatever you want to call it, 0:02:46.000 --> 0:02:49.760 money rattling around in the economy. Government transfers money that 0:02:49.800 --> 0:02:52.880 people didn't spend last year during the lockdown and so forth, 0:02:53.320 --> 0:02:55.520 And so I don't think there's any growth issue, but 0:02:55.600 --> 0:02:58.240 I do think there's a serious inflation interest rate risk 0:02:58.280 --> 0:03:00.720 out there. So Joan, let's pick up on of that specifically. 0:03:00.720 --> 0:03:02.440 I talked to see the Nut in the former Treasury 0:03:02.440 --> 0:03:04.440 sectary this week and he said he thinks the ten 0:03:04.520 --> 0:03:06.640 years going to three point five in part because he 0:03:06.639 --> 0:03:10.000 agrees with Steve he's really concerned about inflation. Is the 0:03:10.000 --> 0:03:12.080 stock market ready for three point five percent in the 0:03:12.080 --> 0:03:15.040 ten year yield? Well, we've already seen some pullbacks in 0:03:15.080 --> 0:03:18.000 some of those higher multiple stocks because investors are finally 0:03:18.000 --> 0:03:20.880 realizing that market interest rates right here are too low, 0:03:21.120 --> 0:03:22.840 and the fan has made it clear they're gonna get 0:03:22.840 --> 0:03:25.880 the taper their purchases and they're gonna hold away from 0:03:25.960 --> 0:03:28.280 raising short term rates. But as they taper, the long 0:03:28.400 --> 0:03:31.000 term rates are are going to start to rise, and 0:03:31.080 --> 0:03:33.920 we should expect that the filter into higher multiple stocks. 0:03:34.040 --> 0:03:35.640 Those are the stocks are going to see the biggest 0:03:35.640 --> 0:03:38.640 declines in their multiples. And that's why we advise our 0:03:38.640 --> 0:03:41.400 clients to make sure if you're gonna own expensive stocks 0:03:41.440 --> 0:03:44.000 like that, make sure they have very good growth profiles, 0:03:44.320 --> 0:03:46.480 you know, which a lot of them do. But yeah, 0:03:46.480 --> 0:03:49.280 it's a risk. I think it's an asymmetric risk across 0:03:49.280 --> 0:03:52.280 the stock market because not all stocks trade at multiples 0:03:52.280 --> 0:03:54.680 that are vulnerable to rising interest rates, but some of 0:03:54.680 --> 0:03:56.880 them really are, and so investors really need to stay 0:03:56.880 --> 0:03:59.920 away from owning concentrated positions and all those stocks that 0:04:00.040 --> 0:04:02.600 it's so well during the heart of the COVID crisis, 0:04:02.960 --> 0:04:05.560 So Steve, the consensus seemed to be in response to 0:04:05.600 --> 0:04:08.240 those very disappointing jobs numbers that in fact, it wasn't 0:04:08.280 --> 0:04:10.680 going to deter the FED, which seems to attracted to 0:04:10.720 --> 0:04:13.960 start tapering perhaps November, the next meeting they have. At 0:04:14.000 --> 0:04:16.480 the same time, if the inflation really is worse than 0:04:16.520 --> 0:04:19.120 what the FED is understanding, is there a danger they'll 0:04:19.120 --> 0:04:21.599 have to really react much more violently when it comes 0:04:21.839 --> 0:04:24.120 Well first, I think it's I think it's risk you 0:04:24.160 --> 0:04:26.120 to try to read too much into any month of 0:04:26.200 --> 0:04:29.680 jobs numbers. This month had a bunch of abnormalities in 0:04:29.720 --> 0:04:33.520 it relating to UH people teachers and school employees going 0:04:33.560 --> 0:04:36.400 back to work in September and so on and so forth. UH. 0:04:36.560 --> 0:04:39.680 The labor force participation number was very disappointing that people 0:04:39.680 --> 0:04:41.719 are actually still dropping out of the labor force, not 0:04:41.800 --> 0:04:45.320 coming back into the labor force, So all of that 0:04:45.400 --> 0:04:49.320 obviously does push you onto the slower side of the economy. 0:04:49.560 --> 0:04:52.320 But on the other side, um, I do think I 0:04:52.320 --> 0:04:54.480 don't think it's a question of when the FED decides 0:04:54.520 --> 0:04:56.159 the taper. I think it's a question of when the 0:04:56.160 --> 0:04:59.560 bond market decides that inflation is now the biggest concern 0:04:59.680 --> 0:05:02.280 rather than slower growth, and the FETE is going to 0:05:02.400 --> 0:05:04.880 end up, perhaps in a reactive position rather than a 0:05:05.040 --> 0:05:07.640 leading position on that issue. Joanne, if that is a 0:05:07.760 --> 0:05:10.240 risk taking in account of all the other risks as well, 0:05:10.600 --> 0:05:13.640 what specific stocks do you do you like at this point, Well, 0:05:13.720 --> 0:05:15.440 there there are several to choose from, depending on what 0:05:15.480 --> 0:05:17.360 you're trying to accomplish. We try to add a few 0:05:17.360 --> 0:05:20.880 different elements secular growth stocks that can hold up against 0:05:20.920 --> 0:05:24.720 those inflation increases and interested increases. Steve, I understood you 0:05:24.800 --> 0:05:26.520 were saying at the beginning, you're not so worried about 0:05:26.560 --> 0:05:29.159 the growth pattern as you are about possible inflation. But 0:05:29.200 --> 0:05:31.760 talk to me about China. Am I overly focused on 0:05:31.839 --> 0:05:34.479 Evergrand and the Chinese property market, because I've seen some 0:05:34.520 --> 0:05:38.480 remarkable numbers about how much of Chinese growth is depending 0:05:38.520 --> 0:05:41.280 upon that property market, and therefore how much of global 0:05:41.320 --> 0:05:43.400 growth is because we defended so much on China over 0:05:43.400 --> 0:05:46.600 recent years. Well, you're certainly right to worry about everywhere, 0:05:46.600 --> 0:05:49.000 and the problem with China in general, Ever Grand certainly 0:05:49.000 --> 0:05:52.279 being an example of it, is there's so much opacity 0:05:52.320 --> 0:05:55.120 in China that it's really hard to know what the 0:05:55.160 --> 0:05:57.560 facts are, what we should even be worrying about. I 0:05:57.600 --> 0:05:59.960 think the Chinese. Look, I think everybody on the planet 0:06:00.080 --> 0:06:02.039 is aware of the ever Grand problem. I think the 0:06:02.120 --> 0:06:04.120 Chinese is certainly aware of it. I think they're trying 0:06:04.120 --> 0:06:06.960 to manage their way through it. I would be cautiously 0:06:06.960 --> 0:06:09.360 optimistic that they will be able to manage their way 0:06:09.400 --> 0:06:11.560 through it. They have a lot of tools at their disposal, 0:06:11.880 --> 0:06:13.640 they don't have to deal with Congress and so on 0:06:13.720 --> 0:06:16.240 and so forth. But but it is certainly, it is 0:06:16.240 --> 0:06:17.760 certainly a risk. But let me mention just one of 0:06:17.800 --> 0:06:20.479 the risk quickly, which I've meant to mention before, which 0:06:20.520 --> 0:06:23.560 is the risk of corporate profit margins. So I agree 0:06:23.560 --> 0:06:26.479 that as or as I said, growth is definitely happening 0:06:26.480 --> 0:06:28.920 out there. But the question is really where the companies 0:06:28.960 --> 0:06:30.839 are going to continue to be able to pass along 0:06:30.880 --> 0:06:33.640 the increasing costs of their raw materials and their other 0:06:33.760 --> 0:06:36.560 and their other supplies, and that is an issue for 0:06:36.720 --> 0:06:39.679 corporate profits and then obviously for the stock market. After 0:06:39.760 --> 0:06:42.560 that reassuring note to finish on, thank you so much 0:06:42.560 --> 0:06:45.159 to Joe and Feenie of Advisor's Capital Management. Thank you 0:06:45.200 --> 0:06:48.440 so much to Steve Ratner of will A Advisors. Coming up, 0:06:48.560 --> 0:06:52.479 the investment opportunities in fintech and the need for crypto 0:06:52.600 --> 0:06:56.240 regulation from a new player in the space, former Treasury 0:06:56.240 --> 0:07:00.720 Secretary Stephen Manuchin. That's next on Wall Street Week on Bloomberg. 0:07:06.000 --> 0:07:10.000 This is Bloomberg Wall Street Week with David Weston from 0:07:10.120 --> 0:07:16.160 Bloomberg Radio. Fintech, everybody's talking about it, even if we're 0:07:16.200 --> 0:07:19.520 not always sure what it is we're talking about. For some, 0:07:19.720 --> 0:07:23.280 it's all about cryptocurrencies with all the promise and all 0:07:23.400 --> 0:07:28.680 the uncertainty. Here's Don Fitzpatrick, Sorrow's fund management CEO. There's 0:07:28.760 --> 0:07:33.120 two million users around the world. Um so I think 0:07:33.120 --> 0:07:37.400 this has gone mainstream. For some, like Citadel CEO Ken Griffin, 0:07:37.560 --> 0:07:41.440 all that uncertainty keeps them from even touching crypto. We 0:07:41.880 --> 0:07:46.080 don't trade crypto because of the regulatory uncertainty. For others, 0:07:46.200 --> 0:07:49.720 it's not about cryptocurrency as such, but about a better 0:07:49.760 --> 0:07:53.280 way to transfer money and settle accounts. Here's Bank of 0:07:53.320 --> 0:07:58.120 America's Brian moynihan and Aperture investors Peter Krauss. One half 0:07:58.240 --> 0:08:00.640 the money moved by consumers today a Bank America today 0:08:00.880 --> 0:08:04.400 has moved digital one half. The more interesting aspect of 0:08:04.480 --> 0:08:08.400 cryptocurrency is not the fact that it is a speculative value, 0:08:08.720 --> 0:08:13.360 but did it's a mechanism by which you can actually trade, settle, 0:08:13.880 --> 0:08:19.120 and effectively record transactions immediately or instantaneously. That's the much 0:08:19.120 --> 0:08:22.080 more valuable part of crypto, and some see the move 0:08:22.200 --> 0:08:25.440 to digital currencies as a way to democratize all the finance, 0:08:25.880 --> 0:08:28.800 removing some of the costs and frictions that keep much 0:08:28.800 --> 0:08:31.640 of the world's population out of the system. That are 0:08:31.680 --> 0:08:36.199 many frictions and international finance and domestic finance. Many people 0:08:36.280 --> 0:08:38.960 don't have easy access to digital payments. You know, in 0:08:39.000 --> 0:08:41.640 the US you need a debit or credit card or 0:08:41.640 --> 0:08:45.439 a bank account to have access to digital payments. International 0:08:45.480 --> 0:08:49.599 payments are still beset by lots of impediments. They're expensive, 0:08:49.720 --> 0:08:53.600 they are very time consuming, it's very difficult to track payments. 0:08:53.640 --> 0:08:57.240 So there is a real need for better digital payments. 0:08:57.320 --> 0:09:01.400 That was Cornell professors. But however, you regard the move 0:09:01.480 --> 0:09:04.480 to digital of our financial systems, the one thing that's 0:09:04.520 --> 0:09:07.719 for certain is that it is coming, and that as 0:09:07.800 --> 0:09:11.720 it comes, we will see regulations shape its future. Something 0:09:11.840 --> 0:09:16.480 SEC Chair Gary Ginstler, Investor Ken Griffin, and Senator Elizabeth 0:09:16.480 --> 0:09:20.440 Warren all agree is needed. Many of these tokens do 0:09:20.679 --> 0:09:25.000 meet the tests of being an investment contract or a 0:09:25.040 --> 0:09:29.080 note or some other form of security that we bring 0:09:29.120 --> 0:09:34.479 them within the investor protection remit of the SEC. Chairperson 0:09:34.559 --> 0:09:38.800 Ginstler is spot on on the need to have thought 0:09:38.840 --> 0:09:41.880 for regulation around cryptocurrency. If people are going to be 0:09:41.920 --> 0:09:44.000 out there trading in it, there needs to be a 0:09:44.040 --> 0:09:48.839 cop on the b Whatever we mean by fintech. Former 0:09:48.880 --> 0:09:52.600 Treasury Secretary Steve Manuchin means to invest in it through 0:09:52.760 --> 0:09:55.800 his new two point five billion dollar fund called Liberty 0:09:55.960 --> 0:10:00.240 Strategic Capital, And for the former secretary, it all begins 0:10:00.360 --> 0:10:03.720 with payment systems. But we really like the payment space. 0:10:04.000 --> 0:10:08.160 We think that's a gigantic opportunity, particularly for real time 0:10:08.440 --> 0:10:13.080 cross border occurrences. I think the underlying technology of blockchain 0:10:13.320 --> 0:10:16.720 and using stable coins is something that's very interesting. But 0:10:16.800 --> 0:10:19.199 let me just comment because I saw a Bloomberg article 0:10:19.240 --> 0:10:22.240 on one of the big stable coins. In my view, 0:10:22.800 --> 0:10:25.840 you know, one, some of these stable coins should most 0:10:25.880 --> 0:10:28.960 likely be regulated. In two, if they're backed by dollars, 0:10:29.400 --> 0:10:32.880 they should be freely transferable, and we should make sure 0:10:33.480 --> 0:10:36.600 that they're really backed by dollars, so that dollars are 0:10:36.640 --> 0:10:40.240 held by a custodian bank and that they're secure. Let's 0:10:40.240 --> 0:10:42.079 go exactly. I'm glad you raised that because it was 0:10:42.120 --> 0:10:45.000 a piece on Bloombergs about Tether, specifically saying that right 0:10:45.000 --> 0:10:47.959 now they have sixty nine billion tether's outstanding and forty 0:10:48.040 --> 0:10:50.920 eight billion of them were issued this year. Theoretically, that 0:10:50.960 --> 0:10:53.400 means they have six and nine billion dollars of more 0:10:53.480 --> 0:10:56.720 or less US cash somewhere. How sured are we that 0:10:56.760 --> 0:10:58.760 they actually have that money. Well, I don't know much 0:10:58.760 --> 0:11:01.360 about Tether other than what I wrote about, and I 0:11:01.400 --> 0:11:04.120 thought the piece was actually quite interesting, but again that 0:11:04.160 --> 0:11:07.120 they shouldn't be like casino chips, that they should be 0:11:07.720 --> 0:11:10.280 in my opinion, if you're going to issue a stable coin, 0:11:11.000 --> 0:11:15.440 the actual money should go be held in a regulated bank, 0:11:16.160 --> 0:11:19.560 uh in a trust account, and the people who hold 0:11:19.559 --> 0:11:22.960 the stable coins should be able to exchange those for 0:11:23.280 --> 0:11:26.640 real dollars at any time, So the stable coins should 0:11:26.679 --> 0:11:31.080 be invested in US treasuries or things that look like 0:11:31.360 --> 0:11:36.360 US treasuries, money markets of highly liquid backed investments. As 0:11:36.440 --> 0:11:38.520 soon as not your job anymore. It was your job. 0:11:38.559 --> 0:11:40.640 Now it's Janet Gellen's job to figure out how you 0:11:40.640 --> 0:11:43.319 should best regulate that. She's had some meetings, as you know, 0:11:43.720 --> 0:11:46.679 to try to figure out regulation of things like stable coins. 0:11:46.880 --> 0:11:48.840 From your point of view, is that something that should 0:11:48.880 --> 0:11:51.760 be the FED responsibility? Is that the SEC? Where does 0:11:51.800 --> 0:11:56.320 that responsibly lie? Well, the Secretary of Treasury oversees a 0:11:56.480 --> 0:12:01.720 committee of all the different regulators, and that's the right place. 0:12:01.920 --> 0:12:05.800 So these issues cross different regulators. Some of them are 0:12:05.840 --> 0:12:09.839 Treasury regulations through Finsen, some of them are the o 0:12:10.000 --> 0:12:11.960 c C for banks, some of them are the FED, 0:12:12.000 --> 0:12:16.960 and some of them are the SEC. And in general, um, 0:12:17.000 --> 0:12:19.320 you know, I'm fine if people want to trade bitcoin 0:12:19.400 --> 0:12:22.559 and cryptocurrencies, but I think there should be full transparency. 0:12:22.640 --> 0:12:25.880 These shouldn't be the equivalent of a Swiss numbered bank account, 0:12:26.280 --> 0:12:28.520 So if you're going to trade in these, they should 0:12:28.559 --> 0:12:32.760 be fully regulatory compliant, fully b s A compliant. And 0:12:32.920 --> 0:12:36.160 one of our big issues is to focus on cyber security, 0:12:36.840 --> 0:12:40.360 and again one of the problems with ransomware is right 0:12:40.400 --> 0:12:43.400 now it's way too easy to pay a twenty five 0:12:43.440 --> 0:12:47.360 million dollar ransom payment in bitcoin. You know, you can't 0:12:47.440 --> 0:12:50.120 wire twillion dollars to people who you don't know, you 0:12:50.160 --> 0:12:54.200 can't deliver cash. I believe the regulation should be same 0:12:54.600 --> 0:12:57.600 on these other cryptocurrencies. So as you look to make 0:12:57.640 --> 0:13:01.520 investments with your fun in this area, how vulnerable are 0:13:01.559 --> 0:13:04.880 your investments to sort of regulatory changes? I mean, is 0:13:04.880 --> 0:13:07.280 that a risk and opportunity a little bit of both well, 0:13:07.320 --> 0:13:10.800 As I like to say, I've been regulated when I 0:13:10.880 --> 0:13:13.400 ran a O c C bank, and I've been a 0:13:13.440 --> 0:13:17.680 regulate tour, so I understand both sides. We actually like 0:13:17.880 --> 0:13:22.760 investing in companies in regulated entities because we think the 0:13:23.400 --> 0:13:26.840 legal and political risk is a lot less and we 0:13:26.920 --> 0:13:31.320 think their safety in a regulated institution, particularly whether a 0:13:31.640 --> 0:13:35.199 US institution, whether it's a regulated by the O c C, 0:13:35.360 --> 0:13:38.480 you are regulated by finn Send or or regulated by 0:13:38.480 --> 0:13:41.880 the SEC. So I as an investor, would be very 0:13:41.880 --> 0:13:45.960 careful investing in unregulated entities. There are clearly places where 0:13:46.000 --> 0:13:48.560 it makes sense to do that, but one has to 0:13:48.559 --> 0:13:51.360 be aware of the regulatory risk. To do you have 0:13:51.400 --> 0:13:53.840 a sense of the possibility of contagion. Let me be specific. 0:13:53.880 --> 0:13:55.840 Let's go back to tether promote. There's a suggestion that 0:13:55.880 --> 0:13:58.200 perhaps if tether collapse, I'm not saying it will, but 0:13:58.240 --> 0:14:01.280 if it did, it could affect other currencies. Is there 0:14:01.280 --> 0:14:04.280 a danger of contagion across cryptocurrencies, Well, let me just 0:14:04.320 --> 0:14:07.440 say I'm less focused on the contagion. I'm more focused 0:14:07.480 --> 0:14:10.120 on there are people who are buying that thinking they're 0:14:10.120 --> 0:14:13.360 buying the equivalent of US dollars. So when you say 0:14:13.400 --> 0:14:17.040 you're buying into a stable coin backed by US dollars, 0:14:17.160 --> 0:14:20.640 there should really be US dollars there. So, whether it's 0:14:21.240 --> 0:14:24.280 an issue that drifts into other things, or whether it's 0:14:24.320 --> 0:14:27.520 just investors can't get their money back, I think that's 0:14:27.520 --> 0:14:30.240 a big problem, and that's a regulatory concern. That was 0:14:30.280 --> 0:14:33.840 former US treasure Secretary Stephen Manuchin coming up a look 0:14:33.880 --> 0:14:36.640 inside the future of electric vehicles with the CEO of 0:14:36.680 --> 0:14:40.320 General Motors. That's next on Wall Street Week on Bloomberg. 0:14:45.680 --> 0:14:49.680 This is Bloomberg Wall Street Week with David Weston from 0:14:49.800 --> 0:14:53.920 Bloomberg Radio. General Motors held its Investors Day in Detroit 0:14:54.040 --> 0:14:56.880 this week with a series of announcements, including the debut 0:14:56.920 --> 0:15:01.000 it's much anticipated electric Silverado pickup. We talked with GM 0:15:01.040 --> 0:15:04.600 CEO and chair Mary Barra about GM's position in the 0:15:04.760 --> 0:15:07.640 race to an electric vehicle future with the scale that 0:15:07.680 --> 0:15:10.400 General Motors has. As we continue to leverage l t M, 0:15:10.520 --> 0:15:14.400 we get the scale, we keep leveraging the science to 0:15:14.440 --> 0:15:17.400 get the cost of the battery cells down. Yes, we 0:15:17.400 --> 0:15:19.920 we have a plan is and that's why we're very 0:15:19.960 --> 0:15:22.520 confident that as we move forward through the end of 0:15:22.520 --> 0:15:24.800 the decade, we're going to see margin growth. Mary, I 0:15:24.800 --> 0:15:26.960 want to skip over the Silverado you mentioned it there 0:15:26.960 --> 0:15:29.320 in brief. Everybody's been waiting for this. Now we've seen 0:15:29.320 --> 0:15:31.080 some pictures of it. I know you're gonna have a 0:15:31.120 --> 0:15:33.800 formal unveiling. I think at c Yes coming up at 0:15:33.800 --> 0:15:37.320 the beginning of next year. Why glass roof, Well, I 0:15:37.640 --> 0:15:41.000 think UM one because we can UM and I think 0:15:41.000 --> 0:15:44.240 when you see the entire Silverado E, you're going to 0:15:44.320 --> 0:15:48.320 see what doing a truck off at all electric platform, 0:15:48.360 --> 0:15:51.840 not trying to retrofit off of an existing platform, opens 0:15:51.920 --> 0:15:55.880 up all new design capability functionality. I'm so excited because 0:15:55.920 --> 0:15:59.880 I think the Silverado E will be a very strong 0:16:00.000 --> 0:16:02.520 reforming truck, but it's going to bring new buyers into 0:16:02.520 --> 0:16:06.160 the truck market, into General Motors truck portfolio. Give us 0:16:06.160 --> 0:16:08.360 a sense of what you need General Motors needs from 0:16:08.360 --> 0:16:11.240 the government, and particularly talking about charging stations, because the 0:16:11.240 --> 0:16:14.080 budget proposals that's being kicked around a capital hill includes 0:16:14.160 --> 0:16:16.680 some serious money for charging stations. Do you need that 0:16:16.840 --> 0:16:18.840 in order for General Motors to be a true leader 0:16:18.840 --> 0:16:21.800 in electric vehicles? Well, we're investing in infrastructure, but we 0:16:21.840 --> 0:16:23.880 do think that the federal government is going to play 0:16:23.880 --> 0:16:26.680 a very important part because think about it, David, we 0:16:26.760 --> 0:16:30.480 need to make sure that someone who only owns one vehicle, 0:16:30.560 --> 0:16:33.600 who may live somewhere where they don't have designated parking, 0:16:33.880 --> 0:16:37.120 to have access to reliable charging because that's what is 0:16:37.120 --> 0:16:39.240 going to enable them to buy an electric vehicles. So 0:16:39.280 --> 0:16:42.480 we think it's a partnership between business and UH the 0:16:42.560 --> 0:16:46.480 government to make sure we provide that infrastructure across the country. 0:16:46.600 --> 0:16:48.800 And in addition to that, we want to make sure 0:16:48.880 --> 0:16:50.760 that we see the revisions to the e V tax 0:16:50.800 --> 0:16:54.440 credit that currently right now, um you know penalizes first 0:16:54.480 --> 0:16:57.640 movers in the way it was originally constructed. So you 0:16:57.720 --> 0:17:00.000 do need some help again in the affordability from from 0:17:00.080 --> 0:17:02.240 the government in terms of tax credits. But we think 0:17:02.240 --> 0:17:05.560 that's just going to accelerate e V adoption and we 0:17:05.600 --> 0:17:09.879 think that's a very important part of accomplishing the president's 0:17:09.920 --> 0:17:13.000 goals for from a climate change perspective, and that will 0:17:13.359 --> 0:17:15.959 expedite the adoption of e V s. And again when 0:17:16.040 --> 0:17:19.439 we have a full portfolio with many different entries at 0:17:19.440 --> 0:17:23.280 different price points, that's why we're well positioned. Mary. One 0:17:23.280 --> 0:17:25.080 of the things we've talked about before is we think 0:17:25.080 --> 0:17:27.760 of General Or as a vehicle company, a car company, 0:17:27.800 --> 0:17:30.240 if you will, but you can see it somewhat differently. 0:17:30.240 --> 0:17:32.679 It's a platform company, and sever your announcements go to 0:17:32.720 --> 0:17:35.480 some of the software that can be put onto this platform. 0:17:35.520 --> 0:17:38.960 Talked to us, particularly about for example, Ultra Cruz. Sure, well, 0:17:39.000 --> 0:17:41.639 you know, if if I start with looking at what 0:17:41.800 --> 0:17:44.840 our ultim platform gives us, this platform to do not 0:17:44.960 --> 0:17:48.120 only a full range of electric vehicles, but also into 0:17:48.160 --> 0:17:52.119 other markets other transportation type vehicles. On top of that, 0:17:52.240 --> 0:17:55.560 then we have the Vehicle Intelligent platform that really allows 0:17:55.600 --> 0:17:58.600 for over the error updates to almost any um you know, 0:17:58.680 --> 0:18:02.640 part of the vehicle. Now we're launching Altify, which gives 0:18:02.720 --> 0:18:07.359 us really a platform that we could offer services subscriptions 0:18:07.359 --> 0:18:09.800 like super Cruise. You know that it's not just you 0:18:09.840 --> 0:18:11.800 buy it in the vehicle, but it can be one 0:18:11.800 --> 0:18:14.000 of those things that you you use it on demand 0:18:14.080 --> 0:18:17.920 with a subscription. So we're very excited about the business 0:18:17.920 --> 0:18:20.600 that we're unlocking. We really feel General Motors is moved 0:18:20.600 --> 0:18:24.239 from being an automaker to really a platform innovator and 0:18:24.280 --> 0:18:28.680 the vehicle itself has become a software defined vehicle that 0:18:28.800 --> 0:18:31.440 it really is going to unlock a lot of revenue 0:18:31.480 --> 0:18:35.480 that's at different margins and really serves the customer. You 0:18:35.480 --> 0:18:37.879 said at different margins. Give us a sense put to 0:18:37.880 --> 0:18:41.720 put aside revenue and talk about profit contribution. At what 0:18:41.880 --> 0:18:45.080 point will those services contribute as much as the vehicles 0:18:45.119 --> 0:18:47.880 will to the profits of General Motors. Well, I think 0:18:47.880 --> 0:18:50.080 if you look at you know, our internal combustion business 0:18:50.160 --> 0:18:53.359 or e V business, um, the services are are going 0:18:53.400 --> 0:18:55.800 to play a very material role. But then on top 0:18:55.840 --> 0:18:58.000 of that, there's also cruise, and we think there's tremendous 0:18:58.000 --> 0:19:01.720 growth potential as we commercialize as crews in addition to 0:19:01.800 --> 0:19:06.280 OnStar insurance, Bright Drop and our GM defense operations. So 0:19:06.320 --> 0:19:08.520 that's why there's so much growth, and there's a different 0:19:08.560 --> 0:19:11.280 margin profile for each of those businesses that I think 0:19:11.320 --> 0:19:14.720 is going to lead to improve profitability. You mentioned bright Drop. 0:19:14.760 --> 0:19:16.600 I want to focus on that for a moment because 0:19:16.640 --> 0:19:18.040 one of the things that I think I see with 0:19:18.119 --> 0:19:20.240 General Motors is a move as well from B to 0:19:20.440 --> 0:19:23.399 C business or consumer to be to be business. You 0:19:23.480 --> 0:19:26.240 have the bright Drop situation and their arrangement. FedEx take 0:19:26.280 --> 0:19:27.920 us through that where you are on it all again 0:19:27.960 --> 0:19:29.480 as as we look at bright Drop, what to me 0:19:29.640 --> 0:19:32.320 is so important about bright Drop. It's not simply taking 0:19:32.480 --> 0:19:36.440 an internal combustion light commercial vehicle and making it electric. 0:19:36.680 --> 0:19:40.080 It's really creating an ecosystem and allowing our customers to 0:19:40.119 --> 0:19:42.480 be more efficient. You know, for example, in some of 0:19:42.520 --> 0:19:44.840 the piloting work we've done with fed X, you know, 0:19:44.960 --> 0:19:49.520 really working with their their truck, their drivers, and then 0:19:49.680 --> 0:19:52.600 how they do deliveries. Were able with our e palette 0:19:52.600 --> 0:19:55.520 system to drive more efficiency so they can actually deliver 0:19:55.600 --> 0:19:58.760 more packages in the same amount of time. And then 0:19:58.960 --> 0:20:03.400 providing a whole uh software system to manage all aspects 0:20:03.560 --> 0:20:07.040 of managing the fleet. So it's really an ecosystem. It's 0:20:07.080 --> 0:20:09.760 a total solution for these customers and we've been working 0:20:09.760 --> 0:20:11.560 with them, and that's what they say they want, We're 0:20:11.600 --> 0:20:15.600 going to deliver. That's GM CEO Mary Barrow coming up. 0:20:15.680 --> 0:20:17.639 We wrap up the week as we always do with 0:20:17.720 --> 0:20:21.200 contributor Larry Summers of Harvard. That's next on Wall Street 0:20:21.200 --> 0:20:30.119 Week on Bloomberg. This is Bloomberg Wall Street Week with 0:20:30.280 --> 0:20:33.920 David Weston from Bloomberg Radio. This is Wall Stree Week. 0:20:34.000 --> 0:20:36.159 I'm David Weston. We're going to conclude our week as 0:20:36.200 --> 0:20:38.640 we always do with our special contributor in Walltere Week. 0:20:38.640 --> 0:20:41.040 He is Larry Summers of Harvard. So, Larry, thank you 0:20:41.080 --> 0:20:42.639 so much for being back with us. Let's start with 0:20:42.680 --> 0:20:46.280 the jobs numbers came out on Friday this week, disappointing 0:20:46.359 --> 0:20:48.320 by quite a margin, I must say, although some people 0:20:48.320 --> 0:20:50.880 thought underlying it, the numbers weren't as bad as maybe 0:20:50.920 --> 0:20:53.760 they appeared. David looked. I think this fit the story 0:20:53.880 --> 0:20:58.399 that we've been telling on this show almost exactly. We 0:20:58.520 --> 0:21:02.080 got a lot of demand, we don't have so much supply. 0:21:03.119 --> 0:21:06.800 That's why the unemployment rate came down more than people expected. 0:21:07.480 --> 0:21:12.880 That's why the wage growth was much higher than people expected. 0:21:13.400 --> 0:21:16.560