WEBVTT - Consumers Cruise as AI Looms over Labor 0:00:01.280 --> 0:00:05.119 You're listening to the Bloomberg Opinion podcast count US Saturdays 0:00:05.120 --> 0:00:08.280 at one in seven pm Eastern on Bloomberg dot Com, 0:00:08.320 --> 0:00:11.479 the iHeartRadio app, and the Bloomberg Business App, or listen 0:00:11.520 --> 0:00:13.760 on demand wherever you get your podcasts. 0:00:15.840 --> 0:00:19.440 Welcome to Bloomberg Opinion. I'm Amy Morris. This week we 0:00:19.480 --> 0:00:23.680 look at artificial intelligence. After a year of mass layoffs, 0:00:23.960 --> 0:00:27.520 AI has put the tech industry back in the hiring mood, 0:00:28.000 --> 0:00:31.240 and later we'll look at the health effects of loneliness. 0:00:31.640 --> 0:00:34.440 Turns out being with each other may be just as 0:00:34.479 --> 0:00:38.199 important for your health as diet and exercise. Plus, the 0:00:38.240 --> 0:00:42.000 war in Ukraine continues, but will the support There may 0:00:42.000 --> 0:00:45.120 be shifting public opinion over how much money and equipment 0:00:45.360 --> 0:00:48.800 to send to Ukraine. We begin with the economy. Chief 0:00:48.800 --> 0:00:53.440 economist Vincent Reinhardt at Melon Asset Management tells Bloomberg Surveillance 0:00:53.640 --> 0:00:57.960 that the latest CPI data show some momentum in services inflation, 0:00:58.440 --> 0:01:01.680 a key indicator that the Federal Reserve monitors and that 0:01:01.760 --> 0:01:04.560 could trigger further tightening. In June, Chair. 0:01:04.520 --> 0:01:08.440 Paddell Is indicated that the forward looking indicators of sheltered 0:01:08.520 --> 0:01:11.440 prices that he looks at suggests there's going to be 0:01:11.480 --> 0:01:14.680 good news soon, but it doesn't change the core problem. 0:01:14.760 --> 0:01:18.840 There's some momentum there. The core question to ask is 0:01:19.600 --> 0:01:24.319 was today's print disqualifying for FED action in June? 0:01:24.640 --> 0:01:25.360 Make the answers. 0:01:25.400 --> 0:01:29.440 No, Let's turn out a Bloomberg opinion columnist Jonathan Levin. Jonathan, 0:01:29.640 --> 0:01:32.479 you have a terrific column on the Bloomberg terminal this week. 0:01:32.520 --> 0:01:37.039 It really helps put these things into perspective, featuring the 0:01:37.080 --> 0:01:39.679 cautious optimism one might find on the deck of a 0:01:39.720 --> 0:01:42.840 cruise ship. If people are willing to fill up these 0:01:42.880 --> 0:01:46.400 city sized party ships, how bad could the economy be? Really? 0:01:47.840 --> 0:01:50.160 Yeah, right now, I don't think the economy is very 0:01:50.160 --> 0:01:52.400 bad at all. In fact, you know, we saw this 0:01:52.520 --> 0:01:56.440 in the GDP report recently. Consumer spending has looked strong, 0:01:56.600 --> 0:02:02.200 up three point seven percent quoter on a seasonally adjusted basis. 0:02:03.440 --> 0:02:06.920 You know, it's easy to understand why things are still 0:02:06.920 --> 0:02:10.720 pretty good right now. The unemployment rate is still extremely, 0:02:10.760 --> 0:02:14.800 extremely low. There is still a ton of excess savings 0:02:14.840 --> 0:02:19.200 in this economy leftover from the sort of pandemic stay 0:02:19.200 --> 0:02:24.960 at home months. Economists estimated to be anywhere between you know, 0:02:25.200 --> 0:02:28.079 just four hundred billion and five hundred billion still in 0:02:28.880 --> 0:02:33.120 excess savings, and so you know, you have this phenomenon 0:02:33.320 --> 0:02:37.240 where a lot of people are still projecting recession. There 0:02:37.240 --> 0:02:39.160 are a lot of bears in the stock market. But 0:02:39.200 --> 0:02:42.320 you go on a cruise ship and people are just 0:02:42.720 --> 0:02:44.480 doing the electric slide like there's no. 0:02:44.520 --> 0:02:47.840 Tomorrow it's right. So is that an anomaly? 0:02:47.880 --> 0:02:48.079 Though? 0:02:48.120 --> 0:02:50.400 I mean my question being is this more like pent 0:02:50.520 --> 0:02:53.200 up demand? Is this sort of a snap back from 0:02:53.280 --> 0:02:55.119 having to shut down because of the pandemic? 0:02:56.240 --> 0:02:56.440 Right? 0:02:56.480 --> 0:02:59.320 Well, so a couple of things. I think the pent 0:02:59.480 --> 0:03:04.040 up demand doesn't necessarily preclude a recession. In fact, it 0:03:04.120 --> 0:03:07.680 certainly doesn't, but it makes it a lot harder to 0:03:07.680 --> 0:03:11.040 topple this US consumer, which of course is two thirds 0:03:11.080 --> 0:03:13.640 of the US economy, And as long as there is 0:03:13.680 --> 0:03:16.280 that strength, that's going to be that much harder to 0:03:16.320 --> 0:03:23.600 go into a downturn. So is it anomaly? I think 0:03:23.760 --> 0:03:29.280 maybe yes and maybe no. So what is anomalous? The 0:03:29.360 --> 0:03:33.200 cruise industry is in the very unique situation that they 0:03:33.440 --> 0:03:38.200 essentially shut off supply for about fifteen months, right so 0:03:38.320 --> 0:03:41.840 starting in March twenty twenty and they're going through about 0:03:41.920 --> 0:03:44.960 June twenty twenty one. You couldn't get on a cruise ship, 0:03:45.600 --> 0:03:48.520 no matter how badly you wanted to do it. And 0:03:48.560 --> 0:03:51.880 then they slowly, slowly ramped it back up. There were 0:03:51.880 --> 0:03:57.160 some capacity caps for a while for safety reasons. And 0:03:57.200 --> 0:04:00.760 so this is an industry that does about thirty million 0:04:00.920 --> 0:04:07.160 passengers globally a year, and that if you just average 0:04:07.160 --> 0:04:11.000 out what happened from twenty twenty to twenty twenty two, 0:04:12.040 --> 0:04:15.560 you ended up getting far far less than that. So 0:04:15.680 --> 0:04:20.320 I estimate. I estimate that there's something like unmet demand 0:04:20.880 --> 0:04:23.800 of around sixty million passengers. So if you just were 0:04:23.800 --> 0:04:26.560 to spread that out over a couple of years, that 0:04:26.720 --> 0:04:30.760 is really something that could keep this industry going even 0:04:30.839 --> 0:04:34.160 as other industries suffer. So that is a bit of 0:04:34.200 --> 0:04:37.560 an anomaly. But what's interesting about this post pandemic economy 0:04:37.680 --> 0:04:42.320 is you find somewhat similar stories in other key industries 0:04:42.360 --> 0:04:45.800 as well. Right, you could tell a similar story about 0:04:45.920 --> 0:04:50.720 auto where you know a certain amount of people just 0:04:50.880 --> 0:04:54.320 need to buy a new automobile every single year, but 0:04:54.400 --> 0:04:57.000 during the pandemic a lot of people couldn't get them. 0:04:57.279 --> 0:05:01.359 So people say, well, you know, economic outlook is getting 0:05:01.440 --> 0:05:05.640 kind of dicey. Why isn't auto demand falling off a cliff? More? 0:05:05.680 --> 0:05:09.040 And I think again, pent up demand is part of 0:05:09.040 --> 0:05:09.840 that story. 0:05:09.960 --> 0:05:13.360 Are you seeing similar reflections in the reports that we've 0:05:13.360 --> 0:05:15.840 been getting out, particularly in this past week, like in 0:05:15.880 --> 0:05:19.600 the earnings reports or CPI numbers. Let's just take them 0:05:19.600 --> 0:05:22.560 apart one by one. What did the earnings reports tell you? 0:05:23.520 --> 0:05:23.719 Sure? 0:05:23.839 --> 0:05:26.719 So, going back to the cruise thing, and the reason 0:05:26.760 --> 0:05:29.960 that I got on this whole kick about services and 0:05:30.040 --> 0:05:34.120 pent up demand is Royal Caribbean and Norwegian just had 0:05:34.360 --> 0:05:39.200 absolutely blowout quarters, like completely inconsistent with the idea that 0:05:39.360 --> 0:05:42.520 we're heading into a recession. And I said to myself, Wow, 0:05:42.600 --> 0:05:45.039 how is this possible? Because these are sort of like 0:05:45.279 --> 0:05:50.200 raw indications of where discretionary spending is. There's no business 0:05:50.240 --> 0:05:53.120 spending on a cruise ship, really, you know, the quarters 0:05:53.160 --> 0:05:57.520 were nothing short of spectacular. So I'll just highlight two indicators. 0:05:57.920 --> 0:06:03.440 Number One, bookings look absolutely phenomenal, either close close to 0:06:04.040 --> 0:06:10.280 or exceeding twenty nineteen levels, right, And so that's sort 0:06:10.279 --> 0:06:13.520 of your forward looking indicator. What's you know, how many 0:06:13.520 --> 0:06:16.200 people are looking to get on a cruise ship through 0:06:16.400 --> 0:06:18.720 the rest of the year and into twenty twenty four. 0:06:19.080 --> 0:06:21.880 And then what I think is maybe even more interesting 0:06:22.400 --> 0:06:26.880 is you're seeing record amounts of onboard spend, which I 0:06:26.920 --> 0:06:29.960 see as sort of like sort of a raw kind 0:06:30.000 --> 0:06:35.159 of sentiment indicator. These are your your bar tabs, these 0:06:35.160 --> 0:06:40.320 are your casino bills, you know, the gifts store, which 0:06:40.800 --> 0:06:45.080 we know those can be pretty overpriced. But people are 0:06:45.120 --> 0:06:50.480 people are are spending like they're not very apprehensive about 0:06:50.560 --> 0:06:53.839 maybe losing their jobs or going into a downturn. 0:06:54.120 --> 0:06:57.400 Is that reflected in the CPI as well? 0:06:57.960 --> 0:07:00.440 Yeah, I mean you could, you could sort of see that. 0:07:00.800 --> 0:07:05.080 I think what we have seen in the CPI recently, 0:07:05.560 --> 0:07:08.000 certainly going back to the last three or four quarters, 0:07:08.560 --> 0:07:11.680 is this idea that it's not rolling over like some 0:07:11.720 --> 0:07:15.600 people had thought. It's this resiliency, which sort of a 0:07:15.720 --> 0:07:19.640 word that I and a lot of people probably overuse 0:07:19.280 --> 0:07:24.160 in this context. But what I really mean is, you know, 0:07:24.640 --> 0:07:28.800 CPI went up really fast in twenty twenty one, sort 0:07:28.800 --> 0:07:31.760 of early twenty twenty two. It did roll over, It 0:07:31.800 --> 0:07:34.360 has peaked, but it's if you just look at like 0:07:34.400 --> 0:07:39.360 a three month annualized basis, it's basically just been going sideways. 0:07:39.600 --> 0:07:44.040 So is this, you know, the hottest inflation readings that 0:07:44.080 --> 0:07:46.360 we've gotten in the cycle. No, No, it isn't. But 0:07:46.400 --> 0:07:48.400 it's still pretty dog on warm out there. 0:07:48.840 --> 0:07:52.440 Okay, So that means then, just basically taking what you've 0:07:52.520 --> 0:07:55.119 explained just now, it sounds like we've seen a post 0:07:55.120 --> 0:08:00.480 pandemic recovery, something of a boon. I'm wondering if that's ending. 0:08:00.480 --> 0:08:02.920 Are we watching this taper off now? Does this have 0:08:03.080 --> 0:08:04.080 momentum behind it? 0:08:04.800 --> 0:08:08.960 Yeah, it all depends on a couple of factors. I mean, 0:08:10.160 --> 0:08:14.160 like I said, I think there is something self sustaining 0:08:14.280 --> 0:08:16.720 in some of these pockets of the economy with a 0:08:16.720 --> 0:08:20.120 lot of pent up demand. I think you can't underestimate 0:08:20.640 --> 0:08:24.120 the story that I told earlier in the broadcast about 0:08:24.200 --> 0:08:27.160 excess savings. Five hundred billion dollars is still a lot 0:08:27.200 --> 0:08:31.400 of money, and it could easily take you through the 0:08:31.440 --> 0:08:35.600 fourth quarter, maybe into the first quarter of twenty twenty four. 0:08:36.200 --> 0:08:40.599 None of this means that the economy is bulletproof. I 0:08:40.600 --> 0:08:44.560 wouldn't want to give anybody that impression either. I just 0:08:44.600 --> 0:08:49.160 think that it would take a much bigger shock or 0:08:49.240 --> 0:08:54.080 perhaps much more tightening of credit to really knock this 0:08:54.200 --> 0:08:56.560 economy off balance. I think that's basically. 0:08:56.240 --> 0:08:56.760 Where we are. 0:08:57.040 --> 0:09:01.040 How unusual is what we're seeing. We have these people, 0:09:02.240 --> 0:09:04.920 by these people, I mean, all of us, you know, 0:09:05.000 --> 0:09:07.520 going out and spending and not really worrying so much 0:09:07.559 --> 0:09:11.880 about a coming recession. And at the same time, the 0:09:11.920 --> 0:09:15.679 Fed is standing pat and they keep raising rights a 0:09:15.679 --> 0:09:18.160 little bit here, a little bit there. Have we seen 0:09:18.240 --> 0:09:23.319 this before where the mentality of the public doesn't quite 0:09:23.400 --> 0:09:26.120 match up with what may be happening, or what may 0:09:26.120 --> 0:09:29.440 be happening doesn't quite mesh with the emotion that we're 0:09:29.440 --> 0:09:30.600 seeing on Wall Street. 0:09:31.120 --> 0:09:36.560 Yeah, I mean, there's no underestimating how strange this environment is. 0:09:36.679 --> 0:09:41.080 I really do think that, you know, the pandemic created 0:09:41.120 --> 0:09:44.560 a completely unique set of circumstances, and you know, I 0:09:44.559 --> 0:09:49.040 would again point to that excess savings that makes it 0:09:49.160 --> 0:09:53.920 such that sort of consumer sentiment could come off quite 0:09:54.080 --> 0:09:56.920 a bit. But there's going to be this difference between 0:09:56.960 --> 0:10:00.520 what people are saying and what they're actually doing until 0:10:00.559 --> 0:10:05.000 they're really feeling it in their pocketbooks. The other thing is, 0:10:06.960 --> 0:10:09.600 you know, it all really comes down at the end 0:10:09.640 --> 0:10:13.120 of the day to what happens with unemployment. People talk 0:10:13.160 --> 0:10:17.680 about unemployment being a lagging indicator, and it is, but 0:10:18.200 --> 0:10:23.079 the real impacts on the consumer side are not going 0:10:23.160 --> 0:10:26.040 to be felt, especially in this unique environment with the 0:10:26.080 --> 0:10:32.320 excess savings scenario until until you start to see an 0:10:32.400 --> 0:10:36.480 uptick in unemployment, and we absolutely have not seen that. 0:10:36.800 --> 0:10:41.600 We've seen a slow down in the amount by which 0:10:41.679 --> 0:10:46.079 companies are adding to their payrolls. But with the momentum 0:10:46.080 --> 0:10:50.880 being what it is, it's hard to think that unemployment 0:10:50.960 --> 0:10:54.680 is going to shoot up immediately in the foreseeable future. 0:10:54.960 --> 0:10:58.560 Bloomberg Opinion columnist Jonathan Levin coming up on Bloomberg Radio, 0:10:58.800 --> 0:11:01.280 I'll look at the war and you and which way 0:11:01.360 --> 0:11:05.000 public opinion may be turning. You're listening to Bloomberg Opinion. 0:11:14.040 --> 0:11:17.880 You're listening to the Bloomberg Opinion podcast. Catch us Saturdays 0:11:17.920 --> 0:11:21.040 at one and seven pm Eastern on Bloomberg dot Com, 0:11:21.120 --> 0:11:24.240 the iHeartRadio app, and the Bloomberg Business app, or listen 0:11:24.320 --> 0:11:26.479 on demand wherever you get your podcasts. 0:11:28.840 --> 0:11:32.440 You're listening to Bloomberg Opinion. I'm Amy Morris. This past 0:11:32.480 --> 0:11:35.560 week we got reports that Russia attacked the Kiv region 0:11:35.679 --> 0:11:39.520 in Ukraine with dozens of Iranian made drones. This as 0:11:39.559 --> 0:11:44.320 the European Commission has reportedly proposed sanctions on seven Chinese 0:11:44.320 --> 0:11:47.360 companies accused of selling equipment that could be used as 0:11:47.440 --> 0:11:50.680 weapons in Russia's war in Ukraine. A Secretary of State 0:11:50.720 --> 0:11:53.680 Anthony Blincoln says that between the military aid and the 0:11:53.720 --> 0:11:57.280 financial support plus training that many nations are giving to 0:11:57.440 --> 0:12:01.440 Ukraine's forces, he believes Ukraine can regain some of the 0:12:01.559 --> 0:12:03.040 territory that's been lost. 0:12:03.160 --> 0:12:09.520 My own estimation is that they have in place across 0:12:09.559 --> 0:12:13.280 all of those dimensions what they need to continue to 0:12:13.280 --> 0:12:16.960 be successful in regaining territory that was seized by force 0:12:17.040 --> 0:12:18.679 by Russia over the last fourteen months. 0:12:18.720 --> 0:12:22.000 But public opinion could be shifting on this. Throughout the West, 0:12:22.320 --> 0:12:25.880 support for supplying Ukraine with weapons is starting to waver, 0:12:26.400 --> 0:12:28.520 and in the US more people are starting to say 0:12:28.520 --> 0:12:32.400 that the government is doing too much for Ukraine. In Germany, 0:12:32.520 --> 0:12:37.000 a steady majority contends that diplomatic efforts are not sufficient. 0:12:37.640 --> 0:12:40.280 Let's talk about all of this with Bloomberg Opinion columnist 0:12:40.600 --> 0:12:44.800 Leonid Burshidsky with the Bloomberg News Automation team. Here's a 0:12:44.800 --> 0:12:48.080 column on the Bloomberg terminal about this very issue, and 0:12:48.120 --> 0:12:50.920 he joins us, now, so let's just get down to it. 0:12:50.960 --> 0:12:53.640 How is public support waning for Ukraine? 0:12:54.360 --> 0:13:01.520 Ukraine has received tens of billions of dollars. It is 0:13:01.600 --> 0:13:06.439 now the greatest the biggest recipient of US military aid 0:13:06.640 --> 0:13:09.920 in history. You know, these are huge amounts of money, 0:13:09.960 --> 0:13:14.679 and they're hard to justify to the kind of taxpayer 0:13:14.800 --> 0:13:19.679 who wants the government to act solely in hazer her 0:13:19.720 --> 0:13:26.400 economic interest. So when you discard emotional arguments and those 0:13:26.440 --> 0:13:31.880 of solidarity with Ukraine as a country that faces an 0:13:31.920 --> 0:13:36.640 invasion and basically a war of choice, you know, there's 0:13:36.960 --> 0:13:40.400 enormous human suffering for people who don't really care about that, 0:13:40.559 --> 0:13:44.000 who mainly care about where their tax dollars are going. 0:13:44.600 --> 0:13:48.720 Such huge amounts of help are suspect. Both in the 0:13:48.840 --> 0:13:53.480 US and in Europe. There are, if not majorities in 0:13:53.559 --> 0:13:57.680 most countries, then at least sizeable numbers of such people. 0:13:58.559 --> 0:14:01.200 You know, That's what I wanted to talk to you about. 0:14:01.320 --> 0:14:04.360 If this is a matter of cost and these astronomical 0:14:04.440 --> 0:14:08.679 numbers sort of make people give them pause, or if 0:14:08.679 --> 0:14:11.320 there are also concerns that this is a zero sum game. 0:14:11.440 --> 0:14:13.000 If you're giving all of this money and all of 0:14:13.040 --> 0:14:16.640 these weapons to Ukraine, then over here I am being 0:14:16.720 --> 0:14:19.560 left out. I am somehow not getting my fair share. 0:14:19.760 --> 0:14:20.480 Something like that. 0:14:21.280 --> 0:14:23.840 To these people, this is money that is not going 0:14:23.920 --> 0:14:27.680 to that is not being spent on domestic means a 0:14:27.720 --> 0:14:31.200 lot of people, if not majorities again, but then sizable 0:14:31.280 --> 0:14:35.520 numbers of people do not understand why a foreign country 0:14:35.880 --> 0:14:39.680 quite far away. Even though Ukraine is a European country, 0:14:40.920 --> 0:14:44.320 it is about as far from Spain as Sudan in 0:14:44.440 --> 0:14:49.680 terms of sheer distance. So people don't understand why a 0:14:49.760 --> 0:14:52.920 distant country is getting all that money while there are 0:14:52.960 --> 0:14:58.080 all these domestic issues. There's high inflation, high energy prices 0:14:58.080 --> 0:15:02.240 that are being caused by the war. Well, they'll understand 0:15:02.280 --> 0:15:05.920 why they should be paying for Ukraine to defend itself 0:15:05.960 --> 0:15:08.160 against Russia. They don't really care. A lot of these 0:15:08.200 --> 0:15:11.360 people don't really care who wins in this war ultimately, 0:15:11.520 --> 0:15:12.960 as long as they don't have to pay. 0:15:13.480 --> 0:15:19.680 I actually experienced that firsthand quite recently with someone in 0:15:19.720 --> 0:15:21.760 this country in the United States, and it sort of 0:15:21.800 --> 0:15:25.720 surprised me. This person said to me, Ukraine is traditionally 0:15:25.760 --> 0:15:29.560 a corrupt country anyway, they have scandals going on even now. 0:15:29.720 --> 0:15:33.080 Why should we send our American tax dollars to them 0:15:33.360 --> 0:15:36.440 to help them when they are just as corrupt as 0:15:36.480 --> 0:15:38.360 any other country? Or are they wrong? 0:15:38.960 --> 0:15:43.280 There are There have been a number of corruption scandals 0:15:43.320 --> 0:15:47.120 in Ukraine since the invasion began, But that I think 0:15:47.200 --> 0:15:50.280 is actually a healthy sign because even in a country 0:15:50.280 --> 0:15:55.640 at war like Ukraine, they've got functioning media, a functioning 0:15:55.680 --> 0:16:00.280 free press that is exposing these cases of care option. 0:16:00.600 --> 0:16:06.320 And actually, like the Ukrainian society has been growing less 0:16:06.320 --> 0:16:10.520 and less tolerant of corruption in the last ten years, 0:16:10.600 --> 0:16:16.240 and during the war, I would say they've become especially intolerant. 0:16:17.000 --> 0:16:21.760 So I guess the degree of corruption in today's Ukraine 0:16:21.800 --> 0:16:25.640 is probably not as high as you would expect from 0:16:25.640 --> 0:16:30.200 a country like Ukraine in peace time. So that is 0:16:30.240 --> 0:16:33.280 perhaps not a very strong argument that this money is 0:16:33.320 --> 0:16:36.920 getting stolen. It's probably most of it is probably getting 0:16:37.560 --> 0:16:44.440 spent actually on strengthening the Ukrainian military. But to some people, 0:16:45.280 --> 0:16:48.920 you know, why should we strengthen the Ukrainian military, Why 0:16:49.040 --> 0:16:51.960 do we even care? And you know, I don't think 0:16:52.000 --> 0:16:55.560 governments in the US and in Europe and in other 0:16:56.440 --> 0:17:00.000 Western countries like Canada, Australia, I don't think the governments 0:17:00.080 --> 0:17:06.640 are doing enough to explain to these voters why they 0:17:06.720 --> 0:17:09.680 are also affected by this war and why they should 0:17:09.760 --> 0:17:12.400 want Ukraine to win and not want Russia to win. 0:17:13.280 --> 0:17:15.600 And let's get into that. We're talking with Bloomberg opinion 0:17:15.640 --> 0:17:19.040 columnist leon Ed Barshinsky about how to shore up more 0:17:19.080 --> 0:17:23.600 public support for Ukraine and what governments need to do 0:17:24.160 --> 0:17:27.760 to make that happen. Okay, tell us what should they 0:17:27.800 --> 0:17:30.840 be doing? What are they leaving out that people are 0:17:30.880 --> 0:17:31.679 not getting? 0:17:32.840 --> 0:17:35.920 In the column, I laid out a number of potential 0:17:36.240 --> 0:17:40.159 selfish arguments that the governments would make for voters who 0:17:40.280 --> 0:17:43.800 only care about, you know, basically themselves and how this 0:17:43.880 --> 0:17:47.880 affects them. It's quite a strong argument for that kind 0:17:47.960 --> 0:17:52.800 of person. The money is actually going toward. Well, it's expensive, 0:17:52.840 --> 0:17:56.880 of course, but it's very useful defense research and rearmament 0:17:57.720 --> 0:18:02.480 for the donor countries as well as Ukraine. A lot 0:18:02.560 --> 0:18:05.840 of new weaponry and a lot of new military tactics 0:18:05.880 --> 0:18:08.879 and strategies are being tried out in that war. It 0:18:09.040 --> 0:18:13.920 becomes clear on the battlefield with which technologies work well 0:18:13.960 --> 0:18:18.679 and which don't. That obviously, the military strategists in the 0:18:18.680 --> 0:18:23.080 West who have not really dealt with wars like this 0:18:23.880 --> 0:18:28.600 between very strong rivals such as Russia and Ukraine, they 0:18:28.640 --> 0:18:32.359 have not really seen you know, such uses of equipment 0:18:32.480 --> 0:18:37.119 and such fears fighting in years. So now they realize 0:18:37.160 --> 0:18:40.640 what works and what doesn't. That is extremely valuable. There's 0:18:40.680 --> 0:18:45.680 also the boost to the defense industries that are very 0:18:45.720 --> 0:18:49.960 important employers in many Western countries, in the US certainly 0:18:50.040 --> 0:18:54.800 and in countries like France and Germany. Then there's also 0:18:54.920 --> 0:18:58.680 the sort of the contribution that the whole war and 0:18:59.080 --> 0:19:03.600 helping Ukraine is having on the resilience and the flexibility 0:19:03.720 --> 0:19:08.199 of Western economies like for Germany, for example, shedding the 0:19:08.240 --> 0:19:12.680 dependence on Russian energy was a forced move caused by 0:19:12.720 --> 0:19:13.080 the war. 0:19:13.680 --> 0:19:17.480 When those who don't seem to care now, who have 0:19:17.600 --> 0:19:21.120 not been won over yet, say what do I care 0:19:21.160 --> 0:19:22.960 if Ukraine ceases to exist? 0:19:23.560 --> 0:19:26.720 What do you say as a Russian? I say, like 0:19:26.960 --> 0:19:30.000 Mputin is not going to stop if he wins this. 0:19:30.000 --> 0:19:32.439 This is not going to be the last country that 0:19:32.520 --> 0:19:38.440 he attacks. If he manages to destroy Ukraine as a nation. 0:19:39.440 --> 0:19:42.760 There are other targets. Some of them are natal members 0:19:43.160 --> 0:19:49.040 the Baltic States, especially because of their vulnerable geographic position, 0:19:49.560 --> 0:19:54.720 because of the uncertainty of whether the West is actually 0:19:54.760 --> 0:19:59.640 going to defend them in case they're attacked, The decision 0:19:59.680 --> 0:20:02.200 to de send them on the parts of the US 0:20:02.240 --> 0:20:06.920 and the West is going to be costlier, and if 0:20:07.640 --> 0:20:11.080 support for Ukraine ceases, and it's allewed to lose. There's 0:20:11.119 --> 0:20:16.240 also the matter of China versus Taiwan. If Putune wins this, 0:20:16.640 --> 0:20:19.160 China will be encouraged to make a move in Taiwan. 0:20:19.560 --> 0:20:23.359 Bloomberg opinion columnist and member of the Bloomberg News Automation team, 0:20:23.440 --> 0:20:27.159 Leonid Bershinski, after a year of mass layoffs, fear of 0:20:27.280 --> 0:20:31.080 missing out on the artificial intelligence wave is boosting jobs 0:20:31.200 --> 0:20:34.959 in Silicon Valley. Companies and investors hyped up about what 0:20:35.160 --> 0:20:39.639 artificial intelligence could mean for future profits and worried about 0:20:39.640 --> 0:20:42.120 what that would mean if they're left behind, and all 0:20:42.160 --> 0:20:45.040 of that could wind up being good news for the 0:20:45.280 --> 0:20:48.680 entire economy. Bloomberg opinion columnist Connor Sen joins us now 0:20:48.720 --> 0:20:51.720 with some insight. Connor, as always, thanks for taking the 0:20:51.760 --> 0:20:55.280 time with us today. I have to say your column 0:20:55.359 --> 0:21:00.840 is about how AI could ultimately help not just the 0:21:00.880 --> 0:21:05.760 tech industry, but the entire economy. Rising tide lifts all boats, 0:21:05.800 --> 0:21:08.720 that sort of thing. But the conventional wisdom with AI 0:21:09.040 --> 0:21:12.440 is you don't really think of job creation. Most most 0:21:12.440 --> 0:21:15.720 people would think of job killer. So set us straight 0:21:15.800 --> 0:21:16.080 on this. 0:21:17.160 --> 0:21:19.600 Sure, So I think it's possible that one day in 0:21:19.640 --> 0:21:21.639 the future. I don't know how long it's going to 0:21:21.640 --> 0:21:24.200 be that sure, maybe it will disrupt millions of people 0:21:24.240 --> 0:21:25.679 in their jobs and we'll have to figure out what 0:21:25.720 --> 0:21:28.400 to do about that. But those products and services don't 0:21:28.400 --> 0:21:31.000 exist yet, and we don't know yet what those should be, 0:21:31.600 --> 0:21:34.760 And so tech companies are really caught up in this frenzy, 0:21:35.400 --> 0:21:37.600 and both they and their investors feel like they have 0:21:37.680 --> 0:21:39.320 to make bets to be a part of this, and 0:21:39.359 --> 0:21:42.800 that means for now, at least, hiring and spending, hiring 0:21:42.800 --> 0:21:44.800 a lot of people, spending a lot of money to 0:21:45.000 --> 0:21:47.440 figure out if they've caught the winning lottery tickets, so 0:21:47.480 --> 0:21:49.640 to speak, or just prove that they're not the ones 0:21:49.640 --> 0:21:51.840 being left behind by the people who seem to be 0:21:52.000 --> 0:21:52.520 doing well. 0:21:52.960 --> 0:21:54.280 Have we seen this before? 0:21:55.800 --> 0:21:57.920 You could talk about any sort of boom we've seen before, 0:21:58.000 --> 0:22:00.600 whether it's dot com boom in the late night, maybe 0:22:00.600 --> 0:22:05.879 crypto in the twenty tens, thin mobile. Yeah, and I 0:22:05.960 --> 0:22:08.000 think most people would agree that there's more to this 0:22:08.119 --> 0:22:10.639 than there was to crypto, But we don't really know 0:22:10.720 --> 0:22:13.560 yet what it's going to be, and so for now 0:22:13.560 --> 0:22:15.600 it's just let's spend a lot of money and try 0:22:15.640 --> 0:22:18.199 to figure it out and our stock prices are now 0:22:18.240 --> 0:22:21.560 going up, So maybe that means investors want us to 0:22:21.560 --> 0:22:23.760 do this rather than to continue to cut costs. 0:22:24.240 --> 0:22:27.280 Does spending a lot of money and hiring and going 0:22:27.280 --> 0:22:30.760 on these hiring blitzes to stop staff up for AI? 0:22:31.320 --> 0:22:35.919 Does that create a destabilization within the tech industry as 0:22:35.920 --> 0:22:38.359 far as employment is concerned, or do you see it 0:22:38.440 --> 0:22:41.760 more stabilizing, Like where does the employment part of this stand. 0:22:42.920 --> 0:22:46.240 I think it's a stabilization from an employment standpoint, because 0:22:46.400 --> 0:22:48.520 really for the past year, we've seen the tech industry 0:22:49.000 --> 0:22:52.440 get caught by first the pandemic boom and demand kind 0:22:52.480 --> 0:22:56.200 of receded and that eroded profitability, made stock prices go down. 0:22:56.640 --> 0:22:58.720 Obviously higher interest rates are a part of that as well, 0:22:58.840 --> 0:23:02.000 and so tech companies got the message from their investors 0:23:02.000 --> 0:23:04.240 that just cut spending because we just need to see 0:23:04.280 --> 0:23:07.600 higher profit margins and a belief that you guys are 0:23:07.680 --> 0:23:10.840 are focused on cost consciousness, and that really persisted through 0:23:10.880 --> 0:23:14.280 the first quarter. But at some point a cost cutting 0:23:14.320 --> 0:23:16.199 cycle ends, and it's really been about a year now 0:23:16.280 --> 0:23:18.760 for most of the tech companies, and then now you 0:23:18.800 --> 0:23:21.280 have this big shiny AI thing to chase, and so 0:23:21.359 --> 0:23:24.200 I think it's kind of an interesting timing where maybe 0:23:24.200 --> 0:23:26.720 the cost cutting cycle was winding down anyway, but now 0:23:26.760 --> 0:23:29.320 there's actually a reason for it beyond Okay, we've cut. 0:23:29.320 --> 0:23:32.280 Enough, you know that. And that's what makes me a 0:23:32.280 --> 0:23:36.080 little bit nervous, this big shiny AI thing to chase to, 0:23:36.119 --> 0:23:39.200 if I can quote you for a second, because if 0:23:39.200 --> 0:23:42.720 they're if the cuts can come to an end, so 0:23:42.800 --> 0:23:46.240 can the hiring blitzes, so can the surges. It seems 0:23:46.280 --> 0:23:50.200 like the pendulum is swinging kind of radically and there's 0:23:50.240 --> 0:23:54.480 no real balance yet, but you say, we're finding. 0:23:54.119 --> 0:23:57.639 It for now, and you can see it in the 0:23:57.680 --> 0:24:00.359 sort of leading indicators or job openings I'm mentioned in 0:24:00.400 --> 0:24:04.200 my calm. The website. The job website indeed has really 0:24:04.200 --> 0:24:07.200 great real time data for job postings and for software developers. 0:24:07.320 --> 0:24:09.560 It's really spiked since in the middle of April, and 0:24:09.600 --> 0:24:13.160 that's coincided with tech companies reported earnings talking about AI, 0:24:13.240 --> 0:24:15.840 how much they're doing. And it's not just your Microsofts 0:24:15.840 --> 0:24:17.800 and your Googles who were talking about it. I saw 0:24:17.880 --> 0:24:21.400 Uber was talking about AI Zilo talking about what AI 0:24:21.480 --> 0:24:23.399 can do for them, So it's really everybody feel like 0:24:23.600 --> 0:24:26.080 Wendy's I think this morning talked about how AI can 0:24:26.119 --> 0:24:29.920 improve ordering for hamburgers at drive through windows. So everybody 0:24:29.920 --> 0:24:32.359 feels like it's there in their interest to talk it 0:24:32.440 --> 0:24:34.359 up and do something to move in that direction. 0:24:34.760 --> 0:24:36.680 And you touched on it just now. I'll want to 0:24:36.720 --> 0:24:38.960 get into it a little bit deeper about how this 0:24:39.080 --> 0:24:42.600