Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanobek. We're here every day bringing
Speaker 1: you the latest news from the world's of business and finance,
Speaker 1: plus technology, politics, economics, all partnising the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
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Speaker 1: You can also listen to our radio show at two
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Speaker 1: YouTube search Bloomberg Global News. Well. Bloomberg Business Week is
Speaker 1: a go to magazine for so many things. In depth
Speaker 1: features as you heard earlier with Drake Bennett, tech trends,
Speaker 1: economic theory, financial markets, politics, and of course the annual
Speaker 1: ranking of the world's top NBA programs and the latest
Speaker 1: list it is out online. We got Demetri Hassanidis with us.
Speaker 1: She is the one behind the Bloomberg Business Week Best
Speaker 1: at b School of twenty three. She's senior editor at
Speaker 1: Bloomberg New She's with us right now in the Bloomberg
Speaker 1: Interactive Broker Studio Demetra, I'm going to give you the
Speaker 1: honor of revealing the top spot here. Drumroll please, Stanford
Speaker 1: is the number one school year sec. Wait, this is
Speaker 1: not last year, this is two. Stanford has been the
Speaker 1: number one school for a few years running now, so
Speaker 1: no surprise. You know, it's got a lot going for it.
Speaker 1: That is very much about what people are looking for today.
Speaker 1: The classic industry, draws, the proximity to the tech industry,
Speaker 1: very strong programs, very entrepreneurial programs. On every point, it's
Speaker 1: really hitting the marks. So it's doing great. And then
Speaker 1: tie for second place she University of Chicago and Harvard
Speaker 1: UH and the top five get rounded out with Northwestern
Speaker 1: and Dartmouth. How often does like the top five kind
Speaker 1: of stay the same? I mean, I would say that
Speaker 1: it stays the same for a few years running, with
Speaker 1: some minor shifts among you know, among the schools. This year,
Speaker 1: the top ten, we're all the same schools. Is last
Speaker 1: year one or two went down one one or two
Speaker 1: one up one? You know that that's what you're dealing with.
Speaker 1: There are also very minor differences, I want to say,
Speaker 1: at those levels in this ranking, Like even though you're
Speaker 1: number one, or number two or number five. The points
Speaker 1: that are separating you from that next school are small
Speaker 1: and few, unless it's one between number one and numbers two, three,
Speaker 1: four and five. Right. That is, though, is very far
Speaker 1: ahead of Well, that's what's so interesting. Eight. Eight is
Speaker 1: the score that Stanford got. Um. I'm wondering when it
Speaker 1: came to diversity what the list looks like, because you know,
Speaker 1: you click on that and by the way, this is
Speaker 1: the type of thing to go check out on Bloomberg
Speaker 1: dot com or look at it on the Bloomberg terminal
Speaker 1: because it's a great interactive feature. Here. It's so funny
Speaker 1: because our producer would be like, should we put off
Speaker 1: the story and that's what we said, it's so interactive.
Speaker 1: Do you really want to go online with it? Exactly?
Speaker 1: It is? Um, I think they've I just want to say, first,
Speaker 1: not the one. There's a huge team behind this and
Speaker 1: the real people who are actually doing this, with the
Speaker 1: ones compiling, you know, looking at the data and building
Speaker 1: these amazing interactive tools. So definitely go to Bloomberg dot
Speaker 1: com slash business hyphen schools and you will have an
Speaker 1: incredible experience. But diversity, yeah, well, it's you know, Endeaversity
Speaker 1: is measured in different ways here and you can you
Speaker 1: can actually filter it in different ways here. But what
Speaker 1: does the rank look like when it comes to diversity, Well,
Speaker 1: you know, I mean, UM, I would say it's it's uh,
Speaker 1: it's mixed. So we're looking at diversity in terms of
Speaker 1: gender diversity and then breakdowns with um, you know, black
Speaker 1: students and Hispanic students. And we say this in our
Speaker 1: overview to the schools have and if there's one area
Speaker 1: where you know, we feel like there's a little bit
Speaker 1: of work to be done, it's in working towards that parody.
Speaker 1: So parody is when you're trying to sort of reach
Speaker 1: relative equality among certain groups. Um, you have seven schools
Speaker 1: only where there was gender parody that was met this year,
Speaker 1: eleven where black students had parody with you know, other groups,
Speaker 1: and UM eight schools for Hispanics. So it's it's not
Speaker 1: really you know, they're there is a ways to go,
Speaker 1: and I think in some ways now we're starting to
Speaker 1: talk about how b schools, you know, are they not
Speaker 1: even reflective of what's happening out in the world. There's
Speaker 1: so much talk and pressure you know, E S G. Equality, diversity,
Speaker 1: UM in the ranks of the c suites, and so
Speaker 1: that pressure I think is trickling over to the schools
Speaker 1: now to ensure that they are focused on getting those
Speaker 1: numbers up there. I am curious about the pandemic because
Speaker 1: it was tricky, right obviously, the pandemic anybody in academia
Speaker 1: and how that has at all impacted rankings or how
Speaker 1: you guys are looking at the different schools in the programs.
Speaker 1: I don't think. I don't know that they've meaningfully affected
Speaker 1: the rankings, especially this year. We did come back with
Speaker 1: the rankings after a year off last year, right one
Speaker 1: for UM. But I think the pandemic has affected a
Speaker 1: lot of things on campus as we're talking to people,
Speaker 1: hearing about the priorities of students, the interests that are
Speaker 1: starting to emerge career wise. The classics are always there,
Speaker 1: uh consulting finance technology, but now E s G is
Speaker 1: a big one. Climate change is a big one. UM.
Speaker 1: The pandemic and being home and experiencing life for two
Speaker 1: years in very different ways has focused people on different things.
Speaker 1: Interest in certain healthcare careers and how we're going to
Speaker 1: move forward from this age of covid um. Maybe other
Speaker 1: pandemics and what kind of opportunities are out there. I
Speaker 1: also think it's really focused the schools and the students
Speaker 1: on how they teach and how they learn, so everybody
Speaker 1: values in person. I don't think that's ever going away.
Speaker 1: But now people know that flexibility is possible, and there
Speaker 1: are really many different ways that you can fashion how
Speaker 1: learning is going to happen when you say in person too,
Speaker 1: And I know we have to wrap up, and I
Speaker 1: do highly recommend people go online because it's just so
Speaker 1: cool to kind of click through the different schools and
Speaker 1: get their rankings and just break it down in so
Speaker 1: many different ways. But I do think in school, especially
Speaker 1: when you think about business school, so much of it
Speaker 1: is outside entrepreneurs, successful entrepreneurs, business people who come into
Speaker 1: to speak and you get FaceTime. Tim. You know at
Speaker 1: first time when you're up at Colombia how important that is.
Speaker 1: Demit we have to run, but thank you so much
Speaker 1: to meet your Cassonedi. She's senior editor Bloomberg News. And
Speaker 1: check out that NBA rankings of Business Week. You're listening
Speaker 1: to Bloomberg Business Week with Carol Messer and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. Yeah, it's a pretty
Speaker 1: busy Thursday and roving fun with our next guest. Not
Speaker 1: a guest, she's actually family. She sometimes subs in for us.
Speaker 1: She covers it when we're out. Uh, and she's got
Speaker 1: her hands in so many different pots. We're talking about
Speaker 1: Katie Greifeld, Bloomberg News, senior markets reporter, co host of
Speaker 1: E T F I q BA, Bloomberg TV and Tim
Speaker 1: She wrote a really about a really big in bet
Speaker 1: that happened last night. We were obviously I asked Carol
Speaker 1: that too, and she said she was asleep and as
Speaker 1: I think it was finalized, like completed, actually close to
Speaker 1: the book at like two, But that kind of makes sense.
Speaker 1: Did you stay up for it? But listen, when I
Speaker 1: woke up, I was all over it. Okay. So for
Speaker 1: people whose heads are spinning right now, being like, okay,
Speaker 1: what we're talking here, tell us what the merge is
Speaker 1: when it comes to ethereum. So we're talking about the
Speaker 1: ethereum blockchain. You probably know ether. I hope. It's the
Speaker 1: second biggest cryptocurrency, second to Bitcoin. It operates, of course,
Speaker 1: on the Ethereum blockchain, which underwent this big big revamps
Speaker 1: seven years in the making last night from a proof
Speaker 1: of work consensus mechanism to proof of steak. And that
Speaker 1: sounds really in the weeds, and it is. But proof
Speaker 1: of work is how bitcoins are mind and how ethers
Speaker 1: were mind. And it takes up a lot of energy,
Speaker 1: which you've probably heard about bitcoins energy consumption being a
Speaker 1: point of contention. Proof of steak is much more energy efficient,
Speaker 1: and proponents say that by moving to proof of steak, Uh,
Speaker 1: the ethereum energy consumption is going to be cut by okay,
Speaker 1: just because I feel like part of our process is
Speaker 1: to educate. So proof of work is what showing the
Speaker 1: actual mechanisms steak just saying the way that um, new
Speaker 1: baby bitcoins are born thirst day that everybody is the
Speaker 1: roof proof of work, where basically bitcoin miners have to
Speaker 1: solve increasingly complex problems to make invalidate new bitcoin. And
Speaker 1: that wasn't really a problem when bitcoin was under a
Speaker 1: hundred dollars worth pennies, as it was for a long time. Uh,
Speaker 1: but that takes up increasingly more and more energy. You
Speaker 1: have like these arms races between miners uh to solve
Speaker 1: those problems. So I mean you often hear comparisons like bitcoins.
Speaker 1: Energy consumption is that of a small country and even
Speaker 1: a big country, even a gig country country of Argentina
Speaker 1: or Ukraine is the latest, or several small countries if
Speaker 1: you add them together. So proof of steak, yeah, proof
Speaker 1: of steak basically it's you have a bunch of ether
Speaker 1: and you become a validator by staking your ether, basically
Speaker 1: putting up your ether. If you put up thirty two ether,
Speaker 1: you become a validator. And if you don't have thirty
Speaker 1: two ether and ether goes right now for round, it
Speaker 1: doesn't sound totally You have to sort of suspend your
Speaker 1: disbelief here, but stick with me, so you can if
Speaker 1: you don't have thirty two ether to put up and
Speaker 1: become a validator, you can join up with your buddies
Speaker 1: and become a joint validator. But the sort of net
Speaker 1: effect that the average person needs to know is proof
Speaker 1: of stake. It's much less energy intensive. So it raises
Speaker 1: the question about dominance when it comes to crypto here
Speaker 1: and the idea that okay, well, if ethereum successfully pulled
Speaker 1: off this merge, and it indeed uses less energy on
Speaker 1: a proof of steak model than a proof of work model.
Speaker 1: Does that mean it's going to be the crypto that
Speaker 1: is sort of crowned king Ether maxis would certainly hope hope.
Speaker 1: Those are maximalists, Yeah, people who really treat this as
Speaker 1: a religion. And there is this sort of event that
Speaker 1: hasn't happened yet. It's called the flippening. And what the flippening?
Speaker 1: Uh something to Paul Sweeney, Yes, control room, are we
Speaker 1: just is she just making up stuff as we go? Yeah,
Speaker 1: welcome to shady thoughts. But the flippening it's when Ether's
Speaker 1: market cap will overtake that of bitcoin. Bitcoin still it
Speaker 1: has twice the can bitcoin do the same thing? That's
Speaker 1: a question that I've asked. And the thing about proof
Speaker 1: of steak, even though it really cuts down on energy use,
Speaker 1: it's not as tried and tested as proof of work.
Speaker 1: We know proof of work works, we know that it's
Speaker 1: hard to hack. People are really worried about sort of
Speaker 1: the security potential vulnerabilities with proof of steak, and you
Speaker 1: have to get the whole network to agree to do this,
Speaker 1: and Ethereum did. But there's a lot of hardcore bitcoin
Speaker 1: maximalists who don't want to do that, who say that
Speaker 1: this is sort of the price you pay for the
Speaker 1: security that the bitcoin blockchain as it operates right now
Speaker 1: provides you. When will we know if this works? It's
Speaker 1: a good question. We know at least that this initial phase,
Speaker 1: this big milestone, is passed, but in the weeks to come,
Speaker 1: it's going to be really interesting. So there are these
Speaker 1: sort of forks that are created. You're gonna have copies
Speaker 1: of ethereum that will spring up that will still is mining.
Speaker 1: It's not a perfect complete switch, so it'll be interesting
Speaker 1: to see how that operates. You did have a lot
Speaker 1: of exchanges, and while it's sort of cease ethereum activity
Speaker 1: leading up to the merge, those have to come back online.
Speaker 1: We haven't seen any problems that I know of so far,
Speaker 1: but the first time there's a security blimp, I mean
Speaker 1: that to me is the huge issue. Right Yeah, ultimately
Speaker 1: people will sees on that, and of course the proof
Speaker 1: of work believers, the bitcoin maximalists will also sees on that,
Speaker 1: but again we haven't seen evidence of that yet. What's
Speaker 1: interesting to me if you look at today's price action,
Speaker 1: though Ether has been rallying like crazy since mid June
Speaker 1: until right now, it is shaping up to be a
Speaker 1: sell the news event. You have Ether down about six
Speaker 1: point seven percent. You look at what bitcoin is doing,
Speaker 1: it's only done about one person. Where their questions still
Speaker 1: in just the last thirty seconds we have with you,
Speaker 1: if this was actually going to be successful, if the
Speaker 1: merge was actually going to happen, there were questions. You
Speaker 1: had a lot of people shorting Ether heading up into
Speaker 1: this sort of hedging the possibility that there will be
Speaker 1: a glitch because software updates. Uh, it's not perfect. Really,
Speaker 1: I've heard of breaking news so well told, so well reported,
Speaker 1: and I know it's something you can continue to keep
Speaker 1: a track on. Kati Gryfile, Bloomberg News, Senior Market reportic
Speaker 1: host of E T f i Q on Bloomberg TV.
Speaker 1: Which is why she knows so much as a little
Speaker 1: about bit going and all that good stuff. Um, I
Speaker 1: have a feeling she was up late waiting for the
Speaker 1: merge to happen. I think she she was awake, quite awake.
Speaker 1: All right, you're listening to Bloomberg Radio. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes. Tim
Speaker 1: Stinovic on Bloomberg Radio. Well, the new issue of Bloomberg
Speaker 1: Business Week it is out, it is on newsstands, it's
Speaker 1: online at Bloomberg dot com, Slash business Week and of
Speaker 1: course on the Bloomberg terminal and uh. The cover story
Speaker 1: this week is about the Chinese spy that wanted ge
Speaker 1: secrets about the US got China's instead. It's one of
Speaker 1: those what moments, Yeah, really is. It's a story that
Speaker 1: has all the trappings of a spy movie. We've got
Speaker 1: meetings in hotel rooms, copying hard drives dated lean from iPhones,
Speaker 1: and a political adversary looking for industrial secrets. Jodan Robertson
Speaker 1: and Drake Bennett wrote the piece. As Carol mentioned, it's
Speaker 1: the cover of Bloomberg Business Week this week. We got
Speaker 1: Drake Bennett, technology reporter for Bloomberg Business this Week with
Speaker 1: us right now in the Bloomberg Interactive Broker Studios. Also
Speaker 1: with us is Joel Webber, the editor of Bloomberg Business Week.
Speaker 1: He's with us in the Bloomberg Interactive Broker Studios. Joel,
Speaker 1: I want to start with you and just give us
Speaker 1: an idea about how a story like this comes together.
Speaker 1: As I mentioned, it's got all the trappings. Yes, yes, yes,
Speaker 1: I'm so excited about this story. Is just marvelous. So
Speaker 1: whenever you talk about China in US and in intellectual
Speaker 1: property and what companies have, you know, there's always been
Speaker 1: this assumption that in reporting has suggested that Chinese are
Speaker 1: really good at a spine and stealing stuff, and but
Speaker 1: we never really get a sense of what that actually
Speaker 1: looks like. And so when Jordan and Drake Um came
Speaker 1: just with this story, the thing that just jumped out
Speaker 1: at us was, it's all there, we have all the reporting,
Speaker 1: and it's in part because of this cotton mouse game
Speaker 1: that evolved that I'm sure Drake's gonna tell us about,
Speaker 1: and it ended up in court, and because the US
Speaker 1: was able to not only nab this Chinese spy and
Speaker 1: his phone, we got it all, we got all the info, Um,
Speaker 1: and Jordan and Drake kind of pieced it all together
Speaker 1: and told this story that reads like you're gonna watch
Speaker 1: this on TV someday. Um. And so Drake, I mean, like,
Speaker 1: you know, this is raw stuff that you ran across,
Speaker 1: and I'm curious, just like when you saw it and
Speaker 1: Jordan's saw it, like, how did it pop to you? Guys?
Speaker 1: I mean, like you said, it's just an extraordinary opportunity
Speaker 1: because this is normally just a black box. UM. You
Speaker 1: just see kind of the outgoing stuff, UM, where it's
Speaker 1: the companies that are being targeted or it's the people
Speaker 1: that are being you know targeted as potential source is
Speaker 1: and you never get to see what goes on back
Speaker 1: in China. And what happened with this guy is he
Speaker 1: was you know, the first ever MSS officer to be
Speaker 1: lured out of China. The Ministry of State Security, so
Speaker 1: it's basically government Chinese yeah intelligence, which is responsible not
Speaker 1: only for military and government intelligence, but you know economic
Speaker 1: and that's a secret, no, like not a secret, not
Speaker 1: a secret. Um, we know what happens, we know a
Speaker 1: lot less about what it looks like. UM. And so
Speaker 1: when this guy gets lured out through this very painstaking
Speaker 1: FBI investigation, UM, he's arrested and he has his phone
Speaker 1: on him and he his iPhone on him, and he
Speaker 1: has backed up everything not I mean just everything to
Speaker 1: the cloud. UM. So there's all this like sensitive you
Speaker 1: know MSS documents. Uh, there's correspondence between him and his colleagues,
Speaker 1: between him and his sources, and there's also just a
Speaker 1: lot of like really intimate person detail about himself. UM,
Speaker 1: you know, he's he's someone I mean, you know, there's
Speaker 1: a lot of like his name is Juan John Um
Speaker 1: and he's um, you know, a lot there's some cloak
Speaker 1: and dagger stuff in the story, but a lot of
Speaker 1: it is also just the you know, he's this espionage
Speaker 1: bureaucrat and he's sort of like you watch him get
Speaker 1: sort of like ground down by his job, and he
Speaker 1: gets more and more unhinged, and he's just spending all
Speaker 1: this time and like massage parlors and drunken card games,
Speaker 1: and I think that may have sort of, you know,
Speaker 1: affected his decision making a little bit. I'm not gonna say,
Speaker 1: quiet quitting the US quiet quit for him? Um what
Speaker 1: tell us about the expense accounts? Right? Right? So? Um,
Speaker 1: he actually in theory, you know, these guys you know
Speaker 1: a lot of right, yeah, so in theory exactly, they
Speaker 1: they you know a lot of what they do is
Speaker 1: they're just handing people money, you know, three thousand dollars,
Speaker 1: six thousand dollars for your travel expenses or for whatever. Um.
Speaker 1: But he one of his sort of gripes over time,
Speaker 1: and it gnaws at him more and more, is that
Speaker 1: his boss just keeps rejecting these expense accounts UM for
Speaker 1: these dinners, he has to like recruit people and it
Speaker 1: just really drives him nuts. And you because we have
Speaker 1: his diary. He has this he treated his eye calendar. Basically,
Speaker 1: it's like a diary. So there's stuff about, you know,
Speaker 1: meeting with this person or doing this hack. And then
Speaker 1: it's just like my boss rejected the expenses again and
Speaker 1: he just like it clearly just burns him. So which
Speaker 1: are just epic, you know, So I just you just assume,
Speaker 1: like we take on the us anything you need, and
Speaker 1: it's like, actually it's yeah, the target that ends up
Speaker 1: being uh, so much of the story is actually ge right,
Speaker 1: what was what was this? By going for and and
Speaker 1: tell us about how that played out. So it's g
Speaker 1: E jet engines and it's in particular it's these uh
Speaker 1: composite fan blade and casings for the fan blade. So
Speaker 1: uh G Aviation is is still basically the only company
Speaker 1: that has these super lightweight fan blades and casing so
Speaker 1: their their engines can be lighter, UM, more fuel efficient, UM,
Speaker 1: safer uh and every and so basically this is a
Speaker 1: key technology UM that Drew had sort of focused on
Speaker 1: and he sort of a rise at this through these
Speaker 1: conversations with folks in the Chinese government, with folks at
Speaker 1: Stayed owned aircraft aeronautics companies UM in China, and so
Speaker 1: that's what So he, through this intermediary, through this academic
Speaker 1: basically a university official, reaches out to this engineer at
Speaker 1: the aviation, you know, through LinkedIn, invites him to come
Speaker 1: give this talk, and then it sort of begins. Um.
Speaker 1: What he doesn't realize is that midway through this process
Speaker 1: the FBI sort of intervenes UM and starts investigating Um,
Speaker 1: his his potential source at the aviation, who then through
Speaker 1: not to boil the end of the story, but who
Speaker 1: ends up being instrumental in in the investigation to then
Speaker 1: turn around and and trap um. You himself, our producer said,
Speaker 1: one of the stupidest or dumbest spies ever just got stop.
Speaker 1: I think that was one of the most interesting takeaways
Speaker 1: from this is like the idea that people have in
Speaker 1: their heads of a James Bond type figure, what is
Speaker 1: the life of a spy? Just in the last minute
Speaker 1: that we have with you, Yeah, I mean he's a bureaucrat.
Speaker 1: He's an espionage bureaucrat. You know, he's a cog in
Speaker 1: this big machine, you know, in certain ways. I think
Speaker 1: he he you know, he has a lot of power
Speaker 1: back home, and he sort of seems to abuse it
Speaker 1: in certain ways. But he also has this boss that's
Speaker 1: on him all the time, you know, who's like constantly
Speaker 1: demanding these things that he feels like a really unreasonable
Speaker 1: um and so it's a bit of a grim existence
Speaker 1: in certain ways, and I think it sort of drives
Speaker 1: him a little around the bend. No Martinis, No Weston
Speaker 1: Martin's No, definitely not there. Maybe Martiniz, but they're not
Speaker 1: gonna out one trip out of the country. You got
Speaker 1: to go to Belgium and then you know, oh my goodness.
Speaker 1: It is a great We're saying, where is he now
Speaker 1: in jail? Oh, he's in jail in Ohio. He's a
Speaker 1: winning sounding Yeah, we'll come back once way no more, yeah,
Speaker 1: exactly to be continued. But it's a great read. It
Speaker 1: is the cover story of the new issue of Bloomberg
Speaker 1: Business Week. As we mentioned, it is online on the
Speaker 1: Bloomberg on newsstands are Thanks to Bloomberg Business we get
Speaker 1: it to Joel Weber and Business Week technology reporter Drake
Speaker 1: Bennett joining us. Check out his story. You're listening to
Speaker 1: Bloomberg Business Week Carol Master, Tim Stanovic, and this is
Speaker 1: Bloomberg Radio. You're listening to Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: Crisis averted at least it seems that way, as US
Speaker 1: railroads and unions representing more than a hundred thousand workers
Speaker 1: reached a tentative deal. According to the government, it's a
Speaker 1: breakthrough that looks to a labor disruption that risks adding
Speaker 1: supply chain strain to the world's largest economy. It was
Speaker 1: just like another thing ing you, like, are you kidding me? Yeah?
Speaker 1: I mean well, fortunately, yeah, it wasn't a joke. But
Speaker 1: it doesn't seem like things are going to be as
Speaker 1: bad as they could have been. We got Crety Group
Speaker 1: to joining us right now. She's Markets correspondent for Bloomberg.
Speaker 1: She's also right now on site at Greenville Yard in
Speaker 1: Jersey City, New Jersey, not that far from us, just
Speaker 1: right over the Hudson Uh Creedy. Uh, what's the latest
Speaker 1: about the unions and railroads actually reaching a tentive agreement here? Um? Well,
Speaker 1: it kind of seems like there's an all clear signal here.
Speaker 1: What's interesting is that about twelve hours ago that was
Speaker 1: absolutely not the case. In fact, we were heading for
Speaker 1: a major halt of the entire U S economy. And
Speaker 1: now it seems to be that the union membership is
Speaker 1: putting this tentive agreement to a vote. But the key
Speaker 1: word here, tim is tentative, because we're not there yet. Remember,
Speaker 1: this deal has a wage increase in about twenty It
Speaker 1: has bonuses included. On ratification of this deal, those workers
Speaker 1: will get about an average of eleven thousand dollars of
Speaker 1: bonus just right off the bat for signing that deal.
Speaker 1: On top of that, they're getting an additional paid day off.
Speaker 1: They're getting access to more health care without increased costs,
Speaker 1: something that the railroad carriers themselves were actually pushing for.
Speaker 1: And arguably more importantly, they're now getting more time off
Speaker 1: work for things like surgical procedures, hospitalizations. If they have
Speaker 1: an emergency and need to take a sick day or
Speaker 1: need to tend to a family member, they won't be
Speaker 1: penalized for it, which was the case earlier. I do wonder, too,
Speaker 1: how much pressure is you know, union leaders thinking about this,
Speaker 1: other industries thinking about this, or the government thinking about
Speaker 1: what this whatever happens here, what this might mean for
Speaker 1: other industries, whether it's retail or something else, about some
Speaker 1: kind of union agreement. Well, the contagion effect here, Carol,
Speaker 1: was so real, but I mean this isn't new. Also
Speaker 1: think about a dear Kellogg PepsiCo. There's are just some
Speaker 1: of the companies that have been dealing with with strikes
Speaker 1: of some sort, strikes that we haven't seen for decades.
Speaker 1: And a lot of this house do have to do
Speaker 1: with wages and also doing working conditions. And you see
Speaker 1: this on Wall Street as well, Carol, this idea that
Speaker 1: perhaps not a strike among junior bankers, but certainly more
Speaker 1: of a move towards catering to better working conditions, better
Speaker 1: work life balance, better health benefits. Uh. Those that is
Speaker 1: all going to be a structural change in the economy.
Speaker 1: We're talking to Sarah house Uh, the Wells Fargo economist
Speaker 1: earlier on Bloomer Television, and she said, well, this is
Speaker 1: something that's getting a little bit hard to quantify now
Speaker 1: because it's such a structural change you're seeing across industries
Speaker 1: and the railroad side of things, Carol, I should say
Speaker 1: it's kind of the anomaly when it comes to a
Speaker 1: lot of these sectors. It has the kind of wonky
Speaker 1: quirk that goes back to legalist to legislation. Excuse me
Speaker 1: written in nine six. I won't borrow you with the details,
Speaker 1: but basically it just means that some of these things
Speaker 1: that have been existing in other industries, like a point
Speaker 1: based system, for example, where if you are put on
Speaker 1: call and you don't make it, you're deducted points. That's
Speaker 1: something that's been in the banking system for a while.
Speaker 1: It is just now post COVID been introduced to the
Speaker 1: railroad system. So extra sensitivity in this particular industry as
Speaker 1: it evolves a crety. Can you just take us through
Speaker 1: what's a what was at stake here and why this
Speaker 1: was such a big deal. I mean we hear figures
Speaker 1: like two billion dollars a day a cost the economy
Speaker 1: if this strike would have happened. Oh and it would
Speaker 1: have been quite the image, actually, Tim, if this had
Speaker 1: actually panned out. I mean, freight is about thirty percent
Speaker 1: of cargo in the entire United States, and the United
Speaker 1: States has the largest rail system in the entire world,
Speaker 1: so let's start with commuting here. We've heard about Amtrak
Speaker 1: now looking to resume their services as soon as possible,
Speaker 1: but that would have affected things like commuters going into Chicago,
Speaker 1: the biggest railroad hub in the entire country. It would
Speaker 1: have affected things like San Francisco Minneapolis. There's a train
Speaker 1: line that goes from Minneapolis into Chicago. It's a major
Speaker 1: commuter hub. Sim rulers the way that New Jersey commuters
Speaker 1: hop into New York, that entire thing would have been
Speaker 1: shut down. So that's just one example. Auto vehicles is
Speaker 1: something that we've seen specifically here in Greenville and the Yard.
Speaker 1: Auto vehicles are transported from Mexico from Detroit across the
Speaker 1: country by primarily trains. It's the most efficient way. And
Speaker 1: here you actually, as we were coming in about twelve
Speaker 1: hours ago, we saw a lot of them just parked
Speaker 1: new vehicles on trucks waiting to be loaded, and they
Speaker 1: were just standing on the sidewalk. I gotta say, everyone listening,
Speaker 1: Creety can hear the activity going on in the background there.
Speaker 1: That sounds like the that sounds like people working, and
Speaker 1: it sounds like helicopters and airplanes flying overhead as well. Well,
Speaker 1: I certainly was. I mean the activity I would say
Speaker 1: picked up a little bit in the last thing a
Speaker 1: couple of hours. That's really fascinating. Well, after what years
Speaker 1: decades of union uh power uh, and it feels like
Speaker 1: authority declining it maybe we're starting to see a little
Speaker 1: bottoming of that. In an upswing um Crety, thank you
Speaker 1: so much, really great reporting. Bloomberg Markets correspondent Creety Group
Speaker 1: on site at the Greenville rail Yard in Jersey City.
Speaker 1: I always think it's fascinating him and increasingly high tech economy,
Speaker 1: high tech society we all talk about, and yet when
Speaker 1: it comes to moving things around, it's about putting them
Speaker 1: on trains, putting them on trucks. It's it's pretty basic. Yeah,
Speaker 1: crisis of But as we talked about yesterday, Carol, what
Speaker 1: a quarter of goods here in the States are moved
Speaker 1: by train. It's it's it's shocking and to a lot
Speaker 1: of people, I think it's still how stuff moves around, right,
Speaker 1: and get central technology exactly. I'm macro a journal now,
Speaker 1: but you let me drive. Oh no, no, no, no, home,
Speaker 1: I'll do gravel. I want to drive. It's a good question. Drive.
Speaker 1: This is the drive to the clothes on Bluebird Radio.
Speaker 1: All right, coming up on less than ten minutes away
Speaker 1: from that closing bell, Charlie. Of course, breaking down the numbers.
Speaker 1: We are just coming off our loads of this session,
Speaker 1: as you mentioned, but still technology names taking the biggest
Speaker 1: hit on a percentage basis, Tim just down about one
Speaker 1: point three. I'm glad you brought that up. Microsoft is
Speaker 1: actually a really wing on the S and P five
Speaker 1: hundred in NASDAC one hundred today. It's down at levels.
Speaker 1: Last scene in the middle of June, which side of
Speaker 1: the way did and by the way, middle of June
Speaker 1: was the lows of this market, So you gotta wonder
Speaker 1: if we're headed back that way. Let's get into it
Speaker 1: with Roger mortim Or, portfolio manager at Crane Shares, joining
Speaker 1: us on the phone from San Francisco. Roger, how are you.
Speaker 1: I'm great, Thanks very much, sim and Carroll, it's gonna
Speaker 1: have you with us. Um. You know, normally on a
Speaker 1: day like today where you see the nastack down one
Speaker 1: point four percent and s and having or down a
Speaker 1: full percentage point, it's kind of like, you know, volatility
Speaker 1: that we've been seeing. It's kind of like par for
Speaker 1: the course, now, days like this aren't out of the ordinary.
Speaker 1: It does seem that way for sure. Yeah, what's going on? Well,
Speaker 1: I tell you what. Our our thesis is an area
Speaker 1: which we think is very attractive for industries to focus
Speaker 1: on at a time when markets are volatile and things
Speaker 1: are changing. Um, energy transition and climate is a huge
Speaker 1: growth area at a time when growth is very difficult
Speaker 1: to find, and so we think that this is a
Speaker 1: place where investors should be paying some attention. How specifically, well,
Speaker 1: here's here's in an allergy for the you know, for
Speaker 1: life on Earth. We're sitting in the car in the
Speaker 1: garage with the door shut and the engine running, and
Speaker 1: that's unsustainable. You know, eight per cent of the energy
Speaker 1: that we use on Earth is fossil fuels. And scientists
Speaker 1: and policy makers now agree that this is not something
Speaker 1: that we can continue to do. And so governments are
Speaker 1: pushing this idea of energy transition, uh and pushing it
Speaker 1: hard all around the world. And they really have three
Speaker 1: reasons to do that. They they believe in energy transition
Speaker 1: because they have signed net zero treatise. More than seventy
Speaker 1: countries around the world have signed climate objectives of net zero,
Speaker 1: but energy transition also addresses this idea of energy security,
Speaker 1: which of course is incredibly important in Europe at the moment,
Speaker 1: where if you don't provide the energy that runs your economy,
Speaker 1: you really don't have control of your economy. And finally,
Speaker 1: as we saw with the Climate Bill here in the
Speaker 1: United States the Inflation and Reduction Act, is that energy
Speaker 1: transition activity can create a huge amount of economic value.
Speaker 1: So so governments really are lined up to drive the
Speaker 1: energy transition and that is a long term policy commitment.
Speaker 1: That is structural desire for spending. And that's quite different
Speaker 1: and um sort of the drivers for many stocks, which
Speaker 1: would be what's the said going to do next week,
Speaker 1: what to earn? Like this is a long term, long
Speaker 1: runway of growth. Well, how long term and how patient
Speaker 1: do investors have to be? Because this Carol has talked
Speaker 1: about for months, as we've learned from what's happening in
Speaker 1: Ukraine and what's happening in Europe with gas supplies being
Speaker 1: shut off from Russia and the price just just exploding. Essentially, Uh,
Speaker 1: this is transition is not coming in a very short time,
Speaker 1: and we're a lot less far along in the transition
Speaker 1: that I think a lot of people thought we were
Speaker 1: I were still reliant on those fossil fuels. Yeah, so
Speaker 1: I would I would turn that arounoun and say the need,
Speaker 1: the need is more acute than ever. And people are
Speaker 1: starting to realize that right that energy costs are a
Speaker 1: huge source of inflation. It takes a long time to
Speaker 1: build infrastructure, and high energy costs speed into food costs
Speaker 1: um which drives inflation there. And these are not transitory factors.
Speaker 1: We're gonna be in an inflationary environment for some time. Roger,
Speaker 1: do you kind of cringe when and forgive me playing
Speaker 1: a little bit of Devil's advocating here, but when whether
Speaker 1: it's the US officials, the president or his teams say,
Speaker 1: you know, we're going to release reserves or whatever to
Speaker 1: bring down you know, oil prices and gasoline prices or whatever,
Speaker 1: you know, if you will, so that it's not so
Speaker 1: much pressure on individuals here in the United States. And
Speaker 1: yet that kind of goes against the climate initiatives because
Speaker 1: you almost in order to facilitate change, there needs to
Speaker 1: be some pain with the way we're trying to get
Speaker 1: away from Is that not fair? Yeah, Carol, it's a
Speaker 1: good question. But the problem is is so much bigger
Speaker 1: than the release of strategic reserves in oil. Right, we
Speaker 1: use energy everywhere in our world, and essentially we have
Speaker 1: to change the way that we do that cross multiple industries,
Speaker 1: and essentially what we are going to try to do
Speaker 1: as a society is electrify everything and generate that electricity
Speaker 1: with renewable power. And that creates huge runway for companies
Speaker 1: that are in business related to either generating renewable power,
Speaker 1: tying it into the grid, storing it perhaps is either
Speaker 1: in a battery or hydrogen form, and in the electrification
Speaker 1: of all of these in technologies. And this is a
Speaker 1: multi decade theme. Uh the do we have multi decade
Speaker 1: I mean, like I think about this and I'm looking
Speaker 1: at what's going on with the climate, and I'm just
Speaker 1: thinking how much time do we realistically have before I mean,
Speaker 1: it's already pretty severe in certain parts of the world. Yeah,
Speaker 1: you're you're preaching to the converted. Here's what I think happens.
Speaker 1: As as the rate of climate change accelerates, people become
Speaker 1: more aware, they put more pressure on policy makers. We
Speaker 1: invest in companies that look dirty today but are transitioning
Speaker 1: to clean business maaw holes, and as they transition their
Speaker 1: valuation increases. There's a valuation arbitrage, and we think that
Speaker 1: as investors see that this is occurring, they will they
Speaker 1: will start pushing other companies to do this. And this
Speaker 1: is what's really interesting is the social and financial objectives
Speaker 1: are aligned. Today clean power generators trade at multiples of
Speaker 1: what dirty power generators do. And so if you're a
Speaker 1: company like our w E in Germany or a S
Speaker 1: in the United States, you're emphasizing to your shareholders that
Speaker 1: you are growing rapidly with renewables and that renewables as
Speaker 1: a share of your total is becoming larger and larger.
Speaker 1: And the pool of investors who want green companies is
Speaker 1: bigger than those who want what you used to be.
Speaker 1: So the valuation expands. Just in the last ninety seconds
Speaker 1: that we have with you, Roger, talk some names here
Speaker 1: and who you think is the are the right companies
Speaker 1: to be bullish on. So this is a global fund
Speaker 1: and and tim you have to to pursue a strategy
Speaker 1: of investing in energy transition. You have to go to
Speaker 1: where the government policy is most aggressive in forcing the change,
Speaker 1: because that's where the companies are reacting the fastest. So
Speaker 1: we have a big position in r w E a
Speaker 1: German utility but today looks like a coal fired utility.
Speaker 1: It's sort of investment that nobody wants to make. But
Speaker 1: it is rapidly transforming itself into a renewable utility and
Speaker 1: trades that less than a quarter of the valuation that
Speaker 1: the companies that look like that trade at. We own
Speaker 1: Reliance Industries as one of India's largest companies, and India
Speaker 1: is a net energy importer. Uh, it requires US dollars
Speaker 1: to do that. That's very difficult. Reliance is the de
Speaker 1: facto implementation vehicle for India to meet its own renewable needs,
Speaker 1: and it's building out the whole value chain at a very,
Speaker 1: very rapid rate. During the United States, they did a
Speaker 1: lot of work ahead. Just quickly discussed to say, in
Speaker 1: the United States, a company like as right next Ara
Speaker 1: is already clean, trades at the very high valuation. As
Speaker 1: is managing that transition between dirty and clean, and it's
Speaker 1: being revalued as it does. As it does, it makes
Speaker 1: hey listen, great to check in with you, especially we've
Speaker 1: got Climate Week coming up over the next week or so,
Speaker 1: and certainly we'll be talking about it a lot. Roger
Speaker 1: Mortimer good check in with you again. Portfolio manager Crane
Speaker 1: Chairs on the phone from San Francisco. Thanks for listening
Speaker 1: to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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