Speaker 1: This is Bloomberg Business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: gloom O Business Finance and tech news. The Bloomberg Business
Speaker 1: Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: W As I mentioned stocks just keep going up, continuing
Speaker 2: the week on a positive note, or kicking the week
Speaker 2: off on a positive note, I should say booyed by
Speaker 2: a burst of deals, even as Fed officials are kind
Speaker 2: of it's been in a last few days, a little
Speaker 2: bit over the weekend, sowing doubts that aggressive interest rate
Speaker 2: cuts are going to materialize next year. Here are a few
Speaker 2: of them, Chicago Fed President Austin Goolsby, Cleveland Fed President Lorettamester.
Speaker 2: They were the latest to join a growing course of
Speaker 2: central make officials tempering market optimism after their New York counterpart,
Speaker 2: John Williams last week said bets on a March reduction
Speaker 2: were premature. The equity market and the bond market are
Speaker 2: kind of ignoring them. Hey, we got a great roundtable
Speaker 2: to kick off our program this afternoon. John Authors is
Speaker 2: a senior editor for Markets and a Bloomberg Opinion columnist.
Speaker 2: Elena Popina is equity markets reporter for Bloomberg News. Both
Speaker 2: of them are here in the Bloomberg Interactive Brokers studio. John,
Speaker 2: I want to start with you because your latest column
Speaker 2: talks about the really quick rally that we've seen and
Speaker 2: how you know, I don't want to use this throw
Speaker 2: out this term, but essentially the easy money has been
Speaker 2: made at this point and if you're if you're looking
Speaker 2: to buy right now, your big question is what's going
Speaker 2: to happen over the next decade.
Speaker 3: Arguably yes, I mean at the moment, the Fed, if
Speaker 3: we believe the dot plot, thinks there's going to be
Speaker 3: three cuts next year, which is more than they were
Speaker 3: saying before, and the Fed funds futures markets thinks they're
Speaker 3: going to be six. So it's hard to see how
Speaker 3: you get lower rates than are currently being priced in
Speaker 3: unless something happens to shock the Fed into cutting farm
Speaker 3: more than it currently wants to. I if there's a recession,
Speaker 3: which messes up equities.
Speaker 2: So what happens if there is a recession the Fed
Speaker 2: has to cut more aggressively. What do we see from equities?
Speaker 3: One would imagine past experience has been that pivots tend
Speaker 3: not to be great for equities because they are pivoting
Speaker 3: for a reason, surprise, which is that now that the
Speaker 3: economy is in trouble, if you have a pivot, as
Speaker 3: in twenty eighteen after the Christmas Eve massacre when j.
Speaker 3: Powell stepped back from I remember that, and that was
Speaker 3: an unusual pivot in that that was at a time
Speaker 3: when the economy wasn't any particular trouble and it just
Speaker 3: loosed the dogs of war that you have this fantastic
Speaker 3: rarey the following year. That's obvious roughly what we've had
Speaker 3: again this time because the Fed is very unusually getting
Speaker 3: worried about whether it should be cutting rates soon with
Speaker 3: unemployed with sorry, with growth at over five percent and
Speaker 3: unemployment at less than four percent, which is, you know, unusual.
Speaker 3: I don't see myself how the current rate forecast is. Oh,
Speaker 3: the current implicit rate forecast is is fulfilled, turns out
Speaker 3: to be accurate unless the economy turns out to be
Speaker 3: much worse than is currently being predicted.
Speaker 2: Elena Popina, come on in here. You are Equen Markets
Speaker 2: report of fort Plomberg News. You joined us at the
Speaker 2: end of last week to give us an idea of
Speaker 2: what we saw when it came to week seven of
Speaker 2: gains for the S and P five hundred. Since then,
Speaker 2: you've spoken to quite a few cellside analysts. What have
Speaker 2: they told you about how they're thinking about not just
Speaker 2: the next few days and the remainder of the year,
Speaker 2: but also what happens next year.
Speaker 4: Yeah, thank you guy, it's the pleasure to be here.
Speaker 5: We are seeing quite a number of sales side analysts
Speaker 5: boosting their target prices for twelve months from now. The
Speaker 5: ratio of upgrades to target prices to downgrades is now
Speaker 5: at the highest level.
Speaker 4: Since at least January twenty twenty two.
Speaker 5: That's the previous time the S and P five hundred
Speaker 5: reached is all time high. Now, whether or not, you know,
Speaker 5: analysts are just reacting to the stock market that's gone
Speaker 5: up quite a bit in November and has gone quite
Speaker 5: a bit in December so far, is yet.
Speaker 4: An open question.
Speaker 5: To John's point, there is quite a bit of a
Speaker 5: concern that there is a mismatch between what the dot
Speaker 5: plot shows and what markets are expecting in terms of
Speaker 5: the pace of rate cuts next year. But the positive
Speaker 5: sign is that the rally seems to be broaden out for.
Speaker 4: Example, the equal weighted S.
Speaker 5: And P five hundred index inven paced for its best
Speaker 5: year since April twenty twenty two relative to the CALCU
Speaker 5: weighted S and P five hints. So it's not just
Speaker 5: maybe seven anymore. The laggards, the relative laggards like value stocks,
Speaker 5: are trying to outperform, so we gives more momentum and
Speaker 5: more breadth to the rally. But then yes, again they
Speaker 5: can be argumently that the rally has become quite a
Speaker 5: bit of an overextended. So we could with you for
Speaker 5: some kind of pullback after New years?
Speaker 6: What does history tell us about these types of pullbacks? John?
Speaker 2: I mean, I know you're not a technical analyst here,
Speaker 2: but in your experience and I'm sure though, you're also
Speaker 2: a chief investment officer of Hindsight Capital, so you have
Speaker 2: an idea.
Speaker 3: With whom I've been in contact Ques.
Speaker 2: Okay, so we'll wait to hear about Hindsight Capital later
Speaker 2: this year. But yeah, but what has history told us
Speaker 2: about moves like this?
Speaker 3: Generally speaking, when you get moves this dramatic, there is
Speaker 3: a risk actually of a melt up. I mean, in
Speaker 3: terms of what Elena was saying. The positive way to
Speaker 3: put it is that breadths widened, which is good. The
Speaker 3: negative way to put it is that there's a dash
Speaker 3: for trash. So the Meme Stock Index the last time
Speaker 3: I checked, was up forty in a month. Something silly
Speaker 3: like that.
Speaker 6: Lots of Crystal has been high.
Speaker 2: Yes, lot Kathy Woods, our innovation et office had a great.
Speaker 3: And lots of small caps that really don't look in
Speaker 3: good financial shape in terms of their credit have rallied.
Speaker 3: Now that's that isn't a sign of breadth, but it's
Speaker 3: also a sign of Okay, let's just buy the really
Speaker 3: cheap stuff now because everything's going to rip. The scenario
Speaker 3: that worries me because again I might be over over
Speaker 3: applying what's happened in my in my experience my career
Speaker 3: is LTCM in ninety eight, yes, which was I think
Speaker 3: the significant the great era of monetary policy in you
Speaker 3: since Volka And for those who don't know, LTCN was
Speaker 3: this huge hedge fund that began to melt down and
Speaker 3: got caught on the wrong side of all its trades.
Speaker 3: After Russia defaulted in August of ninety eight, the Fed
Speaker 3: organized you know, more or less forced all its banks
Speaker 3: its creditors to agree a bailout which didn't actually involve
Speaker 3: public money, which matters a lot. At the time, the
Speaker 3: credit market stayed becalmed, and so Greenspan cut rates. And
Speaker 3: the most palpable turn in sentiments in a day I've
Speaker 3: ever witnessed was the day that green Span cut rates
Speaker 3: between meetings without warning on a Thursday afternoon, and I
Speaker 3: think you know, bank stocks were up more than ten
Speaker 3: percent in the subse hour and the Globe dot com
Speaker 3: went public. About two weeks later, the NASDAK more than
Speaker 3: doubled over the last year. At that point, it looked
Speaker 3: as though the great bullmarket connected to the dot COM's
Speaker 3: had just reached a natural peak and was beginning to
Speaker 3: slide down. And that faithful decision to pivots, which wasn't stupid,
Speaker 3: there were reasons to do it. That the faithful decisions
Speaker 3: pivot led to, you know, the greatest melt up of
Speaker 3: all time, whose consequences you could argue, we are still
Speaker 3: dealing with. That strikes me. Eric balcun has had this
Speaker 3: fascinating chart. Apparently Friday saw the biggest flows into spy.
Speaker 6: Oh wow.
Speaker 3: Ever, I've tried checking it in percentage terms, and there
Speaker 3: were a few bigger days during the real hurly burly
Speaker 3: of the GFC. But in terms of actual money, more
Speaker 3: people put money into or more money was put into
Speaker 3: spy on Friday than on any other day ever before.
Speaker 3: That's that has the signs as somebody who has arguably
Speaker 3: been too bearish and too conservative over the years. That
Speaker 3: instinctively bothers me. Okay, I mean, it might mean you
Speaker 3: should buy now on a short time period, because wouldn't
Speaker 3: it have been fantastic to own stocks through the whole
Speaker 3: of nineteen ninety nine and get outside And lots of
Speaker 3: people will make that calculation. But in terms of what
Speaker 3: that means for the economy and the health of the
Speaker 3: financial system over the next decade, that's concerning to me.
Speaker 6: Helene.
Speaker 2: I want to give you the last word here and
Speaker 2: talk a little bit about what the analysts and you
Speaker 2: speak to tell you in terms of their bearishness, because
Speaker 2: it's kind of hard to find the bearers out there
Speaker 2: right now, isn't it.
Speaker 4: Is It is kind of hard to find you.
Speaker 5: We are looking at an hour of south Side analysts
Speaker 5: being quite bolish on the next half a year, with
Speaker 5: a few exceptions like Mike Wilson, like a few other analysts.
Speaker 5: But what I wanted to mention is that the election
Speaker 5: year historically this century has so far seen some weakness
Speaker 5: in the middle of the year, in the second and
Speaker 5: third quarters of the year.
Speaker 4: We saw that. In two thousand, we saw that.
Speaker 5: Obviously in two thousand and eight, we saw quite a
Speaker 5: bit of that.
Speaker 4: In twenty twenty.
Speaker 5: Now sum our goodness were new, exceptional, new periods of time,
Speaker 5: And yes, I agree with that. But you know, if
Speaker 5: history is any indication at this point, and I don't
Speaker 5: know whether that's going to be the key, we could
Speaker 5: see some fullback and you know, with stops me a record,
Speaker 5: we would be live for fullback sometime.
Speaker 4: In the second and fourth quarter.
Speaker 2: Lena Popina equity market reporter for Bloomberg News, John Author,
Speaker 2: Senior editor for Markets and a Bloomberg Opinion columnist. Here
Speaker 2: in our Bloomberg Interactive Broker studio, we're just getting started
Speaker 2: on this Monday afternoon.
Speaker 6: This is Bloomberg Business Week.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: Well, some public companies are still trying to figure out
Speaker 2: exactly how to comply with new rules from the US
Speaker 2: Securities and Exchange Commission requiring speedy disclosure of significant cyber attacks.
Speaker 2: Those rules, which kicked in Monday, require companies to report
Speaker 2: cyber incidents within four business days of determining that they
Speaker 2: are quote material to shareholders. The sec previously required firms
Speaker 2: to disclose major events that would be of shareholder interest,
Speaker 2: but didn't specify cyber events. We did speak earlier on
Speaker 2: our program about cyber attack herding orders for Vans, north Face,
Speaker 2: Dicky's Supreme Gen Sport, Timberland owner VF Corp. And the
Speaker 2: way that those can really bring a company offline, especially
Speaker 2: at a crucial time like during the holiday season. Well,
Speaker 2: next guest knows a thing or two about cybersecurity. Wendy
Speaker 2: Thomas is president and CEO of Cure Works, the cybersecurity company.
Speaker 2: She's back with us once again, joining us on Zoom
Speaker 2: from Atlanta, Georgia. Wendy, good to have you with us
Speaker 2: this afternoon. How are you well.
Speaker 7: I'm doing well.
Speaker 2: Thanks for having me Tim, Well, thanks for joining us
Speaker 2: once again on this It's a little different environment than
Speaker 2: when we last spoke to you just a few months ago. Specifically,
Speaker 2: when it comes to this new SEC requiring ruling that
Speaker 2: requires speedy disclosure of significant cyber attacks, it seems like
Speaker 2: there's a lot of confusion with what exactly companies now
Speaker 2: have to disclose to their shareholders when it comes to
Speaker 2: cyber attacks.
Speaker 6: What can you tell us about it?
Speaker 7: Sure, glad to share the emerging insights into the new regulations.
Speaker 7: I think about it in sort of the front end
Speaker 7: and the back end. On the back end, as you mentioned,
Speaker 7: public companies now have to report cyber incidents that are
Speaker 7: determined by the company themselves to be material, which is
Speaker 7: a discussion in and of itself within four business days
Speaker 7: the primary back end requirement. But on the front end,
Speaker 7: the disclosures around everything from policies governing cybersecurity risks, the
Speaker 7: companies risk management processes, processes whereby management is informed about
Speaker 7: cyber incidents, and the board's oversight of that. All of
Speaker 7: those are now required to be disclosed in annual ten
Speaker 7: K filings by public companies, and so the scrutiny of
Speaker 7: whether we are pre pairing sufficiently for cyber incidents as
Speaker 7: well as disclosure about them on the back end is
Speaker 7: significantly ramped up.
Speaker 2: I want to talk about this just because this one's
Speaker 2: in the news, but I mean, you could just replace
Speaker 2: VF Corp. With any given company at any given time.
Speaker 6: VF Corp.
Speaker 2: Suffered this cyber attack at pretty much the worst possible
Speaker 2: time and the most important quarter of the company, and
Speaker 2: it has hurt orders for Vans, north Face and other
Speaker 2: brands that the company has. I'm wondering, you know, how
Speaker 2: this stuff continues to happen when we understand that the
Speaker 2: threats are out there and so many companies are spending
Speaker 2: so much money on keeping their network safe.
Speaker 7: They are spending significant amounts of money. But as you
Speaker 7: can see, the cyber criminal only has to be right once,
Speaker 7: and we have to be right in and out every day.
Speaker 7: And that's why it's so important for companies to have
Speaker 7: a security expert partner to help them prepare for and
Speaker 7: navigate situations like this to minimize the damage. There's nothing
Speaker 7: worse for a company than their high season to be
Speaker 7: impacted by this type of a cyber attack. And to
Speaker 7: be frank, the reason these regulations are in place is
Speaker 7: that when things like this hit the headlines, regulators feel
Speaker 7: impelled to incent companies to protect themselves proactively and then
Speaker 7: to be straightforward with shareholders or investors around what may
Speaker 7: be impacting their business in terms of its operations or
Speaker 7: financial performance. And this is a case in point of
Speaker 7: why we see new regulations coming out around this.
Speaker 6: In your opinion, do the regulations go far enough?
Speaker 7: The regulations, I think are a good first step in
Speaker 7: many ways, and I have no doubt we'll continue to
Speaker 7: see them evolve like many other new forms of rulemaking
Speaker 7: over the years. But what I will tell you is
Speaker 7: these regulations are not intended to punish. They are really
Speaker 7: intended to create the right incentives. Look twenty twenty three,
Speaker 7: I think it's on track to be the most prolific
Speaker 7: year for ransomware ever and to have one of the
Speaker 7: highest economic costs of security breaches to day. This cybercrime
Speaker 7: is an ongoing, continual transfer of wealth to criminal enterprises,
Speaker 7: and so I think that the SEC feels compelled to
Speaker 7: provide guidance around how to better prepare for these types
Speaker 7: of situations going forward. And frankly, they've raised the bar
Speaker 7: for CEOs, CSOs and boards of directors around preparing for
Speaker 7: these types of incidents.
Speaker 2: What, in your opinion, is the right amount of money
Speaker 2: for a company to actually spend on keeping their company
Speaker 2: secure from cyber attacks.
Speaker 1: Not a.
Speaker 2: Single figure, not a single figure, but a certain like
Speaker 2: a portion of revenues for example, or portion of expenses.
Speaker 7: That does vary a bit, and I'm glad to provide
Speaker 7: some ranges there. It does vary a bit depending on
Speaker 7: whether the organization is in a highly attacked and frankly
Speaker 7: highly regulated industry eating like.
Speaker 2: A healthcare or financial services for example, Exactly.
Speaker 7: They have a much higher standard. Now what we see
Speaker 7: is damages to companies that are more in the manufacturing
Speaker 7: in the retail space. So it does matter from a
Speaker 7: business up time and financial performance perspective, But generally we
Speaker 7: expect to see companies spending somewhere in the four to
Speaker 7: five percent range. It can sort of merge into other
Speaker 7: technology spend a little bit, because you can have secure
Speaker 7: by design technology deployments, But somewhere between that and twelve
Speaker 7: to fifteen percent of your total technology spend is what
Speaker 7: we see typically in place. Again, for businesses that aren't
Speaker 7: necessarily in a highly regulated industry.
Speaker 6: Do you see that portion moving up?
Speaker 7: I do see that portion moving up, but I also
Speaker 7: see it moving in terms of mix. So while you
Speaker 7: want to invest in preventing as much as you possibly can,
Speaker 7: what these regulations are showing is that you have to
Speaker 7: invest in you aren't able to prevent everything. So you
Speaker 7: absolutely have to be able to detect quickly because with
Speaker 7: these regulations, the ability to assess the impact of an
Speaker 7: incident in terms of what it's going to do to
Speaker 7: your business operations and the financial outcomes of that. You
Speaker 7: absolutely cannot do that with humans alone. It requires technology
Speaker 7: investments and investments in awareness and preparation of your team.
Speaker 7: So I do think that the mix is going to
Speaker 7: shift quite a bit towards the detection and preparation aspect
Speaker 7: of this.
Speaker 2: Wendy, we've talked a lot about AI and in the
Speaker 2: context of, you know, making companies more productive and being
Speaker 2: able to be more efficient. We've talked about it too
Speaker 2: in the concept of people being worried about AI, sort
Speaker 2: of like the way that Elon Musk gets concerned about AGI.
Speaker 2: I'm wondering how you've seen or how you could see
Speaker 2: threat actors use AI to pose as humans to actually
Speaker 2: gain access to networks. What's worst case scenario here that
Speaker 2: you guys are thinking about over at secure works.
Speaker 7: Or as we've talked about before, the power in the
Speaker 7: peril of AI is very real for cybersecurity, and so
Speaker 7: while the power of it to be able to detect
Speaker 7: certain behavioral techniques of the adversary are are incredibly important
Speaker 7: for how we operate as secure works, we also see
Speaker 7: the adversary taking advantage of these tools and techniques as well.
Speaker 7: And I think the most near term one that we
Speaker 7: have seen and increasingly concerns us in terms of its
Speaker 7: accelerated use, is around deep fakes, with the ability to
Speaker 7: impersonate a CEO not just in an email, but in
Speaker 7: a video, and to do that at scale with large
Speaker 7: language models like chat, GPT, it just has put a
Speaker 7: pace of deployment and a fidelity of believability in what
Speaker 7: they're using to deceive, just taking it to another level,
Speaker 7: and that's the primary area where we're focused on the
Speaker 7: ability to detect.
Speaker 2: Yeah, thing is you mean you have to remain sovid
Speaker 2: vigilant regardless of who's you know in your organization, from
Speaker 2: person with access to certain systems versus the person whose
Speaker 2: password or log in credentials could be compromised. Wendy, we
Speaker 2: love it when you join us. Wendy Thomas is President
Speaker 2: and chief executive officer of Secure Works. Back with us
Speaker 2: on Zoom from Atlanta, Georgia. You're listening to Bloomberg Business Week.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: Well the next guest has made his living connecting people.
Speaker 2: Sam Darwish is the co founder, chairman, and CEO of
Speaker 2: one of the world's largest independent owners, operators and developers
Speaker 2: of towers, providing communication infrastructure in eleven markets, serving about
Speaker 2: seven hundred and seventy million people. He joins us on
Speaker 2: Zoom this afternoon. He's the CEO of IHS Towers. It's
Speaker 2: got nearly forty thousand towers across Africa, Latin America and
Speaker 2: the Middle East. Also the co founder and chairman of
Speaker 2: the company. Good to have you with us this afternoon. Sam,
Speaker 2: How are you good?
Speaker 8: Good?
Speaker 1: Thank you? How are you hey?
Speaker 2: I'm doing really well. Hey, this is perfect timing for
Speaker 2: you to come on our program because we are our
Speaker 2: own tech Bloomberg Technology team that day and mad Day
Speaker 2: and team wrote a piece about Project Kuiper earlier today,
Speaker 2: about Amazon's for a into providing high speed internet, and
Speaker 2: he said, you know, Amazon's not just competing against the
Speaker 2: SpaceX and the SpaceX is Starlinks of the world. He's
Speaker 2: competing with anyone out there right now providing connectivity. And
Speaker 2: that's a company like yours that provides the infrastructure for connectivity.
Speaker 2: How are you seeing the landscape right now in the
Speaker 2: markets that you operate.
Speaker 8: Look, we allperate, as you said, we own forty thousand
Speaker 8: towers roughly across and fiber in the tens of thousands
Speaker 8: of kilometers, covering eight or nine million homes across our markets.
Speaker 8: Our markets are we operate in eleven countries across the world,
Speaker 8: covering roughly eight hundred million people, as you said, So
Speaker 8: we kind of like see the trends, understand what's happening.
Speaker 8: The likes of Amazon and the likes of Google, the
Speaker 8: likes of Facebook do from time to time come to
Speaker 8: our markets trying to simulate basically demand for their own services.
Speaker 8: But we haven't come we haven't seen them come into
Speaker 8: our markets, kind of like with big statements or with
Speaker 8: big projects that could move the need. Now, having said that,
Speaker 8: at the end of the day, I get startling.
Speaker 6: I get all the.
Speaker 8: Projects or the ideas of trying to create connectivity using
Speaker 8: satellites or non terrestrial systems. But when it comes to
Speaker 8: basic propagation, basic wireless, there is no alternative to a
Speaker 8: tower on the ground.
Speaker 6: Really, why is that?
Speaker 2: Because you know, here I am thinking to myself, this
Speaker 2: could be a prime moment for you know what you
Speaker 2: guys in the industry called leap frogging. Here the technology,
Speaker 2: you know, this infrastructure technology is so expensive. I don't
Speaker 2: have to tell you. You guys own and operate forty thousand
Speaker 2: of these towers. These are very expensive things to build
Speaker 2: and to operate. And then you have this other technology
Speaker 2: coming in that essentially broadcast internet from the sky. Why
Speaker 2: is this not a serious concern to you at this point?
Speaker 8: Because the technology has limitations. I'll list a few. The
Speaker 8: first is that as you're trying to penetrate a building
Speaker 8: or a structure sideways from a tower, it's much easier
Speaker 8: because you're kind of like going through windows and glass
Speaker 8: and this, and that if you try to do it
Speaker 8: from the satellite, you basically have to penetrate ceilings, like
Speaker 8: multiple ceilings. I mean that's a lot. Given that this
Speaker 8: is also from the satellite to Earth. The satellite may
Speaker 8: be able to protect the power, but the handset is
Speaker 8: kind of like small and it has limitations, and being
Speaker 8: able to penetrate back into into the satellite again is
Speaker 8: another issue. What kind of spectrum do you use? Most
Speaker 8: of the carriers on the spectrum when you start interfacing
Speaker 8: with people, The size of the battery, how long can
Speaker 8: it last? I mean, those are practical limitations. And then
Speaker 8: compile that or add to all of this the fact
Speaker 8: that that people need more and more and more capacity
Speaker 8: by the day, especially as as some of these apps
Speaker 8: like like drones, driverless cars kind of like start to proliferate,
Speaker 8: We're going to need more capacity rather than less capacity.
Speaker 8: I mean, these satellites will not be able to provide
Speaker 8: that capacity.
Speaker 6: He said.
Speaker 8: There are great solutions tem like offshore, rural urban mountains
Speaker 8: provide some bridge like like in the Ukraine situation for example,
Speaker 8: but they can't be a solution to the million of
Speaker 8: people using their phone, for example in Manhattan, or Los
Speaker 8: Angeles or London or a Legos.
Speaker 2: Right, it's just too you know, apples and oranges. It
Speaker 2: certainly sounds like, Hey, Sam, I wanted to talk a
Speaker 2: little bit about the types of technology that these towers
Speaker 2: are providing. When you think about the different markets that
Speaker 2: you're in, is this are we talking four G? Here
Speaker 2: are we talking five G? I mean, what is the
Speaker 2: sort of standard in terms of the equipment that you
Speaker 2: provide or that the folks who lease and use your
Speaker 2: towers end up using.
Speaker 8: Look, simply put, there is no difference in the aspirations
Speaker 8: of carriers and people in our markets to where the
Speaker 8: United States or Europe is. Everyone wants the fastest, cheapest pipe,
Speaker 8: everyone wants five G. Everyone wants fiber to the home. Now,
Speaker 8: having said that, we are definitely behind. Our markets are
Speaker 8: largely in the four G cycle. At the moment. Most
Speaker 8: of the four G deployments have happened on our towers.
Speaker 8: They're selling it now to customers to upgrade from some
Speaker 8: markets two G three G into four G. Many of
Speaker 8: our markets like Nigeria, South Africa, Brazil have also seen
Speaker 8: five G spectrum licensing recently, So we're beginning to see
Speaker 8: commercial tryers or commercial pilots into five G, but five
Speaker 8: G is still still not the standard, so it's largely
Speaker 8: four G.
Speaker 2: You guys offer six different solutions including new sites in
Speaker 2: building solutions, fiber connectivity, small cell infrastructure in urban areas.
Speaker 2: Where are you most bullish for your company?
Speaker 4: Look?
Speaker 8: For us, we think about it from a deployment point
Speaker 8: of view. What does the wireless network that carries a
Speaker 8: four G or a five G or eventually a six
Speaker 8: G what does it require? Initially it used to require
Speaker 8: these macro towers, the big towers, you know, and that's
Speaker 8: what most of us US and some of our peers
Speaker 8: eight American tower crown SBA focused on. But as you
Speaker 8: as rollout starts to change, especially with five G, more
Speaker 8: small cells will be needed. The DAAs becomes very important.
Speaker 8: Fiber is critical as small cells start to kind of
Speaker 8: like cells, start to get closer to each other, so
Speaker 8: the fiber connection to those locations become important. Also, we're
Speaker 8: seeing now compute and cash becoming very important. At the
Speaker 8: end of the day, those towers are the closest really
Speaker 8: state possible to the eyeballs using a cell phone, so
Speaker 8: an element of computing could happen potentially some data center
Speaker 8: or edge data center on these locations. But what I'm
Speaker 8: trying to tell you here, there is no one size
Speaker 8: fit all, kind of like solution. You have to be ahead.
Speaker 8: You have to look at the technology of the time
Speaker 8: in that country and what kind of rollout does it require.
Speaker 8: It always will require micro towers in our view, because
Speaker 8: that's kind of like the basic the umbrella cannot coverage.
Speaker 8: But all these other types, like like small cells, like
Speaker 8: the m building, like the fiber will be required in
Speaker 8: different types and different instances.
Speaker 2: Well, Sam, I could talk about this stuff all afternoon.
Speaker 2: I used to cover telecom, so I just love talking
Speaker 2: about connectivity and how people are getting connected around the world.
Speaker 2: I really appreciate you taking the time in joining us
Speaker 2: on Bloomberg Business Week this afternoon. Sam Darwish, co founder,
Speaker 2: chairman and CEO of IHS Towers.
Speaker 6: Joining us on zoom this afternoon. This is Bloomberg Business Week.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on
Speaker 1: Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 9: The meats.
Speaker 1: Then doing the chickets.
Speaker 2: It's a good song for this, Paul Brandon's who is
Speaker 2: the Fuck You Chicken? I like it well, it all
Speaker 2: sounds pretty great. Meat that's grown in a lab taste
Speaker 2: exactly like chicken, beef, shrimp, pork, you name it, but
Speaker 2: without the downsides to raising livestock. No animals killed, no
Speaker 2: fisheries depleted, no harmful chemical climate emissions. So great that
Speaker 2: over the last few years, investors have poured nearly three
Speaker 2: billion dollars into cultivated meat companies. By the end of
Speaker 2: the year, there were one hundred and fifty six companies
Speaker 2: working on it, according to the Good Food Institute, it's
Speaker 2: a nonprofit think tank for alternative proteins. You've got big names,
Speaker 2: billionaires like Bill Gates and Jeff Bezos. You've got Ashton Kutcher,
Speaker 2: Leonardo DiCaprio, state owned investors pouring money in, and yet
Speaker 2: here we are. When families gather around the table this
Speaker 2: holiday season, the meat that many will eat will not
Speaker 2: have been grown in a lab. Dina Shanker and Pria
Speaker 2: Nod write all about the venture back startups such as
Speaker 2: Upside Foods that have promised cultivated chicken is the solution
Speaker 2: to the meat problem and yet the challenges they've faced.
Speaker 2: The story is in the new issue of A BusinessWeek
Speaker 2: Magazine's available on newstands now, online at Bloomberg dot com,
Speaker 2: slash business Week, and on the Bloomberg terminal. With more,
Speaker 2: We've got Dina Shanker, consumer reporter for Bloomberg News, joining
Speaker 2: us on zoom from New York. Also here the editor
Speaker 2: of Bloomberg BusinessWeek, Joe Webber. He's here in our Bloomberg
Speaker 2: Interactive Brokers studio. Joel is the famous election slogan goes
Speaker 2: a chicken growing bio reactor in every home.
Speaker 6: Yeah, there you go.
Speaker 10: So we've been really interested with sort of a line
Speaker 10: of reporting that Dina has done this year. Some of
Speaker 10: that was about fake meat, and that was a cover
Speaker 10: story or in this year, and then we also wanted
Speaker 10: to talk about and keep our eye on the lab grown.
Speaker 6: Meat, not to be confused with fat. It's actual meat.
Speaker 10: It's cell based meat that got FDA approval. So all
Speaker 10: of a sudden, we expected to see a ton of
Speaker 10: this stuff suddenly hitting the market, only not that much
Speaker 10: actually made it to consumers. So Dina rewind the clock
Speaker 10: a little bit and talk to US. We got that
Speaker 10: wind up from Tim about why we might want to
Speaker 10: be interested in cultivated meat, But how much money has
Speaker 10: gone into this space and what have we gotten for
Speaker 10: it so far?
Speaker 11: So there's been nearly three billion dollars raised for companies
Speaker 11: that are growing meat and seafood from cells extracted from animals,
Speaker 11: and as Joel said, there have been government clearances two
Speaker 11: companies so far, Upside Foods and Eat just have received
Speaker 11: clearances from the FDA and the USDA. And the expectation
Speaker 11: that these companies set was once they had all their
Speaker 11: regulatory business in order, they were going to get stuff
Speaker 11: out to restaurants and we were just going to start
Speaker 11: seeing this build up and more and more of it coming.
Speaker 11: But instead, what we've seen is that Upside Foods is
Speaker 11: currently serving only one pound of chicken a month, and
Speaker 11: that's in one ounce portions to sixteen people each month.
Speaker 11: And Eat just was serving a bit more than that
Speaker 11: to one restaurant, but now they've actually stopped production, so
Speaker 11: they're not serving anything in the US.
Speaker 10: Okay, So if I did want to try this, where
Speaker 10: would I go and what would it taste like?
Speaker 12: You would go to Barcran in San Francisco.
Speaker 11: You'd have to get a reservation, which last I checked,
Speaker 11: was not easy to do. You get your reservation and
Speaker 11: then you could get this very small one ounce portion.
Speaker 11: It's tempora and deep fried, and the reviews have generally
Speaker 11: agreed that it tastes like chicken. Some have said that
Speaker 11: it tastes like better than chicken they remember.
Speaker 12: Others are like, it tastes chickeny enough.
Speaker 11: So I think we could say the through line is
Speaker 11: it tastes like chicken, and you know you take that
Speaker 11: for what it's worth.
Speaker 6: Why is it so well?
Speaker 2: Why is it so difficult to do this at scale?
Speaker 2: If they can do one pound, why can't they do
Speaker 2: ten pounds or twenty pounds or one hundred pounds or
Speaker 2: a thousand pounds.
Speaker 4: So if you think.
Speaker 11: About, like say like a cupcake recipe, and you're going
Speaker 11: to make a cupcake recipe, or as I was just
Speaker 11: doing in my house potato lokas, you just double it, right,
Speaker 11: you just make every just put in twice as much,
Speaker 11: and then it takes you maybe a little longer than
Speaker 11: the original recipe to bake it all or to fry
Speaker 11: it all, depending on what you're making.
Speaker 12: Right, It's just not the same with cell culture.
Speaker 11: It's really tricky to get these cells to grow, and
Speaker 11: every time you increase the amount you're growing, you have
Speaker 11: to increase or you have to change other things, like
Speaker 11: what you're feeding the cells. And if you're changing the vessel,
Speaker 11: then that changes things too, and the cells might grow
Speaker 11: just fine in one kind of vessel and then not
Speaker 11: so fine in another.
Speaker 12: For Upside foods.
Speaker 11: They were having success growing very small amounts in these
Speaker 11: plastic one time.
Speaker 12: Use roller bottles that have been part of.
Speaker 11: The biopharmaceutical industry for decades and decades.
Speaker 12: But when they tried to move.
Speaker 11: Into their much larger steel tanks, they had a number
Speaker 11: of problems, including contamination issues, so they just couldn't get
Speaker 11: those tanks to work in any kind of reliable way,
Speaker 11: and they eventually just abandoned them and stuck with these
Speaker 11: very small roller bottles that we were told by former
Speaker 11: employees that for a single night at Barkren, for that
Speaker 11: one pound of meat would use more than one hundred
Speaker 11: of these one time used plastic bottles. And by the way,
Speaker 11: Barkren is a certified plastic free restaurant.
Speaker 10: Some irony that Dina tell us more about Upside foods
Speaker 10: because this has been a multi year odyssey with millions
Speaker 10: of dollars invested in it. So here we are at
Speaker 10: this point, but who's behind it and what are they
Speaker 10: still hoping that they can accomplish.
Speaker 11: So Upside was founded in twenty fifteen. They called themselves
Speaker 11: the first cultivated meat company. They made huge promises about
Speaker 11: what they were going to do. They said they were
Speaker 11: going to be in whole Foods by twenty twenty and
Speaker 11: costco by twenty twenty one.
Speaker 12: They raised a lot of money.
Speaker 11: They've raised more money than any other company in the space,
Speaker 11: more than six hundred million dollars on all of these promises.
Speaker 11: They've raised money from Tyson, They've gotten money from all
Speaker 11: kinds of investors, including you know, some of the more
Speaker 11: mission driven investors that are really looking for sustainable solutions.
Speaker 11: And instead what's happened is that they even as they
Speaker 11: were going through the motions of these FDA and USDA
Speaker 11: clearances and saying publicly that they were ready to scale,
Speaker 11: they are just not ready to scale. They have currently
Speaker 11: a pilot plant that they said when they opened it
Speaker 11: would be capable right off the bat of fifty thousand
Speaker 11: pounds a year as they are currently selling only about
Speaker 11: twelve pounds a year, but they're already talking about their
Speaker 11: next commercial plant that's going to be one hundred and
Speaker 11: eighty seven thousand square feet and capable they say millions
Speaker 11: of pounds production a year.
Speaker 2: Dina Joel started off our interview by talking about the
Speaker 2: other stories that you've done about the faux meat companies
Speaker 2: impossible foods beyond meat. You've been covering this space for years,
Speaker 2: and one theme that's emerged in your reporting over the
Speaker 2: last couple of years is the alternatives to meat have
Speaker 2: not delivered on the promises that investors thought and that
Speaker 2: the companies communicated, and in the at the end of
Speaker 2: the day, it seems like people are going back to
Speaker 2: just regular old meat, and that is an issue for
Speaker 2: a lot of things, one for animal welfare and two
Speaker 2: for climate change. Can you talk a little bit about
Speaker 2: just big picture what you've learned with these stories in
Speaker 2: terms of the staying power of good old fashioned meat.
Speaker 9: Yeah.
Speaker 12: Well, I think there's a few things.
Speaker 11: One is that we definitely see that there is tremendous
Speaker 11: interest in reducing meat consumption. There's interests from investors, there's
Speaker 11: interests from entrepreneurs and there is interest from consumers as well,
Speaker 11: so that's definitely there. But people are not willing to
Speaker 11: make sacrifices on their food experiences, on foods that they love,
Speaker 11: to do something that they think is better for the
Speaker 11: environment or better for animals, and so people, you know,
Speaker 11: people are willing to say, Okay, maybe i'll pay a
Speaker 11: little bit more for this, but they're not willing to
Speaker 11: pay a little.
Speaker 12: Bit more if what they get is a little bit
Speaker 12: less than what they were trading it in for.
Speaker 11: So people are open to reducing their meat consumption, but
Speaker 11: I think they just haven't really been offered anything that
Speaker 11: is as tasty as meat. I would just like to
Speaker 11: plug caviar lentils. They are so good. They don't take
Speaker 11: anything like meat, but they're really good, and they're cheaper
Speaker 11: than meat, and they're really great for the environment if
Speaker 11: you're looking to reduce your meat consumption.
Speaker 10: I really like them, Okay soon. I am also curious
Speaker 10: the strategy that Upside decided to pursue, which was to
Speaker 10: do to make chicken.
Speaker 1: Why chicken?
Speaker 10: Because chickens already pretty affordable and from a planetary standpoint,
Speaker 10: and we know that that cattle have methane emissions and
Speaker 10: that are very intensive land used propositions. But like chicken,
Speaker 10: like why why make a better chicken without the chicken?
Speaker 11: Well, you know, chicken in chicken in the industry is
Speaker 11: generally seen as significantly easier to cultivate those cells than say,
Speaker 11: beef cells. Uh So that's why we've seen a number
Speaker 11: of companies go with chicken. Some of them call it
Speaker 11: like a stepping stone to beef. Upside has not discussed
Speaker 11: it that way. Uma Valletti, the founder, told me years
Speaker 11: ago in an interview that a story involving his daughter
Speaker 11: loving fried chicken. People talk about chicken as you know,
Speaker 11: everybody loves chicken. It's it's a really you know, popular protein,
Speaker 11: but it just not only is it not a particularly
Speaker 11: environmentally destructive protein, especially from a climate perspective, but it's
Speaker 11: also just really cheap. So trying to make a product
Speaker 11: that's gonna compete with it on price is just really, really,
Speaker 11: really hard.
Speaker 10: And so there's other efforts to do things other than chicken.
Speaker 10: How are those faring and what do those competitors have
Speaker 10: to say about upsides approach?
Speaker 11: Well, for example, cultivated seafood company Wild Type is making
Speaker 11: a their focus first on salmon I will say I
Speaker 11: tried their salmon years ago, and I found it to
Speaker 11: be very impressive, And they said that they told me
Speaker 11: that they thought chicken was strategically a bad idea because
Speaker 11: it's so cheap.
Speaker 12: Salmon is really expensive.
Speaker 11: If you ever go to a restaurant like the salmon
Speaker 11: is one hundred percent guaranteed to cost more than the chicken.
Speaker 11: A lot more too, and so, and the oceans have
Speaker 11: their own have plenty of issues, including overfishing, including microplastics.
Speaker 11: Even farm salmon has its own set of issues. It
Speaker 11: can be tricky as a consumer to find a piece
Speaker 11: of salmon that you feel like lives up to your
Speaker 11: values if you care about where your food comes from.
Speaker 12: So that's the way they're going.
Speaker 11: But they've also said, listen, they're moving along. Wild Type
Speaker 11: told me they are encountering their own problems, but they
Speaker 11: feel like they're making steady progress.
Speaker 2: Well, speaking of steady progress, do you know, based on
Speaker 2: your reporting and all the reporting that you've done in
Speaker 2: this space, when do you think it's a realistic time
Speaker 2: that consumers can expect cultivated fish, or cultivated poultry or
Speaker 2: cultivated meat to actually appear at scale.
Speaker 10: He's asking for an interested party.
Speaker 6: Yeah, I would eat this totally. I would totally eat this.
Speaker 11: You know, a number of people have told me that
Speaker 11: they see an opportunity in this market. I've heard two
Speaker 11: different things that sound like feasible opportunities. One is these
Speaker 11: blended products. So maybe it's a mixture of animal fat
Speaker 11: which has a lot of flavor in it and with
Speaker 11: plant based proteins, and then by using just a little
Speaker 11: bit of those cultivated cells with more plant based proteins,
Speaker 11: you are really reducing costs and you are improving. So
Speaker 11: I think like a beyond Burger, but instead of tiny
Speaker 11: little dippin' dot style coconut fat coconut oil fat balls,
Speaker 11: they're like actually.
Speaker 12: Be fat balls or something along those lines.
Speaker 11: And that could I mean I haven't tried that, I
Speaker 11: can't speak to it, but that could theoretically taste a
Speaker 11: lot better and be available much sooner. And then other
Speaker 11: people have said that the opportunity is in like really
Speaker 11: high end meat, so like foie gras or something along
Speaker 11: those lines, where consumers are already expecting to.
Speaker 12: Pay a ton of money, and the.
Speaker 11: Amount that you have to produce to be considered widely
Speaker 11: available is significantly lower than you would have to produce
Speaker 11: for something like chicken or pork or beef.
Speaker 10: Can't wait, can't wait to watch this space.
Speaker 2: We did this whole interview Joel, and didn't talk about
Speaker 2: fetal bovine sirus here.
Speaker 10: I mean we still have time we do or I
Speaker 10: could just run out the clock by speaking very slowly.
Speaker 2: Let's just say that they're not completely animal free products
Speaker 2: at this point.
Speaker 10: Well, and stay tuned for more great reporting from Dina Shinker.
Speaker 2: Yeah, Dina, always love it when you join us. And
Speaker 2: even if the stories about lap grow and meet, I
Speaker 2: still get hungry when we talk about it. Tina Shaker,
Speaker 2: consumer reporter for Bloomberg News, joining us on soon from
Speaker 2: New York. Also here the editor of Bloomberg Business Week,
Speaker 2: Joel Webber, Joel, would you eat this stuff?
Speaker 10: If ever there's more than the little bit that exists
Speaker 10: in the world, I would try it. I would try
Speaker 10: it per person. I don't think I'm going to be
Speaker 10: seeing anytime soon.
Speaker 2: Okay, yeah, well we'll see, We'll see you're listening and
Speaker 2: watching it. Bloomberg Business Week on at Bloomberg Radio on
Speaker 2: serious XM Channel one twenty one, on Bloomberg Reginals, and
Speaker 2: on YouTube.
Speaker 6: This is Bloomberg Bus this week, Brother Marca.
Speaker 1: The journal.
Speaker 9: Now about you?
Speaker 1: Let me drive?
Speaker 9: Oh no, no, no, no's.
Speaker 3: Honey, please, I'll do the travels.
Speaker 9: Excuse me, I want to drive.
Speaker 5: It's good, question good.
Speaker 6: This is the drive to the clothes.
Speaker 1: We'll buy around each other down on Bloomberg Radio.
Speaker 2: All right, well here we are less than eighteen minutes
Speaker 2: to go to the close of us trading here on
Speaker 2: this and Monday, December eighteenth.
Speaker 6: Twenty twenty three. I'm Tim. Stand back.
Speaker 2: Carol Master is out this afternoon. It is Bloomberg Business week.
Speaker 2: It's time for Drive to the clothes. For that, we
Speaker 2: go to Jay Jacob's US head of Thematics and Active
Speaker 2: Equity ETFs over at black Rock. He joins us on
Speaker 2: a Zoom from New York City. Jay, good to have
Speaker 2: you with us this afternoon. Full disclosure to our audience,
Speaker 2: you and I sat next to each other in a
Speaker 2: few classes business school, so that's how we know each other.
Speaker 2: And you're now at Blackrock and I'm here at Bloomberg,
Speaker 2: and we get to talk ETFs a little bit.
Speaker 6: How are you?
Speaker 3: I am great.
Speaker 9: How are you doing? Tim?
Speaker 1: Yeah?
Speaker 6: Doing pretty well? Doing pretty well?
Speaker 2: Hey, did this rally. You know, you just heard the
Speaker 2: numbers from Charlie Pellett. There did this rally over the
Speaker 2: last eight weeks? Did they to catch you off guard?
Speaker 9: I think it caught a lot of investors off guard
Speaker 9: because we've seen six trillion dollars in money market funds
Speaker 9: in the United States this year, eight billion dollars globally,
Speaker 9: So a lot of people were looking at cash hields
Speaker 9: and thinking, I don't know what's happening in the markets.
Speaker 9: I don't like the risk out there of a recession
Speaker 9: or general volatility. I'm going to take four or five
Speaker 9: percent yield in cash and call it a day. And
Speaker 9: instead we've seen the SMPS now I've almost twenty five
Speaker 9: percent on the year. That's the risk of holding cash.
Speaker 9: We know over the long run, participating in markets is
Speaker 9: key to investor success. Trying to time it can be
Speaker 9: very difficult, though, So I think this's caught a lot
Speaker 9: of people off guard.
Speaker 2: Yeah, trying to time it as a fool's Errand I mean,
Speaker 2: ask anyone who missed this this rally here, Jay. That's
Speaker 2: the thing though, there is still you know, trillions of
Speaker 2: dollars on the sidelines right now in these money market funds.
Speaker 2: In these cash funds, how do you see that getting
Speaker 2: deployed in twenty twenty four, I think.
Speaker 9: The bar is high to bring that cash off the sidelines.
Speaker 9: Investers have voted with their dollars this year. They've said
Speaker 9: they like the yield. If you're going to take money
Speaker 9: out of cash, out of a yield, you know, a
Speaker 9: yielding a bank account, and put it into the markets,
Speaker 9: you need to have a really compelling reason why. And
Speaker 9: so we are looking at, really what are the specific
Speaker 9: areas that are exciting. I think the challenge him is
Speaker 9: if you look back over the last ten years or so,
Speaker 9: we call it the Great Moderation. You know, interest rates
Speaker 9: were following, growth was strong. It was really a great
Speaker 9: time to be in just a sixty forty portfolio. It
Speaker 9: almost didn't matter what you bought, almost all assets were rising.
Speaker 9: But now in this higher volatility, high interest rate environment,
Speaker 9: you really have to get more precise about honing in
Speaker 9: on where the growth areas are in the market. And
Speaker 9: I think that's where investors are going to have to
Speaker 9: do their homework of looking at I want to come
Speaker 9: out of cash, but what are the attractive areas. It's
Speaker 9: not just about broad benchmarks.
Speaker 2: Okay, so let's talk about the thematic outlook that you
Speaker 2: guys have over at I Shares by Blackrock. You talk
Speaker 2: about this higher bar. I know you're also really interested
Speaker 2: in AI. And if we characterize twenty twenty three, and
Speaker 2: you know, really, if there's one way to describe twenty
Speaker 2: twenty three, it's certainly the year when investors started paying
Speaker 2: very close attention to AI, and we saw some big
Speaker 2: winners in Nvidia, Microsoft, and even some startups like open
Speaker 2: ai as well. How are you guys thinking about AI
Speaker 2: in twenty twenty four?
Speaker 9: We see AI in twenty twenty three is really just
Speaker 9: the proof of concept year. Chat GPT burst onto the scene,
Speaker 9: a bunch of people played around with the technology, but
Speaker 9: not a lot of commercial adoption. You haven't seen billions
Speaker 9: of dollars in revenue coming to a lot of these
Speaker 9: AI companies yet. So twenty twenty four is going to
Speaker 9: be that year of commercial success where this technology is
Speaker 9: proven and you're going to start to see more enterprise
Speaker 9: applications for AI as well as more consumer applications. I think,
Speaker 9: just an example, you know, we've seen some companies already
Speaker 9: say they expect to save hundreds of millions of dollars
Speaker 9: in client service because now they can use AI to
Speaker 9: respond to basic questions, you know, how do I reset
Speaker 9: my password or do I find my account information? And
Speaker 9: they can you know, really use AI for kind of
Speaker 9: that low hanging through questions from clients, whereas using their
Speaker 9: more sophisticated human answers for the more sophisticated questions. So,
Speaker 9: in fact, about sixty percent of CEOs who intend to
Speaker 9: use more AI next year have said they want to
Speaker 9: do so for cost saving measures. So if we're in
Speaker 9: a tight economy and AI is looking really promising as
Speaker 9: a technology, I think we're going to see much more
Speaker 9: investment in it for companies to bring down their cost base.
Speaker 2: So what are the types of companies that end up
Speaker 2: being the beneficiaries there. Let's say that you know, people
Speaker 2: are saying to themselves, well, wait a second. You know,
Speaker 2: we know that Nvidia has done really well this year,
Speaker 2: but now we're enter the part of the AI revolution
Speaker 2: where we start to see companies, as you mentioned, embrace
Speaker 2: this technology and lead to real cost savings. Which are
Speaker 2: the types of companies that are going to do that?
Speaker 9: Yeah, we really have to look across the AI tech
Speaker 9: stack to find companies. So at the basic level, you
Speaker 9: look at the hardware. Those are the semiconductors that are
Speaker 9: really powering these AI systems that include some of the
Speaker 9: really powerful GPU manufacturers, but also includes several of the
Speaker 9: CPU manufacturers that can be really efficient for AI processing.
Speaker 9: One level above that, you can look at digital infrastructure.
Speaker 9: Where is all these semiconductors being housed. You know, AI
Speaker 9: doesn't just happen in the air in the cloud, it
Speaker 9: has a physical location where these calculations are happening. It's
Speaker 9: the data owners. Data is the fuel into AI. So
Speaker 9: the companies that own the most data, have the most
Speaker 9: valuable data, are sitting potentially on really valuable information there.
Speaker 9: And then finally at the highest order, these are the
Speaker 9: companies that are building applications using AI. So if we
Speaker 9: take a step back and look at the last decade
Speaker 9: or so, a platform technology that built many businesses was
Speaker 9: four G technology. It allowed us to get data faster
Speaker 9: on our cell phones anywhere where we were in the world.
Speaker 9: That allowed for things like mobile e commerce, mobile social media,
Speaker 9: so that we could stream videos and shop wherever we
Speaker 9: are are. The new platform technology for the next ten
Speaker 9: years is going to be AI. What is the next
Speaker 9: e commerce? What is the next social media that's going
Speaker 9: to be built on top of that technology?
Speaker 2: Hey, what about when it comes to just geopolitical events
Speaker 2: and demographic changes that you see happening and that you
Speaker 2: guys are planning for in terms of your the products
Speaker 2: that you offer at I Shares by black Rock. Let's
Speaker 2: talk presidential election in the next year. I mean, how
Speaker 2: should investors be thinking about that?
Speaker 9: Well, I actually think this goes beyond the presidential election.
Speaker 9: If you look at really from the end of World
Speaker 9: War Two through the global financial crisis, you saw globalization
Speaker 9: really in one direction, more and more globally integrated trade.
Speaker 9: But over the last few years you've started to see
Speaker 9: new industrial policy in the United States with things like
Speaker 9: the Infrastructure Investments and Jobs Act, the Chips and Science Act,
Speaker 9: the Inflation Reduction Act, always to build more critical industries
Speaker 9: in the United States, like sending conductors and electric vehicles,
Speaker 9: and that means that we need a lot more manufacturing,
Speaker 9: but we also need a lot more partner countries that
Speaker 9: can help us build all those things. Earlier this year,
Speaker 9: Mexico became the biggest trade partner of the United States.
Speaker 9: A huge landscape shift there, we've seen more trade with
Speaker 9: India and frankly reduced tariffs with India. As we're looking
Speaker 9: to diversify supply chains into other countries around South and
Speaker 9: Southeast Asia. So as we try to build more and
Speaker 9: really secure key industries in the United States, it also
Speaker 9: comes down to who are the partner countries that the
Speaker 9: United States wants to work with for these new supply chains.
Speaker 2: Jay, we only have like twenty seconds left, but given
Speaker 2: that we're up almost twenty five percent in the s
Speaker 2: and P five hundred, are you bullish overall next year?
Speaker 1: I am.
Speaker 9: I think I'm very optimistic that a lot of the
Speaker 9: cash on the sidelines is going to find these attractive
Speaker 9: areas like AI, like geopolitical fragmentation and our aging populations.
Speaker 2: All right, Jay, really appreciate you joining us. Happy holidays
Speaker 2: if we don't connect before now in the next couple
Speaker 2: of weeks. J Jacobs is US head of Thematics and
Speaker 2: Active Equity ETFs over at Blackrock. He joins us on
Speaker 2: Zoom from New York City.
Speaker 1: This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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