WEBVTT - Bloomberg Wall Street Week: Krishna, Fiorina, Yergin 0:00:00.160 --> 0:00:03.360 This is Bloomberg Wall st Week. What's the state of 0:00:03.400 --> 0:00:06.360 corporate governance? The deficit is a real issue. The US 0:00:06.400 --> 0:00:09.880 economy continues to send mixed signals. The financial stories that 0:00:10.000 --> 0:00:13.000 cheap our world fed action to con concerns over dollar 0:00:13.039 --> 0:00:16.520 liquidity and encouraging China data. The five hundred wealthiest people 0:00:16.520 --> 0:00:19.160 in the world. Through the eyes of the most influential 0:00:19.239 --> 0:00:22.880 voices Larry Summers, the former Treasury Secretary, Starr CEO, Kevin 0:00:22.960 --> 0:00:26.600 Johnson sec Chairman J Clayton. Bloomberg wool Street Week with 0:00:26.760 --> 0:00:31.280 David Weston from Bloomberg Radio Markets struggled a price, political 0:00:31.360 --> 0:00:34.800 risk of an election, a sick president, and stimulus that 0:00:34.960 --> 0:00:38.240 never seems to come. Welcome to Bloomberg Wall Street Week. 0:00:38.360 --> 0:00:43.320 I'm David Weston. It all began in with a backrob 0:00:43.560 --> 0:00:46.400 That was the name of the original algorithm the Google founders, 0:00:46.479 --> 0:00:50.040 Larry Page and Sergey Brin, developed first as PhD students 0:00:50.040 --> 0:00:53.640 at Stanford University. Page had a vision to rank links 0:00:53.720 --> 0:00:56.160 resulting from an Internet search by how often they were 0:00:56.200 --> 0:01:00.720 linked by other pages. In paper, Page Brind made a 0:01:00.800 --> 0:01:04.760 case against ad supported search engine, saying, in general it 0:01:04.840 --> 0:01:07.480 could be argued from the consumer point of view that 0:01:07.560 --> 0:01:10.440 the better the search engine is, the fewer advertisements will 0:01:10.480 --> 0:01:12.800 be needed for the consumer to find what they want. 0:01:13.440 --> 0:01:15.880 Google went public in two thousand four with evaluation of 0:01:15.920 --> 0:01:19.160 twenty seven billion dollars and a perspectives that included the 0:01:19.160 --> 0:01:23.920 company's declared code of conduct, don't be evil. By that time, 0:01:24.120 --> 0:01:26.520 Eric Schmidt had been brought in as CEO, but Larry 0:01:26.560 --> 0:01:29.880 Page and Sergey Brin still charted the company's course as 0:01:29.880 --> 0:01:32.800 a tech giant. In two thousand five and two thousand 0:01:32.840 --> 0:01:36.000 and six, the pair expanded Google's reach by acquiring Android 0:01:36.240 --> 0:01:39.840 and YouTube. Larry Page officially took over a CEO once 0:01:39.880 --> 0:01:42.760 again in two thousand eleven, but stepped aside just a 0:01:42.760 --> 0:01:45.440 few years ago in two thousand fifteen, when the company 0:01:45.480 --> 0:01:50.160 restructured itself as Alphabet. Alphabet is now an Internet search giant, 0:01:50.480 --> 0:01:53.280 serving as the parent company of many businesses touching on 0:01:53.400 --> 0:01:59.120 many parts of consumers daily lives. In a report targeting Alphabet, Apple, Amazon, 0:01:59.280 --> 0:02:02.960 and Facebook, house panel seeks sweeping reforms to curb the 0:02:02.960 --> 0:02:07.840 tech giant's power. Carlie Fiorina, former CEO Hewlett Packard, says 0:02:07.880 --> 0:02:12.000 that the regulatory scrutiny is the new normal for Silicon Valley. 0:02:12.080 --> 0:02:15.480 I think if you look at where innovation traditionally has 0:02:15.520 --> 0:02:20.280 come from, it has come from the smaller startups. After all, 0:02:20.320 --> 0:02:24.320 that's what Google wants was, That's what Amazon once was, 0:02:24.639 --> 0:02:28.600 That's what Apple wants was, that's what all these companies 0:02:28.600 --> 0:02:35.440 Facebook wants were. And it's also true that these huge 0:02:35.480 --> 0:02:42.440 technology companies now have a great interest in leveraging others innovation, 0:02:42.880 --> 0:02:45.920 but they do so by buying them up. That's what 0:02:46.040 --> 0:02:48.799 they have done. And finally, I would say it is 0:02:49.000 --> 0:02:54.160 undoubtedly true that these companies have a market power and 0:02:54.280 --> 0:02:59.320 a power over consumers, not to mention consumer information. That's 0:02:59.360 --> 0:03:03.480 really all the unprecedented, and so I think they can 0:03:03.520 --> 0:03:08.840 Technology companies can no longer make a credible argument that 0:03:09.360 --> 0:03:12.520 somehow they are in a different category, that if you 0:03:12.600 --> 0:03:17.440 do anything to Internet based companies in terms of regulation 0:03:17.680 --> 0:03:22.520 or oversight, that somehow you are going to curtail their growth. 0:03:22.600 --> 0:03:25.320 I just don't think that argument rings true anymore. And 0:03:25.360 --> 0:03:28.400 that's why I think strategically they need to think about 0:03:28.919 --> 0:03:31.680 how to be a part of this conversation instead of 0:03:31.720 --> 0:03:35.080 just saying no, no, there's nothing to see here, there's 0:03:35.160 --> 0:03:37.920 nothing to do here. That's not going to fly Carlie. 0:03:37.960 --> 0:03:40.280 You mentioned earlier the leadership of some of these companies. 0:03:40.360 --> 0:03:42.400 Let's talk about leadership right now. How do you lead 0:03:42.440 --> 0:03:44.920 a company that arguably is winning by too much. You 0:03:45.000 --> 0:03:47.480 had a phenomenon with IBM, You could say that happened 0:03:47.520 --> 0:03:49.640 with you could say it happened with Microsoft. What can 0:03:49.680 --> 0:03:53.960 a leader do in that situation? Well, first, I think 0:03:54.880 --> 0:03:57.800 I don't want to be too critical here, but I 0:03:57.880 --> 0:04:01.640 do think that some of the leaders of some of 0:04:01.680 --> 0:04:07.480 these companies have um damaged their case a bit by 0:04:07.520 --> 0:04:11.360 being we now know less than forthcoming about what was 0:04:11.400 --> 0:04:13.960 really going on. And so we've seen I think too 0:04:13.960 --> 0:04:17.599 many instances where leaders have come before Capitol Hill, and 0:04:17.640 --> 0:04:21.440 let's face it, that's not a pleasant experience for any CEO, 0:04:21.640 --> 0:04:25.240 and CEOs get very outraged about the hypocrisy, all of 0:04:25.279 --> 0:04:28.919 which is deserved. Nevertheless, when a CEO is found to 0:04:28.960 --> 0:04:31.960 be less than forthcoming, that's not helpful to their cause. 0:04:32.480 --> 0:04:35.839 So I think the most important thing for these tech 0:04:35.960 --> 0:04:40.200 ceo s to do is to decide strategically that the 0:04:40.240 --> 0:04:44.720 best course is not resistance at all costs, but instead 0:04:45.160 --> 0:04:48.400 to try and be part of the solution here. You know, 0:04:48.520 --> 0:04:51.839 I started my career out in telecommunications, and there was 0:04:51.880 --> 0:04:54.160 a long period of time where A T and T 0:04:54.760 --> 0:04:59.839 as the big power, resisted at all costs being part 0:04:59.839 --> 0:05:04.000 of solution. That resistance cost them in the end. And 0:05:04.040 --> 0:05:06.480 so I think these CEOs need to think through what 0:05:06.520 --> 0:05:09.719 are they willing to live with? How can they influence 0:05:10.120 --> 0:05:14.160 the legislative process here on both sides of the aisle 0:05:14.480 --> 0:05:17.560 to come up with something that's gonna work. But just 0:05:17.839 --> 0:05:22.120 leave us alone isn't politically feasible anymore, and I think 0:05:22.120 --> 0:05:26.240 the economic arguments for just leave it alone, honestly, are 0:05:26.360 --> 0:05:29.800 no longer completely credible. Just briefly here the conclusion, Carlie, 0:05:29.960 --> 0:05:31.840 is it a plausible defense to say we've got to 0:05:31.880 --> 0:05:36.279 re about China? Well, yes and no. I mean yes, 0:05:36.520 --> 0:05:40.440 of course we do need to worry about China, and 0:05:40.520 --> 0:05:46.000 that is why our approach to China must be consistent 0:05:46.080 --> 0:05:52.080 and persistent and strategic. And that requires collaboration between government 0:05:52.120 --> 0:05:56.040 and business, which hasn't always been in evidence over the 0:05:56.120 --> 0:05:59.800 last twenty years. It also means that we need to 0:05:59.839 --> 0:06:04.320 be consistent across administrations when we deal with China and 0:06:04.560 --> 0:06:10.320 between parties, which we haven't always been. However, these tech 0:06:10.480 --> 0:06:14.920 companies are winning globally. It's why the European Union has 0:06:14.960 --> 0:06:18.839 taken some of them on, and so that argument is important, 0:06:19.120 --> 0:06:23.160 but I don't think it will be successful in saying 0:06:23.760 --> 0:06:26.479 just leave us along. That was Carly Fiorina, founder and 0:06:26.560 --> 0:06:30.720 chair of Carly Fiorina Enterprises, coming up. The tech company 0:06:30.760 --> 0:06:35.480 that's constantly evolving, IBM is taking another step forward becoming 0:06:35.520 --> 0:06:40.120 a major cloud services provider. CEO Arvid Krishna says this 0:06:40.240 --> 0:06:43.400 is just the beginning that's next on Wall Street Week 0:06:43.640 --> 0:06:56.000 on Bloomberg. This is Bloomberg Wall Street Week with David 0:06:56.040 --> 0:06:59.440 Weston from Bloomberg Radio. It's one hundred one year history. 0:06:59.520 --> 0:07:01.960 IBM has reinvented itself to stay at the top of 0:07:02.000 --> 0:07:04.640 its game. This week, the company did it again with 0:07:04.680 --> 0:07:07.320 its announcement that it would be spinning off its infrastructure 0:07:07.360 --> 0:07:11.080 services unit to focus more on cloud computing and artificial intelligence. 0:07:11.560 --> 0:07:14.080 Arvin Krishna, who took over as CEO in April, has 0:07:14.080 --> 0:07:17.640 said he will pursue growth relentlessly, and his services business 0:07:17.640 --> 0:07:20.960 has been struggling during the pandemic. I asked him how 0:07:21.040 --> 0:07:24.240 this shift fits in with his vision for IBM's future. 0:07:24.400 --> 0:07:27.480 When I first became CEO, I talked about our commitment 0:07:27.520 --> 0:07:31.040 to growth, and I talked about a maniacal focus on 0:07:31.120 --> 0:07:34.880 hybrid cloud and AI. As we look at that market, 0:07:35.080 --> 0:07:39.120 that's a trillion dollar addressable opportunity, and as we look 0:07:39.120 --> 0:07:42.880 at our client buying behaviors, they are changing. How to 0:07:42.960 --> 0:07:48.920 do application modernization and how to buy infrastructure modernization is separating. 0:07:49.480 --> 0:07:53.000 So that says it behooves us to unlock growth by 0:07:53.000 --> 0:07:57.120 creating two companies. One company focused on hybrid cloud and 0:07:57.160 --> 0:08:02.440 AI and the other company focused unmanaged infrastructure services. So, 0:08:02.520 --> 0:08:06.360 in the first company, the platform, the open hybrid cloud 0:08:06.360 --> 0:08:10.040 platform that's based on red Hat technology, all of the 0:08:10.120 --> 0:08:14.960 software that gives clients the capability to leverage that platform. 0:08:15.080 --> 0:08:18.400 Then going from there into all the services they can 0:08:18.520 --> 0:08:21.680 use to do their journey to cloud. You put all 0:08:21.720 --> 0:08:25.040 that together, that's going to be IBM, together with the 0:08:25.080 --> 0:08:28.720 infrastructure that they run their most mission critical services on, 0:08:29.200 --> 0:08:33.120 and that company we believe will deliver mid single digit 0:08:33.200 --> 0:08:36.880 growth in a sustainable way in the medium term. The 0:08:36.960 --> 0:08:40.240 other company, we're calling it new code because we don't 0:08:40.240 --> 0:08:43.839 have a name for it yet, is the managed infrastructure company. 0:08:43.960 --> 0:08:47.040 On day one, twice the size of its nearest competitor 0:08:47.640 --> 0:08:51.560 over four thousand clients in a hundred and fifteen countries 0:08:51.559 --> 0:08:56.160 and counting really enables it with a investment grade balance 0:08:56.200 --> 0:08:58.880 sheet to go out and take share and be on 0:08:58.920 --> 0:09:02.320 an improved growth tragic tree. So David, really exciting to 0:09:02.320 --> 0:09:05.400 be able to do this and yet again reinvent our 0:09:05.400 --> 0:09:08.439 company for the future. So are when you talk about growth, 0:09:08.440 --> 0:09:10.760 and you have consistently said that is the question of 0:09:10.760 --> 0:09:13.720 growth for IBM. Compare those two companies. You said mid 0:09:13.800 --> 0:09:17.040 single digits for the one. Are you expecting much higher 0:09:17.080 --> 0:09:20.200 for the hybrid cloud and AI company to do? My 0:09:20.280 --> 0:09:23.080 aspiration and my goals for the company will always be higher. 0:09:23.360 --> 0:09:25.560 We're going to invest to be able to unlock even 0:09:25.600 --> 0:09:28.880 more growth. But I think it's prudent, given where you've 0:09:28.880 --> 0:09:31.040 been for the last few years, to be able to 0:09:31.080 --> 0:09:33.840 put a target out there. So I say in the 0:09:33.880 --> 0:09:37.959 medium term, So think uh, in the in the medium term, 0:09:38.000 --> 0:09:40.400 not the short term, because we've got to execute the 0:09:40.400 --> 0:09:43.080 spin and then do all the work ready to be 0:09:43.120 --> 0:09:46.440 able to generate that And so I would say that 0:09:46.440 --> 0:09:50.240 that's a milestone. Maybe go for higher, that's certainly possible, 0:09:50.559 --> 0:09:52.400 but I think it's prudent to be able to commit 0:09:52.480 --> 0:09:55.480 things that we have high confidence in I be. I'm 0:09:55.520 --> 0:09:57.880 sure it immediately. It took a step up on an 0:09:57.880 --> 0:10:00.439 announcement of this news. How am I? This is a 0:10:00.520 --> 0:10:04.440 question of valuation. How differently are cloud companies valued by 0:10:04.440 --> 0:10:08.079 the marketplace right now as opposed to information services companies. 0:10:08.160 --> 0:10:11.199 So if I look at it UM previous announcement, we 0:10:11.240 --> 0:10:16.080 have a majority services company. Post this announcement, um IBM 0:10:16.120 --> 0:10:20.040 will become over half as a software and solutions company 0:10:20.320 --> 0:10:24.720 and even a larger number in terms of overall product. 0:10:25.080 --> 0:10:27.000 And if I look at the annuity based on the 0:10:27.040 --> 0:10:30.280 new company, it's about a little over So if you 0:10:30.320 --> 0:10:33.000 look at that, that's a very attractive company that promises 0:10:33.000 --> 0:10:36.400 a different valuation than the current structure. So that is 0:10:36.840 --> 0:10:38.839 a piece of it. But I think it's actually more 0:10:38.880 --> 0:10:41.640 the growth and the addressable market opportunity of a trillion 0:10:41.720 --> 0:10:45.440 dollars that I think is driving it. But David, you're 0:10:45.480 --> 0:10:48.480 closer to that audience than probably I am in terms 0:10:48.520 --> 0:10:51.440 of how they think and how they react. Son, what 0:10:51.480 --> 0:10:53.960 will be the relationship continues two companies? Will they be 0:10:53.960 --> 0:10:56.280 contracting with one another? Will they be free to contract 0:10:56.440 --> 0:10:58.679 with other people that might be a competitor of their 0:10:58.679 --> 0:11:04.000 sister company vote. So absolutely you unlocked growth for both 0:11:04.040 --> 0:11:07.600 companies by being allowed to partner with those that maybe competitors. 0:11:07.640 --> 0:11:10.480 Certainly for NUKO they may today not so much to 0:11:10.480 --> 0:11:13.599 be restricted, but others who are competitors of the aggregate 0:11:13.920 --> 0:11:18.160 may feel reluctant to partner deeply with them. That gets unlocked, No, 0:11:18.160 --> 0:11:22.000 no constraints, no restrictions on that side. That said, I 0:11:22.040 --> 0:11:25.800 think it's likely that each other's biggest customers on day one, 0:11:25.960 --> 0:11:28.880 day one post spin, they certainly purchase a lot of 0:11:28.920 --> 0:11:33.520 hardware and software from IBM. IBM certainly purchased the services 0:11:33.600 --> 0:11:36.160 from NUKO in terms of how we run I T 0:11:36.240 --> 0:11:38.880 infrastructure and so on. So the two companies are going 0:11:38.880 --> 0:11:42.600 to have a deep strategic relationship, but that is not 0:11:42.640 --> 0:11:45.760 going to constrain them both from pottering with whoever they 0:11:45.760 --> 0:11:47.880 want to. Arvin, what can you tell us about the 0:11:47.960 --> 0:11:50.440 leadership of the two companies going forward? Who do you 0:11:50.440 --> 0:11:52.680 expect to be the leaders that to assume you're one 0:11:52.720 --> 0:11:55.080 of them? And what about Jim Whitehurst from Red Hat 0:11:55.120 --> 0:11:57.760 what role will we he have going forward? So both 0:11:57.840 --> 0:12:01.120 Jim and myself remained with ib AM and a lot 0:12:01.120 --> 0:12:03.760 of the leadership. Who runs the businesses at IBM is 0:12:03.840 --> 0:12:06.880 going to stay at IBM. The leadership who runs managed 0:12:06.920 --> 0:12:10.480 infrastructure services goes with MUCO. Now, as you know, in 0:12:10.559 --> 0:12:14.959 these spins, the board, the government structure of IBM stays 0:12:14.960 --> 0:12:17.400 in place because the company is staying in place. In 0:12:17.440 --> 0:12:19.320 the new coal we have to create a new board. 0:12:19.760 --> 0:12:21.800 Once the new board is formed, they'll be able to 0:12:21.840 --> 0:12:24.720 select a stop management team. We certainly expect that they 0:12:24.760 --> 0:12:29.640 will select many people from the current management team. But 0:12:29.760 --> 0:12:33.000 as that goes forward, the new board of the company 0:12:33.040 --> 0:12:35.360 will select the overall leadership. But in terms of the 0:12:35.400 --> 0:12:37.319 day to day operations, a lot of the people are 0:12:37.320 --> 0:12:40.400 in place. They run infrastructure services today and they will 0:12:40.440 --> 0:12:44.000 continue to do that RF and you clearly want to 0:12:44.040 --> 0:12:47.679 gain some growth by freeing up the hybrid services and 0:12:47.679 --> 0:12:50.120 and the AI part of the company. Do you also 0:12:50.360 --> 0:12:53.040 run the risk of losing some of such a cross 0:12:53.040 --> 0:12:55.760 selling have customers you can cross sell both sides of 0:12:55.760 --> 0:12:58.360 your business. I think that that's a risk that can 0:12:58.400 --> 0:13:01.280 be managed, David. So the word I would use is 0:13:01.600 --> 0:13:03.839 I don't have any concerns about it. And then I 0:13:03.880 --> 0:13:05.920 was gonna say, of course I'm going to be parted 0:13:05.920 --> 0:13:07.640 out about it, and I've gotta have lots of work 0:13:07.679 --> 0:13:10.320 around it, and so I'm going to mitigate any of 0:13:10.360 --> 0:13:13.760 that risk in terms of how we work um. There 0:13:13.760 --> 0:13:16.160 are certainly common clients across both sides of the business, 0:13:16.440 --> 0:13:20.040 but the clients tend to contract separately for the different 0:13:20.040 --> 0:13:22.520 parts of the business already, so we have to go 0:13:22.640 --> 0:13:25.560 manage that risk. But as I said, also the two 0:13:25.600 --> 0:13:28.480 businesses that will have deep in strategic relationships with each other, 0:13:28.760 --> 0:13:31.800 and that will also help mitigate that part of the risk. 0:13:32.240 --> 0:13:34.760 So I think we'll unlock growth and I think that 0:13:34.880 --> 0:13:38.240 the risk on the aspect you mention can be mitigated. 0:13:38.480 --> 0:13:42.480 This is obviously a very big initiative of IBM. It 0:13:42.480 --> 0:13:44.240 will take a while, I'm sure to put it all 0:13:44.280 --> 0:13:46.680 together to digest it. When do you expect the spinoff 0:13:46.720 --> 0:13:50.160 to be effective effectuated? We believe based on history and 0:13:50.200 --> 0:13:53.520 looking at others who have done similar spinoffs, they seem 0:13:53.600 --> 0:13:55.520 to take about a year to get done, So I'll 0:13:55.559 --> 0:13:57.880 say a year plus minus a few months. So that 0:13:57.920 --> 0:14:01.920 takes us into the latter part of We have to 0:14:01.960 --> 0:14:05.000 get through all of the structure of the new company. 0:14:05.040 --> 0:14:08.560 We have to file to the SEC. There stands we 0:14:08.600 --> 0:14:12.880 expect that will happen somewhere early to mid part of 0:14:13.000 --> 0:14:15.559 next year. You get to get through all of those approvals. 0:14:15.559 --> 0:14:17.560 You've got to get to a final board approval, and 0:14:17.640 --> 0:14:20.920 that then allows us to to impact all this. But 0:14:21.760 --> 0:14:25.240 I think twelve months plus minus some number of months 0:14:25.320 --> 0:14:28.440 is probably a good timeline to expect. That was Arvin Krishna, 0:14:28.600 --> 0:14:32.160 CEO of IBM coming up. Energy policy is one of 0:14:32.160 --> 0:14:35.040 the major issues that separates President Trump and former Vice 0:14:35.080 --> 0:14:38.680 President by Dan Jurgen, vice chairman of I H S Market, 0:14:38.760 --> 0:14:41.600 says the future of energy might be out of either 0:14:41.800 --> 0:14:45.600 of their hands. That's next on Wall Street Week on Bloomboard. 0:14:50.720 --> 0:14:54.680 This is Bloomberg Wall Street Week with David Weston from 0:14:54.800 --> 0:14:58.560 Bloomberg Radio. President Trump and former Vice President Joe Biden 0:14:58.640 --> 0:15:01.200 have very different ideas is about energy policy in the 0:15:01.240 --> 0:15:04.960 United States. President Trump wants to solidify America's position as 0:15:04.960 --> 0:15:07.600 a top oil and gas producer and democratic now and 0:15:07.640 --> 0:15:10.720 new Biden is setting his sights on reducing the company's 0:15:10.720 --> 0:15:14.160 reliance on fossil fuels with a two trillion dollar climate plan. 0:15:14.760 --> 0:15:17.400 Dan Jurgen, chairman of I H S Market and author 0:15:17.440 --> 0:15:20.160 of the new book The New Map Energy, Climate and 0:15:20.200 --> 0:15:22.920 the Clash of Nations says that there is an inevitable 0:15:23.080 --> 0:15:27.120 energy shift underway. The Trump administration has been focused on 0:15:27.880 --> 0:15:30.560 this new position the United States has as the world's 0:15:30.640 --> 0:15:33.360 number one producer of oil and gas and what that 0:15:33.400 --> 0:15:34.840 does for the economy and what it does for the 0:15:34.960 --> 0:15:37.600 position in the world. Joe Biden has a two trillion 0:15:37.600 --> 0:15:42.440 dollar Climate Action Plan which is very focused on addressing 0:15:42.480 --> 0:15:45.960 climate things, and I think in terms of oil and gas, 0:15:46.440 --> 0:15:48.720 it's a little unclear where where he is. He made 0:15:48.760 --> 0:15:50.680 a point to say when he was in Pennsylvania, where 0:15:50.680 --> 0:15:53.480 there are a lot of jobs related to uh fracking 0:15:53.560 --> 0:15:56.640 as it's called, that he's I'm not going to ban fracking, 0:15:56.920 --> 0:16:00.800 but clearly it's it's a pivot towards climate and I 0:16:00.840 --> 0:16:03.800 think certainly more regulation around oil and gas from what 0:16:03.920 --> 0:16:06.560 you know of the technology and the development and the markets, 0:16:06.560 --> 0:16:08.720 because the market drives it as well with the prices. 0:16:09.280 --> 0:16:11.160 Is this sooner or later that we're gonna have a 0:16:11.160 --> 0:16:14.120 fundamental shift away from fossil fuels. I think it's an 0:16:14.120 --> 0:16:17.600 evolution that's going on. I think you mentioned electric power, 0:16:18.080 --> 0:16:20.800 and I was recently with a bunch of the leaders 0:16:20.800 --> 0:16:22.920 of the electric power industry. They do look to be 0:16:23.360 --> 0:16:27.640 net zero carbon by or many of them are moving 0:16:27.720 --> 0:16:30.880 that direction other parts of it. I think it evolves 0:16:30.920 --> 0:16:33.040 over time. There are two eight million cars in the 0:16:33.120 --> 0:16:36.280 United States and about two hundred seventy nine million run 0:16:36.280 --> 0:16:38.000 on gasoline, and I don't think people are gonna throw 0:16:38.000 --> 0:16:40.320 away their cars. So I think it's this is the 0:16:40.400 --> 0:16:43.520 longer evolution. And I think there's what's happens in the US, 0:16:43.560 --> 0:16:46.680 But the US remembers only fifteen percent of CEO two emissions, 0:16:46.880 --> 0:16:51.400 China's twice that. India other emerging markets are looking towards 0:16:51.480 --> 0:16:54.240 commercial energy to get away from burning wood and waste 0:16:54.440 --> 0:16:57.160 in people's houses with the health consequences. So I think 0:16:57.200 --> 0:16:59.880 this is something that unfolds time directionally. Where it's going, 0:17:00.200 --> 0:17:03.920 that's clear directionally, the timing really matters, and the bets 0:17:03.920 --> 0:17:06.160 can be rather substantial. In your book, you point out 0:17:06.200 --> 0:17:08.439 how many jobs you know, I think there's ten million 0:17:08.560 --> 0:17:11.560 are tied to the energy industry. We also have trillions 0:17:11.560 --> 0:17:14.760 of dollars globally who's putting bets on which side of this? 0:17:14.840 --> 0:17:17.680 And we saw a report that Exon, basically internal documents 0:17:17.720 --> 0:17:20.119 leaked suggests that EXON is not moving as quickly as 0:17:20.160 --> 0:17:23.520 maybe some others away from fossil fuel emissions. China certainly 0:17:23.640 --> 0:17:26.000 might benefit. You point out in your book Russia, maybe not. 0:17:26.240 --> 0:17:28.600 Who's betting on which side of Well, let me say 0:17:28.640 --> 0:17:31.000 I think the X and thing. Of course that's still 0:17:31.080 --> 0:17:34.080 unfolding story. But I think what's happening is all major 0:17:34.119 --> 0:17:37.119 companies now are looking at their at their at their 0:17:37.200 --> 0:17:39.399 emissions and saying what are they going to be? And 0:17:39.440 --> 0:17:42.320 then the question becomes how do you mitigate them? And 0:17:42.480 --> 0:17:43.919 in the in the new Map, you know, there's this 0:17:43.960 --> 0:17:47.600 whole chapter called Breakthrough Technologies, based upon the work that 0:17:47.880 --> 0:17:50.160 Ernie more Needs, a former Energy Secretary, and I did 0:17:50.200 --> 0:17:54.080 for lead for Bill Gates Foundation and Breakthrough Energy Coalition 0:17:54.200 --> 0:17:56.720 about the technologies we need. And one of them that's 0:17:56.760 --> 0:18:00.639 really very major is what's called carbon capture carbon mitigation. 0:18:00.960 --> 0:18:03.240 Simply when you look at the numbers, and I think 0:18:03.359 --> 0:18:07.560 that's where you know we're going to see increased UH 0:18:07.680 --> 0:18:10.639 investment going in terms of research on that to meet it. 0:18:10.840 --> 0:18:14.840 In terms of countries, China is a significant winner here 0:18:14.880 --> 0:18:19.040 because it, unlike the US, it imports its oil and 0:18:19.080 --> 0:18:22.040 it regards that as a major strategic problem, particularly in 0:18:22.040 --> 0:18:25.320 the geopolitical issues that are now developing, and it has 0:18:25.359 --> 0:18:28.119 a dominant position in many of what might call that 0:18:28.200 --> 0:18:31.280 they call the new energies. For instance, about sevent the 0:18:31.320 --> 0:18:34.080 solar panels of the world are made in China, another 0:18:34.119 --> 0:18:38.240 ten percent by Chinese companies, and it's Chinese manufacturing that's 0:18:38.600 --> 0:18:42.080 partly responsible for this revolution as solar costs which have 0:18:42.240 --> 0:18:44.600 come way down, so you know, they would be a 0:18:44.640 --> 0:18:47.399 big beneficiary of this. One of the things that I 0:18:47.920 --> 0:18:50.360 was surprised I learned from your book is the Department 0:18:50.440 --> 0:18:53.359 Energy under President Trump is investing an awful lot of 0:18:53.400 --> 0:18:56.960 money in research, science and research, some of which actually 0:18:56.960 --> 0:19:00.080 has to go to renewables, right, uh six and a 0:19:00.160 --> 0:19:04.600 half billion dollars in UM in basic science research. And 0:19:05.000 --> 0:19:09.040 that's the foundation, really the true foundation of an energy transition, 0:19:09.480 --> 0:19:12.040 and that's been pretty consistent. That has been one area 0:19:12.520 --> 0:19:17.240 of bipartisan cooperation in seeing the importance of maintaining that commitment. 0:19:17.440 --> 0:19:19.720 And this is where the u S strength really comes from, 0:19:19.920 --> 0:19:22.840 which is we have this incredible ecosystem that goes from 0:19:23.160 --> 0:19:27.720 seventeen national labs that kind of expenditure, universities, companies, startups. 0:19:27.960 --> 0:19:31.640 No other country has that advantage in new technologies, take 0:19:31.680 --> 0:19:35.560 wind and solar there. Those are fifty years old industries, 0:19:35.600 --> 0:19:37.360 but it's only in the last ten years that they've 0:19:37.480 --> 0:19:40.639 really become so competitive. So it takes time, and so 0:19:40.680 --> 0:19:43.280 the investment you make now really pays off, but it 0:19:43.280 --> 0:19:45.760 can take ten or twenty years from now. Dan draw 0:19:45.920 --> 0:19:48.000 one other contrast that again I got from your book, 0:19:48.040 --> 0:19:50.600 the New Map, and that is between Russia, which is 0:19:50.680 --> 0:19:53.840 very dependent on fossil fuel's goodness knows, and Saudi Arabia, 0:19:53.880 --> 0:19:56.200 which is also very matter but they have that vision 0:19:57.240 --> 0:19:59.480 campaign going on. Does Russia have anything similar to that 0:19:59.520 --> 0:20:02.920 about what ms after fossil fuels? No, I don't think so. 0:20:03.080 --> 0:20:05.640 I mean, the other day Vladimir Putin said, it's great, 0:20:05.720 --> 0:20:08.480 O our budget is only now thirty percent to oil 0:20:08.520 --> 0:20:11.840 instead of being oil that money coming from it. But 0:20:11.960 --> 0:20:16.600 I think Russia has been talking about diversification for UH 0:20:16.640 --> 0:20:18.800 for twenty years since Pootin came to power, and it's 0:20:18.880 --> 0:20:22.200 really not happening. In fact, I was at a conference 0:20:22.240 --> 0:20:25.080 where I asked Putin that question. He and Chancellor Merkel 0:20:25.119 --> 0:20:28.920 were on the platform about diversification, but we got sidetracked 0:20:28.960 --> 0:20:32.159 whose I mentioned shale, and he really doesn't like US shale, 0:20:32.200 --> 0:20:35.239 so he gave me his, uh, his his opinions on that, 0:20:35.280 --> 0:20:37.919 which were pretty strong. That was Dan Jurgen, chairman of 0:20:37.960 --> 0:20:40.440 I h S Market. Coming up. We wrap up the 0:20:40.480 --> 0:20:44.200 week with our special contributor Larry Summers. This is Wall 0:20:44.240 --> 0:20:53.800 Street Week on Bloomberg. This is Bloomberg Wall Street Week 0:20:54.000 --> 0:20:57.600 with David Weston from Bloomberg Radio. As we do every week, 0:20:57.680 --> 0:21:00.399 we welcome now our special contributor, Larry Summers or Treasure 0:21:00.440 --> 0:21:02.879 Secretary talbut makes sense out of this week, And I 0:21:02.920 --> 0:21:05.960 have to say, let me start Larry with the drama 0:21:06.160 --> 0:21:10.080 maybe soap opera of the of the Simulus bill on again, 0:21:10.119 --> 0:21:12.760 off again sometimes. In the same day, we had President 0:21:12.760 --> 0:21:14.239 Trump saying I'm walking away from the table and I 0:21:14.320 --> 0:21:16.280 want to talk about it. We had Nancy Plosi tell 0:21:16.359 --> 0:21:17.960 us here at Bloomberg, I'm not doing this. It's a 0:21:17.960 --> 0:21:19.400 big deal. And at the very end of the week, 0:21:19.440 --> 0:21:20.879 President Trump came back and said, no, I want to 0:21:20.880 --> 0:21:22.560 do more stimuless than anybody. I want to do more 0:21:22.560 --> 0:21:28.639 than Nancy Pelosi. But in the end, do we need it, David, 0:21:28.680 --> 0:21:31.840 We do need it. It's very clear that it's the 0:21:31.960 --> 0:21:36.359 right thing to do. Look doing without stimulus at a 0:21:36.440 --> 0:21:41.919 moment like this is kind of like waiting into a 0:21:42.000 --> 0:21:46.200 crowd not wearing a mask. In the era of COVID, 0:21:47.119 --> 0:21:49.920 it might turn out just to have been a mistake 0:21:50.440 --> 0:21:53.680 for which you didn't pay a price, but very likely 0:21:54.119 --> 0:21:56.120 it will be a mistake for which you will pay 0:21:56.560 --> 0:22:00.320 a very big price. They are all kinds of lines 0:22:00.960 --> 0:22:06.160 that the fast bounce back that the economy was enjoying 0:22:06.880 --> 0:22:11.320 isn't going to continue. Of its own devices. COVID's getting 0:22:11.400 --> 0:22:16.080 further out of control as we moved to winter. Financial 0:22:16.240 --> 0:22:21.879 strains are increasing and interfering with the flow of credit layoffs, 0:22:21.960 --> 0:22:26.400 which people hope to avoid their bowing to necessity and 0:22:26.880 --> 0:22:33.760 uh laying people off. The situation globally is complex at best. 0:22:34.520 --> 0:22:39.520 Stimulus is recovery insurance, and nothing is more important than 0:22:39.640 --> 0:22:43.200 maximizing the prospect that the recovery continues and so learning. 0:22:43.240 --> 0:22:45.600 Given that, and the markets were up. The SMP was 0:22:45.640 --> 0:22:47.960 up the most since July this past week, and it's 0:22:47.960 --> 0:22:50.439 had two weeks up in a row. The markets basically 0:22:50.480 --> 0:22:52.240 saying we're gonna get the stimulus sooner or later, no 0:22:52.280 --> 0:22:54.360 matter what, because we think maybe Joe Biden is gonna 0:22:54.400 --> 0:22:59.480 end up being president. If you look at the internals 0:22:59.520 --> 0:23:05.119