WEBVTT - Bloomberg Businessweek Weekend - September 16, 2022 0:00:01.040 --> 0:00:05.400 This is Bloomberg Business Week Inside from the reporters and 0:00:05.559 --> 0:00:09.200 editors who bring you America's most trusted business magazine, plus 0:00:09.240 --> 0:00:12.600 global business, finance and tech news as it happened. S 0:00:12.600 --> 0:00:16.480 Bloomberg Business Week with Carol Messier and Bloomberg Quick Takes. 0:00:16.520 --> 0:00:21.119 Tim Stinovic on Bloomberg Radio. Hi, everyone, Welcome to the 0:00:21.120 --> 0:00:24.040 weekend edition of Bloomberg Business Week. The big news in 0:00:24.200 --> 0:00:27.040 financial market says week here in the United States, as 0:00:27.080 --> 0:00:30.000 it's been for much of the year, inflation. The latest 0:00:30.000 --> 0:00:33.160 print released on Tuesday showed consumer prices once again coming 0:00:33.159 --> 0:00:36.600 in hotter than expected. Well, stocks tumbled following that report, 0:00:36.640 --> 0:00:40.280 the most since we're likely to see another big interest 0:00:40.360 --> 0:00:43.000 rate high two from the Federal Reserve this coming week. 0:00:43.080 --> 0:00:45.400 So all of that Tim on investor's mind. Yeah, Well, 0:00:45.440 --> 0:00:47.720 I've ahead We've got the perfect guest to help us 0:00:47.800 --> 0:00:51.760 understand the data. Legendary investor David Rubinstein gives us tips 0:00:51.760 --> 0:00:54.280 for tough times and a lesson or two from his 0:00:54.320 --> 0:00:56.720 new book. He's seen a few cycles in any time. Yeah, 0:00:56.720 --> 0:00:59.400 he knows a thing or two about investing. Absolutely. Plus, 0:00:59.400 --> 0:01:02.200 we've got a be in Beth's chief marketing officer on 0:01:02.360 --> 0:01:05.479 how the Brewing Giant is staying connected with consumers amid 0:01:05.560 --> 0:01:08.440 an uncertain market outlook. And our Business Week cover story 0:01:08.560 --> 0:01:11.640 on a Chinese spy and some not so encrypted evidence 0:01:11.800 --> 0:01:14.440 on his phone. It's amazing story. First up this hour, though, 0:01:14.720 --> 0:01:17.200 look at how surging borrowing costs are rippling through a 0:01:17.200 --> 0:01:21.280 critical economics sector, the housing market, both here at home 0:01:21.360 --> 0:01:23.720 and abroad. It was the subject of a Bloomberg Big 0:01:23.760 --> 0:01:26.640 Take from this past week. Major cities around the globe 0:01:26.640 --> 0:01:29.160 that had been seeing real estate boom are now facing 0:01:29.160 --> 0:01:32.000 a painful reset. To find out just how grim the 0:01:32.040 --> 0:01:34.960 picture looks, Bloomberg Market Senior editor Mike Reagan and I 0:01:35.000 --> 0:01:37.840 caught up with our San Francisco bureau chief, Carol Wetzel. 0:01:38.040 --> 0:01:40.160 The markets that were really in focus on are the 0:01:40.160 --> 0:01:42.920 ones that have been hugely bubbly black of the bettle 0:01:42.959 --> 0:01:45.279 word over the past few years of the pandemic boom. 0:01:45.400 --> 0:01:49.440 This is Australia, New Zealand, Canada, where investing in real 0:01:49.560 --> 0:01:52.520 estate just became a huge phenomenon. You know, you've seen 0:01:52.560 --> 0:01:56.280 price gains of plus per year. Not apparently, those are 0:01:56.280 --> 0:01:59.840 the ones that suddenly are rapidly cooling because now that 0:02:00.040 --> 0:02:03.360 we have this synchronized interest rates from central banks around 0:02:03.360 --> 0:02:06.000 the world. Borrowing costs are going up everywhere, and you 0:02:06.080 --> 0:02:08.720 have this combination of now prices were at record levels 0:02:09.000 --> 0:02:11.160 and borrowing costs are now just way out of people's reach, 0:02:11.200 --> 0:02:14.040 so they're having the quickest come down now, you know, Kara, 0:02:14.120 --> 0:02:18.000 when I read about potential double digit home price declines, 0:02:18.040 --> 0:02:20.760 I kind of have a nasty flashback to, uh, you 0:02:20.800 --> 0:02:24.000 know about twelve thirteen years ago and the financial crisis. 0:02:24.000 --> 0:02:26.760 I mean, you covered that, right, and if you're like, 0:02:26.919 --> 0:02:28.880 get get chills up the spot a little bit. But 0:02:29.639 --> 0:02:31.440 I'm wondering. I mean, there's so much has been done 0:02:31.480 --> 0:02:35.080 in the US to safeguard the financial system, and we've 0:02:35.120 --> 0:02:38.440 really moved away from those adjustable rate mortgages in the 0:02:38.520 --> 0:02:41.800 US that we're part of the problem back then. But 0:02:42.120 --> 0:02:44.640 I get the impression the rest of the world is 0:02:44.880 --> 0:02:48.440 still more exposed to adjustable rate mortgages than we are 0:02:48.480 --> 0:02:51.160 in the US. Is that true? And are there concerns 0:02:51.160 --> 0:02:53.679 out there about some sort of ripple effects from a 0:02:53.760 --> 0:02:58.119 drop in property values into the global financial system. Yes, 0:02:58.160 --> 0:03:01.880 that's absolutely true. So the US has vastly come away 0:03:01.880 --> 0:03:04.880 from addressable rate mortgages in the aftermath of the financial crisis. 0:03:04.960 --> 0:03:08.200 It's it's been about um seven percent is average of 0:03:08.280 --> 0:03:09.959 loans are in the past five years. And it makes 0:03:09.960 --> 0:03:12.680 sense because rates have been so low, why would you 0:03:12.760 --> 0:03:15.480 not just lock in those rates. But the US is 0:03:15.520 --> 0:03:17.840 actually something I've just found and working on this story, 0:03:17.960 --> 0:03:20.480 is pretty unique in terms of having thirty year fixed 0:03:20.520 --> 0:03:24.639 mortgages or even fixed here that a lot of these 0:03:24.680 --> 0:03:27.280 countries they are just the mortgage system works by they 0:03:27.280 --> 0:03:30.120 have mortgages that may reset every year depending on you know, 0:03:30.120 --> 0:03:32.840 what central banks do, or they may even reset just 0:03:32.960 --> 0:03:35.760 based monthly or just you know, just be directly tied. 0:03:36.120 --> 0:03:38.600 So that is definitely sort of what some of the 0:03:38.600 --> 0:03:40.760 concern is in some of these markets, like in New 0:03:40.840 --> 0:03:43.880 Zealand for instance, more than fifty of mortgages are going 0:03:43.880 --> 0:03:46.600 to reset to a higher rate UM by next June. 0:03:47.080 --> 0:03:49.960 So yes, so these are it's not just you know, 0:03:50.160 --> 0:03:53.480 home buyers that are affected by the rising rates UM 0:03:53.480 --> 0:03:54.880 as it largely is here in the U S. It's 0:03:54.920 --> 0:03:57.240 also homeowners who now are going to be facing higher 0:03:57.280 --> 0:04:00.520 monthly payments on loans in some cases if they bought 0:04:00.560 --> 0:04:03.440 you know, at very high levels. Probably we're already stretching 0:04:03.440 --> 0:04:05.440 to make, you know, to pay for these things. And 0:04:05.480 --> 0:04:10.120 so yes, ripple effects of consumer spending and other other 0:04:10.160 --> 0:04:12.680 types of things for these economies. So that's something you know, 0:04:12.720 --> 0:04:15.360 again as a central banker's way, how much to race 0:04:15.480 --> 0:04:17.680 rates and the effects on the broader economy. That's something 0:04:17.720 --> 0:04:20.680 I think those bankers have to keep in mind there, Kara, 0:04:20.839 --> 0:04:25.000 is there any silver lining here with with with this 0:04:25.040 --> 0:04:27.800 sort of coming down from from these sky high prices? 0:04:27.800 --> 0:04:29.640 And I asked this question fully realizing that we're in 0:04:29.640 --> 0:04:31.960 an environment where interest rates are higher. So you know, 0:04:32.000 --> 0:04:35.440 even if houses become more quote unquote affordable, that monthly 0:04:35.480 --> 0:04:38.040 payment could be even higher than it was for a 0:04:38.040 --> 0:04:42.599 more expensive house because of interest rates. Yes it could. 0:04:42.680 --> 0:04:46.400 But yes, this liver lining is that I think you know, 0:04:46.440 --> 0:04:48.479 we've all been witnessed to this real estate frenzy. I 0:04:48.520 --> 0:04:50.240 mean in the US as well, where you know, you're 0:04:50.279 --> 0:04:52.839 bidding wars and you have to fight you know, fifteen 0:04:52.880 --> 0:04:55.320 other offers to get at home and that's not healthy either, 0:04:55.720 --> 0:04:59.520 and so slowing that down and that's um, you know, 0:04:59.720 --> 0:05:02.000 not necessarily a problem, and it kind of puts us 0:05:02.040 --> 0:05:04.640 back toward normalization. And yes, if home prices do come 0:05:04.640 --> 0:05:07.560 down a bit, you know, if you're a homeowner, you're 0:05:07.600 --> 0:05:09.760 still sitting on a fair amount of equity. Prices have 0:05:09.800 --> 0:05:12.200 gone so much it's hard to cry too many tears 0:05:12.240 --> 0:05:15.719 for like, oh, um, you know my house gained twenty 0:05:15.720 --> 0:05:17.600 percent a year, is now only up ten percent from 0:05:17.600 --> 0:05:20.119 that figure. You're still you know, you're still doing okay. 0:05:20.120 --> 0:05:22.719 So maybe this provides an opportunity for you know, a 0:05:22.720 --> 0:05:25.320 bit of a cool down in the market in the stabilization. 0:05:26.120 --> 0:05:29.720 I'm fascinating in the story Care that it says New 0:05:29.800 --> 0:05:34.440 Zealand was really the poster child of the pandemic housing boom. 0:05:34.560 --> 0:05:36.600 What's going on there? Is it just a matter of 0:05:37.080 --> 0:05:40.359 the lowest interest rates? We're people flocking to New Zealand 0:05:40.800 --> 0:05:43.560 in the pandemic? Have you seen those pictures? The rest 0:05:43.600 --> 0:05:45.880 of my life, I'm willing to flock there personally, it's 0:05:45.880 --> 0:05:47.800 part of it. I think it's just becomes a cultural 0:05:47.920 --> 0:05:50.640 thing that this is where people see they can build 0:05:50.640 --> 0:05:55.320 their wealth and um, it's it's a big investment play, 0:05:55.400 --> 0:05:57.279 and like it's just the culture of you know, you 0:05:57.320 --> 0:06:00.919 need to be a homeowner, and so everybody, um flock 0:06:00.960 --> 0:06:02.479 to it and it it kind of builds on itself. I 0:06:02.520 --> 0:06:06.120 think a similar thing happened in Canada. It's just um, 0:06:06.160 --> 0:06:08.680 you know, where people see the ability to build wealth 0:06:08.720 --> 0:06:10.200 that you need to buy a house and and so 0:06:10.600 --> 0:06:13.480 that extreme and and again and yes, and then this 0:06:13.600 --> 0:06:16.799 colliding at a time of low rates. Obviously the pandemic 0:06:17.200 --> 0:06:19.400 caused a lot of people to rethink how they're living 0:06:19.480 --> 0:06:21.960 and they need a bigger house, to work from home, 0:06:22.720 --> 0:06:24.120 and that type of thing. It was a bit of 0:06:24.160 --> 0:06:26.839 a you know, all these issues colliding. That was Bloomberg 0:06:26.839 --> 0:06:29.560 News San Francisco Bureau Chief Carol Wetzel with Mike Reagan 0:06:29.720 --> 0:06:32.239 and me coming up the origin story of the world's 0:06:32.240 --> 0:06:35.159 biggest video platform, how it came to be, its impact 0:06:35.320 --> 0:06:37.640 also on the concept of free speech on the internet. 0:06:37.720 --> 0:06:41.120 We are talking YouTube. Are in Mark Bergen details YouTube's 0:06:41.200 --> 0:06:44.080 rise to world domination and its plans to hold down 0:06:44.080 --> 0:06:46.680 the top spot in streaming for years to count. And 0:06:46.680 --> 0:06:48.520 he's got a brand new book on it. You're listening 0:06:48.560 --> 0:06:51.440 to Bloomberg Business Week. This is Bloomberg. It's not just 0:06:51.480 --> 0:07:05.680 about cat videos, you know, it isn't. This is Bloomberg 0:07:05.720 --> 0:07:09.320 Business Week with Carol Messer and Bloomberg Quick Takes. Tim 0:07:09.360 --> 0:07:14.840 Stenovik from Bloomberg Radio YouTube. It's ubiquitous. We all check 0:07:14.880 --> 0:07:17.720 it out regularly. Tim and I and our Bloomberg Business 0:07:17.760 --> 0:07:20.080 Week show We're on it every day. And a new 0:07:20.120 --> 0:07:22.800 book tells the inside story of YouTube and how it 0:07:22.880 --> 0:07:27.080 up ended media, culture, industry and democracy. Bloomberg News technology 0:07:27.080 --> 0:07:29.600 reporter Mark Bergen is out with a new book on 0:07:29.640 --> 0:07:32.760 the world's premier video platform. The book is called Like 0:07:33.000 --> 0:07:37.520 Comments Subscribe, Inside YouTube's chaotic rise to world domination, and 0:07:37.560 --> 0:07:40.680 Mark says it's unparalleled success is about much more than 0:07:40.760 --> 0:07:43.200 being at the right place at the right time. They 0:07:43.200 --> 0:07:46.679 made some really important decisions early on, and as a startup, 0:07:46.680 --> 0:07:49.160 they only existed for about eighteen months before Google swept 0:07:49.160 --> 0:07:52.000 in and pay them for for cool one point six billion. 0:07:52.160 --> 0:07:54.720 The basic feature set of YouTube is pretty much the 0:07:54.720 --> 0:07:57.160 same as it was seventeen years ago. It is simple 0:07:57.160 --> 0:07:59.800 as intuitive. The founders talked about building something that their 0:07:59.800 --> 0:08:02.960 mom could use, and they certainly succeeded. They were one 0:08:02.960 --> 0:08:05.480 of the first digital video sites to building a feature 0:08:05.520 --> 0:08:08.520 where they could embed in other websites and players, which 0:08:08.560 --> 0:08:11.440 was pretty revolutionary at the time. They also took some 0:08:11.600 --> 0:08:15.240 risks that bigger companies including Google and Microsoft wouldn't take. 0:08:15.320 --> 0:08:18.360 Around copyright which ended up paying off for them that 0:08:18.560 --> 0:08:22.080 got them into like big messy legal challenges. So I 0:08:22.120 --> 0:08:24.119 think there was a lot of key decisions they made, 0:08:24.480 --> 0:08:26.880 and then it was like this this moment where there 0:08:26.960 --> 0:08:30.840 was just an explosion in interest and homemade video, and 0:08:30.960 --> 0:08:33.480 clearly video was just moving to the Internet. I think 0:08:33.520 --> 0:08:35.480 what's what's so interesting about this is, you know, in 0:08:35.520 --> 0:08:38.320 the early days of YouTube, there was this reluctance coming 0:08:38.320 --> 0:08:40.240 from media companies to work with it. It was kind 0:08:40.240 --> 0:08:42.400 of seen as like this disruptor that they were really 0:08:42.440 --> 0:08:45.080 scared of. And now what you have is you have 0:08:45.240 --> 0:08:48.800 the large established media organizations using YouTube as a channel 0:08:48.800 --> 0:08:51.160 for for distribution. Mark, can you talk a little bit 0:08:51.160 --> 0:08:53.560 about how they sort of turned from enemies to I 0:08:53.559 --> 0:08:56.000 guess for enemies and now kind of like everybody needs 0:08:56.040 --> 0:08:58.640 to be on YouTube. It was a long battle. I mean, 0:08:58.679 --> 0:09:02.080 they're early These teams at YouTube were very focused on 0:09:02.120 --> 0:09:05.959 getting traditional media to come onto the platform, and part 0:09:06.000 --> 0:09:07.800 of that was a concern that this was the only 0:09:07.800 --> 0:09:09.600 way they were going to have commercial success. That they 0:09:09.600 --> 0:09:12.319 went out and they tried to cut deals with CBS 0:09:12.320 --> 0:09:14.760 and ABC and got pretty close with both of them, 0:09:14.760 --> 0:09:17.240 like to run lost wast like the biggest show and 0:09:17.400 --> 0:09:18.920 one of the biggest shows in America at the time 0:09:19.120 --> 0:09:21.520 on YouTube. A lot of those companies instead went and 0:09:21.679 --> 0:09:25.840 they formed Hulu or they eventually built their own streaming services. 0:09:26.160 --> 0:09:29.040 Disney is a good example, was reluctant to put its 0:09:29.080 --> 0:09:32.040 prized I p onto YouTube. Still to this day, you're 0:09:32.040 --> 0:09:33.880 not going to find like they're they're going on Disney, 0:09:33.920 --> 0:09:37.000 plus they're going in movie theaters. To your point, audience 0:09:37.040 --> 0:09:40.120 was there sort of since day one, and it's been sustainable. 0:09:40.480 --> 0:09:43.679 YouTube put in place rights management system that's basically if, 0:09:43.720 --> 0:09:46.280 if you know, even if someone else uploads a piece 0:09:46.280 --> 0:09:49.280 of Disney content, Disney gets the money from the ad revenue, 0:09:49.320 --> 0:09:51.679 and that was a pretty key decision that they made, 0:09:51.720 --> 0:09:55.280 and that helped persuade the record labels and traditional media 0:09:55.320 --> 0:09:58.400 to come on. YouTube was at one point competing with 0:09:58.480 --> 0:10:01.480 them like they started a few years go, and originals 0:10:01.720 --> 0:10:05.480 building and subscriber only shows. They've dropped that. They're like, 0:10:05.520 --> 0:10:08.600 we're content to be the sort of video advertising platform 0:10:08.640 --> 0:10:12.520 and let Disney, Netflix, Amazon battle it out for subscribers. 0:10:12.760 --> 0:10:15.520 And you've seen media companies being more comfortable with them since. 0:10:15.520 --> 0:10:16.959 But this is what's so weird. I remember a few 0:10:17.000 --> 0:10:19.600 years ago when YouTube did this, I forget what it 0:10:19.640 --> 0:10:21.360 was called. It started off as YouTube Read, which is 0:10:21.440 --> 0:10:25.160 a very clumsy name. But Cobra Kai was was like 0:10:25.200 --> 0:10:26.679 one of the shows that they talked about a lot, 0:10:26.720 --> 0:10:28.240 and nobody watched it when it was on YouTube, but 0:10:28.280 --> 0:10:30.320 then it went to another platform and now everybody talks 0:10:30.360 --> 0:10:32.920 about it. You know, YouTube part of Google. They have 0:10:33.000 --> 0:10:35.160 gobs of money, they're alphabet But at the same time, 0:10:35.200 --> 0:10:38.000 like more recently we reported on this a lot for Bloomberg, 0:10:38.080 --> 0:10:40.560 like they have been cutting back on spending and I 0:10:40.600 --> 0:10:44.280 think the originals program that launched Cobra Kai was sometimes 0:10:44.280 --> 0:10:47.720 in tension with the other goals of the platform, which 0:10:47.800 --> 0:10:50.040 is just scale will get a lot of people out 0:10:50.040 --> 0:10:52.280 of watch hours. You can make an argument that had 0:10:52.280 --> 0:10:55.360 they invested more resources into original content, they could be 0:10:55.559 --> 0:10:58.560 cranking out more of the cobra kais. Google as a 0:10:58.640 --> 0:11:01.600 company just doesn't do media programming, and they went out 0:11:01.679 --> 0:11:04.160 with the original plan was we're going to not just 0:11:04.200 --> 0:11:06.200 have Cobra Kai, but we're gonna have our biggest YouTube 0:11:06.200 --> 0:11:08.280 stars and these shows and then they're some of their 0:11:08.280 --> 0:11:11.600 biggest YouTube stars went out and did like deeply irresponsible 0:11:11.640 --> 0:11:15.640 things that got them in trouble with advertisers and politicians, 0:11:15.679 --> 0:11:18.160 and I think that was a contributing factor to maybe 0:11:18.440 --> 0:11:21.200 maybe we can't take these risks. For years, YouTube had 0:11:21.240 --> 0:11:25.200 been scolded for giving a platform to radical Islamists, and 0:11:25.240 --> 0:11:28.160 I do think about the political side of this and 0:11:28.240 --> 0:11:31.960 the controversy, and this gets to what is YouTube Visit 0:11:32.000 --> 0:11:35.080 a media company, you know, a media arm of Google. 0:11:35.400 --> 0:11:37.800 But but talk to us about some of the controversy 0:11:37.920 --> 0:11:40.600 that has erupted over the years, especially as YouTube has become, 0:11:40.920 --> 0:11:45.080 you know, so ubiquitous. Yeah, it's at the Macaca moment 0:11:45.200 --> 0:11:46.920 is what it was called. And it was a Senate 0:11:47.000 --> 0:11:50.800 race in Virginia. Yeah, candidate was said something deeply racist 0:11:50.960 --> 0:11:53.160 on camera that spread. It was one of the early 0:11:53.240 --> 0:11:57.200 first YouTube political viral hits, and it changed the race. 0:11:57.760 --> 0:11:59.480 I think leaning in you know, I talked the book 0:11:59.480 --> 0:12:01.520 talks about the Arab Spring, which was a very different 0:12:01.520 --> 0:12:04.719 time for social media companies when they were seen as 0:12:04.840 --> 0:12:08.319 toppling dictators. Right. YouTube did at the time invest in 0:12:08.360 --> 0:12:12.000 a partnership around verifying footage coming out of the Middle 0:12:12.000 --> 0:12:14.680 East in the Arab world. For a variety of reasons 0:12:14.800 --> 0:12:17.960 that the company's d n A their risk averse. They 0:12:17.960 --> 0:12:20.040 didn't want to get into legal trouble. They were more 0:12:20.080 --> 0:12:23.600 hands off on taking editorial approach, especially on politics. And 0:12:23.640 --> 0:12:27.000 then fast forward to the Trump era, they've been extremely 0:12:27.000 --> 0:12:31.000 cautious this politics. It is effectively radioactive for YouTube. Um, 0:12:31.160 --> 0:12:33.839 you know they they answer that Susan Wiski, the CEO IS, 0:12:33.920 --> 0:12:36.640 has talked about is that news and politics is a 0:12:36.679 --> 0:12:39.760 relatively small percentage of platform, which in some ways it 0:12:39.800 --> 0:12:41.920 is true. Right, you go look at YouTube, it is gaming, 0:12:42.200 --> 0:12:46.120 it is beauty, kids content, write music videos. You know, 0:12:46.200 --> 0:12:49.720 you've reported on this company, you know for a long time. 0:12:50.320 --> 0:12:53.040 What surprised your what came to light that you were like, wow, 0:12:53.040 --> 0:12:55.439 I didn't know that I was Well, some of the 0:12:55.480 --> 0:12:59.200 early success was actually, um, the YouTube their early success 0:12:59.240 --> 0:13:01.200 was based on myces, which is really funny now if 0:13:01.200 --> 0:13:04.360 we think about my space is the tom That was 0:13:04.440 --> 0:13:09.199 kind of surprising to me. Yeah, the you know, YouTube 0:13:09.720 --> 0:13:12.840 is they built the world's biggest kids entertainment platform and 0:13:12.880 --> 0:13:15.600 it's a multimillion billion dollar business now right, and they're 0:13:15.640 --> 0:13:18.520 like huge conglomerate companies coming out of Hollywood that are 0:13:18.600 --> 0:13:21.200 just around YouTube kids content. What surprised me was the 0:13:21.200 --> 0:13:23.319 extent to which the company had turned a blind eye 0:13:23.360 --> 0:13:26.040 of that and really didn't expect that to happen, and 0:13:26.080 --> 0:13:28.080 for a long time didn't know how to deal with that. 0:13:28.120 --> 0:13:30.320 And I think just in the past recent years, after 0:13:30.360 --> 0:13:33.320 they've been regulated and and a lot of attention to 0:13:33.679 --> 0:13:36.440 focus on that, they're finally turning to, Wow, we we 0:13:36.480 --> 0:13:38.720 have some responsibility here with where we're raising the entire 0:13:38.760 --> 0:13:41.319 generation of kids. Hey, Mark, what is the future of 0:13:41.320 --> 0:13:43.720 of YouTube look like? What do we expect them to 0:13:43.760 --> 0:13:46.480 do to try to compete with TikTok, certainly leading in 0:13:46.520 --> 0:13:49.640 on shorts, they have plans to I believe by the 0:13:49.720 --> 0:13:53.959 end of the year turn on modernization and commercials for 0:13:54.120 --> 0:13:56.040 YouTube shorts. And I think you know, you talked to 0:13:56.120 --> 0:13:59.600 creators and they're really jazzed about TikTok. TikTok is a 0:13:59.640 --> 0:14:01.840 is a play where they can break through to an audience. 0:14:01.880 --> 0:14:05.599 YouTube is very crowded. Now that being said almost consistently, 0:14:05.640 --> 0:14:07.760 it's like, well, I can I can have fun, that 0:14:07.800 --> 0:14:10.319 can experiment on TikTok, I can preach a big audience. 0:14:10.440 --> 0:14:12.400 I really make money on YouTube. And so I think 0:14:12.440 --> 0:14:15.400 once YouTube is able to turn on that flip that switch, 0:14:15.480 --> 0:14:18.800 it's it's going to have a bigger competitive advantage against 0:14:18.840 --> 0:14:21.440 TikTok and against Facebook, which has never really figured out 0:14:21.640 --> 0:14:25.440 how to monetize Um creators in that way. YouTube is 0:14:25.440 --> 0:14:27.920 also they're They're big focus is still like eating into 0:14:27.960 --> 0:14:31.480 the television market. We will see them increasingly try to 0:14:31.480 --> 0:14:34.000 take more capture more time on on big screens. That 0:14:34.000 --> 0:14:36.840 was Bloomberg News technology reporter Mark Bergen. Pick up a 0:14:36.880 --> 0:14:39.840 copy of his new book, Like Comments Subscribe Inside YouTube's 0:14:39.880 --> 0:14:44.119 chaotic rise to world domination still ahead on Bloomberg Business Week. Ethereum, 0:14:44.120 --> 0:14:47.000 one of the world's most popular crypto networks and its makeover. 0:14:47.280 --> 0:14:50.040 A breakdown of the so called Ethereum merge and why 0:14:50.160 --> 0:14:53.479 it could shake up the crypto universe. This is Bloomberg 0:14:59.520 --> 0:15:03.120 Front nesting from the financial capital of the world Bloomberg 0:15:03.160 --> 0:15:06.640 eleven Frio in New York to Washington, d C. Bloomberg 0:15:07.640 --> 0:15:10.880 to Boston, Bloomberg one oh six one to San Francisco, 0:15:10.920 --> 0:15:14.400 Bloomberg nine sixty to the country Sirius XM Chado one 0:15:14.440 --> 0:15:17.400 nine team and around the globe the Bloomberg Business app 0:15:17.520 --> 0:15:21.880 and Bloomberg Radio dot Com. This is Bloomberg Business Week. 0:15:22.960 --> 0:15:25.600 This week, the Ethereum network finalized a shift known as 0:15:25.640 --> 0:15:28.600 the merge, adopting a new mechanism for creating tokens and 0:15:28.720 --> 0:15:32.320 ordering transactions. The network runs Ether, the world's second most 0:15:32.360 --> 0:15:36.480 valuable digital currency. The merge drastically lowers Ethereum's energy use 0:15:36.520 --> 0:15:39.520 and could silence the critics who doubt the sustainability of 0:15:39.560 --> 0:15:42.960 blockchain technology due to its environmental impact. It will also 0:15:43.000 --> 0:15:46.040 make Ether look more like a traditional financial asset that 0:15:46.080 --> 0:15:49.360 pays interest, which could be more lucrative, at least for 0:15:49.480 --> 0:15:53.000 some mainstream investors. In the finance section of the magazine 0:15:53.040 --> 0:15:56.680 this week, crypto reporter Ogakreif breaks down the overhaul, what 0:15:56.760 --> 0:15:58.680 it means for crypto minors, and why the rest of 0:15:58.760 --> 0:16:01.520 us should care. She spoke with Tim Mike Regan and 0:16:01.560 --> 0:16:05.360 Bloomberg Business wee getitor Joe Weber before the merge took place. 0:16:06.040 --> 0:16:08.520 This kind of a change has never been attempted in 0:16:08.840 --> 0:16:12.640 the blockchain world before, and what it does is essentially 0:16:13.280 --> 0:16:19.040 until now and for the next day or so, miners, 0:16:19.120 --> 0:16:23.240 basically very powerful computers are the ones ordering transactions on 0:16:23.400 --> 0:16:26.640 the Ethereum blockchain, and then after that there will be 0:16:26.760 --> 0:16:31.600 a switch to proof of stake essentially stakes of coins. 0:16:31.960 --> 0:16:34.760 Will be used to do the same to order transactions. 0:16:34.760 --> 0:16:36.960 And of course what this means for miners is that 0:16:37.000 --> 0:16:40.000 they will be out of the job. And miners have 0:16:40.120 --> 0:16:43.360 been looking around to see which other changes they could 0:16:43.360 --> 0:16:48.080 potentially move their equipment to or what other options they have. 0:16:48.920 --> 0:16:52.440 And for Ethereum, what this will mean is that um 0:16:52.760 --> 0:16:57.640 power consumption of the blockchain will drop by about which 0:16:57.720 --> 0:17:02.000 is really good news for invest stars and and developers 0:17:02.000 --> 0:17:06.720 who have been deterred from participating in the theorym ecosystem 0:17:06.840 --> 0:17:12.000 because of its high energy consumption. You know, companies and 0:17:12.119 --> 0:17:17.720 investors who have s G requirements can now perhaps give 0:17:17.800 --> 0:17:21.359 ethereum a second look. But what I'm fascinated with is 0:17:21.400 --> 0:17:24.439 the other innovation that this sort of unlocks, which is 0:17:24.640 --> 0:17:27.679 staking coins in return for your yield. You know, you 0:17:27.760 --> 0:17:31.560 lock up your ether uh in a staking protocol and 0:17:31.600 --> 0:17:33.200 you get, say, I don't know, three or four or 0:17:33.240 --> 0:17:37.120 five percent whatever the yield is. Obviously, that makes Ether 0:17:37.640 --> 0:17:40.800 look a lot more like a security than just a 0:17:40.800 --> 0:17:44.520 cryptocurrency like bitcoin. I wonder, how are you thinking about 0:17:44.520 --> 0:17:48.320 the regulators? Is there the potential for a backlash? Absolutely, 0:17:48.440 --> 0:17:51.000 this is an issue that a lot of people are 0:17:51.240 --> 0:17:57.560 thinking about and worrying about. Because so about twenty eighteen, 0:17:58.080 --> 0:18:02.359 high up executive at the SEC essentially said, you know, 0:18:03.040 --> 0:18:06.080 ethereum does not look like a security to us, and 0:18:06.160 --> 0:18:10.159 so that was the assumption to everybody ever since. But 0:18:10.359 --> 0:18:15.240 now Etherium is undergoing some very dramatic changes. Right now 0:18:15.359 --> 0:18:18.119 people are going to be essentially putting in money to 0:18:18.240 --> 0:18:23.120 earn yield. That brings ethereum just a little bit closer 0:18:23.320 --> 0:18:28.280 to appearing to at least one point of about four 0:18:28.520 --> 0:18:32.720 that regulators look at the determine if something is a 0:18:32.840 --> 0:18:36.159 security or not. There are also questions about does the 0:18:36.280 --> 0:18:41.280 theem become more or less decentralized after this change, which 0:18:41.320 --> 0:18:44.320 also impacts whether it will be defined as a security 0:18:44.400 --> 0:18:47.760 or not. So there could be some moves from regulators 0:18:48.000 --> 0:18:51.200 on this front, and in fact, in August, coin Base, 0:18:51.640 --> 0:18:56.400 the US's biggest scripto exchange, did disclose that the SEC 0:18:57.119 --> 0:19:02.160 has asked for some information from it on it's taking services. 0:19:02.160 --> 0:19:05.119 Someone out that things, okay, so this has never happened before, 0:19:05.240 --> 0:19:07.399 it's going to happen. If it doesn't go, well, can 0:19:07.440 --> 0:19:09.439 you just put it in reverse and back up and 0:19:09.520 --> 0:19:12.600 like go back to the way it was before. Well, 0:19:12.720 --> 0:19:16.879 there are some people who are creating an alternative chain 0:19:17.400 --> 0:19:20.560 in hopes that the merge does not go well, and 0:19:20.600 --> 0:19:23.120 then people will be like, wait a minute, we want 0:19:23.119 --> 0:19:26.520 to go back to the previous block chains. There are 0:19:26.560 --> 0:19:31.640 people who are creating a copy of Etherium that will 0:19:31.640 --> 0:19:36.360 still use minors, but the majority of the Ethereum community 0:19:36.400 --> 0:19:40.000 is going ahead with this new proof of state blockchain. 0:19:40.080 --> 0:19:43.600 It's been tested and retested for years. Okay, and what 0:19:43.640 --> 0:19:46.680 does this all mean for bitcoin? And there's this thing 0:19:46.720 --> 0:19:51.200 called the flippening right, so some people believe that this 0:19:51.440 --> 0:19:56.120 puts Etherium more head to head in competition with Bitcoin, which, 0:19:56.160 --> 0:20:01.480 of course crypto fans have long cold digital gold. With 0:20:01.720 --> 0:20:06.280 Ethereum undergoing this transition, perhaps it's going to become more 0:20:06.840 --> 0:20:12.880 more attractive for corporate treasuries and for hedge funds and 0:20:13.000 --> 0:20:16.720 for other investors that have only invested in bitcoins. There 0:20:16.840 --> 0:20:21.080 is a potential for something that crypto fans called the flippenine, 0:20:21.480 --> 0:20:26.960 which is basically the Etherium market cap exceeding bitcoins. Likely 0:20:27.040 --> 0:20:29.359 quite a bit of time before that occurs. This is 0:20:29.359 --> 0:20:31.240 a story that we're going to continue to follow really 0:20:31.280 --> 0:20:33.800 closely in our big Thanks to Bloomberg News crypto reporter 0:20:33.840 --> 0:20:36.600 Olga Karif, Joe Weber and Mike Reagan. We'll be back 0:20:36.640 --> 0:20:38.960 a little later in the program. You're listening to Bloomberg 0:20:38.960 --> 0:20:42.159 Business Week. Up next, Carlisle Group co founder David Rubinstein 0:20:42.400 --> 0:20:44.560 breaks down his new book on stock trading, Tips from 0:20:44.560 --> 0:20:46.679 the best in the business and what to make of 0:20:46.680 --> 0:20:49.320 global markets right now. Good luck with that one. I mean, 0:20:49.480 --> 0:20:52.240 he's got to talk to about this. Yeah, exactly, Stick around. 0:20:52.359 --> 0:21:05.760 This is Bloomberg. You're listening to Bloomberg Business Week with 0:21:05.840 --> 0:21:11.960 Carol Messer and Bloomberg Quick Takes Tim Stinovich from Bloomberg Radio. Well, 0:21:11.960 --> 0:21:14.440 on Tuesday, US docks posted their biggest drop in two 0:21:14.520 --> 0:21:17.520 years after that latest CPI reports, surprise to the up 0:21:17.640 --> 0:21:20.880 side the silver lining, though, maybe it is a good 0:21:20.920 --> 0:21:23.600 time for savvy investors to buy the dip. At least 0:21:23.640 --> 0:21:26.320 that's what David Rubens died told our Bloomberg TV colleagues 0:21:26.359 --> 0:21:28.959 the day after that massive sell off. His comments got 0:21:28.960 --> 0:21:31.080 a lot of play online, because, well, after all, who 0:21:31.119 --> 0:21:33.520 doesn't want investing tips from some of the best in 0:21:33.600 --> 0:21:36.240 the biz. Luckily for us, he's back with more. The 0:21:36.280 --> 0:21:38.960 Carlisle Group co founder, he's well known to our audience. 0:21:39.000 --> 0:21:41.240 He's the host of Bloomberg Wealth and the author of 0:21:41.359 --> 0:21:44.440 numerous books. His latest one is just out. It's called 0:21:44.480 --> 0:21:47.439 How to Invest Masters on the Craft and Tim. We 0:21:47.440 --> 0:21:49.800 spoke with David about a lot of things, including that 0:21:49.880 --> 0:21:52.200 new book. We began though, with his thoughts on how 0:21:52.240 --> 0:21:55.680 to navigate a volatile market environment. Clearly the markets are 0:21:55.840 --> 0:21:59.400 not happy with the higher inflation numbers, and I think 0:21:59.400 --> 0:22:01.800 that's a big actor. When you have higher inflation, you 0:22:01.880 --> 0:22:04.960 can expect higher interest rates, and the Fed is next 0:22:05.000 --> 0:22:08.120 week like the increase interest rates by seventy five basis points. 0:22:08.320 --> 0:22:10.520 There's some who think it could be a hundred basis points, 0:22:10.520 --> 0:22:12.720 but I doubt that that that that would happen. That 0:22:12.720 --> 0:22:15.800 would probably really hurt the markets much more because that 0:22:15.840 --> 0:22:18.240 would show the FT is much more nervous about inflation 0:22:18.280 --> 0:22:20.840 than it has said it is, although it has said 0:22:20.880 --> 0:22:23.680 it's it's worried. But I think a hundred basis points 0:22:23.680 --> 0:22:25.520 will be much more than their guidance has been. So 0:22:25.920 --> 0:22:27.440 if they were to do a hundred basis points and 0:22:27.480 --> 0:22:29.880 market will really sell off. In my view, seventy five 0:22:29.880 --> 0:22:32.320 basis points and markets already assuming that's going to happen, 0:22:32.359 --> 0:22:35.199 so probably not a big surprise of the markets. So 0:22:35.240 --> 0:22:36.920 I think markets are gonna be choppy for a while, 0:22:36.920 --> 0:22:39.600 There's no doubt about it. Shoppy, but you still think 0:22:39.680 --> 0:22:42.280 there are opportunities, especially when we see the equity side 0:22:42.320 --> 0:22:44.440 of the markets. David sell Off that that is a 0:22:44.520 --> 0:22:48.120 time to enter you You stand by that the greatest 0:22:48.440 --> 0:22:51.160 more fortunes in the stock market are generally not made 0:22:51.160 --> 0:22:53.080 when people see a top of the market and they say, 0:22:53.080 --> 0:22:59.080 now I'm going to get in. Generally markets are down, 0:22:59.640 --> 0:23:02.280 and then what happens is people say, I think it 0:23:02.280 --> 0:23:04.000 could go down further, and they try to look for 0:23:04.040 --> 0:23:06.520 the bottom of the market. Anybody that's looking for the 0:23:06.560 --> 0:23:08.240 top of the market or the bottom of the market 0:23:08.280 --> 0:23:11.320 generally is on a fool's Errand so markets are shares 0:23:11.400 --> 0:23:14.359 her off now what more than from the peak, and 0:23:14.440 --> 0:23:16.520 that's a pretty good downside. It could go down a 0:23:16.560 --> 0:23:18.920 little bit more, but I don't see another twenty percent down. 0:23:18.920 --> 0:23:21.320 I think the markets are pretty much near the bottom. 0:23:21.320 --> 0:23:23.600 They might be five percent more to go, or maybe 0:23:23.600 --> 0:23:25.359 a little bit more. But I think we know a 0:23:25.359 --> 0:23:27.080 lot of what's going on in the markets now and 0:23:27.520 --> 0:23:30.600 not likely to see big changes now. The Ukraine Russia 0:23:30.680 --> 0:23:33.800 situation has had some positive news, maybe that war could 0:23:33.840 --> 0:23:37.280 be over sooner than we once thought. Now. Um, generally 0:23:37.320 --> 0:23:40.600 the inflation situation not under control, but the FED seems 0:23:40.600 --> 0:23:42.439 to be on top of the situation, maybe more than 0:23:42.440 --> 0:23:44.879 it was before. So I'm not expecting we're going to 0:23:44.960 --> 0:23:48.840 see another decline in stock prices. But would you con 0:23:48.920 --> 0:23:51.000 see that it's safe to say that we really don't 0:23:51.080 --> 0:23:54.440 know kind of how things go on the other side 0:23:54.440 --> 0:23:56.680 of it. Considering the pandemic that we're coming out of, 0:23:56.880 --> 0:23:59.399 the amount of stimulus that was pumped in to the 0:23:59.440 --> 0:24:02.240 globally economy, is it safe to say we don't quite 0:24:02.440 --> 0:24:04.720 really know how this all plays out. Um. This is 0:24:04.720 --> 0:24:07.400 what lawyers often call a case of first impression, which 0:24:07.400 --> 0:24:10.159 is to say, we have something that's relatively unique in 0:24:10.160 --> 0:24:13.560 the sense that we haven't had five trillion dollars injected 0:24:13.600 --> 0:24:16.120 into an economy quite the way the federal government did, 0:24:16.160 --> 0:24:17.919 and then know what the impact is going to be 0:24:17.920 --> 0:24:19.880 an inflation in the markets a year or two later. 0:24:20.359 --> 0:24:22.719 We did prevent it recession, but we also gave us 0:24:22.720 --> 0:24:25.280 a lot of inflation. Um. If you go back at 0:24:25.320 --> 0:24:28.680 any time in market history, you'll always fullfind that there 0:24:28.600 --> 0:24:30.760 are problems. There's never a case where people say, you know, 0:24:30.800 --> 0:24:33.280 everything is looking great and actually turns out to be great. 0:24:33.480 --> 0:24:35.800 You know, the challenges of getting people back to work, 0:24:36.080 --> 0:24:40.080 the challenges of avoiding another COVID type pandemic, the challenge 0:24:40.080 --> 0:24:42.440 of the U. S. China relationship, the challenge of the 0:24:42.480 --> 0:24:46.080 Russian situation, the energy situation, money challenges. But that's what 0:24:46.200 --> 0:24:49.440 makes great investors great. They can see through the challenges 0:24:49.480 --> 0:24:52.000 and get in when they going is good. Is there 0:24:52.040 --> 0:24:54.200 any concern Do you have any concern that the FED 0:24:54.240 --> 0:24:57.080 could overdo it? Well? Of course the FED didn't make 0:24:57.080 --> 0:24:59.679 a mistake that it admitted it thought the inflation was 0:24:59.680 --> 0:25:02.520 was going to transitory. Obviously was not j Pal who 0:25:02.600 --> 0:25:04.240 used to work at my firm, and I've known him 0:25:04.240 --> 0:25:06.280 for a long time, though I'm obviously not getting inside 0:25:06.280 --> 0:25:09.159 information from him now. I think he's a very cautious person. 0:25:09.400 --> 0:25:11.040 He likes to tell you what he's going to do, 0:25:11.119 --> 0:25:13.560 and they'd like to then do it. Um He's pretty 0:25:13.600 --> 0:25:16.240 much said, I'm gonna go the Fed's gonna FOMC is 0:25:16.240 --> 0:25:18.920 gonna go up by seventy five basis points. I think 0:25:18.960 --> 0:25:20.879 if they were going to go a hundred basis points 0:25:20.920 --> 0:25:23.360 or more, I think they would have tipped the markets 0:25:23.359 --> 0:25:26.000 a bit. A hundred basis points or more now would 0:25:26.040 --> 0:25:28.720 shock the markets, and I think it would be uh, 0:25:29.080 --> 0:25:30.920 something that would see a big sell off in stock. 0:25:31.040 --> 0:25:33.680 So I don't see that being tipped from the FED. 0:25:34.040 --> 0:25:36.720 And obviously he doesn't control what the FMC does, but 0:25:36.760 --> 0:25:39.160 he has an enormous amount of influence. So I suspect 0:25:39.640 --> 0:25:41.800 um will be something around seventy five basis points. The 0:25:41.840 --> 0:25:44.520 real change is whether we will have another fifty basis 0:25:44.520 --> 0:25:46.240 points increase the remainder of the year, which is what 0:25:46.280 --> 0:25:49.120 the markets have assumed, or could it be the case 0:25:49.160 --> 0:25:51.159 that we get more than fifty basis points or the 0:25:51.160 --> 0:25:53.000 remainder of the year. And then, of course, right now 0:25:53.040 --> 0:25:56.440 the markets are generally assuming probably not any real increases 0:25:56.480 --> 0:25:59.399 early next year, and who knows that could change? All right, 0:25:59.400 --> 0:26:01.760 So let's talk about the book How to invest Masters 0:26:01.800 --> 0:26:04.920 on the Craft Uh, And I do wonder, you know, David, 0:26:04.960 --> 0:26:08.359 generally successful investors it's because of their differences they find 0:26:08.359 --> 0:26:11.320 opportunities where others do not. So at the same time, 0:26:11.359 --> 0:26:13.800 I wonder, is there's something that successful investors all have 0:26:14.040 --> 0:26:17.639 in common. Yes, they have these things in common. They 0:26:17.680 --> 0:26:21.320 tend to come from blue collar and middle class families. 0:26:21.320 --> 0:26:23.639 They don't come from very wealthy families. They tend to 0:26:23.640 --> 0:26:27.040 be pretty good students. These are not typically college dropouts 0:26:27.119 --> 0:26:29.520 or high school dropouts. As a general rule of thumb, 0:26:29.760 --> 0:26:32.080 they tend to be pretty good in math. They tend 0:26:32.119 --> 0:26:35.200 to like to make decisions. They tend not like to delegate. 0:26:35.760 --> 0:26:39.400 They tend to be people who will defy conventional wisdom. 0:26:39.640 --> 0:26:42.040 The conventional wisdom say now is not the time to 0:26:42.040 --> 0:26:44.639 to invest. That's when they invest. They also tend to 0:26:44.640 --> 0:26:47.040 be relatively humble because they've made a lot of mistakes 0:26:47.040 --> 0:26:49.840 over the years. Every investor does. They also tend to 0:26:49.880 --> 0:26:52.120 get rid of their mistakes pretty quickly. A really good 0:26:52.119 --> 0:26:54.760 investor when they when he or she makes a mistake, 0:26:54.800 --> 0:26:56.760 they don't labor over it for months and months and 0:26:56.800 --> 0:26:58.720 months and still about it. They get out of the 0:26:58.760 --> 0:27:01.160 position and they go into the next thing. They also 0:27:01.200 --> 0:27:04.640 tend to be i'd say relatively philanthropic. Clearly, if you're 0:27:04.760 --> 0:27:06.600 if you're in the business world and you're an investor, 0:27:06.680 --> 0:27:09.639 as opposed to be in the endowment world or nonprofit world, 0:27:09.840 --> 0:27:11.640 you tend to make a lot of money as investors, 0:27:11.640 --> 0:27:14.199 and they tend to give away a large percentage of it. Generally, 0:27:14.240 --> 0:27:17.800 these are people who are quite articulate, quite smart, and 0:27:17.880 --> 0:27:20.280 quite hard working. We're hard work is not a problem 0:27:20.320 --> 0:27:22.760 for them because what they do is what they love. 0:27:23.240 --> 0:27:26.199 Investing is not for them work, It's it's pleasure. And 0:27:26.240 --> 0:27:28.840 once they've made whatever they need to make a billion dollars, 0:27:28.840 --> 0:27:31.840 two billion, ten billions, twenty billion dollars, they don't stop working. 0:27:31.880 --> 0:27:34.399 They work until they just can't do it anymore. They 0:27:34.440 --> 0:27:36.879 don't tend to retire at fifty five or sixty. Some 0:27:36.920 --> 0:27:38.080 of the names on here, I mean this is a 0:27:38.119 --> 0:27:40.800 who's who of the of the Wall Street world and 0:27:40.840 --> 0:27:42.959 also Silicon Value. When it comes to alternatives, I mean 0:27:43.000 --> 0:27:45.840 we're talking people like Larry Fink, John Gray, Sam Zell 0:27:45.920 --> 0:27:47.919 are featured in here, rate Dahio. When it comes to 0:27:48.000 --> 0:27:52.159 hedge funds, we got John Poulson on hedge funds, Mark Injuries. 0:27:52.240 --> 0:27:54.359 And when it comes to venture capital, I want to 0:27:54.359 --> 0:27:56.439 go back to what you said about mistakes though, What 0:27:56.520 --> 0:27:59.480 are some prominent mistakes that you learned about when you 0:27:59.520 --> 0:28:03.040 were doing reporting for this book. Well, of course, um, 0:28:03.080 --> 0:28:06.000 every investor has his or her stories of their mistakes, 0:28:06.400 --> 0:28:09.560 and I wouldn't put myself in the great investor category, 0:28:09.880 --> 0:28:13.480 but I turned down Facebook when Mark Zuckerberg was in college. UM, 0:28:13.520 --> 0:28:16.680 I basically didn't. I told Jeff Bezos his company wasn't 0:28:16.680 --> 0:28:19.040 gonna get anywhere, and I sold his stock relatively early, 0:28:19.280 --> 0:28:21.719 right at the I P O. When Mark Andreeson came 0:28:21.760 --> 0:28:23.879 to my firm to try to raise money at the 0:28:23.880 --> 0:28:26.720 beginning for Netscape, I told him it would never get anywhere. 0:28:27.160 --> 0:28:30.119 I think every investor UM makes mistakes, and that's what 0:28:30.240 --> 0:28:33.080 life is all about. I'm trying to think of the 0:28:33.200 --> 0:28:36.200 average investor out there, David, and I'm wondering what lessons 0:28:36.240 --> 0:28:38.760 they can take away from listening to the pros. The 0:28:38.840 --> 0:28:43.040 most common mistake that investors make, the pros would say, 0:28:43.120 --> 0:28:46.000 and I think I'm talking about average investors. If the 0:28:46.000 --> 0:28:48.120 book is not designed to make you into sam's Ow 0:28:48.280 --> 0:28:51.000 or John Gray, that's unrealistic. On the book is going 0:28:51.040 --> 0:28:53.440 to do that, but it's designed for people who are 0:28:53.480 --> 0:28:57.480 average investors who dabble in the market, or they buy 0:28:57.600 --> 0:28:59.760 funds and they have other people dabbling for them. And 0:28:59.800 --> 0:29:02.360 if back, I would say that the cost common mistake 0:29:02.440 --> 0:29:05.080 that people point out to me is that people when 0:29:05.080 --> 0:29:07.480 the markets are going up, they rush in and they 0:29:07.480 --> 0:29:09.600 want to catch it at the top, and then when 0:29:09.600 --> 0:29:11.680 the markets are going down, they want to sell. So 0:29:11.800 --> 0:29:13.800 you got to be very careful and I think know 0:29:13.880 --> 0:29:17.240 what you're doing. Also, one of the advantages of of 0:29:17.240 --> 0:29:20.480 of being a value investor in a long term investor's 0:29:20.480 --> 0:29:22.800 Warren Buffett is they tend not to sell a lot. 0:29:23.080 --> 0:29:24.800 And when you sell a lot or you buy a lot, 0:29:24.840 --> 0:29:26.720 you have a lot of transaction costs and you have 0:29:26.880 --> 0:29:29.320 to pay taxes, and that's an important thing. People should 0:29:29.360 --> 0:29:31.320 hold on the things for quite a bit longer than 0:29:31.680 --> 0:29:34.560 than they tend to. David. The people you spoke with, 0:29:34.800 --> 0:29:38.040 um again really interesting names. But can I just says 0:29:38.080 --> 0:29:41.560 a lot of men. There's a lot of men. Well, um, 0:29:41.600 --> 0:29:44.920 there are a lot of women too. I would say. 0:29:44.920 --> 0:29:46.600 Obviously it's easy to do a book like that and 0:29:46.680 --> 0:29:49.520 fill up with old white men. I tried hard not 0:29:49.600 --> 0:29:52.320 to do that. Um. I have in there, for example, 0:29:52.400 --> 0:29:55.959 Kim lou who is the woman that runs the endownment 0:29:56.000 --> 0:30:00.200 for Columbia University. Are really impressive investor. Also was in 0:30:00.240 --> 0:30:03.200 there Paula Blin, who runs the endownment for Rockefeller University. 0:30:03.480 --> 0:30:05.320 But I tried to show is that there are women 0:30:05.360 --> 0:30:08.320 and minorities who are moving up into the pantheon of 0:30:08.360 --> 0:30:11.200 great investors. But let's be honest, today there are more 0:30:11.280 --> 0:30:14.720 white male people who are considered great investors than women, 0:30:14.960 --> 0:30:16.600 rightly or wrong, and it may change in time. And 0:30:16.600 --> 0:30:18.840 in part what I wanted to do is inspire people 0:30:19.160 --> 0:30:22.120 who are not white males to go into this business 0:30:22.120 --> 0:30:25.160 and see that you can become Paula Balin or Kimlu. 0:30:25.240 --> 0:30:27.680 I want to ask David about crypto because you know, 0:30:27.720 --> 0:30:30.120 in the alternative section Mike nova Gradson, who's the name 0:30:30.200 --> 0:30:32.640 very familiar to our audience, UM, but also somebody who 0:30:32.640 --> 0:30:35.479 has you know, dabbled just in traditional finance trad FI 0:30:35.520 --> 0:30:37.320 as it's known, and also in defy with when it 0:30:37.360 --> 0:30:40.320 comes to crypto, your thoughts after interviewing him for this 0:30:40.360 --> 0:30:42.520 book and about whether or not the crypto actually has 0:30:42.560 --> 0:30:44.480 staying power because he did make a lot of money 0:30:44.480 --> 0:30:46.240 and also recently lost a lot of money when it 0:30:46.240 --> 0:30:49.960 comes to crypto. Yes, well, overall, he's ahead my own 0:30:50.040 --> 0:30:53.520 view on crypto, and I don't own crypto currencies myself, 0:30:53.520 --> 0:30:56.360 Like I have invested in companies that service the industry 0:30:56.480 --> 0:30:58.000 because I think the industry is gonna be around for 0:30:58.040 --> 0:31:00.400 quite a while. The people that buy crypto tend to 0:31:00.400 --> 0:31:03.040 be younger people, and I think they like it in 0:31:03.120 --> 0:31:05.840 part because they can trade it frequently, of course, but 0:31:05.960 --> 0:31:08.080 it has fluctuations which makes them think they're going to 0:31:08.160 --> 0:31:10.160 make money and they're willing to take the risk about 0:31:10.160 --> 0:31:14.080 it going down. But also they the privacy associated with it. 0:31:14.240 --> 0:31:17.200 You don't dependent on nobody else knows what you really own. 0:31:17.680 --> 0:31:19.600 The government can't take it away from you. And I 0:31:19.640 --> 0:31:21.680 also think that people that are buying it to a 0:31:21.720 --> 0:31:24.160 large extent are they tend to be very libertarian in 0:31:24.200 --> 0:31:26.160 many ways. They want to be countered to the government, 0:31:26.160 --> 0:31:28.760 and they've lobbied Congress and I've had a lot of uh, 0:31:28.920 --> 0:31:30.360 there are a lot of members of Congress who are 0:31:30.360 --> 0:31:32.480 Republicans who are listening to what they're saying, and I 0:31:32.480 --> 0:31:35.320 think it's unlikely you're gonna see a lot of over regulation. 0:31:35.600 --> 0:31:38.360 That's Carlisle Group co founder David Rubinstein. Check out his 0:31:38.360 --> 0:31:41.120 new book. It is entitled How to Invest Masters on 0:31:41.160 --> 0:31:43.360 the Craft. It is out now. And that wraps up 0:31:43.400 --> 0:31:45.400 the first hour of the weekend edition of Bloomberg Business 0:31:45.400 --> 0:31:47.880 Week from Bloomberg Radio. I'm Carol Masser and I'm Tim 0:31:47.880 --> 0:31:50.440 Stentivic ahead in our next hour. Our Business Week cover 0:31:50.560 --> 0:31:53.320 story how the FBI built its case against the Chinese 0:31:53.320 --> 0:31:56.160 spy using evidence from his iPhone. It all happens off 0:31:56.160 --> 0:31:58.640 of her phone, doesn't it? Oh my gosh. Plus how 0:31:58.720 --> 0:32:00.880 China is finding a way around slee tariffs with a 0:32:00.880 --> 0:32:03.120 little help from Mexico, and a look at the post 0:32:03.120 --> 0:32:06.400 COVID marketing strategy at the world's largest brewer. We sit 0:32:06.440 --> 0:32:09.000 down with the CMO of A B and BEV. This 0:32:09.200 --> 0:32:19.720 is Bloomberg. This is Bloomberg Business Week inside from the 0:32:19.760 --> 0:32:23.880 reporters and editors who bring you America's most trusted business magazine. 0:32:23.920 --> 0:32:27.560 Plus global business finance and tech news as it happened 0:32:27.680 --> 0:32:31.520 Sloomberg Business Week with Carol Messer and Bloomberg Quick Takes 0:32:31.600 --> 0:32:36.160 Tim Stinovic on Bloomberg Radio. Blay ahead in our second 0:32:36.160 --> 0:32:39.040 hour of the weekend edition of Bloomberg Business Week, including Yeah, 0:32:39.160 --> 0:32:40.920 We're doing some food and beer if. We've got the 0:32:40.960 --> 0:32:44.120 CEO of Upside Foods on how the company is growing 0:32:44.320 --> 0:32:47.520 real meat directly from animal cells. We've also got the 0:32:47.520 --> 0:32:49.760 CMO of A B and BEV opening up a key 0:32:49.800 --> 0:32:53.040 strategic shift at the global brewer. Plus our Business Week 0:32:53.040 --> 0:32:55.960 team looks at how Chinese manufacturers are skirting U S 0:32:56.040 --> 0:32:59.040 tariffs by setting up south of the border. First up 0:32:59.080 --> 0:33:02.479 This Hour, this week's cover story, a Chinese intelligence officer 0:33:02.680 --> 0:33:05.880 targeted US industrial giants for a living and then left 0:33:05.920 --> 0:33:09.120 a heap of evidence on his phone, his iPhone, along 0:33:09.160 --> 0:33:12.400 with his own personal secrets. Drake Bennett and Jordan Robertson 0:33:12.440 --> 0:33:14.880 co wrote that story Drake and Business we getitor Joe 0:33:14.960 --> 0:33:18.880 Webber taking us inside a spy's diary. Whenever you talk 0:33:18.920 --> 0:33:22.920 about China in US and in intellectual property and what 0:33:23.000 --> 0:33:26.640 companies have you know, there's always been this assumption and 0:33:26.760 --> 0:33:30.800 reporting has suggested that Chinese are really good at at spying, 0:33:31.160 --> 0:33:32.960 but we never really get a sense of what that 0:33:33.120 --> 0:33:36.960 actually looks like. And so when Jordan and Drake came 0:33:37.000 --> 0:33:38.959 to just us with this story, the thing that just 0:33:39.600 --> 0:33:43.200 jumped out at us was it's all there in part 0:33:43.280 --> 0:33:46.000 because of this cotton mouse game that evolved that I'm 0:33:46.000 --> 0:33:48.600 sure Drake's gonna tell us about, and it ended up 0:33:48.640 --> 0:33:51.400 in court because the US was able to not only 0:33:51.520 --> 0:33:55.960 nab this Chinese spy and his phone, we got it all. 0:33:56.080 --> 0:33:58.880 We got all the info, and so Drake I mean, like, 0:33:59.000 --> 0:34:03.480 this is raster that you ran across, and I'm curious, 0:34:03.520 --> 0:34:07.040 just like when you saw it and Jordan's saw, how 0:34:07.040 --> 0:34:09.959 did it pop to you guys? I mean, like you said, 0:34:09.960 --> 0:34:13.680 it's just an extraordinary opportunity because this is normally just 0:34:13.719 --> 0:34:16.719 a black box. You just see kind of the outgoing 0:34:16.840 --> 0:34:19.600 stuff where it's the companies that are being targeted or 0:34:19.680 --> 0:34:23.040 it's the people that are being targeted as potential sources, 0:34:23.080 --> 0:34:25.239 and you never get to see what goes on back 0:34:25.320 --> 0:34:27.799 in China. And what happened with this guy is he 0:34:27.920 --> 0:34:31.440 was the first ever MSS officer to be lured out 0:34:31.440 --> 0:34:35.240 of China the Ministry of State Security, so it's basically 0:34:35.440 --> 0:34:39.280 Chinese government Chinese yeah intelligence, which is responsible not only 0:34:39.320 --> 0:34:43.799 for military and government intelligence, but you know economic and 0:34:43.840 --> 0:34:46.920 that's not exactly a secret. No, not a secret, not 0:34:47.000 --> 0:34:50.680 a secret. Um, we know what happens, we know a 0:34:50.680 --> 0:34:53.359 lot less about what it looks like. So when this 0:34:53.400 --> 0:34:58.440 guy gets lured out through this very painstaking FBI investigation, 0:34:58.800 --> 0:35:01.239 he's arrested and he has his phone on him and 0:35:01.320 --> 0:35:03.520 he his iPhone on him and he has backed up 0:35:03.760 --> 0:35:06.960 everything not I mean just everything to the cloud. Um, 0:35:06.960 --> 0:35:11.520 so there's all this like sensitive MSS documents, correspondence between 0:35:11.600 --> 0:35:14.360 him and his colleagues, between him and his sources, and 0:35:14.360 --> 0:35:16.560 there's also just a lot of like really intimate personal 0:35:16.600 --> 0:35:20.440 detail about himself. You know, he's he's someone I mean, 0:35:20.520 --> 0:35:22.960 you know, there's a lot of like his name is 0:35:23.239 --> 0:35:25.920 Juan John, you know, a lot there's some cloak and 0:35:25.960 --> 0:35:28.120 dagger stuff in the story, but a lot of it 0:35:28.200 --> 0:35:31.640 is also just the he's this espionage bureaucrat and he's 0:35:31.640 --> 0:35:33.680 sort of like you watch him get sort of like 0:35:33.840 --> 0:35:36.480 ground down by his job, and he gets more and 0:35:36.480 --> 0:35:39.040 more unhinged, and he's just spending all this time and 0:35:39.080 --> 0:35:42.279 like massage parlors and drunken card games, and I think 0:35:42.280 --> 0:35:45.080 that may have you know, affected his decision making. Tell 0:35:45.160 --> 0:35:47.400 us about the expense account, right, So a lot of 0:35:47.400 --> 0:35:49.400 what they do is they're just handing people money, you know, 0:35:49.480 --> 0:35:52.400 three thousand dollars, six thousand dollars for your travel expenses 0:35:52.520 --> 0:35:55.319 or for whatever. But he one of his sort of 0:35:55.719 --> 0:35:58.200 gripes over time, and it gnaws at him more and more, 0:35:58.239 --> 0:36:01.520 is that his boss just keeps rejecting these expense accounts 0:36:01.560 --> 0:36:03.920 for these dinners he has to like recruit people, and 0:36:03.960 --> 0:36:06.319 it just really drives him nuts, and you because we 0:36:06.440 --> 0:36:09.400 have his diary. He treated his eye calendar like a diary, 0:36:09.480 --> 0:36:12.000 so there's stuff about, you know, meeting with this person 0:36:12.200 --> 0:36:14.200 or doing this hack. And then it's just like my 0:36:14.239 --> 0:36:17.200 boss rejected the expenses again and he just like it 0:36:17.520 --> 0:36:20.480 clearly just burns him, which are just epic, you know. 0:36:20.719 --> 0:36:22.800 So I just you just assume, like we take on 0:36:22.840 --> 0:36:30.320 the us anything you need, and it's like, actually it's yeah, 0:36:30.360 --> 0:36:33.480 the target that ends up being so much of the 0:36:33.520 --> 0:36:36.880 story is actually g E. Right, what was the spy 0:36:36.920 --> 0:36:39.719 going for and and tell us about how that played out. 0:36:40.040 --> 0:36:42.920 So it's g E jet engines and it's in particular 0:36:43.000 --> 0:36:48.319 it's these uh composite fan blade and casings for the 0:36:48.360 --> 0:36:53.040 fan blades. So uh G Aviation is is still basically 0:36:53.120 --> 0:36:56.840 the only company that has these super lightweight fan blades 0:36:56.920 --> 0:37:00.319 and casings so their their engines can be lighter, UM, 0:37:00.360 --> 0:37:05.160 more fuel efficient, UM, safer uh and every and so 0:37:05.200 --> 0:37:09.560 basically this is a key technology UM that Drew had 0:37:09.719 --> 0:37:12.520 sort of focused on, and he sort of rise at 0:37:12.520 --> 0:37:15.680 this through these conversations with folks in the Chinese government, 0:37:15.719 --> 0:37:20.320 with folks at Stayed owned aircraft aeronautics companies um in China, 0:37:20.680 --> 0:37:23.839 and so that's what. So he, through this intermediary, through 0:37:23.880 --> 0:37:27.239 this academic basically a university official, reaches out to this 0:37:27.360 --> 0:37:31.480 engineer at the aviation, you know, through LinkedIn, invites him 0:37:31.520 --> 0:37:33.920 to come give this talk, and then it sort of begins. 0:37:34.520 --> 0:37:38.800 Um What he doesn't realize is that midway through this process, 0:37:38.880 --> 0:37:44.440 the FBI sort of intervenes um and starts investigating um 0:37:44.480 --> 0:37:48.680 his his potential source at the aviation, who then not 0:37:48.760 --> 0:37:51.600 to spoil the end of the story, but who ends 0:37:51.640 --> 0:37:55.279 up being instrumental in in the investigation to then turn 0:37:55.360 --> 0:38:00.000 around and and trap um U himself. Our producer said, 0:38:00.320 --> 0:38:03.279 one of the stupidest or dumbest spies ever just got stop. 0:38:06.520 --> 0:38:08.320 I think that was one of the most interesting takeaways 0:38:08.360 --> 0:38:10.480 from this is like the idea that people have in 0:38:10.520 --> 0:38:14.160 their heads of a James Bond type figure. What is 0:38:14.160 --> 0:38:16.640 the life of a spy? Yeah, I mean he's a bureaucrat. 0:38:16.680 --> 0:38:19.160 He's an espionage bureaucrat. You know, he's a cog in 0:38:19.200 --> 0:38:21.480 this big machine. You know, in certain ways, I think 0:38:21.520 --> 0:38:23.720 he he you know, he has a lot of power 0:38:23.760 --> 0:38:26.080 back home and he sort of seems to abuse it 0:38:26.120 --> 0:38:28.439 in certain ways. But he also has this boss that's 0:38:28.480 --> 0:38:31.080 on him all the time, you know, who's like constantly 0:38:31.120 --> 0:38:33.760 demanding these things that he feels like a really unreasonable 0:38:34.320 --> 0:38:36.799 um And so it's a bit of a grim existence 0:38:36.800 --> 0:38:38.680 in certain ways, and I think it sort of drives 0:38:38.760 --> 0:38:42.000 him a little around the bend. Now, Martinis, no, Aston, 0:38:42.040 --> 0:38:46.719 Martin's no, definitely not. Oh my goodness, we're saying, where 0:38:46.760 --> 0:38:49.320 is he now in jail? Oh, he's in jail in Ohio. 0:38:49.400 --> 0:38:52.240 He's a winning sounding. That was Bloomberg News Technology reporter 0:38:52.320 --> 0:38:54.960 Drake Bennett, along with Business Week editor Joe Weber on 0:38:55.040 --> 0:38:57.880 this week's cover story. Check out the full story online 0:38:58.000 --> 0:39:01.239 on the Bloomberg or on newsstands. Coming up, Jiell Webber 0:39:01.360 --> 0:39:04.160 joins us again for another story in this week's magazine. 0:39:04.400 --> 0:39:07.359 It's about the haven for Chinese companies very close to 0:39:07.400 --> 0:39:20.840 the United States. This is Bloomberg. This is Bloomberg Business 0:39:20.960 --> 0:39:24.680 Week with Carol Messer and Bloomberg Quick Takes Tim Stinovik 0:39:24.920 --> 0:39:28.880 from Bloomberg Radio. Well, this is one of those stories 0:39:28.880 --> 0:39:30.960 that we've come to love business Week four, one that 0:39:31.000 --> 0:39:33.319 taps into the big themes of our time, but may 0:39:33.320 --> 0:39:36.040 not be on your radar, but definitely should be. It's 0:39:36.040 --> 0:39:39.000 about a prime spot between Mexico's industrial capital and the 0:39:39.080 --> 0:39:42.839 US border that's become a haven for Chinese manufacturers looking 0:39:42.880 --> 0:39:46.400 to sidestep US tariffs and shortened supply chains. The story 0:39:46.440 --> 0:39:49.280 was also a Bloomberg Big Take. This week, Bloomberg business 0:39:49.280 --> 0:39:51.640 Week editor Joel Webber is back with more, along with 0:39:51.680 --> 0:39:55.800 Business Week Global Economics editor Christina lynd Lad. China became 0:39:55.960 --> 0:39:59.759 very interested in sort of a side door to the 0:39:59.840 --> 0:40:01.839 U U S there and so we have seen an 0:40:01.840 --> 0:40:07.719 explosion of factories there and uh it is effectively a 0:40:07.760 --> 0:40:13.239 workaround of Trump's tariff policy, which the Biden administration is 0:40:13.280 --> 0:40:16.600 basically kept in place. Um. And so it's interesting about 0:40:16.640 --> 0:40:21.640 that is that you know, you basically have gained the system. Uh. 0:40:21.719 --> 0:40:25.120 And so things going forward may not be manufactured in 0:40:25.200 --> 0:40:29.000 China as before you find some cheap real estate in 0:40:29.080 --> 0:40:31.600 other countries. Mexico is not the only version of this, 0:40:31.719 --> 0:40:34.200 but certainly the closest to the U S. UM. So 0:40:34.239 --> 0:40:37.040 how's this, how's this working out? As uh as a 0:40:37.040 --> 0:40:40.600 little bit of arbitrage, Christina, Well, that's the globalization is 0:40:40.600 --> 0:40:45.160 always arbitrage, right, So I think when we interviewed companies 0:40:45.200 --> 0:40:47.880 that are based in one particular industrial park that we 0:40:48.000 --> 0:40:50.840 focused on. They most of the Chinese firms preferred to 0:40:51.200 --> 0:40:54.759 emphasize the you know, proximity to the US market and 0:40:54.760 --> 0:40:58.200 this and this savings on shipping, but when pressed they 0:40:58.360 --> 0:41:01.920 admitted that, you know, for example, one furniture maker was 0:41:01.960 --> 0:41:05.320 facing taffs of twenty when they were shipping from China 0:41:05.440 --> 0:41:09.520 and now uh qualified for duty free shipments into the US. 0:41:10.320 --> 0:41:12.279 What blew me away is how quickly they were able 0:41:12.320 --> 0:41:14.040 to do that, right, Like I always feel like when 0:41:14.080 --> 0:41:16.080 we're talking to CEOs and like, well the shift, you know, 0:41:16.080 --> 0:41:17.799 if we have to shift our production elsewhere, it's going 0:41:17.800 --> 0:41:20.040 to take a long time. I mean, they move pretty quickly, 0:41:20.040 --> 0:41:22.600 and it reminds us that they are still the manufacturer 0:41:22.640 --> 0:41:24.399 to the world. Yes, and I think some of these 0:41:24.400 --> 0:41:27.360 companies are pretty I mean they're not all big. I 0:41:27.360 --> 0:41:30.360 mean one of the manufacturers is a really big manufactor 0:41:30.440 --> 0:41:32.839 in China, but like so they are nimble and they 0:41:33.000 --> 0:41:38.600 you know um. As a policy, China has been basically 0:41:39.000 --> 0:41:42.759 willing to shed kind of low margin manufacturing businesses as 0:41:42.800 --> 0:41:46.080 it you know, as it focuses on high end stuff 0:41:46.120 --> 0:41:51.600 like you know, new new fuel vehicles and biotechnology and semiconductors. 0:41:51.960 --> 0:41:55.920 So I think the first wave went to places like Vietnam. 0:41:56.080 --> 0:41:58.759 But now you know, you can see, like, you know, 0:41:58.920 --> 0:42:01.520 businesses are moving for they're away, you know, from those 0:42:01.560 --> 0:42:07.839 comfort kind of locales where they first landed. And um, yeah, 0:42:07.960 --> 0:42:09.680 I mean I think what I thought it was kind 0:42:09.680 --> 0:42:12.880 of funny was that. Do you remember when Trump tweeted 0:42:13.840 --> 0:42:18.759 basically ordering American companies home, and I said, what came 0:42:18.840 --> 0:42:24.000 floating across like the Pacific or Chinese Chinese plants didn't 0:42:24.000 --> 0:42:25.719 exactly work that way. I don't know. It seems like 0:42:25.800 --> 0:42:27.600 there could be like a way for the US to 0:42:27.600 --> 0:42:30.320 close this loophole. I mean, they know what these Chinese 0:42:30.320 --> 0:42:34.440 companies produce, and isn't there a way that they can say, Okay, 0:42:34.440 --> 0:42:37.319 well we know that it comes from a subsidiary of 0:42:37.360 --> 0:42:40.520 a Chinese company, and you're not sticking to the spirit 0:42:40.640 --> 0:42:43.040 of the rule. Um, we're going to attack on that tariff? 0:42:43.120 --> 0:42:45.000 Do they want to? Oh? I don't know. I mean 0:42:45.320 --> 0:42:47.239 that might cause issues with the U. S m c 0:42:47.440 --> 0:42:50.080 A right like the successor to NAFTA. I mean, I 0:42:50.120 --> 0:42:53.600 think Mexico would have legitimate reason to say what are 0:42:53.600 --> 0:42:55.440 you doing? You know, as long as they meet the 0:42:55.480 --> 0:42:58.719 content requirements, which they are and to do that. I mean, 0:42:59.200 --> 0:43:01.800 we should be clear that this implies a certain amount 0:43:01.800 --> 0:43:04.279 of effort on the part of these Chinese companies because 0:43:04.280 --> 0:43:07.919 they're having to source products from Mexico, could be even 0:43:07.960 --> 0:43:11.560 North America. There they can't just import assemble everything from 0:43:11.640 --> 0:43:14.680 Chinese parts and shipping across. Yeah. The other thing to 0:43:14.719 --> 0:43:16.560 keep in mind here, you know, Belton Road is a 0:43:16.680 --> 0:43:19.520 very top down initiative in China. This is not that 0:43:19.880 --> 0:43:25.400 this is just grassroots, grassroots effort by Chinese exporters to 0:43:25.440 --> 0:43:28.040 be like, how do we It's kind of simple, but 0:43:28.080 --> 0:43:31.280 it makes so much sense also, I mean, we talked 0:43:31.280 --> 0:43:34.799 to some companies that off the record explicitly said part 0:43:34.800 --> 0:43:37.080 of the reason we're doing this isn't just cost savings, 0:43:37.200 --> 0:43:40.799 is that there's political risk, I mean policy risk. Rather 0:43:40.880 --> 0:43:44.239 in China in recent years we've seen like crackdowns in 0:43:44.280 --> 0:43:48.120 tech and other sectors, and so, you know, so we 0:43:48.239 --> 0:43:52.400 talked about the Mexico side of this too. Amlo being obviously, 0:43:52.680 --> 0:43:56.799 um the president of Mexico has been you know, very 0:43:57.320 --> 0:44:00.400 eager to try and get employment whatever there can be employment. 0:44:00.440 --> 0:44:03.600 How is this shaping out domestically for him? Well? The 0:44:03.640 --> 0:44:06.600 interesting thing is at the federal level, Mexico has never 0:44:06.680 --> 0:44:11.359 really actively courted Chinese investment because they see Chinese exporters 0:44:11.440 --> 0:44:15.240 as rivals in third markets, right. So, but the state, 0:44:15.360 --> 0:44:19.240 at the state level, they like states have so Nueo Leon, 0:44:19.320 --> 0:44:22.520 which is where you know, this particular industrial park, and 0:44:22.560 --> 0:44:24.279 these are a lot of these companies are setting up shop. 0:44:24.920 --> 0:44:27.879 UM has has done and they're building a special road 0:44:27.920 --> 0:44:31.160 for example, from like you know, the from the industrial 0:44:31.200 --> 0:44:36.359 park to the border. Uh. And so yeah, but I 0:44:36.400 --> 0:44:38.880 think that some people have said that Mexico might have 0:44:38.920 --> 0:44:42.200 actually seen even a bigger windfall of this kind of 0:44:42.239 --> 0:44:47.360 investment if am Low was being less nationalistic on topics 0:44:47.360 --> 0:44:49.960 like energy and you know and things like that. But 0:44:50.000 --> 0:44:53.360 I mean, this is great for Mexico, right, Like the 0:44:53.440 --> 0:44:55.799 number that really jumped out at me here is UH 0:44:56.080 --> 0:44:59.560 near shoring UH could boost Mexico's exports by three five 0:44:59.600 --> 0:45:02.600 billion year, a bit over seven percent. I mean, that's 0:45:02.600 --> 0:45:07.160 like the real that's reformative. Yeah. Also, I mean while 0:45:07.239 --> 0:45:10.120 the Chinese investment, like like the most recent figures five 0:45:10.520 --> 0:45:13.600 million dollars a year is not huge, there is there 0:45:13.640 --> 0:45:16.399 are a couple of deals that could happen this year 0:45:16.719 --> 0:45:20.240 that would be transformative that that we're talking about billion 0:45:20.320 --> 0:45:23.200 dollar factories. One of them is there an e V 0:45:23.400 --> 0:45:26.719 engine maker that's looking at two different sites in Mexico. 0:45:27.200 --> 0:45:31.120 And those kinds of investments pulls supply chains you know, 0:45:31.719 --> 0:45:34.919 around them, you know, So that kind of that kind 0:45:34.920 --> 0:45:36.479 of thing I think would take it to the next level. 0:45:36.920 --> 0:45:39.359 The suppliers that play into it. Hey, um, you guys 0:45:39.400 --> 0:45:41.800 point out in the story, though Chinese companies aren't the 0:45:41.800 --> 0:45:44.560 first to seek shelter from US terris right, Japan did. 0:45:44.560 --> 0:45:47.720 It went back in the similar playbook when Reagan started 0:45:47.800 --> 0:45:51.399 layering all these different restrictions on Japanese cars, and then 0:45:51.440 --> 0:45:54.120 when NAFTA took effect, they saw, well, this is a 0:45:54.120 --> 0:45:57.319 great export platform now. But I think it's interesting, right 0:45:57.320 --> 0:45:59.839 in terms of the globalization conversations that we're having about 0:45:59.840 --> 0:46:02.160 what is going on. What I forgot about that we 0:46:02.200 --> 0:46:04.239 haven't talked about that forever. Well, I mean the way 0:46:04.280 --> 0:46:13.799 I think, well, we didn't use the word French shor freh. Yes, 0:46:13.840 --> 0:46:16.440 that's when you go to friendly countries. That was Bloomberg 0:46:16.440 --> 0:46:19.160 business Week editor Joel Webber, along with Business Week Global 0:46:19.200 --> 0:46:22.919 Economics editor Christina Lyndblad still to come on Bloomberg Business Week, 0:46:23.120 --> 0:46:25.800 Beyond Meat and Impossible Foods are the key players in 0:46:25.840 --> 0:46:28.840 the race to market plant based meat alternatives, often with 0:46:29.040 --> 0:46:32.120 ingredients like p protein and soy. Going up next, you'll 0:46:32.120 --> 0:46:34.840 meet Upside. That's the company that's got a different approach. 0:46:35.080 --> 0:46:38.759 They're actually growing meat. We take real animals, take themselves 0:46:39.360 --> 0:46:42.040 from those animals. We essentially select the ones that are 0:46:42.040 --> 0:46:44.480 going to taste the best and grow the best. When 0:46:44.520 --> 0:46:46.799 I first had my bite of cultivated meat, I can 0:46:46.840 --> 0:46:49.440 tell you that's the moment when I really believe. Upsides 0:46:49.480 --> 0:46:52.600 Chief operating Officer Amy Chan explains on the other side, 0:46:52.960 --> 0:47:03.280 this is Bloomberg broadcasting from the financial capital of the world, 0:47:03.360 --> 0:47:06.840 Bloomberg eleven Frio in New York to Washington, d C. 0:47:07.040 --> 0:47:11.759 Bloomberg to Boston, Bloomberg one oh six one to San Francisco, 0:47:11.800 --> 0:47:15.279 Bloomberg nine sixty to the country Sirius XM Chado one 0:47:15.320 --> 0:47:18.279 nine team, and around the globe the Bloomberg Business app 0:47:18.400 --> 0:47:22.759 and Bloomberg Radio dot Com. This is Bloomberg Business Week. 0:47:23.760 --> 0:47:25.920 Eating meat takes a toll on the environment. You know 0:47:26.000 --> 0:47:28.479 that We've talked about it on our broadcast. We've also 0:47:28.520 --> 0:47:31.960 talked about several plant based food startups that manufactured meat 0:47:32.000 --> 0:47:36.480 alternatives beyond meat and impossible foods, commonly using ingredients such 0:47:36.480 --> 0:47:39.040 as soy and p protein. Turning now to a company 0:47:39.040 --> 0:47:42.719 that's got quite a different solution for sustainable consumption. Check 0:47:42.719 --> 0:47:46.240 out Upside Foods. It's a startup that grows meat directly 0:47:46.320 --> 0:47:49.800 from animal cells. The company recently announced a four million 0:47:49.800 --> 0:47:52.480 dollars seriously funding round. It put its valuation at over 0:47:52.520 --> 0:47:56.040 a billion dollars. Investments came from Bill Gates, Tyson Foods, 0:47:56.040 --> 0:47:59.040 and soft Bank, to name just a few. Upsides products 0:47:59.080 --> 0:48:01.960 are still pending reulatory review, but the company hopes it's 0:48:02.040 --> 0:48:04.920 lab grown chicken, breasts, steaks, and more will be market 0:48:04.920 --> 0:48:07.480 ready by the end of this year. Tim and Mike 0:48:07.520 --> 0:48:10.360 Reagan recently spoke with Amy Chen. She is the company's 0:48:10.400 --> 0:48:14.600 chief operating officer. We take real animals, take themselves from 0:48:14.680 --> 0:48:17.239 those animals. We essentially select the ones that are going 0:48:17.280 --> 0:48:19.920 to taste the best and grow the best, and then 0:48:19.960 --> 0:48:22.680 we feed them something that we call self feed or media. 0:48:23.080 --> 0:48:26.560 It's essentially the same kind of nutrients they would normally 0:48:26.560 --> 0:48:28.440 get inside of an animal's body. We just do it 0:48:28.480 --> 0:48:30.360 in a what we call cultivator, which is like a 0:48:30.400 --> 0:48:32.719 stainless steel tank that you might see in a brewery 0:48:32.960 --> 0:48:35.719 or in a yogurt factory. We allow them to grow, 0:48:35.800 --> 0:48:38.520 continue feeding them, and then ultimately are able to harvest 0:48:38.560 --> 0:48:40.799 meat that is as close to the real thing as 0:48:40.800 --> 0:48:42.960 you can possibly get because it's grown from real animals. 0:48:43.320 --> 0:48:45.759 Amy the timing of this segment is perfect because Tim 0:48:45.760 --> 0:48:49.160 and I were both starving. So I'm curious when will 0:48:49.200 --> 0:48:50.960 we be able to see this on the market. I 0:48:51.040 --> 0:48:54.000 understand it has to get regulatory approval first, right, That's 0:48:54.000 --> 0:48:56.960 exactly right, and so we are currently pending regulatory approval. 0:48:57.239 --> 0:48:59.040 But as soon as it happens, we will be excited 0:48:59.080 --> 0:49:00.640 to start being able to share are it more broadly 0:49:00.680 --> 0:49:03.840 with consumers. One of the things that really convinced me 0:49:04.200 --> 0:49:06.680 about the potential and the promise of cultivated meat was 0:49:06.680 --> 0:49:08.640 actually the taste of it, and growing up in the 0:49:08.680 --> 0:49:11.359 food world, taste of King and Queen. When I first 0:49:11.400 --> 0:49:13.560 had my bite of cultivated meat, I can tell you 0:49:13.640 --> 0:49:15.960 that's the moment when I really believe, and when you 0:49:16.000 --> 0:49:17.839 think about plant based and a lot of these other 0:49:17.920 --> 0:49:20.440 things that require people to make changes in their habits. 0:49:20.640 --> 0:49:23.359 I'm from Texas, and I love my meat and so 0:49:23.640 --> 0:49:25.799 I have always just wanted to be able to think 0:49:25.800 --> 0:49:28.040 about a way to change the world without requiring people 0:49:28.040 --> 0:49:29.799 to really change their habits. And I think does this 0:49:29.840 --> 0:49:32.000 in a really compelling way. What okay, if you were 0:49:32.000 --> 0:49:33.399 to be able to buy this in this store when 0:49:33.440 --> 0:49:35.560 you look at the ingredients, but on the box, what 0:49:35.560 --> 0:49:38.719 would it say? And also are their antibiotics? Are their 0:49:38.760 --> 0:49:41.239 their chemicals in it, etcetera. Now, one of the things 0:49:41.280 --> 0:49:43.960 that's amazing is that it doesn't have antibiotics or hormones 0:49:44.080 --> 0:49:45.279 or some of the things that you think about with 0:49:45.320 --> 0:49:48.040 respect to conventional meat. We're still working on exactly what 0:49:48.120 --> 0:49:50.520 the label would say, but would essentially say chickens grown 0:49:50.560 --> 0:49:53.520 from animal cells are cultivated from high quality animal cells. 0:49:53.600 --> 0:49:55.600 There's a whole range of products is you can imagine 0:49:55.600 --> 0:49:58.279 everything from a chicken breast or a chicken file at 0:49:58.360 --> 0:50:00.800 through to a sausage or a hot dog. Um. Different 0:50:00.800 --> 0:50:03.399 products of conventional meat would have different labels, and so 0:50:03.680 --> 0:50:06.400 you'd see that same kind of thing reflected here. But 0:50:06.520 --> 0:50:09.120 ultimately the promise is that the real cell can be 0:50:09.239 --> 0:50:11.520 the meat that we all love. You know, Amy, I'm 0:50:11.520 --> 0:50:14.680 wondering if there's the potential down the roads even sort 0:50:14.680 --> 0:50:16.680 of improve on mother nature, you know, and make a 0:50:17.239 --> 0:50:20.480 steak with less cholesterol, or chicken that I don't know 0:50:20.560 --> 0:50:24.040 comes pre flavored with buffalo sauce or something like that. 0:50:24.440 --> 0:50:29.239 But you're you're just playing with God there, alright. But 0:50:29.320 --> 0:50:32.319 I'm curious, is there yeah? Is there is there the 0:50:32.360 --> 0:50:35.280 potential to actually enhance foods and make them even healthier, 0:50:35.400 --> 0:50:39.680 more nutritious than than what we're used to. Long term? Absolutely, um, 0:50:39.719 --> 0:50:42.200 I think that's something on our roadmap in the horizon. 0:50:42.360 --> 0:50:44.400 I think in the near term we're focused on delivering 0:50:44.440 --> 0:50:49.200 amazing delicious meat um that is safe enough, high quality, 0:50:49.239 --> 0:50:51.480 and that fits into people's diets and into their habits 0:50:51.480 --> 0:50:53.719 in a way that makes a lot of sense. But absolutely, 0:50:53.719 --> 0:50:55.719 longer term, I mean exactly what you say, you could 0:50:55.760 --> 0:50:58.960 have a steak with the intritional profile of samins um 0:50:59.080 --> 0:51:01.839 or anything else you could imagine in terms of allergies 0:51:02.080 --> 0:51:04.360 or other issues that are currently part of the conventional 0:51:04.360 --> 0:51:06.920 meat system. Well, Amy, speaking of the conventional meat system, 0:51:06.920 --> 0:51:09.680 a lot of people who are vegetarians, they don't they 0:51:09.719 --> 0:51:11.840 don't eat meat, you know, for a few reasons, and 0:51:11.880 --> 0:51:15.400 among those reasons include treatment of animals, or they're just 0:51:15.640 --> 0:51:19.880 against killing animals for food. UM, what is this type 0:51:19.880 --> 0:51:25.040 of thing vegetarian friendly? You know, it's a great question. UM. 0:51:25.080 --> 0:51:27.719 I would say absolutely, but it probably depends on what 0:51:27.840 --> 0:51:31.000 kind of vegetarians are UM. We have a company that 0:51:31.120 --> 0:51:34.839 is a mix of passionate meat eaters UM and carnivores 0:51:34.920 --> 0:51:37.520 and folks that are passionate vegans and vegetarians. And what 0:51:37.560 --> 0:51:40.120 we've generally found is that people who are vegetarian or 0:51:40.200 --> 0:51:44.400 vegan for ethical reasons or environmental reasons UM will embrace 0:51:44.440 --> 0:51:47.480 cultivated meat. Folks who are maybe vegetarian or vegan for 0:51:47.680 --> 0:51:50.279 religious reasons or other ones may want to take a 0:51:50.280 --> 0:51:52.560 second look. I was going to say, the the environmental 0:51:52.600 --> 0:51:57.000 footprint of cultivated meat sounds like it must be way 0:51:57.120 --> 0:52:01.120 less than the farm grown version. Is that is that safe? 0:52:01.160 --> 0:52:04.279 Is that a selling point of this product? Absolutely? I 0:52:04.280 --> 0:52:06.279 think one of the pieces when you think about what's 0:52:06.280 --> 0:52:09.160 happening in the future is people predict that demand for 0:52:09.200 --> 0:52:12.160 meat is going to almost double by And when you 0:52:12.200 --> 0:52:14.600 think about the amount of land and water, it's about 0:52:14.600 --> 0:52:17.400 a third that's currently used for agriculture, you know, one fifth, 0:52:17.400 --> 0:52:20.760 one six of all greenhouse gases, and the world simply 0:52:20.800 --> 0:52:23.920 cannot sustain the kind of demand increases that we're expecting 0:52:23.920 --> 0:52:26.040 on meat UM and so one of the things that's 0:52:26.080 --> 0:52:28.840 really exciting about cultivated meat is because it happens in 0:52:28.840 --> 0:52:32.239 a controlled environment similar to a manufacturing plant. UM, it 0:52:32.320 --> 0:52:35.040 had the potential to have a substantially lower footprint. That 0:52:35.120 --> 0:52:37.640 was a me chen chief operating officer of Upside Foods 0:52:37.680 --> 0:52:40.680 with Tim and fellow Bloomberg carnivore Mike Crea again, and 0:52:40.719 --> 0:52:42.680 a big shout out to Mike for filling in while 0:52:42.719 --> 0:52:44.160 I was out of the office. Maybe I'll send a 0:52:44.160 --> 0:52:47.040 mistake or something. You're listening to Bloomberg Business Week coming up. 0:52:47.239 --> 0:52:50.000 You've had your food, now, how about a beer. I mean, 0:52:50.239 --> 0:52:53.040 it has been quite a week. The chief marketing officer 0:52:53.120 --> 0:52:55.719 at a Bienbev joins us right after the break. This 0:52:55.880 --> 0:53:08.720 is Bloomberg. You're listening to Bloomberg Business Week with Carol 0:53:08.760 --> 0:53:13.000 Masser and Bloomberg Quick takes Tim Steinovik from Bloomberg Radio. 0:53:14.440 --> 0:53:17.880 This company, it is the world's biggest brewer maker, Budweiser, Stella, 0:53:17.920 --> 0:53:20.800 Artois and Corona. And our next guest to spent nearly 0:53:20.840 --> 0:53:23.520 twenty years at the company, and he's got some thoughts 0:53:23.520 --> 0:53:26.360 for us. On today's marketplace for adult beverages and really 0:53:26.480 --> 0:53:30.320 what consumers want most. Marsin Marcondez is the chief marketing 0:53:30.320 --> 0:53:32.920 Officer at a b Nbev. He's also the former global 0:53:32.960 --> 0:53:36.200 president of a b nbev's Beyond Beer division. He joined 0:53:36.239 --> 0:53:38.720 us in studio this past week and express his hope 0:53:38.800 --> 0:53:42.719 that the world is finally hopefully putting COVID nineteen in 0:53:42.760 --> 0:53:44.880 the rear view mirror your business. It's very meaningful to 0:53:44.880 --> 0:53:48.319 see the people that people are really willing to go 0:53:48.400 --> 0:53:51.560 back to life to enjoy, to be outside, to enjoy 0:53:51.719 --> 0:53:54.880 concerts too, to be with friends, to be with family, 0:53:54.920 --> 0:53:57.000 to have a good time, to feel like they can 0:53:57.080 --> 0:54:00.440 enjoy time together one more time. This has an impact 0:54:00.480 --> 0:54:03.880 on on the economy. This this has a significant impact 0:54:03.960 --> 0:54:06.239 in our business as well. You can imagine all the 0:54:06.280 --> 0:54:10.160 frequency on the restaurants, bars, events are all those things 0:54:10.160 --> 0:54:13.280 that were not happening anymore. So there's a balance points 0:54:13.320 --> 0:54:16.000 of concern as as it's always the case in life, 0:54:16.320 --> 0:54:19.480 but a lot of points for optimism as well. Do 0:54:19.480 --> 0:54:21.280 you feel like you have a lot of clarity and 0:54:21.280 --> 0:54:23.560 and in terms of the outlook, And it's interesting that 0:54:23.600 --> 0:54:25.959 you talk about events tib and I did a couple 0:54:25.960 --> 0:54:28.440 of shows from the U S Open here in New 0:54:28.480 --> 0:54:32.080 York City and it was so packed compared to where 0:54:32.080 --> 0:54:34.560 it was pretty pandemic. So, having said that, do you 0:54:34.640 --> 0:54:38.759 feel like the economy is stronger versus like all of 0:54:38.800 --> 0:54:43.120 the recessionary talk that seems to be going on globally. Yes, 0:54:43.280 --> 0:54:47.080 And I am optimistic. That's exactly how I feel, especially 0:54:47.120 --> 0:54:49.480 for our industry. I am optimistic. There's a lot of 0:54:49.600 --> 0:54:51.840 bright side, a lot of bright angles for us to observe, 0:54:51.920 --> 0:54:55.560 like the ones you just described. People are out there. 0:54:55.640 --> 0:54:59.520 There's always a key concern about inflation, recession here and there, 0:54:59.560 --> 0:55:05.239 but there's a bigger inner voice and energy saying go live. Well, 0:55:05.280 --> 0:55:07.720 it's it's interesting here you speak this way because obviously 0:55:07.760 --> 0:55:09.680 your job is to tappen to what people are feeling, 0:55:09.719 --> 0:55:11.839 because you need to know how to communicate to them. 0:55:11.960 --> 0:55:14.400 You need to know how to express your brands to 0:55:14.480 --> 0:55:16.480 them in a way that they will be receptive to. 0:55:17.080 --> 0:55:20.440 How have you community? How is your communication A B 0:55:20.560 --> 0:55:23.920 N beats communication changed over the last couple of years. 0:55:24.160 --> 0:55:26.080 And that's a very good question. And actually I should 0:55:26.120 --> 0:55:28.719 take one or two steps back before I get really 0:55:28.760 --> 0:55:31.720 straight into your into your question, because I think we 0:55:31.719 --> 0:55:34.320 we as a company, we're going through a meaningful process 0:55:34.320 --> 0:55:37.719 of evolution. We're known for our financial discipline and for 0:55:37.880 --> 0:55:40.560 growing inorganically. But then in the last couple of years, 0:55:40.560 --> 0:55:43.880 to your question, we became the indisputable number one brewery 0:55:43.880 --> 0:55:45.600 in the world. And by the time you become the 0:55:45.680 --> 0:55:49.200 number one, you lead the category. So your growth model 0:55:49.239 --> 0:55:52.400 needs to adjust because it's not about acquiring other companies 0:55:52.440 --> 0:55:55.320 anymore and just fighting for share. You need to work 0:55:55.680 --> 0:55:58.759 to enlarge and to grow the whole category so that 0:55:58.840 --> 0:56:02.440 everybody wins and win together. Meaning we need to move 0:56:02.480 --> 0:56:05.360 from a growth model that is focused on inorganic growth 0:56:05.400 --> 0:56:07.920 to a growth model that is focused on organic growth. 0:56:08.600 --> 0:56:11.080 And by the time any company makes that decision, brands 0:56:11.280 --> 0:56:14.920 become inevitably one of the most important assets of the organization, 0:56:14.920 --> 0:56:17.520 if not the most important ones. And this is when 0:56:17.680 --> 0:56:20.080 we really talk about our messaging and all that. So 0:56:20.200 --> 0:56:23.600 we are intentionally becoming much more consumer centric. And this 0:56:23.680 --> 0:56:26.200 is for real, it's not just a nice thing a 0:56:26.280 --> 0:56:29.840 nice thing to say. So we became obsessed about talking 0:56:29.840 --> 0:56:33.879 to people, understanding people, understanding what's going on with them, 0:56:34.120 --> 0:56:37.120 what's impacting their behaviors, which are their needs so that 0:56:37.160 --> 0:56:40.719 we can identify relevant opportunities to make our brands relevant 0:56:41.040 --> 0:56:43.600 in their lives. The key thing is that when you 0:56:43.640 --> 0:56:46.279 do marketing, when you build brands, there's a trap or 0:56:46.320 --> 0:56:49.760 a tendency for people to be okay just if they're visible, 0:56:50.040 --> 0:56:51.520 and then you can spend a lot of money just 0:56:51.560 --> 0:56:54.680 on visibility. The key thing to really drive growth and 0:56:54.719 --> 0:56:57.000 to be meaningful to people is when you find the 0:56:57.160 --> 0:56:59.640 right spots to be relevant to them. How do you 0:56:59.680 --> 0:57:02.600 figure relevancy? It all comes. It all comes as a 0:57:02.640 --> 0:57:05.400 consequence of being closed to them. So we talked to 0:57:05.640 --> 0:57:11.759 literally millions of people every year. We have survey we 0:57:11.840 --> 0:57:15.200 have online panels and fixed online panels. We we talked 0:57:15.239 --> 0:57:19.560 to thousands of consumers every week because we're obsessed about 0:57:19.680 --> 0:57:23.040 understanding their behavior. We learn a lot of that coming 0:57:23.080 --> 0:57:25.600 after COVID right, because when the big thing happens that 0:57:25.640 --> 0:57:28.560 it significantly changes the way people live. We need to 0:57:28.560 --> 0:57:31.040 to have a much tighter post on how they're living 0:57:31.080 --> 0:57:33.240 so you can identify the opportunities to be meaningful and 0:57:33.320 --> 0:57:36.160 relevant in their lives. And that's a big change that 0:57:36.200 --> 0:57:38.640 we've been going through as an organization. Because there's so 0:57:38.680 --> 0:57:42.000 many brands today b and some five brands. How does 0:57:42.000 --> 0:57:45.880 is structured internally because you can't personally oversee five hundred brands. 0:57:45.880 --> 0:57:48.080 So take us inside the company a little bit. I 0:57:48.160 --> 0:57:49.760 was about to say welcome to the kitchen, but i'd 0:57:49.800 --> 0:57:53.920 right say welcome to the bar, to the brewery, all right. 0:57:54.400 --> 0:57:57.040 I have heads of marketing responsible for the different regions 0:57:57.080 --> 0:57:59.960 of the world, and I also have people reportents directly 0:58:00.040 --> 0:58:03.160 to me to lead from those five brands. With the 0:58:03.200 --> 0:58:09.360 four global brands, and they are Budweiser, Stellartoa, Corona, and Miklobota, 0:58:09.760 --> 0:58:12.520 So there's a special focus their plus the long tail 0:58:12.600 --> 0:58:15.960 of brands because this is still an industry where fifty 0:58:16.320 --> 0:58:19.720 percent of the industry is focused still in local brands, 0:58:19.840 --> 0:58:22.800 they usually carry the local pride. Right, that makes a 0:58:22.800 --> 0:58:25.040 lot of sense. I mean, do you anticipate that those 0:58:25.080 --> 0:58:28.760 four brands continue to be really the engine for the 0:58:28.800 --> 0:58:32.840 company going forward? Definitely yes, because these four brands there 0:58:32.840 --> 0:58:36.520 are premium brands, and the premiumization is a gigantic trend 0:58:36.600 --> 0:58:39.520 that we see having a huge impact in multiple industries, 0:58:39.520 --> 0:58:41.920 including hours and it's here to stay. What are the 0:58:41.960 --> 0:58:45.480 top brands that's sell in the United States. I'll give 0:58:45.520 --> 0:58:47.600 you the top two. Okay, so number one, it is 0:58:47.600 --> 0:58:49.680 not going to be hard to to guess. It's bud 0:58:49.760 --> 0:58:52.880 Light and it's been the case for decades. But number 0:58:52.880 --> 0:58:55.000 two might be in new news for you. Number two 0:58:55.040 --> 0:58:59.600 is michelob Ultra low carbs, locale, great taste for twenty years. 0:58:59.600 --> 0:59:02.200 That's been around for twenty years, and since last year 0:59:02.240 --> 0:59:05.919 it's the number two brand in volumes in the United States. Timmy, 0:59:05.920 --> 0:59:07.600 you were shocked by that. Yeah, I was really surprised 0:59:07.600 --> 0:59:09.560 because to me, it's still a new brand even though 0:59:09.560 --> 0:59:11.360 it is twenty years old. That's one of those brands 0:59:11.400 --> 0:59:14.160 that I think I remember when it was introduced, like 0:59:14.160 --> 0:59:16.080 how has it been so successful and why, especially in 0:59:16.080 --> 0:59:18.480 the last year, has it seen a real uptick Again, 0:59:18.520 --> 0:59:22.080 It's all about getting extremely well connected with consumer behavior 0:59:22.240 --> 0:59:25.280 and with big consumer trends and industry trends. In this case, 0:59:25.640 --> 0:59:28.360 we see that health and wellness is a big trend. 0:59:28.440 --> 0:59:31.680 We see this in every industry for sure. COVID has 0:59:31.720 --> 0:59:34.680 accelerated that as well, so we see a clear impact 0:59:34.680 --> 0:59:37.000 of this in our industry too, and this has definitely 0:59:37.040 --> 0:59:40.080 accelerated the performance of Mikolo Boltra more so. That's what 0:59:40.120 --> 0:59:41.720 I wanted to ask you, like Tim and I for 0:59:41.800 --> 0:59:44.080 so many of our conversations for a long time, and 0:59:44.120 --> 0:59:46.280 I do feel like we're getting increasingly away of thinking 0:59:46.280 --> 0:59:49.560 about the COVID impact. But what happened to you guys 0:59:49.720 --> 0:59:52.160 during COVID that has stayed with you in terms of 0:59:52.200 --> 0:59:55.960 corporate strategy and how you relate with consumers. So when 0:59:55.960 --> 1:00:00.000 you think about brands and commercial trends in the indust 1:00:00.040 --> 1:00:02.400 three I could name three. So the first one, as 1:00:02.400 --> 1:00:04.880 we just spoke about, is health and wellness. Second point 1:00:04.960 --> 1:00:09.400 is premiumization. Because beer is affordable luxury, right, so when 1:00:09.400 --> 1:00:11.520 people say, like Okay, things are complicated, I want to 1:00:11.520 --> 1:00:14.960 give myself some treat, they can't afford great beers. So 1:00:15.000 --> 1:00:17.280 we see premiumization. Again. This is a trend that we 1:00:17.320 --> 1:00:19.720 see happening in multiple industries, but in our case in 1:00:19.760 --> 1:00:22.440 the beer industry, it's a very evident and strong trend. 1:00:23.040 --> 1:00:25.080 So back to your previous question on the global brands, 1:00:25.080 --> 1:00:27.200 they're all premium and they continue to be the big 1:00:27.200 --> 1:00:29.840 growth engine of the company because they're sitting over a 1:00:29.920 --> 1:00:32.840 gigantic trend. The third thing that I think we all 1:00:32.920 --> 1:00:36.000 feel it e commerce. Because of the lockdown lives people 1:00:36.040 --> 1:00:38.800 started getting used to buying things online. So we've been 1:00:38.840 --> 1:00:43.880 investing significantly significant amounts of money on technology, on building 1:00:43.920 --> 1:00:47.920 those platforms. And for example, more than fifty percent of 1:00:48.000 --> 1:00:52.720 our net revenues they are already sold worldwide via digital channels. 1:00:52.840 --> 1:00:56.080 How does that work for beer? Right? How does that work? 1:00:56.160 --> 1:01:01.120 So this is because but this is sold from us 1:01:01.200 --> 1:01:04.440 to the clients, to the retailers right, so to the entrade. 1:01:04.800 --> 1:01:07.480 These are business to business platform called bees. It's already 1:01:07.520 --> 1:01:09.840 one of the top ten e commerce platforms in the world. 1:01:10.400 --> 1:01:13.840 But imagine a company our size, more than fifty percent 1:01:13.880 --> 1:01:16.640 of our natural revenues are already sold via digital channels. 1:01:16.680 --> 1:01:19.800 What about director consumer? Direct to consumers? This is our 1:01:20.000 --> 1:01:23.440 next endeavor. So we have already in a few countries. 1:01:23.760 --> 1:01:27.000 So in the US specifically, we have strong partnerships with 1:01:27.040 --> 1:01:29.720 the big retailers that are that also have online versions 1:01:29.760 --> 1:01:32.160 like Walmart and so and so forth and easily and 1:01:32.160 --> 1:01:35.520 the ones you mentioned. We cannot operate in the US 1:01:35.560 --> 1:01:39.600 doing direct two consumers operations, but in multiple countries of 1:01:39.640 --> 1:01:43.080 the world we can. In Brazil, it's uh, it already 1:01:43.120 --> 1:01:46.240 represents more than five percent of our total sales. We 1:01:46.320 --> 1:01:49.240 sell direct to consumers. And that we're just about to launch, 1:01:49.320 --> 1:01:51.400 Like fIF World Cup will be a big opportunity for us, 1:01:51.480 --> 1:01:55.160 especially in Latin American markets because imagine how many people 1:01:55.160 --> 1:01:57.520 will be watching the games at home. I feel like, oh, 1:01:57.560 --> 1:02:01.040 I should have ordered more beers. So we're launching Tada 1:02:01.200 --> 1:02:04.880 Tada right, which is our our new global brand for 1:02:05.000 --> 1:02:07.320 for director consumers in more than ten countries in the 1:02:07.400 --> 1:02:10.880 second semester of this year. And this has become this 1:02:10.920 --> 1:02:15.000 is growing very fast. Are beer trends among consumers? I mean, 1:02:15.000 --> 1:02:19.480 it's probably stupid question, but I mean, are they the same? Like? 1:02:19.520 --> 1:02:23.720 How different are some some things they hit the tren 1:02:23.960 --> 1:02:27.360 the different markets, uh, and with different intensities, But they're 1:02:27.400 --> 1:02:30.520 the same, Like the mega trends as we say, like primalization, 1:02:30.560 --> 1:02:32.440 health and well in the e commerce these are mega trends. 1:02:32.480 --> 1:02:36.840 But for example, beyond beer is something that is not 1:02:37.000 --> 1:02:40.800 equally split yet. So you see like the US, for example, 1:02:40.840 --> 1:02:43.960 having a very meaningful market already for beyond beer, I 1:02:44.000 --> 1:02:48.640 mean selters, ready to drink, cocktails, hearties and these kinds 1:02:48.640 --> 1:02:52.760 of products. It's already tennish percent of the total industry 1:02:52.800 --> 1:02:55.760 in the US. It's very sizeable in other markets, it's 1:02:55.800 --> 1:02:59.880 still more at the early stages. So this is one trend. 1:03:00.200 --> 1:03:05.680 It is a trend everywhere, but it's still uneven lead 1:03:05.720 --> 1:03:07.760 the street any thanks to Marsel Marcone days he's the 1:03:07.800 --> 1:03:10.560 chief marketing officer at A B and BEV. And speaking 1:03:10.600 --> 1:03:12.600 of thanking someone, a big shout out to our Carley 1:03:12.680 --> 1:03:15.120 Wanna of Bloomberg News. She has been with us doing 1:03:15.120 --> 1:03:18.360 a rotation three months with the Bloomberg Radio Group and 1:03:18.400 --> 1:03:20.800 she's been such an important member of our team, including 1:03:20.920 --> 1:03:23.360 helping us produce this weekend broadcast on a regular basis. 1:03:23.400 --> 1:03:25.200 And she's not going too far, so maybe she'll actually 1:03:25.200 --> 1:03:26.680 get to join us back on air in a bit 1:03:26.720 --> 1:03:29.400 when she's got some new stories potentially about Crypto. We 1:03:29.480 --> 1:03:31.520 totally want her back. And that wraps up the weekend 1:03:31.640 --> 1:03:34.040 edition of Bloomberg Business Week from Bloomberg Radio. Thank you 1:03:34.080 --> 1:03:36.200 so much for joining us. I'm Carol Masser and I'm 1:03:36.240 --> 1:03:38.680 Tim Stanovk. Be sure to tune into Bloomberg Business Week 1:03:38.680 --> 1:03:40.800 Monday through Friday. It starts at two pm Wall Street 1:03:40.800 --> 1:03:43.160 time on Bloomberg Radio. You can also watch our daily 1:03:43.200 --> 1:03:46.360 broadcast on YouTube. Just search Bloomberg Global News and check 1:03:46.360 --> 1:03:48.600 out our Bloomberg Business Week podcast. You can find that 1:03:48.640 --> 1:03:51.680 at Bloomberg dot com, Apple, or wherever you get your podcast. 1:03:51.760 --> 1:03:54.680 Bloomberg Business Week is available on newsstands, now, at Bloomberg 1:03:54.680 --> 1:03:57.040 dot com and always on the Bloomberg terminal. 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