1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,240 --> 00:00:12,119 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us Live 3 00:00:12,200 --> 00:00:14,920 Speaker 2: weekdays at ten am Eastern on Apple card Playing and 4 00:00:15,040 --> 00:00:17,919 Speaker 2: Broid Auto with the Bloomberg Business App. Listen on demand 5 00:00:17,960 --> 00:00:22,040 Speaker 2: wherever you get your podcasts, or watch us live on YouTube. 6 00:00:22,880 --> 00:00:24,919 Speaker 3: All right, let's get to some geopolitical headlines that have 7 00:00:25,000 --> 00:00:29,360 Speaker 3: definitely been moving the equity market. Ukraine firing UK Stormshadow 8 00:00:29,400 --> 00:00:32,480 Speaker 3: missiles into Russia. That's according to an official Hesblah also 9 00:00:32,520 --> 00:00:34,240 Speaker 3: saying that they are going to stay on the battlefield 10 00:00:34,280 --> 00:00:36,800 Speaker 3: no matter what. And we do see the Nasdaq around 11 00:00:36,840 --> 00:00:38,960 Speaker 3: down by one percent. We're now around the loads of 12 00:00:38,960 --> 00:00:41,360 Speaker 3: the session when it comes to the equity market. Roz Mathison, 13 00:00:41,360 --> 00:00:45,560 Speaker 3: Bloomberg News director for Your Middle East and Africa, joins us. Now, Roz, 14 00:00:45,600 --> 00:00:49,400 Speaker 3: this doesn't tell me or push me towards some kind 15 00:00:49,440 --> 00:00:52,879 Speaker 3: of negotiating table that we're all expecting to happen in 16 00:00:52,880 --> 00:00:54,080 Speaker 3: the first quarter of next year. 17 00:00:55,880 --> 00:00:59,600 Speaker 4: Well, in a way, I think escalating between Russia and Ukraine. 18 00:01:00,120 --> 00:01:03,840 Speaker 4: Got the news that they use UK made storm Shadow missiles. 19 00:01:03,880 --> 00:01:07,920 Speaker 4: It seems to strike just over the border inside Russia. 20 00:01:07,959 --> 00:01:11,000 Speaker 4: That's after the use of the US attacking missiles to 21 00:01:11,000 --> 00:01:14,640 Speaker 4: strike just over the border into Russia, so in the 22 00:01:14,640 --> 00:01:17,240 Speaker 4: conflict zone in a way, a couple of one hundred 23 00:01:17,280 --> 00:01:20,679 Speaker 4: miles at most across the border. But this all is 24 00:01:20,720 --> 00:01:22,919 Speaker 4: in the realm of the idea of them both positioning. 25 00:01:23,280 --> 00:01:26,800 Speaker 4: Russia trying to advance as much as possible inside Ukraine, 26 00:01:26,959 --> 00:01:30,680 Speaker 4: Ukraine trying to hold on to as much land inside 27 00:01:30,760 --> 00:01:34,200 Speaker 4: Russia that it's got as a negotiating tool, because we are, 28 00:01:34,560 --> 00:01:38,640 Speaker 4: it seems, heading towards some kind of negotiating negotiating at 29 00:01:38,680 --> 00:01:42,440 Speaker 4: some point early potentially in the next year. The incoming 30 00:01:43,040 --> 00:01:45,520 Speaker 4: US President Donald Trump has made it clear that he 31 00:01:45,640 --> 00:01:47,640 Speaker 4: wants this war to come to an end or he 32 00:01:47,680 --> 00:01:51,360 Speaker 4: wants some kind of ceasefire to be negotiated, and he 33 00:01:51,400 --> 00:01:54,360 Speaker 4: doesn't want to continue to send military and financial aid 34 00:01:54,840 --> 00:01:57,120 Speaker 4: to Ukraine's there's a front running of a lot of 35 00:01:57,200 --> 00:02:00,080 Speaker 4: aid to Ukraine that we're seeing at the moment, and 36 00:02:00,120 --> 00:02:03,040 Speaker 4: again both Ukraine and Russia trying to position themselves the 37 00:02:03,040 --> 00:02:06,000 Speaker 4: best they can for getting to the table. 38 00:02:06,600 --> 00:02:08,880 Speaker 5: Ros We had a guest on earlier this morning who 39 00:02:08,960 --> 00:02:11,560 Speaker 5: characterized the war in Ukraine is one in which Ukraine 40 00:02:11,840 --> 00:02:15,520 Speaker 5: is losing slowly every single day, is that of you 41 00:02:15,639 --> 00:02:19,880 Speaker 5: held by folks, you know, in the business of really 42 00:02:19,919 --> 00:02:20,919 Speaker 5: thinking about these things. 43 00:02:22,160 --> 00:02:24,280 Speaker 4: Well, it's definitely a concern. You can hear it in 44 00:02:24,320 --> 00:02:27,840 Speaker 4: some of Ukraine's strongest allies that what they're were saying 45 00:02:27,880 --> 00:02:31,960 Speaker 4: privately to themselves and each other, they're now saying more publicly, 46 00:02:32,160 --> 00:02:35,120 Speaker 4: which is that, you know, the grinding war that's been 47 00:02:35,160 --> 00:02:38,360 Speaker 4: going on for years now, and it's not just about 48 00:02:38,520 --> 00:02:41,320 Speaker 4: you know, whether they've got access to long range missiles 49 00:02:41,720 --> 00:02:43,760 Speaker 4: and sort of high tech kit, but it's also the 50 00:02:43,800 --> 00:02:47,160 Speaker 4: reality that Ukraine is suffering very badly from a shortage 51 00:02:47,200 --> 00:02:49,600 Speaker 4: of manpower. I mean, Russia has lost a lot of 52 00:02:49,960 --> 00:02:52,639 Speaker 4: soldiers on the battlefield, but so is Ukraine, and with 53 00:02:52,880 --> 00:02:56,800 Speaker 4: fewer met with less manpower to hand, and so a 54 00:02:56,840 --> 00:03:01,079 Speaker 4: real concern is that Ukraine is slowly, slowly losing the 55 00:03:01,080 --> 00:03:05,359 Speaker 4: fight and Russia is slowly, slowly increasing its hold on territory. 56 00:03:05,520 --> 00:03:08,639 Speaker 4: And so, you know, bit by bit is Ukraine weakening 57 00:03:08,680 --> 00:03:11,640 Speaker 4: its position to negotiate again. That's why there seems to 58 00:03:11,639 --> 00:03:14,240 Speaker 4: be this push suddenly to get it into a stronger 59 00:03:14,280 --> 00:03:15,240 Speaker 4: position to do so. 60 00:03:15,840 --> 00:03:18,720 Speaker 3: I was reading a Bloomberg opinion piece by James Ravitas 61 00:03:18,919 --> 00:03:21,480 Speaker 3: earlier today. He's an opinion columnist, but also retired you 62 00:03:21,520 --> 00:03:25,200 Speaker 3: as maybe admiral and former Supreme Allied Commander of NIDO. 63 00:03:25,280 --> 00:03:27,919 Speaker 3: And he's like, look, the solution is you just drop 64 00:03:27,919 --> 00:03:30,840 Speaker 3: where you are right now and create a demilitarized zone 65 00:03:30,880 --> 00:03:33,040 Speaker 3: like North Korea and South Korea have and that you 66 00:03:33,120 --> 00:03:35,200 Speaker 3: just have what you have, and then there's this area 67 00:03:35,520 --> 00:03:38,800 Speaker 3: that's going to be neutral. Is that something that could 68 00:03:38,840 --> 00:03:41,680 Speaker 3: be palatable on negotiating table. 69 00:03:43,040 --> 00:03:44,920 Speaker 4: Well, in a way, it's an extension of what we've 70 00:03:44,960 --> 00:03:48,200 Speaker 4: got already or had already in Ukraine, because of course 71 00:03:48,240 --> 00:03:51,840 Speaker 4: we have this area in Danesque in so the south 72 00:03:51,880 --> 00:03:54,880 Speaker 4: and east of Ukraine. That's been a version of a 73 00:03:54,920 --> 00:03:58,840 Speaker 4: line of control between Russia and Ukraine since twenty fourteen, 74 00:03:58,880 --> 00:04:02,040 Speaker 4: and certainly with the addexation of Crimea as part of that, 75 00:04:02,160 --> 00:04:05,480 Speaker 4: and it's been a low level conflict for years since 76 00:04:05,480 --> 00:04:10,080 Speaker 4: twenty fourteen, and obviously a full blown invasion since twenty 77 00:04:10,120 --> 00:04:12,760 Speaker 4: twenty two. And so do we revert to a version 78 00:04:12,800 --> 00:04:15,760 Speaker 4: of that, but with Russia controlling more territory And it's 79 00:04:15,840 --> 00:04:19,000 Speaker 4: clear that in any settlement Russia would want to control 80 00:04:19,080 --> 00:04:23,520 Speaker 4: a lot more territory than it already did. Essentially inside Ukraine, 81 00:04:23,760 --> 00:04:26,719 Speaker 4: and so really how much of that is palatable for 82 00:04:26,839 --> 00:04:29,320 Speaker 4: Ukraine or how much choice does Ukraine end up having 83 00:04:29,920 --> 00:04:31,920 Speaker 4: in that? And so you freeze the conflict. You don't 84 00:04:32,000 --> 00:04:33,760 Speaker 4: end it, but you freeze it. And so obviously the 85 00:04:33,800 --> 00:04:36,479 Speaker 4: question is just Russia then go back, regroup, re and 86 00:04:36,520 --> 00:04:39,200 Speaker 4: come back again for something more exactly. 87 00:04:39,240 --> 00:04:40,719 Speaker 5: All right, Ros, thank you so much for joining us. 88 00:04:40,760 --> 00:04:43,520 Speaker 5: Russ Mathison news director for you in the Middle East 89 00:04:43,520 --> 00:04:46,200 Speaker 5: and Africa for Bloomberg News. She is based in London, 90 00:04:46,240 --> 00:04:49,360 Speaker 5: joining us vias IM getting the latest on the conflict 91 00:04:49,680 --> 00:04:50,440 Speaker 5: in Ukraine. 92 00:04:51,880 --> 00:04:55,760 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 93 00:04:55,880 --> 00:04:59,360 Speaker 2: weekdays at ten am Eastern on applecar Play and right 94 00:04:59,400 --> 00:05:02,560 Speaker 2: Otto with Bloomberg Business Act. You can also listen live 95 00:05:02,680 --> 00:05:05,839 Speaker 2: on Amazon Alexa from our flagship New York station Just 96 00:05:05,920 --> 00:05:08,560 Speaker 2: Say Alexa playing Bloomberg eleven thirty. 97 00:05:09,400 --> 00:05:11,120 Speaker 3: Well, Alex, you al alongside pause. We need this a 98 00:05:11,160 --> 00:05:14,200 Speaker 3: Boomberg Intelligence Radio. We're broadcasting to live from our Inductor 99 00:05:14,240 --> 00:05:18,000 Speaker 3: Broker studio right here in Midtown Manhattan. Also check us 100 00:05:18,040 --> 00:05:21,599 Speaker 3: out on YouTube. So the big event today obviously is 101 00:05:21,640 --> 00:05:24,320 Speaker 3: going to be in Vidia reporting after the Bell for twenty. 102 00:05:24,440 --> 00:05:25,800 Speaker 3: It's going to be a moment and as that one 103 00:05:25,880 --> 00:05:28,640 Speaker 3: hundred dropping over one percent ahead of that. But what's 104 00:05:28,680 --> 00:05:31,200 Speaker 3: making a lot of headlines is the option implied move, 105 00:05:31,760 --> 00:05:34,040 Speaker 3: particularly if you look at potentially an eight percent move 106 00:05:34,080 --> 00:05:36,480 Speaker 3: to the upper the downside, which we've been reporting can 107 00:05:36,520 --> 00:05:38,960 Speaker 3: translate into three hundred billion dollars worth of market cap 108 00:05:39,000 --> 00:05:41,840 Speaker 3: to the upper downside. That's pretty tremendous. So let's get 109 00:05:41,839 --> 00:05:44,839 Speaker 3: some take here with Shelby McFadden investment analyst and Motley 110 00:05:44,839 --> 00:05:48,039 Speaker 3: Fool asset Management. So, Shelby, how do you play in video, 111 00:05:48,120 --> 00:05:50,280 Speaker 3: whether that's in Vidia specifically or is it going to 112 00:05:50,360 --> 00:05:52,280 Speaker 3: be an offshoot? How do you play the next twenty 113 00:05:52,279 --> 00:05:52,880 Speaker 3: four hours? 114 00:05:54,640 --> 00:05:57,000 Speaker 6: Well, when we think about the long term and active management, 115 00:05:57,000 --> 00:05:59,320 Speaker 6: the way we play it is we kind of sit tight, 116 00:05:59,360 --> 00:06:01,200 Speaker 6: We wait for things to roll out, and then we 117 00:06:01,200 --> 00:06:02,880 Speaker 6: go ahead and adjust based off of what we get 118 00:06:02,880 --> 00:06:05,320 Speaker 6: from there, because really we're not in the business of 119 00:06:05,400 --> 00:06:07,719 Speaker 6: trading per se. We're really in this sort of long 120 00:06:07,800 --> 00:06:09,839 Speaker 6: term investing, So you have to sort of wait and 121 00:06:09,880 --> 00:06:12,080 Speaker 6: see not just how the performance was for the last quarter, 122 00:06:12,320 --> 00:06:14,400 Speaker 6: but get a read on the outlook. I think that's 123 00:06:14,440 --> 00:06:16,320 Speaker 6: going to be what a lot of investors are looking for, 124 00:06:16,520 --> 00:06:18,479 Speaker 6: and then we sort of take that back to the models, 125 00:06:18,480 --> 00:06:20,680 Speaker 6: we take that back to the allocation meetings, and we 126 00:06:20,760 --> 00:06:24,000 Speaker 6: decide what effect, if any, it has on our current 127 00:06:24,000 --> 00:06:26,680 Speaker 6: allocations and how we're thinking about the macro environment. So 128 00:06:26,920 --> 00:06:30,480 Speaker 6: I think it's unfortunately that non answer of there's really 129 00:06:30,520 --> 00:06:33,120 Speaker 6: not a way to play it that's not speculation. 130 00:06:33,920 --> 00:06:37,159 Speaker 5: So where do you have high conviction areas? And or 131 00:06:37,160 --> 00:06:40,880 Speaker 5: what are sectors that where you have high conviction areas today? 132 00:06:42,760 --> 00:06:44,799 Speaker 6: Yeah, you know, we sort of being a bottom up team, 133 00:06:45,040 --> 00:06:49,320 Speaker 6: we don't necessarily pick anyone sector or vertical. But something 134 00:06:49,360 --> 00:06:51,880 Speaker 6: that's surprisingly been more exciting and doing a little bit 135 00:06:51,920 --> 00:06:55,839 Speaker 6: well is advertising and advertising related type of companies, despite 136 00:06:55,920 --> 00:06:59,080 Speaker 6: how related they are to the consumer space. So that's 137 00:06:59,080 --> 00:07:01,840 Speaker 6: something that's been thriving in the portfolio, as well as 138 00:07:01,880 --> 00:07:04,839 Speaker 6: payment networks. And then we're actually sort of reinvigorating some 139 00:07:04,920 --> 00:07:08,760 Speaker 6: interest in medtech and biotech, not just because of the election, 140 00:07:08,960 --> 00:07:12,000 Speaker 6: but because small cap med and biotech has been something 141 00:07:12,000 --> 00:07:14,000 Speaker 6: that's been pretty interesting to a lot of our pms, 142 00:07:14,000 --> 00:07:16,400 Speaker 6: and we've had some decent success across the portfolio there. 143 00:07:16,480 --> 00:07:17,400 Speaker 1: What do you do with retail? 144 00:07:17,480 --> 00:07:17,600 Speaker 7: Right? 145 00:07:17,640 --> 00:07:20,560 Speaker 3: You got Walmart yesterday, Target just getting wiped out today 146 00:07:20,600 --> 00:07:23,080 Speaker 3: and then you have Williams Sonoma up like twenty five percent. 147 00:07:24,800 --> 00:07:26,600 Speaker 6: Yeah, retail is an interesting story, and I think it 148 00:07:26,680 --> 00:07:29,480 Speaker 6: actually makes a pitch for active management because that example 149 00:07:29,520 --> 00:07:31,280 Speaker 6: that you just made is how are all three of 150 00:07:31,320 --> 00:07:34,040 Speaker 6: these so different. You've got three very different stores, but 151 00:07:34,080 --> 00:07:36,120 Speaker 6: at the same time, you've got Target almost sitting in 152 00:07:36,160 --> 00:07:37,960 Speaker 6: the middle of the two of them. So you've got 153 00:07:38,000 --> 00:07:40,320 Speaker 6: Williams Sonoma where it's this place where you get a 154 00:07:40,320 --> 00:07:43,800 Speaker 6: premium customer and they tend to face a lot less 155 00:07:43,800 --> 00:07:47,040 Speaker 6: income elasticity, so they're a little bit sticky. Then you've 156 00:07:47,080 --> 00:07:50,040 Speaker 6: got Walmart that is capturing not only their main customer base, 157 00:07:50,080 --> 00:07:52,280 Speaker 6: but some of those Williams and Nooma customers who might 158 00:07:52,320 --> 00:07:55,000 Speaker 6: be purchasing their actual bake weares from one place and 159 00:07:55,040 --> 00:07:59,560 Speaker 6: getting ingredients other small things from Walmart. And then you've 160 00:07:59,600 --> 00:08:01,240 Speaker 6: got Target kind of sitting in the middle where they're 161 00:08:01,240 --> 00:08:03,720 Speaker 6: trying to figure out their value proposition. And so the 162 00:08:03,800 --> 00:08:07,360 Speaker 6: bottom up process helps us figure out who's going to 163 00:08:07,360 --> 00:08:10,680 Speaker 6: be able to serve whom and over what parts of 164 00:08:10,680 --> 00:08:12,200 Speaker 6: the cycle they're going to be able to do it. 165 00:08:12,480 --> 00:08:15,640 Speaker 6: So you play retail by finding the value proposition that's 166 00:08:15,680 --> 00:08:18,080 Speaker 6: really going to suit not just customers, but the shareholders 167 00:08:18,080 --> 00:08:18,440 Speaker 6: as well. 168 00:08:19,040 --> 00:08:21,520 Speaker 8: United Parcel Service talk to us about that name. 169 00:08:23,160 --> 00:08:23,360 Speaker 9: Yeah. 170 00:08:23,600 --> 00:08:26,000 Speaker 6: Ups has been really interesting. So when they had the 171 00:08:26,200 --> 00:08:29,520 Speaker 6: Team Starves negotiation, the stock got absolutely whacked, but we 172 00:08:29,640 --> 00:08:32,200 Speaker 6: stayed put. We really trusted Carol Tomey and her team, 173 00:08:32,640 --> 00:08:34,640 Speaker 6: and they've shown us the value of going ahead and 174 00:08:34,679 --> 00:08:37,920 Speaker 6: sticking with quality over volume, and they have been able 175 00:08:37,960 --> 00:08:40,760 Speaker 6: to claw back allow of the lost volume from the 176 00:08:40,800 --> 00:08:43,800 Speaker 6: concerns about that contract. They are now lapping their greatest 177 00:08:43,800 --> 00:08:47,400 Speaker 6: costs in those negotiations, and they are still feeling pretty 178 00:08:47,400 --> 00:08:50,120 Speaker 6: good about Peaks. So that's another great story of sort 179 00:08:50,160 --> 00:08:53,319 Speaker 6: of riding through, playing the long game, adding up when 180 00:08:53,360 --> 00:08:56,640 Speaker 6: the market is over punishing something and realizing that the 181 00:08:56,760 --> 00:09:00,560 Speaker 6: greater macro environment does not necessarily determine exactly how well 182 00:09:00,600 --> 00:09:03,719 Speaker 6: someone is going to do, and they can outperform their 183 00:09:03,840 --> 00:09:05,640 Speaker 6: peers if they're better prepared. 184 00:09:05,520 --> 00:09:07,280 Speaker 3: Right, And that's why you're a bottom up investor. Like 185 00:09:07,320 --> 00:09:09,680 Speaker 3: that makes sense. But when we have something that feels 186 00:09:09,679 --> 00:09:14,199 Speaker 3: somewhat binary in terms of taxes and tariffs incoming Trump administration, 187 00:09:14,679 --> 00:09:17,000 Speaker 3: how do you layer that onto your bottom up models? 188 00:09:18,679 --> 00:09:21,080 Speaker 6: I think what we do is we don't change our universe. 189 00:09:21,280 --> 00:09:24,160 Speaker 6: So we continue to search for companies that are going 190 00:09:24,160 --> 00:09:27,679 Speaker 6: to meet our thresholds for quality. Where that sort of 191 00:09:27,760 --> 00:09:30,760 Speaker 6: macro comes in is when we're doing our allocations. So 192 00:09:30,800 --> 00:09:33,280 Speaker 6: we will definitely consider the environment in the same way 193 00:09:33,280 --> 00:09:36,360 Speaker 6: that we've considered this extended high rate environment and say, 194 00:09:36,400 --> 00:09:38,320 Speaker 6: you know what, this is something that we want to 195 00:09:38,600 --> 00:09:41,360 Speaker 6: have at a lower allocation in the portfolio. It's a 196 00:09:41,440 --> 00:09:44,120 Speaker 6: very high quality company, it's likely to beat out its peers, 197 00:09:44,280 --> 00:09:46,240 Speaker 6: but we need to kind of change these allocations because 198 00:09:46,240 --> 00:09:48,640 Speaker 6: of who's going to get affected. So it's the same 199 00:09:48,679 --> 00:09:51,080 Speaker 6: thing where if we were to actually see some tariffs 200 00:09:51,080 --> 00:09:54,439 Speaker 6: come through, especially thinking for example Walmart with a lot 201 00:09:54,480 --> 00:09:57,680 Speaker 6: of Chinese import exposure, that's something that we would consider, 202 00:09:57,760 --> 00:10:00,280 Speaker 6: probably not completely getting rid of it because we also 203 00:10:00,320 --> 00:10:04,000 Speaker 6: have it for the purpose of dividend yielding, but absolutely 204 00:10:04,040 --> 00:10:07,400 Speaker 6: considering those allocations and also looking at our discount rates 205 00:10:07,400 --> 00:10:08,760 Speaker 6: in our models and making those changes. 206 00:10:09,600 --> 00:10:12,800 Speaker 5: How do you typically view dividends? How important are they 207 00:10:12,920 --> 00:10:14,120 Speaker 5: in your stock selection? 208 00:10:16,000 --> 00:10:16,480 Speaker 10: Overall? 209 00:10:16,600 --> 00:10:19,000 Speaker 6: It's not something that we necessarily consider when we're looking 210 00:10:19,000 --> 00:10:22,600 Speaker 6: at our large cap dividend product. It's something that is 211 00:10:22,600 --> 00:10:24,360 Speaker 6: at the top of the list. So when we have 212 00:10:24,440 --> 00:10:28,560 Speaker 6: companies that are three plus percent positions. We're definitely looking 213 00:10:29,080 --> 00:10:31,319 Speaker 6: core over quarter or at least on a half year basis, 214 00:10:32,120 --> 00:10:35,320 Speaker 6: how safe that dividend is. Looking we're looking at the 215 00:10:35,559 --> 00:10:38,200 Speaker 6: yield in and of itself, and not just the dividend yield, 216 00:10:38,200 --> 00:10:40,800 Speaker 6: but the total shareholder return there. So they tend to 217 00:10:40,800 --> 00:10:42,640 Speaker 6: also be the companies that are kicking back a lot 218 00:10:42,679 --> 00:10:46,559 Speaker 6: more capital to cash to shareholders. So it's very important 219 00:10:46,559 --> 00:10:48,480 Speaker 6: in that regard when we start to get into our 220 00:10:48,520 --> 00:10:52,080 Speaker 6: more aggressive growth products, traditional growth, especially when we're looking 221 00:10:52,080 --> 00:10:54,440 Speaker 6: at small that's not really something we consider. If we 222 00:10:54,480 --> 00:10:57,080 Speaker 6: do see a small company that is cash generative, they're 223 00:10:57,679 --> 00:11:00,240 Speaker 6: positive earnings and they're cranking out a dividend, and that's 224 00:11:00,240 --> 00:11:03,240 Speaker 6: definitely going to boost their economics score, But overall, the 225 00:11:03,240 --> 00:11:06,240 Speaker 6: dividend is not something that we consider top of the 226 00:11:06,280 --> 00:11:08,000 Speaker 6: list for our entire universe. 227 00:11:08,960 --> 00:11:09,680 Speaker 1: What else do you like? 228 00:11:09,720 --> 00:11:13,240 Speaker 3: You mentioned like biotech and medical space. What kind of 229 00:11:13,240 --> 00:11:14,240 Speaker 3: stocks you guys like there? 230 00:11:15,679 --> 00:11:18,240 Speaker 6: Well, unfortunately, for compliance reasons, there's a couple of small 231 00:11:18,280 --> 00:11:20,760 Speaker 6: names that are a little bit too low market cap 232 00:11:20,800 --> 00:11:23,960 Speaker 6: to discuss. But we have looked at a couple of 233 00:11:24,040 --> 00:11:28,480 Speaker 6: names that have some specific heart surgical sort of medical 234 00:11:28,840 --> 00:11:31,280 Speaker 6: devices that we've looked at in the past. 235 00:11:31,400 --> 00:11:32,439 Speaker 1: We did own and this. 236 00:11:32,400 --> 00:11:33,760 Speaker 6: Is I think more of a small mid We had 237 00:11:33,760 --> 00:11:36,040 Speaker 6: some shockwave and so that was really exciting to see 238 00:11:36,640 --> 00:11:39,080 Speaker 6: that get acquired. So that's sort of one of the 239 00:11:39,120 --> 00:11:41,480 Speaker 6: success stories. We tend to be in that sort of 240 00:11:41,559 --> 00:11:44,080 Speaker 6: niche space where you do have to sit and wait 241 00:11:44,160 --> 00:11:47,400 Speaker 6: through those Phase one, phase two, phase three, those FDA approvals, 242 00:11:48,200 --> 00:11:50,160 Speaker 6: but we have had some success in that space, and 243 00:11:50,200 --> 00:11:53,840 Speaker 6: it really just tends to be in those products where 244 00:11:53,880 --> 00:11:57,320 Speaker 6: they actually are innovating for professionals, and yes it may 245 00:11:57,360 --> 00:12:00,000 Speaker 6: be expensive, but if it is solving one particular issue 246 00:12:00,040 --> 00:12:01,839 Speaker 6: and they're the first to do it, that's where we've 247 00:12:01,840 --> 00:12:02,960 Speaker 6: found most success. 248 00:12:03,440 --> 00:12:03,800 Speaker 8: Shelby. 249 00:12:03,840 --> 00:12:06,560 Speaker 5: Two weeks ago today, the world woke up to a 250 00:12:06,640 --> 00:12:12,480 Speaker 5: new US president elect and a Republican controlled both houses 251 00:12:12,880 --> 00:12:16,959 Speaker 5: of Congress. That changed the way you guys think about 252 00:12:17,080 --> 00:12:19,440 Speaker 5: asset allocation investing themes. 253 00:12:21,880 --> 00:12:24,000 Speaker 6: Yeah, we actually we call the portfolio meeting right away, 254 00:12:24,520 --> 00:12:26,839 Speaker 6: and it's something that right now we're sort of in 255 00:12:26,920 --> 00:12:30,079 Speaker 6: the waiting period, right it's the lane duck. So it's 256 00:12:30,080 --> 00:12:31,840 Speaker 6: the same for us where we're sitting here and we 257 00:12:31,880 --> 00:12:36,719 Speaker 6: are waiting for the administration to actually come in for 258 00:12:36,760 --> 00:12:39,360 Speaker 6: a lot of these different positions to be filled and 259 00:12:39,480 --> 00:12:42,360 Speaker 6: confirmed and then to start to see the policy rolling out. 260 00:12:42,440 --> 00:12:44,520 Speaker 6: So something that we think about when it comes to, 261 00:12:44,960 --> 00:12:49,800 Speaker 6: for example, the potential extension of the tax plan where 262 00:12:49,800 --> 00:12:53,280 Speaker 6: there's the lower corporate taxes, the immediate expensing of R 263 00:12:53,360 --> 00:12:55,360 Speaker 6: and D. We do know that that's something that can 264 00:12:55,400 --> 00:12:59,040 Speaker 6: benefit the bottom line. However, we also have tried to 265 00:12:59,080 --> 00:13:01,520 Speaker 6: make sure we're not choosing companies that are holding out 266 00:13:01,640 --> 00:13:05,360 Speaker 6: on reinvesting in their business just for you know, how 267 00:13:05,400 --> 00:13:08,320 Speaker 6: the earnings look. We want to find operators that are 268 00:13:08,360 --> 00:13:11,200 Speaker 6: able to do that profitably. So we think that there'll 269 00:13:11,240 --> 00:13:13,560 Speaker 6: be a little bit of a boost in that regard 270 00:13:13,600 --> 00:13:17,640 Speaker 6: from R and D, but not necessarily saying let's absolutely 271 00:13:17,679 --> 00:13:21,200 Speaker 6: pile into smalls or let's absolutely pile into these not 272 00:13:21,320 --> 00:13:25,000 Speaker 6: so profitable businesses because regulation and taxes are going down. 273 00:13:25,200 --> 00:13:27,120 Speaker 6: But it is something that we're aware of in terms 274 00:13:27,120 --> 00:13:29,840 Speaker 6: of how it's going to affect performance, and any businesses 275 00:13:29,880 --> 00:13:32,400 Speaker 6: that are very R and D heavy, we you know, 276 00:13:32,440 --> 00:13:33,439 Speaker 6: we might increase. 277 00:13:33,120 --> 00:13:33,920 Speaker 8: Our allocation a bit. 278 00:13:33,960 --> 00:13:35,560 Speaker 5: All right, Shelby, thank you so much for joining us. 279 00:13:35,559 --> 00:13:38,360 Speaker 5: As always, Shelby McFadden investment analyst A Motley full asset 280 00:13:38,360 --> 00:13:41,080 Speaker 5: management down there in Alexandria, Virginia. 281 00:13:41,400 --> 00:13:45,240 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 282 00:13:45,360 --> 00:13:48,440 Speaker 2: weekdays at ten am Eastern on Apple Cardplay and Android 283 00:13:48,440 --> 00:13:51,560 Speaker 2: Auto with the Bloomberg Business App, Listen on demand wherever 284 00:13:51,600 --> 00:13:54,800 Speaker 2: you get your podcasts, or watch us live on YouTube. 285 00:13:56,800 --> 00:13:59,640 Speaker 3: This is Bloomberg Intelligence Radio. We are broadcasting to live 286 00:13:59,679 --> 00:14:03,319 Speaker 3: from our interactive Brokers studio right here in midtown at Manhattan, 287 00:14:03,600 --> 00:14:06,040 Speaker 3: and we want to know what would you like to 288 00:14:06,080 --> 00:14:08,760 Speaker 3: hear about on Bloomberg Radio. This helps make shows like 289 00:14:08,760 --> 00:14:11,880 Speaker 3: ours even better. 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That' stock now 299 00:14:33,240 --> 00:14:35,560 Speaker 3: are on the highs of the session up almost five percent. 300 00:14:36,040 --> 00:14:38,280 Speaker 3: Joining us how to discuss as Emily Cohne and Bloomberg 301 00:14:38,280 --> 00:14:40,960 Speaker 3: Consumer team leader. I mean she heads all the stuff 302 00:14:41,000 --> 00:14:43,640 Speaker 3: of consumer stocks. She joins us now in studio, Emily, 303 00:14:43,680 --> 00:14:44,600 Speaker 3: wonderful to see. 304 00:14:44,400 --> 00:14:45,400 Speaker 1: You, Thanks AlCH. 305 00:14:46,280 --> 00:14:49,320 Speaker 3: What do we make about the reaction to Walmart stock? 306 00:14:49,320 --> 00:14:52,600 Speaker 3: Because consensus was already high, the stock had already moved 307 00:14:52,640 --> 00:14:54,120 Speaker 3: like we kind of knew it was going to be good. 308 00:14:55,040 --> 00:14:57,920 Speaker 10: So when you think about Walmart, Walmart is a bellweather 309 00:14:57,960 --> 00:15:00,320 Speaker 10: of the American economy, of the American con sumer. 310 00:15:00,440 --> 00:15:02,680 Speaker 1: What does Walmart earnings tell us about that? 311 00:15:03,760 --> 00:15:08,640 Speaker 10: Walmart beat expectations today sent a really strong signal that 312 00:15:08,680 --> 00:15:12,200 Speaker 10: the holiday season is off to a solid start, and 313 00:15:12,240 --> 00:15:13,760 Speaker 10: the market was excited about that. 314 00:15:14,880 --> 00:15:15,720 Speaker 1: The growth in the. 315 00:15:15,760 --> 00:15:20,120 Speaker 10: Number of transactions or checkouts slowed, the growth rate slowed 316 00:15:20,160 --> 00:15:24,320 Speaker 10: a little bit ticket the average ticket, the amount people 317 00:15:24,360 --> 00:15:28,480 Speaker 10: were paying in each checkout, was up, and a lot 318 00:15:28,520 --> 00:15:32,040 Speaker 10: of that growth was coming from higher income shoppers, people 319 00:15:32,040 --> 00:15:34,920 Speaker 10: in households making more than one hundred thousand dollars a year. 320 00:15:35,240 --> 00:15:38,280 Speaker 10: That cohort made up roughly seventy five percent of the 321 00:15:38,400 --> 00:15:39,120 Speaker 10: share gains. 322 00:15:40,440 --> 00:15:41,280 Speaker 3: So this was good. 323 00:15:41,360 --> 00:15:45,800 Speaker 10: It was a solid start to the holiday season, and 324 00:15:46,720 --> 00:15:48,440 Speaker 10: the stock is up a lot. 325 00:15:48,560 --> 00:15:50,080 Speaker 1: Four and a half percent is up a lot for 326 00:15:50,240 --> 00:15:51,000 Speaker 1: a company that. 327 00:15:51,040 --> 00:15:54,680 Speaker 5: Big stopstocks at all time high of sixty seven percent 328 00:15:54,720 --> 00:15:58,400 Speaker 5: year today, which I had no idea their e commerce business. 329 00:15:58,400 --> 00:16:00,400 Speaker 5: Talk to us about their e commerce business. I know 330 00:16:00,440 --> 00:16:03,960 Speaker 5: it's big, but Amazon's pretty big too, So how did 331 00:16:03,960 --> 00:16:05,760 Speaker 5: they talk about their e commerce business? 332 00:16:05,760 --> 00:16:07,640 Speaker 10: When they talk about e commerce, they just talk about 333 00:16:07,640 --> 00:16:11,080 Speaker 10: the potential to grow. It is big, but there is 334 00:16:11,120 --> 00:16:14,840 Speaker 10: still so much room to grow. So just in the 335 00:16:14,880 --> 00:16:17,480 Speaker 10: last couple of months, we saw them branching into categories 336 00:16:17,520 --> 00:16:21,680 Speaker 10: that you wouldn't find in a typical Walmart store. Pre 337 00:16:21,760 --> 00:16:26,360 Speaker 10: owned watches, collectible sneakers, stuff you would typically go to 338 00:16:26,400 --> 00:16:31,440 Speaker 10: another retailer for, but now you can buy at Walmart online. Also, 339 00:16:31,480 --> 00:16:34,160 Speaker 10: they're adding benefits to their services, like Walmart Plus. 340 00:16:34,200 --> 00:16:36,680 Speaker 1: You can now get discounts of Burger King if you're a. 341 00:16:36,600 --> 00:16:40,480 Speaker 10: Walmart Plus member. So they're really expanding their offering there. 342 00:16:41,080 --> 00:16:46,880 Speaker 10: Deliveries can get faster, and they see just endless potential there. 343 00:16:47,120 --> 00:16:48,200 Speaker 1: It's always growing. 344 00:16:48,480 --> 00:16:50,960 Speaker 3: My question I had before the break was those people 345 00:16:50,960 --> 00:16:54,040 Speaker 3: that make over one hundred thousand dollars or more, are 346 00:16:54,040 --> 00:16:57,960 Speaker 3: they sticky as in once the economy save recovers or 347 00:16:58,000 --> 00:17:00,400 Speaker 3: once they feel better about inflation or et cetera. Do 348 00:17:00,440 --> 00:17:02,720 Speaker 3: they flee then to go to Target or somewhere else, 349 00:17:02,840 --> 00:17:04,240 Speaker 3: or go to the fancy drug store, or. 350 00:17:04,280 --> 00:17:05,200 Speaker 1: Do they stay at Walmart. 351 00:17:05,359 --> 00:17:07,280 Speaker 10: I think that's a really good question and something we're 352 00:17:07,320 --> 00:17:11,719 Speaker 10: definitely watching for. You know, spending across the board at 353 00:17:11,760 --> 00:17:15,119 Speaker 10: Walmart was consistent. The growth, as you said, was coming 354 00:17:15,119 --> 00:17:18,159 Speaker 10: from these wealthier households. Maybe it's a shopper who typically 355 00:17:18,200 --> 00:17:21,560 Speaker 10: shops at Whole Foods but is feeling particularly pinched right 356 00:17:21,600 --> 00:17:23,880 Speaker 10: now and is going to Walmart for value. Do those 357 00:17:23,920 --> 00:17:26,160 Speaker 10: people stick around when they get a raise in their 358 00:17:26,200 --> 00:17:28,520 Speaker 10: next paycheck or their paycheck. 359 00:17:28,160 --> 00:17:29,360 Speaker 1: In the next couple of quarters. 360 00:17:29,880 --> 00:17:32,840 Speaker 10: That's something we're definitely watching for. I think it does 361 00:17:32,880 --> 00:17:34,080 Speaker 10: have limits. 362 00:17:34,880 --> 00:17:38,639 Speaker 5: So are they still opening stores? Isn't there a Walmart 363 00:17:38,680 --> 00:17:40,720 Speaker 5: pretty much in every town USA these days? 364 00:17:41,040 --> 00:17:42,560 Speaker 1: It's a good question. I think. 365 00:17:42,640 --> 00:17:44,760 Speaker 10: Like when they talk about growth now, they're talking about 366 00:17:44,760 --> 00:17:47,960 Speaker 10: e commerce growth. I think that's where they see the 367 00:17:48,400 --> 00:17:53,359 Speaker 10: highest potential for growth and they needed to get profitable. 368 00:17:53,560 --> 00:17:56,600 Speaker 10: That's something we heard the CEO talk about today. Not 369 00:17:56,680 --> 00:17:58,480 Speaker 10: that they're racing to it, but it's a long term 370 00:17:58,520 --> 00:18:00,320 Speaker 10: game they want their e commerce division into. 371 00:18:02,119 --> 00:18:05,680 Speaker 5: So they feel pretty okay about a holiday shopping season because. 372 00:18:05,600 --> 00:18:10,080 Speaker 10: Yeah holiday, right, Yeah, holiday shopping is off to a 373 00:18:10,119 --> 00:18:12,639 Speaker 10: strong start. So the interesting thing about the holiday season 374 00:18:12,720 --> 00:18:16,600 Speaker 10: this year is that it's shorter than in most years. 375 00:18:16,640 --> 00:18:21,080 Speaker 10: Thanksgiving is following later in the month of November, So 376 00:18:21,160 --> 00:18:24,600 Speaker 10: the answer to that is that they triggered the deals 377 00:18:24,640 --> 00:18:26,639 Speaker 10: even earlier than than the usual. 378 00:18:27,920 --> 00:18:29,760 Speaker 3: Coming in to Paul knows that I I shop on 379 00:18:29,800 --> 00:18:32,480 Speaker 3: the sales, Let's go to Low's because that is interesting 380 00:18:32,480 --> 00:18:34,600 Speaker 3: as well. That stock is off the loads of the session, 381 00:18:34,600 --> 00:18:37,280 Speaker 3: but still down over three percent. What did low say? 382 00:18:38,119 --> 00:18:38,320 Speaker 7: So? 383 00:18:38,640 --> 00:18:41,840 Speaker 10: Lowe's years fell before the bell and quarterly comps were 384 00:18:41,960 --> 00:18:43,560 Speaker 10: better than expected. 385 00:18:43,560 --> 00:18:46,080 Speaker 1: But still declining. 386 00:18:46,880 --> 00:18:51,160 Speaker 10: So high interest rates and a week housing market means 387 00:18:51,200 --> 00:18:54,120 Speaker 10: people are moving less than they were before. It means 388 00:18:54,119 --> 00:18:59,480 Speaker 10: they're spending less on big ticket home renovations. But despite 389 00:18:59,480 --> 00:19:04,040 Speaker 10: blooming gloomy sales, Lowe's actually raised its forecast for the year, 390 00:19:04,359 --> 00:19:08,440 Speaker 10: seeing positive growth in its professional business so selling goods 391 00:19:08,480 --> 00:19:14,440 Speaker 10: to contractors and builders, also in e commerce, and spending 392 00:19:14,440 --> 00:19:18,359 Speaker 10: on smaller ticket outdoor projects. Last week we saw Home 393 00:19:18,440 --> 00:19:23,480 Speaker 10: Depot similarly say that the weather was actually a bright 394 00:19:23,520 --> 00:19:27,119 Speaker 10: spot for its sales. So hurricane led to higher sales 395 00:19:27,119 --> 00:19:30,879 Speaker 10: for home depot. Warm weather meant that people were spending 396 00:19:31,440 --> 00:19:34,800 Speaker 10: more on grills because the Great Grilling Season was getting longer. 397 00:19:35,800 --> 00:19:39,320 Speaker 1: So in general, for these Los home depot. 398 00:19:40,680 --> 00:19:43,040 Speaker 10: Sales are down, but the outlook got a little bit 399 00:19:43,040 --> 00:19:43,760 Speaker 10: better this quarter. 400 00:19:44,520 --> 00:19:47,920 Speaker 5: Where do we see the weakness in the consumers like 401 00:19:48,000 --> 00:19:50,119 Speaker 5: in the dollar stores? Because I mean I can I 402 00:19:50,119 --> 00:19:54,520 Speaker 5: see a strong number from Walmart. To me, that is America. 403 00:19:54,640 --> 00:19:56,879 Speaker 8: So where is the American consumer hurting? 404 00:19:56,960 --> 00:19:57,119 Speaker 9: Is it? 405 00:19:57,400 --> 00:19:58,840 Speaker 8: I guess it's even at a lower. 406 00:19:58,720 --> 00:20:01,679 Speaker 10: End than wal Yeah, the end is definitely suffering. The 407 00:20:01,720 --> 00:20:06,159 Speaker 10: dollar stores are suffering. They don't offer the variety that 408 00:20:06,200 --> 00:20:10,040 Speaker 10: Walmart offers. Walmart sixty percent of Walmart's business today is 409 00:20:10,080 --> 00:20:14,120 Speaker 10: in groceries and you can go, wow, uh, you know 410 00:20:14,359 --> 00:20:17,720 Speaker 10: some pretty good stuff at Walmart these days, gluten free 411 00:20:17,760 --> 00:20:21,960 Speaker 10: items and organic produce and stuff that like you're not 412 00:20:22,000 --> 00:20:25,560 Speaker 10: going to necessarily find out your dollar store. And that's 413 00:20:25,640 --> 00:20:28,080 Speaker 10: really really helping them, especially when it comes to growing 414 00:20:28,119 --> 00:20:30,600 Speaker 10: an e commerce business where people are looking for a 415 00:20:30,600 --> 00:20:32,080 Speaker 10: one stop shop for everything. 416 00:20:32,280 --> 00:20:34,359 Speaker 8: So before I let you, I have a gluten free friend. 417 00:20:34,840 --> 00:20:35,760 Speaker 8: And it's a good job. 418 00:20:35,880 --> 00:20:36,320 Speaker 10: It's a thing. 419 00:20:36,480 --> 00:20:37,160 Speaker 3: It is a thing. 420 00:20:38,000 --> 00:20:39,879 Speaker 1: I have multiple friends. 421 00:20:40,600 --> 00:20:43,160 Speaker 8: I didn't know it was a thing. Oh, I've been educated. 422 00:20:43,200 --> 00:20:45,359 Speaker 3: You've been educated for that one friend before we let 423 00:20:45,400 --> 00:20:47,080 Speaker 3: you go. We get a lot of retailers out this 424 00:20:47,160 --> 00:20:48,600 Speaker 3: week as well. What are you going to be focusing 425 00:20:48,640 --> 00:20:49,880 Speaker 3: on the consumer trends land? 426 00:20:50,440 --> 00:20:54,639 Speaker 10: Definitely the holiday season? What are people seeing that's the 427 00:20:54,680 --> 00:20:58,439 Speaker 10: big question this year. Are people spending as much as 428 00:20:58,440 --> 00:21:01,040 Speaker 10: they usually spend? Are they buying as many gifts as 429 00:21:01,040 --> 00:21:06,200 Speaker 10: they usually buy? Also Thanksgiving? For the grocers, I think 430 00:21:06,240 --> 00:21:08,440 Speaker 10: a lot of people are just worn out from paying 431 00:21:08,520 --> 00:21:12,800 Speaker 10: really high prices for food. They're also worn out from 432 00:21:13,240 --> 00:21:15,240 Speaker 10: cooking a lot more than they have been since they're 433 00:21:15,240 --> 00:21:18,320 Speaker 10: eating out less. So how is that showing up in 434 00:21:19,400 --> 00:21:23,560 Speaker 10: consumer sales? Definitely trying to get a sense of how 435 00:21:23,560 --> 00:21:26,960 Speaker 10: the consumer is feeling about what is the most significant 436 00:21:27,200 --> 00:21:28,440 Speaker 10: shopping season of the year. 437 00:21:28,640 --> 00:21:30,199 Speaker 3: I know my husband's getting a little burnt by all 438 00:21:30,200 --> 00:21:31,000 Speaker 3: the cooking he's doing. 439 00:21:31,480 --> 00:21:34,600 Speaker 1: I'm really good at ordering takeout. He's the chef in 440 00:21:34,680 --> 00:21:35,199 Speaker 1: the family. 441 00:21:35,359 --> 00:21:37,200 Speaker 3: All right, thanks so much, it's really I really appreciate 442 00:21:37,200 --> 00:21:39,440 Speaker 3: it. It was wonderful to have you at Emily con joining us. 443 00:21:39,440 --> 00:21:43,200 Speaker 3: She heads consumer trends coverage for Bloomberg News. 444 00:21:44,760 --> 00:21:48,640 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 445 00:21:48,720 --> 00:21:51,800 Speaker 2: weekdays at ten am Eastern on Apple car Play and 446 00:21:51,800 --> 00:21:54,720 Speaker 2: Android Auto with a Bloomberg Business app. You can also 447 00:21:54,760 --> 00:21:58,280 Speaker 2: listen live on Amazon Alexa from our flagship New York station. 448 00:21:58,640 --> 00:22:01,000 Speaker 2: Just say Alexa play Bloomberg eleven. 449 00:22:02,440 --> 00:22:05,720 Speaker 3: I'm Alex you alongside Paul Sweeney. This is Bloomberg Intelligence Radio. 450 00:22:05,720 --> 00:22:07,560 Speaker 3: We bring you all the top news and business, economics 451 00:22:07,560 --> 00:22:10,159 Speaker 3: and finance through our lens of our Bloomberg Intelligence folks. Now, 452 00:22:10,240 --> 00:22:13,480 Speaker 3: luckily Paul Sweeney was the guy who started Bloomberg Intelligence. 453 00:22:13,480 --> 00:22:14,959 Speaker 3: But now he says right next to me. So when 454 00:22:15,000 --> 00:22:17,679 Speaker 3: some of my Comcast breaks, I'm like, Paul, what's your 455 00:22:17,720 --> 00:22:19,000 Speaker 3: take what's your question? 456 00:22:19,080 --> 00:22:19,919 Speaker 1: Paul, what's your takeaway? 457 00:22:19,920 --> 00:22:21,159 Speaker 8: What's your bust? It's interesting. 458 00:22:21,160 --> 00:22:24,240 Speaker 5: I think Comcast is just acknowledging that the cable network 459 00:22:24,280 --> 00:22:26,439 Speaker 5: business is a tough business out there. Maybe it's a 460 00:22:26,800 --> 00:22:29,400 Speaker 5: better to be standalone and not part of the bigger Comcast. 461 00:22:29,520 --> 00:22:32,280 Speaker 5: But this is a pretty big move for the company. 462 00:22:32,400 --> 00:22:35,119 Speaker 5: Let's break it down. Let's go to an expert. I 463 00:22:35,160 --> 00:22:36,439 Speaker 5: know an expert on all this stuff. 464 00:22:36,560 --> 00:22:37,280 Speaker 8: Terry Kawajing. 465 00:22:37,400 --> 00:22:40,720 Speaker 5: He's a founder, he's the CEO of Luma Partners, Luma 466 00:22:40,760 --> 00:22:42,679 Speaker 5: Partners is an investment bank in New York City that 467 00:22:42,800 --> 00:22:46,199 Speaker 5: really works with digital advertising companies. Think about the companies 468 00:22:46,200 --> 00:22:50,200 Speaker 5: that kind of make all the plumbing for Facebook, Google, Amazon, 469 00:22:50,280 --> 00:22:52,439 Speaker 5: all that kind of stuff. Before that, Terry was an 470 00:22:52,560 --> 00:22:55,120 Speaker 5: m and a banker on Wall Street for many decades, 471 00:22:55,119 --> 00:22:58,560 Speaker 5: covering these big media companies, including a Comcast. 472 00:22:58,880 --> 00:23:00,280 Speaker 8: He's the author of a lot of. 473 00:23:00,280 --> 00:23:03,159 Speaker 5: The big media deals over the last twenty five thirty years. 474 00:23:03,400 --> 00:23:05,440 Speaker 8: Terry, what do you make a Comcast here? 475 00:23:05,440 --> 00:23:09,159 Speaker 5: What's kind of the strategy behind spinning out their cable networks? 476 00:23:10,480 --> 00:23:13,360 Speaker 11: So, yeah, you're right, I mean it feels like there's 477 00:23:13,359 --> 00:23:15,919 Speaker 11: a bit of a round trip. Having advised Comcast in 478 00:23:15,920 --> 00:23:18,480 Speaker 11: the build up of their cable systems and their cable 479 00:23:18,520 --> 00:23:21,199 Speaker 11: networks in the early nineties, so that was like a 480 00:23:21,200 --> 00:23:23,040 Speaker 11: long time ago last I checked. 481 00:23:24,040 --> 00:23:24,200 Speaker 7: This. 482 00:23:24,359 --> 00:23:28,719 Speaker 11: I think is a natural evolution of acknowledgment of a 483 00:23:28,760 --> 00:23:31,439 Speaker 11: sector in structural change. 484 00:23:31,480 --> 00:23:33,400 Speaker 7: It's the linear TV. 485 00:23:33,320 --> 00:23:36,960 Speaker 11: Business doesn't come as a surprise to anyone who's in 486 00:23:36,960 --> 00:23:42,080 Speaker 11: structural decline, and essentially you know, we've got Comcasts here. 487 00:23:42,119 --> 00:23:45,840 Speaker 11: In fact, the whole media industry tends to be fairly 488 00:23:46,359 --> 00:23:51,000 Speaker 11: strategically savvy and financially savvy. So we have seen other 489 00:23:51,240 --> 00:23:58,359 Speaker 11: media companies like Liberty, like IAC do spin offs when 490 00:23:59,560 --> 00:24:03,160 Speaker 11: a business will have a different growth trajectory or perhaps 491 00:24:03,359 --> 00:24:07,960 Speaker 11: have a different financial viability than the core. So we've 492 00:24:07,960 --> 00:24:11,119 Speaker 11: seen it written large across the media industry, and Comcast 493 00:24:11,200 --> 00:24:15,080 Speaker 11: is particularly strategically savvy and financially savvy. Here, this is 494 00:24:15,119 --> 00:24:19,720 Speaker 11: an acknowledgment that probably these are assets that are not 495 00:24:20,000 --> 00:24:24,760 Speaker 11: as necessary to the future of the digitally delivered peacock, 496 00:24:25,400 --> 00:24:29,600 Speaker 11: and yet they probably would do best on their own 497 00:24:30,560 --> 00:24:33,640 Speaker 11: to sort of viy for their future as a content 498 00:24:33,760 --> 00:24:36,720 Speaker 11: company purely content without the distribution. 499 00:24:37,080 --> 00:24:40,960 Speaker 3: How do they buy as a content company without that distribution? Like, 500 00:24:41,119 --> 00:24:43,080 Speaker 3: what does it need to do? And if I'm an investor, 501 00:24:43,640 --> 00:24:44,840 Speaker 3: why would I buy that stock? 502 00:24:46,359 --> 00:24:51,080 Speaker 11: So, I mean, look, historically, right media has has gone 503 00:24:51,119 --> 00:24:55,520 Speaker 11: back and forth from vertical integration of pure content versus distribution, 504 00:24:55,840 --> 00:24:59,639 Speaker 11: and then sometimes they get together and combine content and distribution. 505 00:25:00,040 --> 00:25:04,080 Speaker 11: This is simply an acknowledgment that these assets may best 506 00:25:04,119 --> 00:25:07,480 Speaker 11: live on their own. Now, some I have noticed have 507 00:25:07,560 --> 00:25:11,560 Speaker 11: described this transaction as a good bank bad bank type 508 00:25:11,640 --> 00:25:14,160 Speaker 11: of scenario, or you hive off the assets. 509 00:25:14,320 --> 00:25:15,200 Speaker 7: I don't believe that. 510 00:25:15,119 --> 00:25:18,720 Speaker 11: To be necessarily true here because it is a little 511 00:25:18,760 --> 00:25:21,760 Speaker 11: bit different. This isn't pure member. They did not put 512 00:25:21,760 --> 00:25:27,400 Speaker 11: Bravo into this asset group. They kept that with NBCU 513 00:25:27,720 --> 00:25:29,000 Speaker 11: to support Peacock. 514 00:25:29,359 --> 00:25:31,240 Speaker 7: What they did was they've set this on their own. 515 00:25:31,280 --> 00:25:34,119 Speaker 11: They didn't over or at least they're announcing they're not 516 00:25:34,119 --> 00:25:37,280 Speaker 11: going to overleverage it. They're putting the same leverage ratio 517 00:25:37,480 --> 00:25:41,000 Speaker 11: that exists with comcasts, and that means that this is 518 00:25:41,040 --> 00:25:44,440 Speaker 11: going to be a viable business and in other words, 519 00:25:44,480 --> 00:25:47,240 Speaker 11: is not going to be overburdened by debt and just 520 00:25:47,600 --> 00:25:52,159 Speaker 11: operated purely for its cash flows. In fact, I would 521 00:25:52,200 --> 00:25:55,040 Speaker 11: suggest that it would be a mistake to think that 522 00:25:55,160 --> 00:25:57,200 Speaker 11: this is going to be an entity the spin co 523 00:25:57,760 --> 00:25:59,520 Speaker 11: that's going to go quietly into the night. 524 00:26:00,080 --> 00:26:02,520 Speaker 7: Would fully expect that they will make their. 525 00:26:02,359 --> 00:26:07,320 Speaker 11: Own strategic and capital allocation decisions, and invariably they will 526 00:26:07,359 --> 00:26:11,000 Speaker 11: be making investments in digital to help, you know, grow 527 00:26:11,040 --> 00:26:13,720 Speaker 11: the business, because once it's independent, it's going to make 528 00:26:13,800 --> 00:26:17,800 Speaker 11: banking its own decisions. And I would fully expect, for example, 529 00:26:18,160 --> 00:26:21,359 Speaker 11: this spin co to launch fast channels right to take 530 00:26:21,480 --> 00:26:28,440 Speaker 11: advantage in a digital distribution delivery of the IP that 531 00:26:28,480 --> 00:26:30,240 Speaker 11: they now have wholly owned. 532 00:26:30,800 --> 00:26:32,159 Speaker 8: Well Alex. 533 00:26:32,200 --> 00:26:33,880 Speaker 5: This morning at seven am, I came on the air 534 00:26:33,880 --> 00:26:35,960 Speaker 5: and an answer to a question from Tom Keene, I 535 00:26:36,119 --> 00:26:38,240 Speaker 5: in fact said, this looks like a good bank bad 536 00:26:38,240 --> 00:26:40,400 Speaker 5: bank scenario to me. So, but I've learned it long 537 00:26:40,440 --> 00:26:43,639 Speaker 5: ago not to argue with Terry Kawaja because you'd rarely 538 00:26:43,680 --> 00:26:46,399 Speaker 5: come out on the on the good side of those arguments. Terry, 539 00:26:46,800 --> 00:26:49,480 Speaker 5: how are you guys thinking about just bigger picture for 540 00:26:49,560 --> 00:26:52,520 Speaker 5: these media companies. They've got these cable networks where you know, 541 00:26:52,560 --> 00:26:57,040 Speaker 5: the subscribers are declining, advertisings deepdeclining. It's a declining business, 542 00:26:57,560 --> 00:26:59,800 Speaker 5: but the streaming businesses are showing growth. How do you 543 00:26:59,840 --> 00:27:02,640 Speaker 5: think think about how these companies are managing that transition. 544 00:27:04,160 --> 00:27:06,760 Speaker 7: I think they're actually managing it quite well. 545 00:27:07,600 --> 00:27:12,639 Speaker 11: If you look at Comcast's third quarter narrative, Mike Cavanaugh 546 00:27:13,040 --> 00:27:15,800 Speaker 11: talks all about I mean you would you would, you 547 00:27:15,800 --> 00:27:18,360 Speaker 11: would swear if you didn't know the name of his company, 548 00:27:18,480 --> 00:27:21,160 Speaker 11: that he was at Telco, because he's talking about delivery, 549 00:27:21,200 --> 00:27:24,520 Speaker 11: he's talking about speeds, he's talking about products that enhance 550 00:27:25,240 --> 00:27:28,240 Speaker 11: a broadband. So all related to that as opposed to 551 00:27:28,320 --> 00:27:32,000 Speaker 11: the video business, the video business, the media business, whether 552 00:27:32,080 --> 00:27:37,400 Speaker 11: that be the broadcast or the streaming or the cable networks, 553 00:27:37,720 --> 00:27:41,720 Speaker 11: you know, is now a secondary business for those companies, 554 00:27:41,720 --> 00:27:43,919 Speaker 11: and I think you're going to see them do just 555 00:27:44,040 --> 00:27:47,160 Speaker 11: fine as a broadband delivery business. And I think there's 556 00:27:47,200 --> 00:27:51,600 Speaker 11: ample growth opportunities for them in that realm, which you know, 557 00:27:51,960 --> 00:27:55,760 Speaker 11: arguably is a bit of a reversal of that you know, 558 00:27:56,040 --> 00:28:01,119 Speaker 11: vertical integration strategy they essentially pursued in nineties with cable 559 00:28:01,160 --> 00:28:04,760 Speaker 11: networks and in twenty twelve with their NBCU acquisition. 560 00:28:05,160 --> 00:28:08,879 Speaker 3: So based on that, how long do you think it 561 00:28:08,920 --> 00:28:11,680 Speaker 3: has before we start talking about private equity getting in etc. 562 00:28:12,040 --> 00:28:13,879 Speaker 3: Or do you think that their runway to prove itself 563 00:28:13,920 --> 00:28:14,679 Speaker 3: is a bit longer? 564 00:28:16,119 --> 00:28:16,879 Speaker 7: Yeah, we'll see. 565 00:28:16,920 --> 00:28:21,080 Speaker 11: I mean, every private equity firm has looked at all 566 00:28:21,119 --> 00:28:24,200 Speaker 11: the major media companies from a variety of angles. Right 567 00:28:24,359 --> 00:28:28,720 Speaker 11: Recall twenty to twenty five years ago, all the big 568 00:28:28,760 --> 00:28:32,639 Speaker 11: telcos and some media companies hived off their Yellow Pages 569 00:28:32,680 --> 00:28:37,080 Speaker 11: business Why because and most of them one was to 570 00:28:37,080 --> 00:28:39,960 Speaker 11: spin off. Most of them were private sales to private 571 00:28:40,000 --> 00:28:44,640 Speaker 11: equity firms. Why is because those were businesses in structural decline. 572 00:28:44,880 --> 00:28:48,280 Speaker 11: Let me know when it starts sounding familiar, and essentially 573 00:28:48,320 --> 00:28:51,320 Speaker 11: the private equity firms made the bet that that decline 574 00:28:51,360 --> 00:28:54,280 Speaker 11: curve would not be as severe as what the market 575 00:28:54,360 --> 00:28:56,600 Speaker 11: was pegging, and sure enough, that in fact was the 576 00:28:56,640 --> 00:28:59,240 Speaker 11: case all the private equity firms that paid billions of 577 00:28:59,280 --> 00:29:02,240 Speaker 11: dollars for those that's yes, those assets did decline. You know, 578 00:29:02,280 --> 00:29:04,760 Speaker 11: we don't use yellow pages because we have the Internet now, 579 00:29:05,000 --> 00:29:08,680 Speaker 11: but that declined curve made for a positive equity investment 580 00:29:08,760 --> 00:29:09,080 Speaker 11: for them. 581 00:29:09,280 --> 00:29:11,880 Speaker 7: Here, I think there's a few more degrees of freedom. 582 00:29:11,920 --> 00:29:15,719 Speaker 11: Remember, they've announced the intention to spin this under the 583 00:29:15,760 --> 00:29:19,520 Speaker 11: same super voting structure that Comcast has. 584 00:29:19,720 --> 00:29:21,920 Speaker 7: So Brian Roberts Mike Cavana. 585 00:29:21,600 --> 00:29:24,720 Speaker 11: Will be in control of this entity and we'll see 586 00:29:24,760 --> 00:29:27,120 Speaker 11: whether it logically makes sense for it to become a 587 00:29:27,160 --> 00:29:32,160 Speaker 11: consolidation vehicle for maybe other like assets owned by Paramount 588 00:29:32,280 --> 00:29:33,000 Speaker 11: or water Rock. 589 00:29:33,200 --> 00:29:35,560 Speaker 5: All Right, Terry has always great stuff. Terry Quajer Folks, 590 00:29:35,600 --> 00:29:38,120 Speaker 5: founder and CEO of Luma Partners. He as the investment 591 00:29:38,160 --> 00:29:40,960 Speaker 5: banker to the media business, and we want to get 592 00:29:40,960 --> 00:29:43,880 Speaker 5: his thoughts there on Comcast spinning off their cable networks 593 00:29:43,920 --> 00:29:47,000 Speaker 5: here and so we'll see how that plays out here. 594 00:29:47,040 --> 00:29:48,600 Speaker 5: But there's a lot of movement in the media space 595 00:29:48,600 --> 00:29:50,640 Speaker 5: as we talk about all the time, Alex. People trying 596 00:29:50,680 --> 00:29:52,720 Speaker 5: to figure out how to manage that transition from you know, 597 00:29:52,760 --> 00:29:55,120 Speaker 5: the cable TV bundles that we always. 598 00:29:54,800 --> 00:29:57,960 Speaker 8: Paid for now to streamers. We're all streaming. We don't 599 00:29:58,000 --> 00:29:59,600 Speaker 8: know what we're streaming and what we're paying for, but 600 00:30:00,040 --> 00:30:01,040 Speaker 8: to look at our credit card. 601 00:30:00,840 --> 00:30:02,760 Speaker 3: Statements, Oh yeah, we have to go through that and 602 00:30:02,800 --> 00:30:04,440 Speaker 3: be like, okay, what what And now you can bundle 603 00:30:04,480 --> 00:30:06,720 Speaker 3: some of those together or they offer some bundles together. 604 00:30:06,760 --> 00:30:09,160 Speaker 3: So I guarantee you I'm probably paying three times and 605 00:30:09,360 --> 00:30:12,240 Speaker 3: YouTube for like Hulu, But nonetheless. 606 00:30:13,160 --> 00:30:17,040 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 607 00:30:17,120 --> 00:30:20,160 Speaker 2: weekdays at ten am Eastern on Apple card Play and 608 00:30:20,160 --> 00:30:23,480 Speaker 2: Android Auto with the Bloomberg Business. You can also listen 609 00:30:23,560 --> 00:30:26,680 Speaker 2: live on Amazon Alexa from our flagship New York station, 610 00:30:27,040 --> 00:30:30,760 Speaker 2: Just say Alexa playing Bloomberg eleven thirty. 611 00:30:31,720 --> 00:30:33,520 Speaker 5: Alex Steele, I'm Paul Sweeney. We're live here in our 612 00:30:33,520 --> 00:30:36,400 Speaker 5: Bloomberg Interactive Brokers studio. We're streaming live on that YouTube 613 00:30:36,440 --> 00:30:40,600 Speaker 5: things at overd YouTube dot com search Bloomberg Podcast. All right, 614 00:30:40,800 --> 00:30:42,640 Speaker 5: Nvidia after the close, it's AI. 615 00:30:43,040 --> 00:30:46,160 Speaker 8: I'm actually hosting a couple of panels on AI conference. Today, 616 00:30:46,720 --> 00:30:47,080 Speaker 8: I don't know. 617 00:30:47,240 --> 00:30:49,120 Speaker 3: And this is after or before the numbers come out, 618 00:30:49,200 --> 00:30:52,200 Speaker 3: And I was at four right at Oh, that's not stressful. 619 00:30:52,320 --> 00:30:53,240 Speaker 8: People going to be coming out. 620 00:30:53,320 --> 00:30:55,120 Speaker 5: So you know, I'm not even sure what my how 621 00:30:55,120 --> 00:30:57,280 Speaker 5: I feel about this whole thing. Anyway, Our next guest 622 00:30:57,320 --> 00:30:59,360 Speaker 5: has some thoughts there. Philipenera joints us. He's the founder, 623 00:30:59,400 --> 00:31:02,160 Speaker 5: former CEO the Boston Consulting Group. You're just up there 624 00:31:02,160 --> 00:31:04,320 Speaker 5: at a BCG event last year. 625 00:31:05,080 --> 00:31:09,560 Speaker 3: Last year you're giving me last year. I don't remember yesterday. 626 00:31:08,840 --> 00:31:09,240 Speaker 1: We were up there. 627 00:31:09,280 --> 00:31:11,200 Speaker 5: It was fun af there will we I can't remember, 628 00:31:11,360 --> 00:31:13,120 Speaker 5: all right, Philip, thanks so much for joining us here 629 00:31:13,160 --> 00:31:16,800 Speaker 5: in our studio. When you talk to your C suite clients, 630 00:31:17,240 --> 00:31:18,560 Speaker 5: how do you talk to them about AI? 631 00:31:18,640 --> 00:31:20,280 Speaker 8: How does a conversation typically go? 632 00:31:21,200 --> 00:31:24,560 Speaker 9: So from an AI perspective, it seems as though, you know, 633 00:31:24,680 --> 00:31:27,800 Speaker 9: only the hyper scale is truly understanding, which is why 634 00:31:28,040 --> 00:31:32,200 Speaker 9: Navidia has forty percent in a revenue. You know, with Mata, Microsoft, 635 00:31:32,360 --> 00:31:35,440 Speaker 9: Amazon and so on. It doesn't seem like it's fully 636 00:31:35,520 --> 00:31:39,440 Speaker 9: penetrated the four hundred and ninety five other corporate Fortune 637 00:31:39,480 --> 00:31:42,120 Speaker 9: five hundreds. And I always say this saying, you know, 638 00:31:42,200 --> 00:31:44,959 Speaker 9: it's like a beautiful Chinese poem. If you don't understand Chinese, 639 00:31:45,200 --> 00:31:47,400 Speaker 9: you don't know how beautiful the poem is, which means 640 00:31:47,440 --> 00:31:50,360 Speaker 9: they don't really understand the value of AI and the 641 00:31:50,400 --> 00:31:53,000 Speaker 9: type of productivity it actually can provide you. 642 00:31:53,760 --> 00:31:56,800 Speaker 3: So based on that, when we take a look at 643 00:31:56,920 --> 00:32:00,280 Speaker 3: whatever cycle AI chips may live in, how do we 644 00:32:00,400 --> 00:32:02,280 Speaker 3: know what that cycle looks like? Is it going to 645 00:32:02,280 --> 00:32:05,280 Speaker 3: be super fast? Is it super long? How do you 646 00:32:05,480 --> 00:32:06,120 Speaker 3: think about that? 647 00:32:06,520 --> 00:32:09,520 Speaker 9: Yeah, so I think we're barely in the first inning. Okay, 648 00:32:09,760 --> 00:32:11,760 Speaker 9: as you can see, if forty percent of the earnings 649 00:32:11,760 --> 00:32:14,160 Speaker 9: are with four or five companies, that leaves a lot 650 00:32:14,160 --> 00:32:17,240 Speaker 9: of room for growth. The problem is people don't understand 651 00:32:17,280 --> 00:32:20,880 Speaker 9: the use cases for AI and how that would actually 652 00:32:20,960 --> 00:32:23,920 Speaker 9: make things better. So I think a good benefit for 653 00:32:24,000 --> 00:32:27,120 Speaker 9: today is to actually talk about how you really could 654 00:32:27,120 --> 00:32:30,640 Speaker 9: apply AI. So when you talk about Nvidia, there's like 655 00:32:30,720 --> 00:32:34,520 Speaker 9: three drivers. There's the AI. There's also what people don't 656 00:32:34,560 --> 00:32:36,920 Speaker 9: talk about is the transition from Web two to Web 657 00:32:36,960 --> 00:32:39,880 Speaker 9: three and what that means in English is right now, 658 00:32:39,960 --> 00:32:43,640 Speaker 9: Web two is CPU driven. Web three is GPU driven, 659 00:32:43,760 --> 00:32:47,280 Speaker 9: which is three D. It's a more immersive technology. The 660 00:32:47,320 --> 00:32:50,040 Speaker 9: only way you drive that is through GPU chips, which 661 00:32:50,080 --> 00:32:52,960 Speaker 9: is what Nvidia has. And I'm not sure if you're aware, 662 00:32:53,000 --> 00:32:56,480 Speaker 9: but Morgan Stanley's, City Bank, Goldman Sachs have all given 663 00:32:56,520 --> 00:33:00,000 Speaker 9: an estimate of Web three being worth eight to twelve 664 00:33:00,320 --> 00:33:04,000 Speaker 9: trillion dollars and right now we're spending less than a trillion. 665 00:33:04,640 --> 00:33:07,760 Speaker 9: So my point is there's a massive growth, but there's 666 00:33:07,800 --> 00:33:09,600 Speaker 9: something also new that's come up, and I'm going to 667 00:33:09,640 --> 00:33:12,680 Speaker 9: talk about specific use cases for this. The Department of 668 00:33:12,680 --> 00:33:16,320 Speaker 9: Government Efficiency has just been put together by Musk and Vivek, 669 00:33:16,840 --> 00:33:19,320 Speaker 9: and what that will be is looking at how you 670 00:33:19,440 --> 00:33:22,240 Speaker 9: cut costs in the government. So if you want the 671 00:33:22,320 --> 00:33:26,480 Speaker 9: simplest way to cut costs, you actually digitize assets. What 672 00:33:26,520 --> 00:33:29,320 Speaker 9: does that mean in English? You basically create digital twins 673 00:33:29,360 --> 00:33:31,680 Speaker 9: of the buildings. The federal government has over three hundred 674 00:33:31,680 --> 00:33:36,320 Speaker 9: thousand buildings. You can digitize the building and by digitizing it, 675 00:33:36,400 --> 00:33:39,320 Speaker 9: you can actually run the building from your phone, and 676 00:33:39,320 --> 00:33:41,840 Speaker 9: that's how you drive AI. And once you create that 677 00:33:41,960 --> 00:33:45,480 Speaker 9: AI shell, you actually can start to drive the workflows 678 00:33:45,520 --> 00:33:50,880 Speaker 9: in it. So you can reinvent how the government manages buildings, infrastructure, 679 00:33:51,360 --> 00:33:53,840 Speaker 9: and also corporations. 680 00:33:54,160 --> 00:33:57,520 Speaker 5: I can't I can't depend upon my government to do 681 00:33:57,560 --> 00:33:59,720 Speaker 5: something like that, I mean, can they deliver the mail 682 00:33:59,720 --> 00:33:59,880 Speaker 5: on that? 683 00:34:00,240 --> 00:34:02,400 Speaker 9: Yeah, so with AI? 684 00:34:02,560 --> 00:34:02,920 Speaker 7: Maybe? 685 00:34:03,000 --> 00:34:03,959 Speaker 8: With AI maybe. 686 00:34:04,120 --> 00:34:06,160 Speaker 9: So if you think about in World War two they 687 00:34:06,160 --> 00:34:10,160 Speaker 9: had the Manhattan Project where Einstein pend message to Roosevelt 688 00:34:10,239 --> 00:34:13,120 Speaker 9: saying that the ways wars will be fought will be 689 00:34:13,160 --> 00:34:17,040 Speaker 9: different with atomic energy. Well, the way government will be 690 00:34:17,239 --> 00:34:21,919 Speaker 9: managed and the services provided will be with AI. And 691 00:34:22,000 --> 00:34:23,640 Speaker 9: so if they really want to say that's why the 692 00:34:23,800 --> 00:34:26,120 Speaker 9: Trump said that this is going to be Manhattan Project too. 693 00:34:26,719 --> 00:34:29,759 Speaker 9: If you really want to see how AI impacts the 694 00:34:29,760 --> 00:34:33,080 Speaker 9: government cut services as opposed to all the stupid redundant programs, 695 00:34:33,360 --> 00:34:35,920 Speaker 9: you can drive it through AI and Musk. You know, 696 00:34:36,000 --> 00:34:39,759 Speaker 9: he's the author of autonomous cars. So essentially, what does 697 00:34:39,800 --> 00:34:43,799 Speaker 9: that mean from a government perspective? You can have autonomous buildings, 698 00:34:44,200 --> 00:34:48,239 Speaker 9: you can have autonomous infrastructure, and eventually, as you already know, 699 00:34:48,280 --> 00:34:50,080 Speaker 9: the AI is already spreading to the military. 700 00:34:50,200 --> 00:34:52,600 Speaker 3: So what's autonomous building and infrastructure? What does that mean? 701 00:34:52,719 --> 00:34:52,799 Speaker 10: So? 702 00:34:52,920 --> 00:34:56,280 Speaker 9: Autonomous building is a cognitive building, which is a learning building, 703 00:34:56,360 --> 00:34:58,959 Speaker 9: which is basically it sees the patterns of what goes 704 00:34:59,000 --> 00:35:02,280 Speaker 9: on and as the resulted at it cuts the energy, 705 00:35:02,360 --> 00:35:05,440 Speaker 9: the waste, the air. In other words, it learns it 706 00:35:05,520 --> 00:35:08,120 Speaker 9: learns patterns. But in order to do that, you have 707 00:35:08,160 --> 00:35:11,439 Speaker 9: to create it from a digital perspective first, a digital twin. 708 00:35:11,560 --> 00:35:14,160 Speaker 9: So for your audience, a digital twin is nothing more 709 00:35:14,200 --> 00:35:18,120 Speaker 9: than a digital representation of the physical building. But what 710 00:35:18,160 --> 00:35:21,280 Speaker 9: you do is you put scanners on all the h facts, 711 00:35:21,440 --> 00:35:25,160 Speaker 9: the air, the waste, and you actually run the building 712 00:35:25,640 --> 00:35:29,600 Speaker 9: from the digital twin. And that's how all infrastructure should 713 00:35:29,640 --> 00:35:32,759 Speaker 9: be managed going forward. I've already had discussions. I don't 714 00:35:32,760 --> 00:35:35,560 Speaker 9: know if you're aware of this. The Biden administration appointed 715 00:35:35,640 --> 00:35:39,840 Speaker 9: AI heads for each of the major agencies and HUD 716 00:35:39,880 --> 00:35:42,719 Speaker 9: has you know whatever, three hundred thousand buildings, and I 717 00:35:42,760 --> 00:35:46,239 Speaker 9: had a discussion with the head of AI and the 718 00:35:46,239 --> 00:35:49,800 Speaker 9: CFO for that, and we discussed how we'd actually digitize 719 00:35:49,800 --> 00:35:51,919 Speaker 9: the assets and that if you want to talk about 720 00:35:52,000 --> 00:35:55,279 Speaker 9: how you actually drive costs down and run things more efficiently, 721 00:35:55,640 --> 00:35:57,640 Speaker 9: that's the way you do it. And guess who powers 722 00:35:57,719 --> 00:35:58,120 Speaker 9: all of that? 723 00:35:58,480 --> 00:35:59,800 Speaker 8: Who in video and video? 724 00:36:00,160 --> 00:36:02,120 Speaker 9: So my point is people keep on looking at like 725 00:36:02,160 --> 00:36:05,640 Speaker 9: the numbers and wondering these too expensive. What they don't 726 00:36:05,680 --> 00:36:09,160 Speaker 9: realize is right now the spending on Web three and 727 00:36:09,360 --> 00:36:11,920 Speaker 9: AI is less than a trillion, and it's scheduled to 728 00:36:11,960 --> 00:36:14,920 Speaker 9: go to ten ten trillion. So all the infrastructure in 729 00:36:14,920 --> 00:36:17,160 Speaker 9: the economy is going to move from Web two to 730 00:36:17,280 --> 00:36:20,280 Speaker 9: Web three. So what does that mean? There's nine trillion 731 00:36:20,320 --> 00:36:22,680 Speaker 9: dollars the left to spend and how do you power 732 00:36:22,719 --> 00:36:24,200 Speaker 9: it through? Nvidia? 733 00:36:24,360 --> 00:36:27,040 Speaker 5: Some investors really over the last several quarters or maybe 734 00:36:27,040 --> 00:36:29,200 Speaker 5: the last year, saying okay, I kind of have an 735 00:36:29,760 --> 00:36:32,520 Speaker 5: idea about the dollars that are being spent a billion, 736 00:36:32,560 --> 00:36:35,120 Speaker 5: maybe going to a trillion, maybe going to ten trillion. 737 00:36:36,400 --> 00:36:38,320 Speaker 5: I need to hear more about the return on investment, 738 00:36:38,480 --> 00:36:39,759 Speaker 5: and I think that's what some of the companies are 739 00:36:39,760 --> 00:36:40,400 Speaker 5: starting to get. 740 00:36:40,320 --> 00:36:42,759 Speaker 8: Questions a little bit more these days. How do you 741 00:36:42,760 --> 00:36:43,680 Speaker 8: answer that question. 742 00:36:43,520 --> 00:36:46,719 Speaker 9: Or how do you so I'm actually a practitioner. I 743 00:36:46,760 --> 00:36:48,440 Speaker 9: know most of the people come in here, they make 744 00:36:48,480 --> 00:36:51,759 Speaker 9: speeches and they write papers. I actually do the technology. 745 00:36:52,280 --> 00:36:54,160 Speaker 9: One thing that I actually did was actually built the 746 00:36:54,160 --> 00:36:58,439 Speaker 9: market surveillance system for the NASDAK. It reduced investigations from 747 00:36:58,480 --> 00:37:00,200 Speaker 9: four months to a minute. So if you want to 748 00:37:00,200 --> 00:37:04,359 Speaker 9: talk about how technology impacts productivity, there's your example. They 749 00:37:04,440 --> 00:37:07,359 Speaker 9: used to have around one thousand people in regulation when 750 00:37:07,400 --> 00:37:08,960 Speaker 9: they had less than they did only a couple of 751 00:37:09,040 --> 00:37:11,600 Speaker 9: hundred million in the mass there now they're doing billions. They 752 00:37:11,640 --> 00:37:14,359 Speaker 9: actually have less people now. So when you're talking about 753 00:37:14,400 --> 00:37:16,880 Speaker 9: an improvement from four months to a minute, that's the 754 00:37:16,920 --> 00:37:17,520 Speaker 9: impact of. 755 00:37:17,480 --> 00:37:20,719 Speaker 3: AI from an Nvidia story specifically, And I know you 756 00:37:20,719 --> 00:37:23,120 Speaker 3: say it's all powered by Nvidia. They also come out 757 00:37:23,120 --> 00:37:26,040 Speaker 3: with new chips a lot. So if I'm a customer, 758 00:37:27,000 --> 00:37:29,040 Speaker 3: why don't I just wait for the really good chip 759 00:37:29,080 --> 00:37:31,160 Speaker 3: that's going to come out in six months rather than 760 00:37:31,239 --> 00:37:33,280 Speaker 3: keep buying all the chips at the same time. Does 761 00:37:33,320 --> 00:37:35,719 Speaker 3: that make sense? It's like they're going so fast. They're 762 00:37:35,719 --> 00:37:38,320 Speaker 3: moving so fast, and they sort of trump themselves so much. 763 00:37:38,400 --> 00:37:40,040 Speaker 3: Do they eat their own lunch? Like, at what point 764 00:37:40,040 --> 00:37:40,680 Speaker 3: does that happen? 765 00:37:41,040 --> 00:37:41,200 Speaker 8: No? 766 00:37:41,280 --> 00:37:45,160 Speaker 9: I actually like exactly what they're doing. They've actually taken. 767 00:37:44,920 --> 00:37:46,920 Speaker 8: The Apple model, you. 768 00:37:46,840 --> 00:37:48,839 Speaker 9: Know, where Apple keeps on putting out a new phone 769 00:37:48,840 --> 00:37:51,640 Speaker 9: and it keeps on getting better and better. But not 770 00:37:51,680 --> 00:37:54,640 Speaker 9: to say anything against Apple, their improvements are way greater 771 00:37:54,719 --> 00:37:57,080 Speaker 9: than the iterations in the Apple phone. So if you 772 00:37:57,160 --> 00:38:00,520 Speaker 9: take and let's take an example, they have Hopper chip 773 00:38:00,560 --> 00:38:02,680 Speaker 9: that's the number one chip right now and it's being 774 00:38:02,719 --> 00:38:07,200 Speaker 9: replaced by Blackwell. If you look at the productivity of 775 00:38:07,200 --> 00:38:10,759 Speaker 9: a Blackwell chip, compared to HAPPA. It's four times the 776 00:38:10,800 --> 00:38:15,319 Speaker 9: amount for slightly more cost. So my point is they're 777 00:38:15,360 --> 00:38:17,799 Speaker 9: going to keep on producing things better and better and 778 00:38:17,880 --> 00:38:21,600 Speaker 9: for the hyper scale is frying them, Yeah, because I mean, 779 00:38:21,760 --> 00:38:23,960 Speaker 9: I'm sure you know about Sam Ultimately he made this 780 00:38:24,040 --> 00:38:26,600 Speaker 9: crazy statement he needed six trillion to build all these 781 00:38:26,640 --> 00:38:30,160 Speaker 9: data centers. There's actually some truth in that because all 782 00:38:30,200 --> 00:38:32,000 Speaker 9: the data centers are going to have to be built 783 00:38:32,000 --> 00:38:34,560 Speaker 9: to drive and run this. I know this thing came 784 00:38:34,640 --> 00:38:37,040 Speaker 9: up with the Nvidia Blackwell chip. You know they had 785 00:38:37,080 --> 00:38:40,560 Speaker 9: a cooling issue. That's because this is important for you guys. 786 00:38:40,680 --> 00:38:41,640 Speaker 8: Know that CPU. 787 00:38:41,920 --> 00:38:44,160 Speaker 9: We were in a CPU dominate environment, which is a 788 00:38:44,200 --> 00:38:47,200 Speaker 9: central processing unit, which is a single processing In order 789 00:38:47,239 --> 00:38:50,960 Speaker 9: to run AI, you need GPU. The data centers in 790 00:38:51,000 --> 00:38:53,960 Speaker 9: the US were set up for CPU because that was 791 00:38:54,000 --> 00:38:56,200 Speaker 9: the dominant thing. Now that we're going to have a 792 00:38:56,239 --> 00:39:00,399 Speaker 9: GPU dominated future, you're going to have to restructure those 793 00:39:00,440 --> 00:39:03,480 Speaker 9: data centers. But just so you're aware, it's not that complicated. 794 00:39:03,520 --> 00:39:05,680 Speaker 9: If you liquid cool the data center, which is what 795 00:39:05,760 --> 00:39:08,160 Speaker 9: Meta did, then those ships work fine. 796 00:39:09,000 --> 00:39:09,800 Speaker 8: Applications. 797 00:39:10,239 --> 00:39:12,839 Speaker 5: Are there certain industries, certain types of companies you think 798 00:39:12,880 --> 00:39:15,759 Speaker 5: will be at the forefront of really employing AI in 799 00:39:15,800 --> 00:39:17,799 Speaker 5: their business models, and if so, kind of. 800 00:39:17,760 --> 00:39:18,799 Speaker 8: Who do you think those might be? 801 00:39:19,520 --> 00:39:22,640 Speaker 9: Yeah, I mean I want to stick to the government example, 802 00:39:22,880 --> 00:39:24,879 Speaker 9: only because of the fact that that's in the news 803 00:39:24,920 --> 00:39:26,960 Speaker 9: and people want to know what the OGE is going 804 00:39:27,040 --> 00:39:30,000 Speaker 9: to be doing. I mean again, I go back to 805 00:39:30,040 --> 00:39:32,760 Speaker 9: the buildings. That's as simple as business case. A building 806 00:39:32,800 --> 00:39:35,640 Speaker 9: has energy costs, that has people who maintain it. Once 807 00:39:35,680 --> 00:39:37,759 Speaker 9: you build that digital twin of the building, you can 808 00:39:37,840 --> 00:39:40,239 Speaker 9: drive down the energy costs up to fifty percent and 809 00:39:40,280 --> 00:39:44,040 Speaker 9: reduce your manpower by fifty percent. But let's take another example. 810 00:39:44,360 --> 00:39:47,920 Speaker 9: Once you actually digitize that building, you can start producing 811 00:39:48,200 --> 00:39:51,040 Speaker 9: AI workflows. And I'll give you an example. Some embassies 812 00:39:51,040 --> 00:39:53,359 Speaker 9: have already started moving to this. I'm sure you've gone 813 00:39:53,400 --> 00:39:55,440 Speaker 9: to embassies. We have to physically stand the line and 814 00:39:55,440 --> 00:39:58,160 Speaker 9: give them all the information and it's a real pain. 815 00:39:58,680 --> 00:40:00,719 Speaker 9: In the future, there's already embass that are doing as 816 00:40:00,760 --> 00:40:03,600 Speaker 9: one Caribbean island, Barbados, has already started it. You can 817 00:40:03,680 --> 00:40:08,040 Speaker 9: actually go into the embassy through the metaverse and actually 818 00:40:08,080 --> 00:40:12,520 Speaker 9: do all your activities and services digitally. So my point 819 00:40:12,600 --> 00:40:15,000 Speaker 9: is all the government services are going to be moved 820 00:40:15,040 --> 00:40:16,440 Speaker 9: from physical to digital. 821 00:40:17,040 --> 00:40:19,880 Speaker 1: How long is that going to take. How long is 822 00:40:19,920 --> 00:40:20,440 Speaker 1: this transition? 823 00:40:21,920 --> 00:40:23,799 Speaker 9: The problem is this, and I want to be very 824 00:40:23,880 --> 00:40:26,520 Speaker 9: very straightforward with you. The reason why forty percent of 825 00:40:26,560 --> 00:40:29,960 Speaker 9: revenues are with those hypo scalers is they understand AI. 826 00:40:30,719 --> 00:40:34,600 Speaker 9: It's amazing, amazing. I talk to the top people at 827 00:40:34,600 --> 00:40:38,520 Speaker 9: the top firms. Consultants, the heads of technology don't even 828 00:40:38,560 --> 00:40:41,960 Speaker 9: understand AI. The CEOs of those other four hundred and 829 00:40:42,040 --> 00:40:45,719 Speaker 9: ninety firms don't understand AI. And the simplest example I 830 00:40:45,719 --> 00:40:48,360 Speaker 9: give them to the benefit is how we reduced inside 831 00:40:48,360 --> 00:40:50,480 Speaker 9: of trading from four months to a minute. And that's 832 00:40:50,520 --> 00:40:53,120 Speaker 9: the type of benefit they get. So they're very skeptical. 833 00:40:53,160 --> 00:40:55,080 Speaker 9: And just so you know, the US is in last place, 834 00:40:55,120 --> 00:40:58,040 Speaker 9: believe it or not, if you look at AI adoption. 835 00:40:58,400 --> 00:41:01,759 Speaker 9: We'll just take the simple building example. China already has 836 00:41:01,760 --> 00:41:03,760 Speaker 9: a lot of their stores that have been made digital 837 00:41:03,760 --> 00:41:06,120 Speaker 9: twins and they run them off their phone. I'm sure 838 00:41:06,160 --> 00:41:09,160 Speaker 9: you know China already has some autonomous cars, which your 839 00:41:09,239 --> 00:41:13,520 Speaker 9: driverless cars. So basically Asia is first an AI adoption. 840 00:41:13,760 --> 00:41:16,800 Speaker 9: Middle East the second, because Malisee wants to leap forward 841 00:41:16,840 --> 00:41:19,880 Speaker 9: SORDI raiders, particularly with the Neon project that you aware. 842 00:41:20,400 --> 00:41:24,080 Speaker 9: Europe is third, US is actually last interesting. 843 00:41:24,120 --> 00:41:25,680 Speaker 8: We could go on for this. Actually you can host 844 00:41:25,719 --> 00:41:26,160 Speaker 8: my panels. 845 00:41:26,760 --> 00:41:28,080 Speaker 3: There you go. Did you learn Sey write down? 846 00:41:28,120 --> 00:41:28,319 Speaker 7: Yeah? 847 00:41:28,320 --> 00:41:28,680 Speaker 8: I got speed. 848 00:41:29,040 --> 00:41:30,960 Speaker 5: Phil Pernaro, thanks so much for joining us. Fil Penaro 849 00:41:30,960 --> 00:41:33,479 Speaker 5: as a founder at former CEO of Boss Consulting Group. 850 00:41:33,880 --> 00:41:36,000 Speaker 8: Talking a little Technology, Talking a little AI. 851 00:41:36,160 --> 00:41:41,560 Speaker 2: Here you're listening to the Bloomberg Intelligence Podcast. Catch us 852 00:41:41,600 --> 00:41:45,000 Speaker 2: live weekdays at ten am Eastern on applecar Play and 853 00:41:45,000 --> 00:41:47,919 Speaker 2: Android Auto with the Bloomberg Business app. You can also 854 00:41:48,000 --> 00:41:51,479 Speaker 2: listen live on Amazon Alexa from our flagship New York station. 855 00:41:51,840 --> 00:41:55,560 Speaker 2: Just say Alexa play Bloomberg eleven thirty. 856 00:41:56,480 --> 00:41:58,719 Speaker 3: This is Bloomberg Intelligence Radio. We bring you all the 857 00:41:58,760 --> 00:42:01,480 Speaker 3: top news, business and I can and finance and politics. 858 00:42:01,560 --> 00:42:03,920 Speaker 3: There are lens of our Bloomberg Intelligence folks think over 859 00:42:04,000 --> 00:42:06,359 Speaker 3: two thousand companies in one hundred and thirty industries all 860 00:42:06,400 --> 00:42:08,480 Speaker 3: around the world. We also tap our vast network of 861 00:42:08,520 --> 00:42:11,120 Speaker 3: Bloomberg reporters as well, and for that we're going to 862 00:42:11,160 --> 00:42:15,879 Speaker 3: go to Washington. Bloomberg Washington Senior correspondent Seleiah Molsen joins us. Now, 863 00:42:15,960 --> 00:42:20,040 Speaker 3: as we know, as time ticks towards President Trump picking 864 00:42:20,040 --> 00:42:23,319 Speaker 3: his Treasury secretary, who's on the list. Now do we 865 00:42:23,400 --> 00:42:27,600 Speaker 3: know the ranking? What's the state of play on the list? 866 00:42:27,680 --> 00:42:30,720 Speaker 12: Now? Alex are Scott Bessant, he's a hedge fund manager. 867 00:42:30,719 --> 00:42:33,880 Speaker 12: We have Mark Rowan of Apollo. We have Kevin worsh 868 00:42:34,000 --> 00:42:38,920 Speaker 12: the former Federal Reserve governor in the mix. And Bill Haggerty, 869 00:42:38,960 --> 00:42:42,040 Speaker 12: a senator. His name has also been mentioned. It's really 870 00:42:42,080 --> 00:42:45,279 Speaker 12: hard to know who's number one on that list, who's 871 00:42:45,280 --> 00:42:49,880 Speaker 12: a top contender. We know that the president wants someone 872 00:42:49,960 --> 00:42:52,680 Speaker 12: with Wall Street pedigree, like he did during his first 873 00:42:52,840 --> 00:42:57,400 Speaker 12: term when he had former Goldman Sachs banker Stephen Mnushan 874 00:42:57,560 --> 00:43:00,080 Speaker 12: as his Treasury secretary. And we also know that he 875 00:43:00,120 --> 00:43:04,360 Speaker 12: wants someone who is sort of full bore, is supportive 876 00:43:04,520 --> 00:43:08,279 Speaker 12: of Trump's tariff plans. 877 00:43:09,080 --> 00:43:11,560 Speaker 5: So is it a problem in and of itself, Selia 878 00:43:12,040 --> 00:43:15,440 Speaker 5: that Trump has not yet made a decision on the 879 00:43:15,480 --> 00:43:18,440 Speaker 5: Treasury secretary. Does that suggest that maybe there's some real 880 00:43:18,480 --> 00:43:19,320 Speaker 5: difference of opinion. 881 00:43:21,000 --> 00:43:24,360 Speaker 12: I think generally we you know, when we have a 882 00:43:24,440 --> 00:43:26,560 Speaker 12: change of power in the White House, we get a 883 00:43:26,600 --> 00:43:28,959 Speaker 12: pick before Thanksgiving, so we're kind of on track. Even 884 00:43:29,560 --> 00:43:31,840 Speaker 12: when Obama came in during in the midst of the 885 00:43:31,880 --> 00:43:34,960 Speaker 12: global financial crisis. Tim Geitner at the time was announced 886 00:43:35,120 --> 00:43:39,839 Speaker 12: mid to late November of that year. I think what 887 00:43:39,840 --> 00:43:42,319 Speaker 12: we're seeing is that the long term consequences here are 888 00:43:42,560 --> 00:43:47,080 Speaker 12: one it really will is showing how serious Trump is 889 00:43:47,239 --> 00:43:51,400 Speaker 12: about tariffs as a key tool of his trade policy, 890 00:43:51,520 --> 00:43:56,360 Speaker 12: and tariffs are one thing that have foreign allies, adversaries, investors, 891 00:43:56,880 --> 00:43:59,640 Speaker 12: everyone kind of wondering how is that going to play out. 892 00:44:00,480 --> 00:44:04,239 Speaker 3: So in terms of timing, we're we're on the same wavelength. 893 00:44:04,600 --> 00:44:08,279 Speaker 3: What do we think Elona Musk's role is in picking. 894 00:44:07,920 --> 00:44:09,000 Speaker 1: A Treasury secretary. 895 00:44:10,280 --> 00:44:12,640 Speaker 12: The only thing that we've heard from him on Treasury 896 00:44:12,719 --> 00:44:15,080 Speaker 12: was Saturday with his tweet. It was kind of a 897 00:44:15,120 --> 00:44:18,080 Speaker 12: big deal. He tweeted out and coming out in support 898 00:44:18,120 --> 00:44:21,360 Speaker 12: of Howard Lutnik, who has now been tapped as Commerce Secretary. 899 00:44:21,960 --> 00:44:28,160 Speaker 12: Lutnik was not a clear favorite among the Trump camp, 900 00:44:28,800 --> 00:44:32,520 Speaker 12: and he came out in support of Lutnik by saying 901 00:44:32,640 --> 00:44:35,520 Speaker 12: that while sanctions are going to be so important important, 902 00:44:35,960 --> 00:44:37,959 Speaker 12: that means you need a Treasure secretary who was willing 903 00:44:37,960 --> 00:44:39,719 Speaker 12: to blow things up, be a bit of a disruptor, 904 00:44:40,000 --> 00:44:43,120 Speaker 12: and that's Howard Lutnick. Since then, we have not heard 905 00:44:43,239 --> 00:44:47,160 Speaker 12: Musk talking or tweeting about it, and so I guess 906 00:44:47,160 --> 00:44:48,560 Speaker 12: you can read into that what you want to. 907 00:44:49,440 --> 00:44:54,080 Speaker 5: Sally, what's the thinking in DC about Senate confirmations of 908 00:44:54,200 --> 00:44:58,880 Speaker 5: some of the more I guess questionable or contested candidates 909 00:44:58,960 --> 00:45:03,440 Speaker 5: that President Trump has. I'm thinking Matt Gates and some others. 910 00:45:04,120 --> 00:45:06,440 Speaker 5: What's the Is there a feeling kind of growing down 911 00:45:06,440 --> 00:45:07,720 Speaker 5: there about how that will proceed? 912 00:45:08,560 --> 00:45:10,399 Speaker 12: Yeah, Paul, that's such a great question because I keep 913 00:45:10,440 --> 00:45:13,719 Speaker 12: thinking to myself that once Trump has chosen a Treasure secretary, 914 00:45:14,400 --> 00:45:16,439 Speaker 12: this person not only had to go through the last 915 00:45:16,440 --> 00:45:19,239 Speaker 12: ten days of rigmarole to get the job, possibly, but 916 00:45:19,360 --> 00:45:22,200 Speaker 12: also the real vetting work starts when you go through 917 00:45:22,239 --> 00:45:24,719 Speaker 12: the Senate confirmation process, which is your you know, all 918 00:45:24,800 --> 00:45:27,799 Speaker 12: your financial disclosures are made public. People are coming through 919 00:45:27,840 --> 00:45:30,320 Speaker 12: your information and your background, your family and your history, 920 00:45:30,320 --> 00:45:32,879 Speaker 12: and then you have a very public two hour long 921 00:45:33,200 --> 00:45:35,400 Speaker 12: grilling that anyone around the world can watch as you 922 00:45:35,520 --> 00:45:39,200 Speaker 12: interview with the Senate Finance Committee for this job. Yeah, 923 00:45:39,239 --> 00:45:42,080 Speaker 12: and everyone's talking about Matt Gates, whether that's really going 924 00:45:42,160 --> 00:45:43,319 Speaker 12: to be able to make it to the Senate. We 925 00:45:43,400 --> 00:45:46,919 Speaker 12: haven't heard a lot from John Thune, who is the 926 00:45:46,960 --> 00:45:51,200 Speaker 12: Republican senator who will be the Republican majority leader once 927 00:45:51,239 --> 00:45:54,520 Speaker 12: that session in Congress starts. I think that's where the 928 00:45:54,600 --> 00:45:56,440 Speaker 12: cues are going to come from. So far, he said 929 00:45:56,719 --> 00:46:00,000 Speaker 12: that a president should get to choose his own cabinet office, 930 00:46:01,040 --> 00:46:03,040 Speaker 12: but he does want a thorough vetting process. 931 00:46:03,120 --> 00:46:05,880 Speaker 3: And this goes to what Nathan dena Bloomberg Intelligence was 932 00:46:05,880 --> 00:46:08,040 Speaker 3: talking to us yesterday on radio in terms of the 933 00:46:08,040 --> 00:46:10,840 Speaker 3: populist versus Wall Street pick, And for most of the candidates, 934 00:46:10,880 --> 00:46:12,760 Speaker 3: it seems like it's going to be the populist pick 935 00:46:13,120 --> 00:46:15,799 Speaker 3: except when it comes to the money, and then maybe 936 00:46:15,840 --> 00:46:18,680 Speaker 3: it's more of a Wall Street type. Is that a 937 00:46:18,760 --> 00:46:20,080 Speaker 3: feel done in Washington? 938 00:46:21,800 --> 00:46:22,000 Speaker 11: You know? 939 00:46:22,200 --> 00:46:24,359 Speaker 12: I think one thing that we've realized here is that 940 00:46:24,560 --> 00:46:29,719 Speaker 12: economic populism is the policy of choice for both parties 941 00:46:29,760 --> 00:46:35,000 Speaker 12: here in Washington. Republicans and Democrats both favorite protectionism over 942 00:46:35,640 --> 00:46:39,040 Speaker 12: globalization right now, and so that shouldn't come as a 943 00:46:39,160 --> 00:46:41,440 Speaker 12: huge surprise. But I think kind of back to what 944 00:46:41,480 --> 00:46:44,120 Speaker 12: we've been talking about the reason that this fight maybe 945 00:46:44,200 --> 00:46:46,879 Speaker 12: has played out for so long is that there are 946 00:46:46,960 --> 00:46:50,560 Speaker 12: dueling forces here that if you are swearing an oath 947 00:46:50,719 --> 00:46:53,880 Speaker 12: to march forward with a plan to use terrace as 948 00:46:53,920 --> 00:46:57,319 Speaker 12: a strong tool of trade policy, that is somewhat at 949 00:46:57,360 --> 00:47:00,240 Speaker 12: odds with the way Wall Street minds tend to work. 950 00:47:01,640 --> 00:47:04,759 Speaker 8: So lay in addition to the Treasury Secretary, is what 951 00:47:04,800 --> 00:47:07,400 Speaker 8: else are we kind of waiting for of importance? 952 00:47:08,440 --> 00:47:10,160 Speaker 12: I mean, we've had a lot of the picks so far. 953 00:47:10,520 --> 00:47:12,680 Speaker 12: We have we don't have much of the Economic policy 954 00:47:12,719 --> 00:47:15,800 Speaker 12: team at all. We have Commerce Secretary, and that was interesting. 955 00:47:16,360 --> 00:47:19,000 Speaker 12: What Trump did was he made it so that Howard 956 00:47:19,040 --> 00:47:22,960 Speaker 12: Lutnik is Commerce Secretary and the US Trade Representative's office 957 00:47:23,440 --> 00:47:26,960 Speaker 12: reports to the Commerce Secretary, which is interesting because usually 958 00:47:27,000 --> 00:47:31,880 Speaker 12: the USTRH official is a member of the president's cabinet. 959 00:47:31,880 --> 00:47:34,920 Speaker 12: Now presidents do have sway, some say all to say 960 00:47:35,160 --> 00:47:39,400 Speaker 12: over which specific rule, which agency head is on a 961 00:47:39,440 --> 00:47:42,760 Speaker 12: member officially of his cabinet. We also are still waiting 962 00:47:42,800 --> 00:47:45,759 Speaker 12: for a pretty powerful, powerful position from the within the 963 00:47:45,800 --> 00:47:49,439 Speaker 12: White House. That's the National Economic Council Director. I mean, 964 00:47:49,480 --> 00:47:51,160 Speaker 12: I think people are they're such a big fight over 965 00:47:51,239 --> 00:47:54,759 Speaker 12: Treasury right now, we're forgetting how powerful that post can be, 966 00:47:55,280 --> 00:47:58,040 Speaker 12: and also OMB director and a couple of other jobs. 967 00:47:58,200 --> 00:48:00,440 Speaker 3: When we look at the transition, do we expect the 968 00:48:00,440 --> 00:48:04,440 Speaker 3: transition from January sixth to January twentieth to be smooth? 969 00:48:06,920 --> 00:48:10,320 Speaker 12: I think so, because right now Trump has a full mandate, 970 00:48:10,320 --> 00:48:13,680 Speaker 12: he won the electoral College, he won Republicans have all 971 00:48:13,800 --> 00:48:16,160 Speaker 12: of Congress, and he also won the popular vote. So 972 00:48:16,200 --> 00:48:18,480 Speaker 12: I don't know what would be the disruptive power there. 973 00:48:18,920 --> 00:48:21,000 Speaker 8: All right, Sally, thank you so much. We appreciate it. SLAYH. 974 00:48:21,000 --> 00:48:25,440 Speaker 5: Molsen, she's Washington senior correspondent for Bloomberg News from Washington. 975 00:48:25,480 --> 00:48:27,400 Speaker 5: T But I guess you have to ask that question 976 00:48:27,520 --> 00:48:29,120 Speaker 5: after what happened four years ago. 977 00:48:29,040 --> 00:48:31,600 Speaker 3: About well, well also just in terms of like will 978 00:48:32,640 --> 00:48:35,279 Speaker 3: the first lady meet with the first lady? Like will 979 00:48:35,320 --> 00:48:37,240 Speaker 3: the VP? You mean with the VP? Like will Advance 980 00:48:37,280 --> 00:48:39,560 Speaker 3: meet with Harris? Like is that happening? I don't know, 981 00:48:40,080 --> 00:48:41,839 Speaker 3: I mean, or does it matter in it as long 982 00:48:41,880 --> 00:48:42,239 Speaker 3: as well I. 983 00:48:42,200 --> 00:48:42,840 Speaker 8: Should expect it. 984 00:48:42,960 --> 00:48:44,880 Speaker 5: Yeah, yeah, I guess what we've seen so far is 985 00:48:45,080 --> 00:48:48,040 Speaker 5: President Biden did it welcome President elect Trump to the 986 00:48:48,040 --> 00:48:49,600 Speaker 5: White House right after the election. 987 00:48:50,520 --> 00:48:53,760 Speaker 8: So that did happen per protocol or per tradition. 988 00:48:53,840 --> 00:48:58,120 Speaker 5: I guess I don't believe Millennia Trump came on that visits. 989 00:48:58,200 --> 00:49:03,120 Speaker 3: Yeah, that's also is bidenpen Interestingly enough, you had Bridgewater 990 00:49:03,400 --> 00:49:05,839 Speaker 3: saying say that Trump's policies actually may push you as 991 00:49:05,880 --> 00:49:08,439 Speaker 3: inflation above that two percent target, which, if you game 992 00:49:08,520 --> 00:49:10,240 Speaker 3: that out in terms of who might lead the FED, 993 00:49:10,760 --> 00:49:13,239 Speaker 3: that I'll have to nominate a future FED chair who 994 00:49:13,320 --> 00:49:16,920 Speaker 3: might accommodate higher inflation and allow for rate cut. So 995 00:49:16,960 --> 00:49:19,600 Speaker 3: that's sort of their take on the longer term economic 996 00:49:19,680 --> 00:49:20,759 Speaker 3: policies from there. 997 00:49:21,320 --> 00:49:25,840 Speaker 2: This is the Bloomberg Intelligence Podcast, available on apples, Spotify, 998 00:49:26,080 --> 00:49:29,720 Speaker 2: and anywhere else you'll get your podcasts. Listen live each weekday, 999 00:49:29,840 --> 00:49:33,320 Speaker 2: ten am to noon Eastern on Bloomberg dot com, Theheart 1000 00:49:33,400 --> 00:49:36,360 Speaker 2: radio app, tune In, and the Bloomberg Business app. You 1001 00:49:36,400 --> 00:49:39,600 Speaker 2: can also watch us live every weekday on YouTube and 1002 00:49:39,760 --> 00:49:41,360 Speaker 2: always on the Bloomberg terminal