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Speaker 3: Hard to keep track, you know it. We have watched
Speaker 3: the headlines come fast and furious. We are trying to
Speaker 3: know when it comes to the US administration's policy on
Speaker 3: US tariffs. What we do know at this hour. President
Speaker 3: Trump said he will exempt Mexico from his new twenty
Speaker 3: five percent tariffs on any goods and services that fall
Speaker 3: under the North American trade agreement that he actually renegotiating
Speaker 3: during renegotiated, i should say, during his first administration. So
Speaker 3: this does offer reprieve for a major, major US trading partner.
Speaker 4: A reprieve, but perhaps just until April second. Back to
Speaker 4: our DC News Bureau and Bloomberg Intelligence Senior pol analyst
Speaker 4: Nathan deeed, it's hard for us, Nathan, to keep track
Speaker 4: of it. What are you telling Bloomberg clients about what
Speaker 4: they need to know in terms of timing and how
Speaker 4: much these tariffs are going to affect them.
Speaker 5: Yeah, So what we're coining this is we're coining this
Speaker 5: as shock and awe strategy for tariffs, where President Trump
Speaker 5: comes out here and says, look, this is what I'm
Speaker 5: going to do. It's going to happen. I'm not going
Speaker 5: to negotiate. And we saw this with Canada. Mexico tariffs
Speaker 5: are on thirty day extension, tariffs are on. Now we're
Speaker 5: seeing the exemption for Mexico. So come April second, which
Speaker 5: is the next major catalyst. Obviously there's potentially some negotiations
Speaker 5: with Canada to go between then, but with April second,
Speaker 5: clients need to prepare for this idea that these reciprocal
Speaker 5: tariffs are going to come. But they also have to
Speaker 5: prepare for the idea that there are going to be exemptions.
Speaker 5: The one thing that President Trump does not want to
Speaker 5: see is sticker shock amongst the consumer base. So if
Speaker 5: you're talking about any types of goods, you know, we
Speaker 5: saw the big three automobile makers in there. They got
Speaker 5: their exemption. So I do think that President Trump will
Speaker 5: be amicable to some exemptions when it comes to April second.
Speaker 5: He just may be in the days after April second,
Speaker 5: not the lead up to it. So you have to
Speaker 5: certainly pay attention to it because it's going to be
Speaker 5: really interesting to see what happens.
Speaker 3: Can I just say to anybody, see the trade deficit
Speaker 3: today winding to a record ahead of these tariffs. I mean,
Speaker 3: I know people might be bringing stuff in to get
Speaker 3: ahead of them, but I mean we import a ton
Speaker 3: of stuff. So are we talking, ultimately, Nathan about a
Speaker 3: lot of exemptions to come.
Speaker 5: Well, you know that's the challenge here is because you know,
Speaker 5: every industry is going to want their own exemption. The
Speaker 5: big three automobile makers were in there, Tim Cook from
Speaker 5: Apple could be in there next time talking about an
Speaker 5: exemption for the technic industry. So you know what I
Speaker 5: think he needs to happen here is, you know, we
Speaker 5: prepare for the worst case scenario, and the worst case
Speaker 5: scenario is reciprocal tariffs across the board. But then also
Speaker 5: you just have to remember that what are the industries
Speaker 5: and what are the consumer facing goods that American people
Speaker 5: want President Trump to bring the price down?
Speaker 2: Food?
Speaker 5: In particular, this is something that drove a lot of
Speaker 5: voters to him at the end of twenty two in
Speaker 5: the elections. So I think what the White House will
Speaker 5: do is to look and see, Okay, what industries in
Speaker 5: which sectors do we think are going to hurt the
Speaker 5: American consumer more than others? And look, automobiles technology, that's
Speaker 5: something that Americans buy quite a lot of. So I
Speaker 5: wasn't surprised to see the exemption for the automobile makers there.
Speaker 5: So it's really hard to tell, though, because there's only
Speaker 5: one person that decides whether these tariffs are on or off,
Speaker 5: and it's President Trump, and so we just have to
Speaker 5: like prepare for one scenario and prepare for the other.
Speaker 4: Nathan, I know this is fast moving, and I know
Speaker 4: that we are only getting details sort of as they
Speaker 4: come out day by day and even hour by hour.
Speaker 4: But have we been able to has Bloomberg been able
Speaker 4: to quantify now, given the thirty day reprieve from the
Speaker 4: tariffs on Mexico, what actually is tariff in terms of
Speaker 4: amount of goods?
Speaker 5: Yeah, so we were looking at this morning, and obviously
Speaker 5: the exemption is for all goods that found her within
Speaker 5: the US MCA. We think that's probably close to one
Speaker 5: hundred percent, not exactly, but even the President of Mexico
Speaker 5: this morning, you know, the President of Mexico said in
Speaker 5: her briefing that's pretty much everything. So, you know, I
Speaker 5: want to say that, you know, obviously these you know,
Speaker 5: the headlines are there and so forth, but you know,
Speaker 5: we think it's effectively a push off of the tariff
Speaker 5: until April second. The situation obviously is a little bit
Speaker 5: different in Canada. You know, Prime Minister Justin Trudeau and
Speaker 5: President Trump have been feuding a little bit on social media,
Speaker 5: and I think that's probably going to continue because what
Speaker 5: we you know, we discussed this yesterday in the program.
Speaker 5: The negotiation stance that we saw coming from Mexico was
Speaker 5: different than the take that we saw it was coming
Speaker 5: from Canada, and it looks like it got different results.
Speaker 5: So unless that relationship between Ottawa and Washington changes, the
Speaker 5: Canadian tariffs may be here until April second, if not longer.
Speaker 3: Nathan, I mean, we can't get in this mind. We
Speaker 3: don't know what he's ultimately thinking. But what does President
Speaker 3: Trump ultimately want? Is it tariffs and pushback? Is it
Speaker 3: something else that he wants from these countries, from our allies,
Speaker 3: from our major trading partners. Do we know what it is?
Speaker 5: I think what it is is he wants a fundamental
Speaker 5: shift in terms of the American economy. If you listen
Speaker 5: to Scott best Into, the Treasury Secretary in his speech
Speaker 5: this he was talking about how, you know, manufacturing can
Speaker 5: come back to the United States. The challenge with that
Speaker 5: is is that in order to build a plant, or
Speaker 5: buy a plant, or shift the supply chain, you're talking
Speaker 5: about a three four five year you know time frame
Speaker 5: and you know tariffs, on the other hand, are going
Speaker 5: to have an immediate time frame in terms of price
Speaker 5: and consumer impact. So that's I think the challenge for
Speaker 5: the White House here is you have a long term
Speaker 5: strategy and a long term goal, but you're going to
Speaker 5: have to deal with short term pain in the interim.
Speaker 5: The question is will the White House stomach that short
Speaker 5: term gain or short term pain and the economic hit
Speaker 5: in order to achieve their long term goals. I'm not
Speaker 5: so sure.
Speaker 3: Well, it's interesting when you talk about supply chains. We've
Speaker 3: talked with our Markerman about the apple supply chain, as
Speaker 3: massive as it is, and how that would take a
Speaker 3: long long time to shift in terms of you know,
Speaker 3: so much over in China, how.
Speaker 6: Much time they spend building it up.
Speaker 3: Yeah, in China, several decades, right and so, and ultimately
Speaker 3: that assembly to try and replicate that, create that somewhere else.
Speaker 3: That is something that would take many, many years to do. Nathan,
Speaker 3: as always, thank you. Nathan Dean, senior policy analyst at
Speaker 3: Bloomberg Intelligence, joining us from our Washington, DC bureau.
Speaker 4: Okay, so you're up to date on US tariffs for now,
Speaker 4: but no promises for what happens over the next day, ten,
Speaker 4: twenty four or forty eight hours. We're going to stay
Speaker 4: in DC with our focus now on the US labor market.
Speaker 4: We're gonna get the closely watched monthly jobs report coming
Speaker 4: from the US government tomorrow. Lots of conversations though being
Speaker 4: had right now about how the cuts to the federal
Speaker 4: workforce will impact the US labor picture.
Speaker 3: All right, with more on that, we head back to Washington,
Speaker 3: DC into Bloomberg News Real Economy Team reporter Mark Naquette. Mark,
Speaker 3: a couple of things I want to get to, including
Speaker 3: the story that you guys have put out investors. Obviously
Speaker 3: focusing on jobs. We did get the outplacement firm report,
Speaker 3: Challenger Gray and Christmas their report talking about employers in
Speaker 3: February announcing plans to reduce headcount at the fastest pay
Speaker 3: since early in the pandemic, led by cuts in the
Speaker 3: government sector as the Trump administration moved to shrink the
Speaker 3: federal workforce. How bad is that? How does that tell
Speaker 3: us about what's to come?
Speaker 7: Unfortunately, we have a jobs report coming out Friday that
Speaker 7: will not necessarily reflect the impact of the DOGE cuts.
Speaker 7: The survey period for the jobs report coming out Friday
Speaker 7: was a second week in February, kind of afford the
Speaker 7: you know, the cuts really began. But it's gonna expected
Speaker 7: to show sort of the first indications of, you know,
Speaker 7: the the impact of these federal firings. And it's it's
Speaker 7: not just the federal employees who are being let go,
Speaker 7: but it's the contractors and folks who work for entities
Speaker 7: that do business with the government who are getting terminated
Speaker 7: as well as a result of the broader cost cutting
Speaker 7: and reductions that the DOGE and the Trump administration is making.
Speaker 7: So we expect to see in the upcoming job reports
Speaker 7: for March and April, you know, some more soificant impact
Speaker 7: of these cuts. But I think you're already starting to see,
Speaker 7: like you's mentioned in the Challenger report, you know, the
Speaker 7: sort of the knock on effects of the streamlining that's
Speaker 7: happening right now at the federal government, you know, with
Speaker 7: these contractors and other folks who are being affected.
Speaker 4: Does it have a real possibility, because the federal government
Speaker 4: is such a big employer in the United States, to
Speaker 4: have a significant effect on the unemployment rate in the US?
Speaker 7: It can? I mean, it's it's it's projected that the
Speaker 7: total impact on the private sector job market could be
Speaker 7: ash as a half a million if you add all
Speaker 7: the direct and indirect reductions. It won't move the needle tremendously,
Speaker 7: but it would certainly have an impact on, you know,
Speaker 7: the unemployment rate going forward.
Speaker 3: So to the story that you and the team Augustus,
Speaker 3: Sarah and Gerald Dillard had put out, you guys note
Speaker 3: specifically that economists are seriously, you know, looking at all
Speaker 3: of what's happening in the federal government and maybe rethinking
Speaker 3: their forecast for labor market expansion this year. What are
Speaker 3: you hearing either anecdotally or are they putting or starting
Speaker 3: to put some numbers to it.
Speaker 7: Now they're starting to put some numbers to it, you know,
Speaker 7: hit as much as one hundred and twenty five thousand,
Speaker 7: you know, over the course of several months on individual
Speaker 7: job reports. Because of this impact we're seeing of the
Speaker 7: reductions at the federal level, but we're also seeing some
Speaker 7: kind of interesting sort of ancillary effects, and we've put
Speaker 7: it in our story today, states like New York and
Speaker 7: Maryland actively recruiting fire federal workers to join the state
Speaker 7: workforce in a case where they have, you know, an
Speaker 7: opening and their state workforce, particularly for us specialized the expertise,
Speaker 7: you know, like some of these scientists and researchers who
Speaker 7: are losing their jobs at the federal level come find,
Speaker 7: you know, the state workforce and work for the state.
Speaker 7: So there could actually be some opportunities for folks who
Speaker 7: are losing their jobs at the federal level to still
Speaker 7: get a job in their field just at the state level.
Speaker 4: Is there any concern from you or economists that we
Speaker 4: might not get as a good of insight from the
Speaker 4: federal government in terms of the data that they track,
Speaker 4: that that we use, that we look to, that investors
Speaker 4: look to as a result of cuts at the federal level.
Speaker 7: Yeah, and it's hard to even track, you know, the
Speaker 7: impact of the federal firings. You know, for example, you know,
Speaker 7: we look at initial jobless claims to try and see,
Speaker 7: you know, what kind of impact the federal reductions are having.
Speaker 7: And one the unemployment claims are filed under a separate
Speaker 7: program for federal workers, and there's a leg in reporting
Speaker 7: that number, and some of the claims are not reflected, right,
Speaker 7: folks who had put on administrative lead and they have
Speaker 7: not yet filed for unemployment for example. So bottom line,
Speaker 7: I don't think we will see the entire impact of
Speaker 7: the reductions that are happening at the federal level in
Speaker 7: the various jobs reports.
Speaker 3: All right, super important as we go through the numbers,
Speaker 3: and maybe need to be patient to wait to see
Speaker 3: what the ultimate impact will be. Mark Kat, thank you
Speaker 3: so much, Real Economy team, reporter at Bloomberg News there
Speaker 3: in DC.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 3: We're going to get another take on kind of what's
Speaker 3: been going on in the markets with someone who's actually
Speaker 3: been watching the rates US rates market pretty closely.
Speaker 4: Yeah, I want to bring in Thomas Carroll founder and
Speaker 4: CEO at the registered investment advisor at ballast Rock Asset
Speaker 4: Management and invest in multi family real estate properties and
Speaker 4: also in a venture capital. The firm has about two
Speaker 4: hundred and forty million dollars in assets under management. Thomas
Speaker 4: joining us from a Boca Raton, Florida. Thomas, good to
Speaker 4: have you here. Look, I just want to start on
Speaker 4: daylight today, where you see the markets really volidile, Grateful
Speaker 4: to be in a an asset class that doesn't buy
Speaker 4: and sell at the whim or click of a button.
Speaker 8: Absolutely, and in fact it's fascinating. Over the last two months,
Speaker 8: we've seen a real uptick in investor demand for our
Speaker 8: asset class for interest in investing simply, I think a
Speaker 8: large part because they are nervous about the forward for
Speaker 8: equities and for public markets, and they don't want to
Speaker 8: be in an asset class that gy rates as much
Speaker 8: as we've seen in equities. So after twenty twenty four,
Speaker 8: which frankly was a ballmarket year in general, we on
Speaker 8: the private markets invest side found it quite challenging to
Speaker 8: raise capital in twenty four. However, twenty five has started
Speaker 8: totally differently, and I think it is driven by people
Speaker 8: seeing significant volatility if their public markets is social.
Speaker 4: So essentially what they're saying is, we don't want to
Speaker 4: be in public markets because it's too volatile. We'll pull
Speaker 4: the money from public equities and instead we'll invest it
Speaker 4: in alternatives. And one of those alternatives is with you.
Speaker 3: And can I just say that that's what we heard
Speaker 3: from Raj Danda of Arias Wealth.
Speaker 6: Management, who was a huge some privates.
Speaker 2: Yeah, so that the.
Speaker 3: Volatility of the public markets is freaking people out. But
Speaker 3: forgive me go ahead.
Speaker 6: Is that what it is? Thomas?
Speaker 8: Absolutely, And it's not necessarily as directors pull out and
Speaker 8: put in, because of course placing capital into private markets
Speaker 8: is a slower, more stable process. But certainly reallocation proportionally
Speaker 8: adjusting portfolios. We believe that we are seeing that, and
Speaker 8: we're certainly seeing it here at the coal face raising
Speaker 8: capital or private market deals with pross venture capital and
Speaker 8: real estate.
Speaker 3: So, Thomas, you know, we live on these headlines that
Speaker 3: are coming out of DC, and rightfully so, because they
Speaker 3: do move the financial markets, some of them do, not
Speaker 3: all of them do. How do you take in US
Speaker 3: policy out of the White House, How does that ultimately
Speaker 3: impact your world? Rates are important. If rates go up,
Speaker 3: that's going to be more problematic. I would assume if
Speaker 3: rates go down that could be better as long as
Speaker 3: we're not maybe in a recession. But tell us how
Speaker 3: you see it.
Speaker 8: Well, we certainly have to manage to a long term view.
Speaker 8: We cannot be driven by short term decisions in the
Speaker 8: same way that a hedge fund trader or market maker
Speaker 8: can be in public markets. So we view our job
Speaker 8: more like i'd say, driving an oil tanker and having
Speaker 8: to make decisions two miles out if we want to
Speaker 8: turn course in the way that we build portfolios and
Speaker 8: execute acquisitions and dispositions and value add strategies. So we're
Speaker 8: certainly taking a long view. These short term decisions, though,
Speaker 8: and their driver on interest rates do impact us, both
Speaker 8: for the positive and for the negative. The positive in
Speaker 8: that actually rate volatility and in particular what we perceive
Speaker 8: as a likely rates higher for longer as inflationary pressures
Speaker 8: like tariffs and DEGO globalization and near shoring, those are
Speaker 8: all inflationary pressures that will that will really require the
Speaker 8: FED to keep rates higher for longer. That pressure a
Speaker 8: lot of sponsors out there, a lot of real estate
Speaker 8: owners out there who acquired assets at the peak in
Speaker 8: twenty twenty or twenty twenty one and even twenty twenty
Speaker 8: two have been clinging on for dear life, waiting for
Speaker 8: rates to drop, and especially those that are acquired assets
Speaker 8: at the peak using floating rate short term bridge financing,
Speaker 8: have been desperately waiting for that drop, and if it's
Speaker 8: not going to come, they will have to concede and
Speaker 8: likely take a loss, but that will certainly get the
Speaker 8: acquisition market started again, a market that's stalled through twenty
Speaker 8: twenty three and four. So that opportunity for those of
Speaker 8: us that are well capitalized is really exciting. We see
Speaker 8: the next two years with a lot of sellers just
Speaker 8: conceding and capitulating. We see that as a great opportunity
Speaker 8: to acquire if you're well capitalized.
Speaker 3: All right, we're going to leave it on that note, Thomas,
Speaker 3: So good that we could get to you on this
Speaker 3: day when there's a lot going on in the markets
Speaker 3: and get your perspective an important one. Thomas Carrol, founder
Speaker 3: and CEO at the registered investment advisor ballast Rock Asset Management.
Speaker 3: They've got about two hundred and forty million dollars in
Speaker 3: asseids under management, joining us there from Florida.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 4: Well, let's talk about Alibaba. As we noted, they introduced
Speaker 4: its Quinn platform. It's a model that it claims performs
Speaker 4: as well as Chinese startup Deep Sequel with a fraction
Speaker 4: of the data, with US as Bear Technology Strategies. Ted
Speaker 4: Mortenson with US from Tampa, Florida. Ted, I think this
Speaker 4: coming as a surprise to people, especially just a few
Speaker 4: weeks after we got the Deep Seek news.
Speaker 6: What do we need to know about this announcement from
Speaker 6: Ali Baba.
Speaker 9: Well, there's two things. Number One, I would consider this
Speaker 9: almost as a war between the US and China for
Speaker 9: Jenai leadership. This is a major advance, and I think
Speaker 9: if you look at Ali Baba's last report when they
Speaker 9: focused on their Cloud Intelligence group, they let the street
Speaker 9: know for the first time that they're going to spend
Speaker 9: roughly fifty three billion over three years that's more than
Speaker 9: that they spent in the last decade. They also indicated
Speaker 9: that when they get to what's called AGI, and that's
Speaker 9: eighty percent of kind of human capability, the States are
Speaker 9: very very high. You're talking about fifty percent of GDP.
Speaker 9: So this is going full bore between two nations that
Speaker 9: can afford not to be in a lagging stance, and
Speaker 9: I would not be surprised if President Trump makes some
Speaker 9: moves in this area over the coming weeks.
Speaker 3: When you say AGI, you mean artificial general intelligence, which, yeah,
Speaker 3: I googled it. You're talking about basically, when you've got
Speaker 3: a machine that can do anything that Tim and I
Speaker 3: can do a human can do.
Speaker 4: Correct you trust that because that's Gemini showing you that
Speaker 4: search result. I can tell you that I'm looking at
Speaker 4: your screen.
Speaker 3: But that's what you're talking about, right.
Speaker 9: That's That's exactly what I'm talking about. We're a couple
Speaker 9: of years off from that, but we're going to get there.
Speaker 9: And the implications on how this is going to change
Speaker 9: every industry and how we look at you know, SMP
Speaker 9: earnings and GDP, you have to have a very open
Speaker 9: mind because it is changing extremely rapidly.
Speaker 6: How rapidly.
Speaker 4: I spoke to Bin Ran of Sigtec earlier this week
Speaker 4: at Bloomberg invest He's the founder and CEO of this
Speaker 4: firm that spun off of Brevin Howard back in twenty nineteen,
Speaker 4: and they've created these agents to essentially do the job
Speaker 4: of analysts and quants on Wall Street.
Speaker 6: It's pretty remarkable stuff.
Speaker 4: He gave us a demonstration, But he said, by the
Speaker 4: end of this year, half of the workforce is going
Speaker 4: to be made up of AI agents. Is that too
Speaker 4: bold a proclamation.
Speaker 9: That maybe a little bit aggressive? I mean, Mango dB
Speaker 9: last night basically said for them, and they're they're kind
Speaker 9: of the database layer for JENNYI applications. Whether it be
Speaker 9: right or wrong. They said fiscal twenty six was going
Speaker 9: to be a transition year, So there's different opinions it's
Speaker 9: going to happen to degree of how quick it happens,
Speaker 9: is how the next generation jenn Ai Silkan stacks mature
Speaker 9: number one and number two. We have some major major
Speaker 9: Silkin advances happening going forward into next year with Navidia's
Speaker 9: release of Reuben, for example. This is a technology innovation
Speaker 9: we've really never seen, at least I haven't seen in
Speaker 9: thirty years of doing this.
Speaker 3: So what's the role of Nvidia at this point? I mean,
Speaker 3: they're down about sixteen percent seventeen percent this year. We
Speaker 3: know that they've really taken a hit, you know, following
Speaker 3: the deep seak news that we got back in January.
Speaker 3: But I mean, is it silly for investors to count
Speaker 3: Nvidia out? I mean, how are you thinking about the
Speaker 3: companies that investors should be watching when it comes to
Speaker 3: the AI trade.
Speaker 9: So the chart doesn't look great, and that's just feeding
Speaker 9: on itself. But if you look at the if you
Speaker 9: look at what Jensen's doing, the man's brilliant. He's he's
Speaker 9: one of I would say the greatest tech innovators of
Speaker 9: our time. He invested billions of dollars into this area
Speaker 9: before it even became a market. So Navidia has a
Speaker 9: four to five year lead. I think where the street
Speaker 9: really misses it is Navidia's dominance in that software stack area.
Speaker 9: On Jenny I they are light years ahead of people,
Speaker 9: and it could be conceivable that Navidia could be one
Speaker 9: of the largest software companies of the next tech cycle
Speaker 9: as we get additional infrastructure rolled out. So you cannot
Speaker 9: count this company out. They're holding a lot of the cards,
Speaker 9: both on training and inference, and they have a very
Speaker 9: good field where the market's going. So it's more buying
Speaker 9: from the fearful.
Speaker 7: Here.
Speaker 3: Hey, Ted, just got about forty fifty seconds here. So
Speaker 3: Ali Baba, how does the news today make you now
Speaker 3: think about this company which is known for its electronic commerce,
Speaker 3: you know, e commerce, retail, financial online. How does this
Speaker 3: news that maybe make you rethink a little bit about
Speaker 3: Ali Baba?
Speaker 9: And just quickly, you know, it really doesn't because if
Speaker 9: you look at the innovations and Jenny, I look what
Speaker 9: AWS is doing, or a zore or GPC, they're at
Speaker 9: the same plane of tech innovation. It's just going to
Speaker 9: be a matter of who gets there the quickest and
Speaker 9: who has as as much as free cash flow to
Speaker 9: get there the quickest. You know, it's it's gonna be
Speaker 9: a battle. But I don't think it really changes the
Speaker 9: thought process.
Speaker 3: All right, So happy we could spend some time with you,
Speaker 3: Ted Mortensen, Bear Technology Alice joining us.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 4: Well, Harvard Law School has a long history of catapulting
Speaker 4: black students into the American elite. Barack Obama, Ken Channall
Speaker 4: the Vammex, Ken Frasier of merk Ray MacGuire of Lazard.
Speaker 4: A generation before them, Conrad Harper became the first black
Speaker 4: partner at Wall Street law firm Simpson, Thatcher and Bartlett.
Speaker 4: Decades later, as President, Obama would appoint Katanji Brown Jackson's
Speaker 4: a federal judge on her way to becoming the first
Speaker 4: black woman to join the US Supreme Court. Now, Harvard
Speaker 4: Laws status as a training ground for potential black stars
Speaker 4: in the worlds of business, politics, and culture could be
Speaker 4: under threat after the Supreme Court banned the use of
Speaker 4: race and admissions across the college system, so writes Janet
Speaker 4: Lauren in a Big Take this week. She's Bloomberg News
Speaker 4: Higher Education Finance reporter. She joins us here in the
Speaker 4: Bloomberg Interactive Brokers studio. Also joining us an alumna of
Speaker 4: Harvard Law School, Deborah Lee, the former CEO of Black
Speaker 4: Entertainment Television Networks, also a board member at Marriott Procter
Speaker 4: and Gamble and Warner Brothers Discovery.
Speaker 6: Thanks so much to both of you for joining us.
Speaker 10: Thanks for having it having me.
Speaker 4: Hey, Jane, I do want to start with you, because
Speaker 4: just start with the numbers, the data you're reporting. What
Speaker 4: did it tell you about black students and how they're
Speaker 4: doing at Harvard Law today.
Speaker 10: So this year the number of first year law students
Speaker 10: called one l's is nineteen, a year after the Supreme
Speaker 10: Court decision, and previously the year before it was forty three.
Speaker 6: Wow.
Speaker 10: So it was a big, sharp decline in the first
Speaker 10: year that students could apply after the Supreme Court declared
Speaker 10: that race was no longer a factor in admissions.
Speaker 6: How big? How big are the would a class be?
Speaker 10: Just for context, Harvard's is quite large. It's five hundred
Speaker 10: and sixty students in compared to some of its peers
Speaker 10: like Stanford and Yale are roughly about two hundred, so
Speaker 10: it's more than double the size. In fact, this year, Yale,
Speaker 10: with about two hundred students, had more black students first
Speaker 10: year students than Harvard did at all.
Speaker 3: So to be fair, what does Harvard say about that drop?
Speaker 10: Well, Harvard was a named litigation litigant in the case.
Speaker 10: So they're saying, you know, it could be one year.
Speaker 10: It's you know, it's just one year of data. They
Speaker 10: continue to want a diverse class, but they're sort of
Speaker 10: hamstrung in what they can say given what's going on
Speaker 10: in the country right now. And I say, one thing
Speaker 10: that was a very bright spot about reporting the story
Speaker 10: was meeting with the current students and what they're doing
Speaker 10: to try to recruit and and make students comfortable with
Speaker 10: the application process.
Speaker 3: Well, let's talk about that in a moment.
Speaker 9: Definitely.
Speaker 3: I want to bring you to the conversation. You're an
Speaker 3: alum of the Harvard Law School, former CEO of Black
Speaker 3: Entertainment Television Networks. What do you think about that drop?
Speaker 11: I was very upset when I heard about the drop
Speaker 11: in numbers. I was at Harvard Law School and the
Speaker 11: Kennedy School. I did a joint degree program, so I
Speaker 11: was in a four year program. I was there from
Speaker 11: seventy six to nineteen eighty. Every year I was there
Speaker 11: at Harvard Law School, they admitted with the entering class,
Speaker 11: as Janet said, of about five hundred students, would include
Speaker 11: fifty black people, right, that was the number they kind
Speaker 11: of aimed for. I've found out since then that sometimes
Speaker 11: it was higher, sometimes it was lower, but fifty was
Speaker 11: kind of the end all. And it was as a
Speaker 11: result of something called the Harvard Plan, which was implemented
Speaker 11: years ago, where people came together and said they wanted
Speaker 11: Harvard to Law to be one of the best training
Speaker 11: grounds for black law students and black lawyers, and they
Speaker 11: implemented this plan. There was a dean who focus on this.
Speaker 11: So everything worked out until this year. And you know,
Speaker 11: we know what the Supreme Court said, but they also said,
Speaker 11: you know, students could talk about race in their applications.
Speaker 11: They can consider all kinds of other factors. So I
Speaker 11: have to say I blame Harvard Law School for this
Speaker 11: drop because a lot of other law schools didn't have
Speaker 11: up the drop.
Speaker 3: And they ultimately decide to be fair, right, They ultimately
Speaker 3: decide who comes in who doesn't.
Speaker 7: Yes.
Speaker 11: And when I was at Harvard, there was a case
Speaker 11: called back Baki, which was the first reverse discrimination case,
Speaker 11: and as black law students, some of them wrote an
Speaker 11: a meekas breed for the Supreme Court, and as part
Speaker 11: of that, the admissions director from Harvard College came over
Speaker 11: to talk to us one day and She said, only
Speaker 11: one fourth of the students at Harvard College get in
Speaker 11: on the numbers, one fourth get in on diversity, one
Speaker 11: fourth get in on legacy, and the other fourth one
Speaker 11: fourth get in on whether you're an oboe player from Utah,
Speaker 11: you know, some distinguishing factor. So she made it very clear.
Speaker 11: And I haven't forgotten this in fifty years whenever I
Speaker 11: finished Harvard.
Speaker 6: That's a formula. There is a form where there was
Speaker 6: a formula.
Speaker 9: There was a formula.
Speaker 11: And you know, people say, oh, diversity, you know, screws
Speaker 11: up everything. There are all these otherqualifications that can get
Speaker 11: you into Harvard College. So I don't know how they
Speaker 11: did it at the law school. But let me just
Speaker 11: say this. The thing that bathers me the most about
Speaker 11: the drop is because nineteen students black students were admitted
Speaker 11: this year. Does that say to everyone above nineteen that
Speaker 11: if brace wasn't taken into account, you wouldn't have got
Speaker 11: into Harvard Law School those fifty students that were admitted.
Speaker 11: And I hate that anyone would think that, because, first
Speaker 11: of all, everyone admitted to Harvard Law School is qualified.
Speaker 11: It's not you know, we're just going to pick some
Speaker 11: random students and you have to perform, and you have
Speaker 11: to graduate. And as you said, there's so many amazing
Speaker 11: Harvard graduates. Everyone that you mentioned I know except Conrad Harper,
Speaker 11: and I know them in part because I went to
Speaker 11: Harvard Law School, so there's such a great network.
Speaker 6: Some of them were there with me.
Speaker 11: But when you meet someone and they tell you they
Speaker 11: went to Harvard lawsie were, You're like, oh, yeah, so
Speaker 11: did that?
Speaker 10: Well?
Speaker 4: I did mention Barack Obama. I won't to ask you
Speaker 4: what he thinks about what's going on in Washington, because
Speaker 4: you know we won't call on him right now, but
Speaker 4: I do want to know. You are featured in Janet's
Speaker 4: piece as working to make sure the numbers don't fall right.
Speaker 6: So what are you doing well.
Speaker 11: I was part of a call of black alums from
Speaker 11: Harvard Law School before Christmas, and we talked a lot
Speaker 11: about what can we do, and so the decision was
Speaker 11: made to write a group letter to the dean, and
Speaker 11: that letter was delivered and the Dean of LA Harvard
Speaker 11: Law has agreed to meet with a group of alums.
Speaker 11: So you know, the first thing we have to talk
Speaker 11: about is what happened. You know, I'm not saying this
Speaker 11: was done intentionally. I think it was just, you know,
Speaker 11: the circumstances change and people weren't ready for it. And
Speaker 11: as Janet said, the law students are getting more involved.
Speaker 11: There was the head of the Law Students was on
Speaker 11: the call with Thus and you know he's very active.
Speaker 11: And I went up to Harvard Law last week to
Speaker 11: speak and tell students to keep the faith and work hard,
Speaker 11: and we can't let this happen again.
Speaker 4: Jenna, what would you say to somebody who hears the
Speaker 4: nineteen figure as a drop from last year and says, well, wait,
Speaker 4: a second one year does not a trend make maybe
Speaker 4: this is an anomaly.
Speaker 10: Well, I actually did speak to an admitted student who
Speaker 10: also is considering Stanford and Chicago and Duke and other
Speaker 10: top law students in his schools, and he's leaning towards Harvard.
Speaker 10: But one thing that he took a lot of comfort
Speaker 10: in was interacting with the current students. You know, they
Speaker 10: held zooms, they read essays. He met the current president
Speaker 10: of the Black Law Students Association when he in a
Speaker 10: Harvard Law officer admissions officer came to recruit at Dillard.
Speaker 10: So he felt comforted knowing there is this tight student
Speaker 10: group who are there to provide assistance and to provide
Speaker 10: a community. So I think that bodes well. But they've
Speaker 10: got some work to do.
Speaker 11: Yeah, a lot of work. And you know, one thing
Speaker 11: we talked about is the lums is maybe we don't
Speaker 11: give Harvard Law money until.
Speaker 6: We resolve this issue money talks.
Speaker 11: I started a public service scholarship program at Harvard Law,
Speaker 11: so people who wanted to go to public service and
Speaker 11: didn't have money that you make when you go to
Speaker 11: a corporate law firm law firm, could do that as
Speaker 11: an alternative. I mean there, we just have to talk
Speaker 11: about and figure out what went wrong and keep it
Speaker 11: from happening again, because it reflects poorly on the law school.
Speaker 11: It really does, especially when no one else's numbers fell.
Speaker 3: Junk Car Harvard Law class of eighty three, retired partner
Speaker 3: at Simpson and Thatcher. This is in Janet's story said
Speaker 3: this country is going through a new Jim Crow, referring
Speaker 3: to the laws that legalized racial segregation in the US South,
Speaker 3: as we know, back in the nineteen sixties sixties.
Speaker 11: Do you agree, yes, I agree. I was born the
Speaker 11: year Brown versus Board Education was decided nineteen fifty four.
Speaker 11: And my father pushed me into Ivy League schools because
Speaker 11: I was a generation, first generation who could take advantage
Speaker 11: of that. I went to Harvard Law School because I
Speaker 11: could take an advantage of that. And it does feel
Speaker 11: like the Supreme Court and this White House are trying
Speaker 11: to roll back progress that has been made. Anytime our
Speaker 11: president says a plane went down because of a DEI higher,
Speaker 11: you know, he's equating it one DEI with just black,
Speaker 11: even though a lot of other categories included in DEI,
Speaker 11: and he's equating it with incompetence. And that's not what
Speaker 11: THEI is about. And I'm old enough to remember affirmative
Speaker 11: action before DEI. It's been called different things, but the
Speaker 11: goal is to open the door to people that are qualified.
Speaker 11: And someone said to me, so, what you're talking about
Speaker 11: is a diverse meritocracy, and I said, exactly, that's what
Speaker 11: we're talking about.
Speaker 3: One thing I do want to ask, because I know
Speaker 3: we get pushed back on this a lot, is that
Speaker 3: people are going to say, well, half of America put
Speaker 3: this president with his initiatives and his campaign promises, you know,
Speaker 3: to roll back woke initiatives.
Speaker 6: His words.
Speaker 3: You know, what do you say to that.
Speaker 11: I hope that's not true. You know, you mentioned it before.
Speaker 11: I came on about the twenty twenty five plan, and
Speaker 11: there were horrible things in that when I first heard
Speaker 11: about it, and you know, Trump distanced himself phone, No,
Speaker 11: I'm not going to do that, And now he's doing it.
Speaker 11: So did all those people that voted for him know
Speaker 11: he was going to do this? Is this what they wanted?
Speaker 11: We've made a lot of progress, all kind of groups women,
Speaker 11: you know, Asians, Latinos, and I just don't think the
Speaker 11: majority of Americans want that roll back and are saying
Speaker 11: we only want white men again. I don't believe that.
Speaker 6: Jennet.
Speaker 4: You your story is about what's happening at Harvard Law,
Speaker 4: but you already mentioned some of the other Ivy League
Speaker 4: law schools here in the US. Did they see a
Speaker 4: similar drop off too following the Supreme Court decision?
Speaker 6: Do we know that yet?
Speaker 1: Well?
Speaker 10: I mean we looked at the top five law schools,
Speaker 10: and nobody else had the same drop that they did.
Speaker 10: They increased. Now, one reason one Harvard law professor said was,
Speaker 10: you know, Harvard wasn't named litigant in the Supreme Court.
Speaker 6: Lawsuit, So what does that mean?
Speaker 4: Though, does that mean they're more sensitive to it, they're
Speaker 4: more concerned with following the law.
Speaker 10: Well, certainly they're going to be very concerned about it.
Speaker 10: But perhaps if you're a student and you keep hearing
Speaker 10: Harvard Harvard Law School Supreme Court case, Harvard Law Harvard
Speaker 10: University Supreme Court case, over and over and over, that
Speaker 10: could be a recent In the University of North Carolina,
Speaker 10: which was also a name litigant was they also had
Speaker 10: a slight decline.
Speaker 3: Jennet, what are you seeing in terms of colleges? And
Speaker 3: I want to bring you back in and you know
Speaker 3: your reach out to Deborah, But are college's universities not
Speaker 3: talking about issues before? Or they'll give you stuff on background,
Speaker 3: but they want to be very careful. Has it changed
Speaker 3: a medically? You've been covering this industry, this group for
Speaker 3: a long time.
Speaker 10: Everybody is very nervous. You know, people I've talked to
Speaker 10: for more than a decade are very nervous. It's you know,
Speaker 10: the federal funding is under scrutiny.
Speaker 7: No.
Speaker 10: We wrote a story in December basically outlining all the
Speaker 10: things that were likely to happen, especially at a place
Speaker 10: like Harvard, which has been under imment scrutiny and the
Speaker 10: idea that they're considering pulling federal federal research funding seven
Speaker 10: hundred million dollars at Harvard. It's quite a lot of money.
Speaker 6: Debora.
Speaker 4: I want to speak to you in the capacity of
Speaker 4: not just a graduate of Harvard Law and also was
Speaker 4: it the Kennedy School as well, but also as a
Speaker 4: business leader, former CEO of Black Entertainment Television Networks, also
Speaker 4: currently a board member of Marriott p ANDNG Warner Brothers Discovery.
Speaker 4: You've been on boards for many boards for the last
Speaker 4: twenty two years. This is also happening at the corporate level, right.
Speaker 4: So what we're seeing happen in education, we saw executive
Speaker 4: orders from the president, and we know there are a
Speaker 4: lot of people at different universities and our company is
Speaker 4: trying to think, Okay, what do we do with the
Speaker 4: DEI initiatives that we have that have we have invested
Speaker 4: so much in over the past few decades.
Speaker 6: Well, what are you hearing?
Speaker 11: Yeah? Well, what Janet said, people are.
Speaker 6: Afraid business leaders are business.
Speaker 11: Leaders even though the Supreme Court has not touched them,
Speaker 11: doesn't apply to them. But there have been activists that
Speaker 11: have gone after certain corporations and said, you know, you're
Speaker 11: doing too much in DEI. Offices have been shattered, people
Speaker 11: have been reassigned, and they're pulling back on money to
Speaker 11: organizations that might look like DEI. And so there's a
Speaker 11: lot of change going.
Speaker 4: But is there a way to still have a leadership
Speaker 4: team or a workforce that looks like America? Yes, when
Speaker 4: you have pushed back from the federal government at initiatives
Speaker 4: that attempt to do that.
Speaker 11: Several more than several companies have said, diversity has been
Speaker 11: one of our values for one hundred and twenty years
Speaker 11: and we're not going to change it because of this
Speaker 11: White House that may be in office for four years.
Speaker 11: And so people are standing up against the political pressure.
Speaker 11: And I admire those companies because it does take a lot.
Speaker 11: And if next week they do get some federal funding
Speaker 11: from the government, will that change their position. I don't know.
Speaker 11: But several companies well that are standing tough.
Speaker 3: Don't bring you into this question. You you know, did all
Speaker 3: this reporting and have talked to Deborah ahead of the
Speaker 3: story being put out on the Bloomberg.
Speaker 10: Well, I guess, Deborah, is there anything that you would
Speaker 10: say to a potential Harvard law student now a black
Speaker 10: student who's considering option. Should I go there? Is it
Speaker 10: or should I go somewhere else? Only nineteen students in
Speaker 10: one year, maybe if maybe it's just going to be small,
Speaker 10: what would you say?
Speaker 11: I would say, If they're admitted, go to Harvard, try
Speaker 11: to apply, you know, talk to students, talk to consultants
Speaker 11: that help with these kind of things. Put your best
Speaker 11: foot forward, and hopefully you will get admitted. And I
Speaker 11: will tell students because I do get this question a
Speaker 11: lot from students who are admitted to Stanford or Georgetown
Speaker 11: or whatever, and they're like, oh, I got a full
Speaker 11: ride from UCLA. I'm like, if you got into Harvard,
Speaker 11: go into debt and go. It's the best network, it's
Speaker 11: the best law school. You know, you can't go wrong
Speaker 11: with going there. You may have to pay back more
Speaker 11: money than if you went to UCLA on a full ride.
Speaker 11: So I'm a big proponent of it. Even though I
Speaker 11: didn't really want to go to Harvard. My dean made
Speaker 11: me apply, and I didn't tell my father I applied
Speaker 11: because I knew if I told him and I got in,
Speaker 11: he would make me go. So I didn't tell him.
Speaker 11: When I told him, I got in and I was
Speaker 11: going because I made it up my own mind. He said, oh,
Speaker 11: that's funny, you didn't even apply, and I was like, well,
Speaker 11: I forgot to tell you. But it's one of the
Speaker 11: best decisions I made.
Speaker 6: Hey, before we let you go.
Speaker 4: What someone listening or watching right now who might agree
Speaker 4: with what the White House has done might say to
Speaker 4: themselves or say to us, what about the idea of meritocracy.
Speaker 4: We're only the best of the best get to do
Speaker 4: these things. And if you bring in other factors, it's
Speaker 4: not a meritocracy.
Speaker 6: What would you say?
Speaker 11: I would say, that's absolutely not true. We bring in
Speaker 11: other factors all the time. I remember my first law
Speaker 11: firm job. The guy who started the same day I
Speaker 11: did was a baseball player, and all the partners kept saying,
Speaker 11: Oh my god, you're going to be on our team.
Speaker 11: We're so excited. Why did he get the job?
Speaker 5: You know?
Speaker 11: And maybe I got the job because I was black
Speaker 11: or a woman, But there are always other factors, and
Speaker 11: meritocracy is always an issue. You know, if someone opens
Speaker 11: the door for you and you walk through it and
Speaker 11: you can't compete, you're not gonna make it. You're not
Speaker 11: going to make it. I saw a great thing on
Speaker 11: Instagram about that about black women doctors. Someone said, I
Speaker 11: don't trust them and they take the same exams as
Speaker 11: everyone else, They do the same work and they have
Speaker 11: to graduate. What are you talking about? So I like
Speaker 11: the word. And actually John Malone came up with it.
Speaker 11: He's on one of the boards I'm on and he
Speaker 11: said to me, Deborah, what you want is a diverse meritocracy.
Speaker 3: And I said, exactly, a diverse meritocracy, something to really
Speaker 3: think about. We don't want standards to be lowered exactly. Hey, listen,
Speaker 3: we've got a run. We've got to get back to
Speaker 3: the markets. But thank you so much, an important story
Speaker 3: to tell. Jenna Lauren, Bloomberg News Higher Education finance reporter,
Speaker 3: incredible reporting, climbed it on the Bloomberg and Deborly thank
Speaker 3: you for finding time pres as well former CEO Black
Speaker 3: Entertainment Television Network.
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