1 00:00:12,160 --> 00:00:15,000 Speaker 1: This is Wall Street Week. I'm David Weston bringing you 2 00:00:15,200 --> 00:00:18,360 Speaker 1: stories of capitalism. This week, we go to the waters 3 00:00:18,400 --> 00:00:21,360 Speaker 1: off of Mexico to see the role private equity is 4 00:00:21,400 --> 00:00:24,560 Speaker 1: playing in getting you that high end blue fin tuna 5 00:00:24,680 --> 00:00:28,560 Speaker 1: for your favorite sashimi. And we hear from Anna Botina 6 00:00:28,680 --> 00:00:32,440 Speaker 1: Santander about prospects for growth in the US and Europe 7 00:00:32,600 --> 00:00:35,159 Speaker 1: and how the crisis in Ukraine may serve as a 8 00:00:35,200 --> 00:00:37,599 Speaker 1: wake up call for the EU to make the financial 9 00:00:37,680 --> 00:00:41,040 Speaker 1: reforms it has needed for years. But we start with 10 00:00:41,159 --> 00:00:43,960 Speaker 1: the big story for global Wall Street this week, the 11 00:00:44,000 --> 00:00:46,600 Speaker 1: tale of Trump tariffs and what they may do to 12 00:00:46,640 --> 00:00:50,320 Speaker 1: the US economy. For his views on tariffs and the economy, 13 00:00:50,360 --> 00:00:54,000 Speaker 1: we welcome back our very special contributor, Larry Summers of Harvard. 14 00:00:55,640 --> 00:00:58,960 Speaker 2: We will charge them approximately half of what they are 15 00:00:59,000 --> 00:01:04,640 Speaker 2: and happened to, so the tariffs will be not a 16 00:01:04,720 --> 00:01:08,320 Speaker 2: full reciprocal I could have done that, yes, but it 17 00:01:08,360 --> 00:01:10,560 Speaker 2: would have been tough for a lot of countries who 18 00:01:10,600 --> 00:01:11,440 Speaker 2: didn't want to do that. 19 00:01:11,800 --> 00:01:15,959 Speaker 1: Will these increased costs be passed along the consumer? I 20 00:01:16,000 --> 00:01:18,360 Speaker 1: know you've taken a position on that. The Secuar and 21 00:01:18,400 --> 00:01:22,680 Speaker 1: Treasury current Secuary and Treasury Scott Besson has questioned exactly 22 00:01:22,880 --> 00:01:24,120 Speaker 1: why they would be passed on. 23 00:01:24,760 --> 00:01:26,360 Speaker 3: I'm not going to get in a back and forth 24 00:01:26,400 --> 00:01:30,080 Speaker 3: with Professor Summers, And you know, maybe Professor Summers should 25 00:01:30,240 --> 00:01:32,120 Speaker 3: let the world know who his client lift is and 26 00:01:32,160 --> 00:01:35,679 Speaker 3: why he's talking about things like this, because he does 27 00:01:35,760 --> 00:01:39,320 Speaker 3: have professional clients away from Harvard. But you know, I 28 00:01:39,360 --> 00:01:43,760 Speaker 3: would also add that I have seven years of empirical 29 00:01:43,840 --> 00:01:47,800 Speaker 3: data and which showed that the China terrifts were not 30 00:01:48,000 --> 00:01:49,880 Speaker 3: passed on to the American people. 31 00:01:50,160 --> 00:01:50,960 Speaker 1: What's your response. 32 00:01:51,520 --> 00:01:53,720 Speaker 4: He's tried to call me out like I've got some 33 00:01:53,840 --> 00:01:57,360 Speaker 4: kind of importer clients who's paying me. 34 00:01:57,480 --> 00:01:59,000 Speaker 5: That's ridiculous. 35 00:02:00,120 --> 00:02:03,880 Speaker 4: Maybe we ought to pay some attention to the various 36 00:02:03,920 --> 00:02:07,280 Speaker 4: financial affiliations of all the people in the Trump administration 37 00:02:08,040 --> 00:02:09,280 Speaker 4: involved with Crypto. 38 00:02:10,200 --> 00:02:12,960 Speaker 5: On the marriage, we've got a clear test. 39 00:02:13,760 --> 00:02:17,080 Speaker 4: They put a tariff on steel, and the price of 40 00:02:17,120 --> 00:02:21,679 Speaker 4: stealing the United States is up thirty percent since inauguration day. 41 00:02:22,600 --> 00:02:26,679 Speaker 4: We got many economists at the Peterson Institute. There's a 42 00:02:26,720 --> 00:02:31,280 Speaker 4: different study in the American Economic Review that looked at 43 00:02:31,320 --> 00:02:35,680 Speaker 4: the effects of President Trump's tariffs in his first administration. 44 00:02:36,160 --> 00:02:38,280 Speaker 5: Those are much smaller. 45 00:02:37,800 --> 00:02:42,280 Speaker 4: Tariffs than are being discussed and put in place today. 46 00:02:42,880 --> 00:02:45,480 Speaker 4: But the evidence looks like it's pretty close to dollar 47 00:02:45,520 --> 00:02:52,440 Speaker 4: for dollar in terms of increased prices that consumers face. 48 00:02:53,400 --> 00:02:56,800 Speaker 4: And the economic logic is, if you put a dime 49 00:02:56,919 --> 00:02:59,919 Speaker 4: tax on a hot drug, the guys selling the hot 50 00:03:00,040 --> 00:03:03,639 Speaker 4: rug's going to sell it for ten cents more. If 51 00:03:04,040 --> 00:03:07,079 Speaker 4: he could have squeezed to suppliers, he would have already 52 00:03:07,080 --> 00:03:10,800 Speaker 4: squeezed his suppliers. Putting that ten cents on doesn't make 53 00:03:10,800 --> 00:03:15,000 Speaker 4: it any easier. So I don't understand the argument, and 54 00:03:15,560 --> 00:03:20,640 Speaker 4: I'm not alone among serious economists in not being able 55 00:03:20,680 --> 00:03:24,840 Speaker 4: to understand the argument that this will be absorbed. 56 00:03:25,120 --> 00:03:27,080 Speaker 1: There was a lot of anticipation built up to this 57 00:03:27,240 --> 00:03:30,680 Speaker 1: so called Liberation Day this week, But by all accounts, 58 00:03:30,720 --> 00:03:32,640 Speaker 1: this is not the end of the process. This is 59 00:03:32,919 --> 00:03:34,800 Speaker 1: in the middle of the beginning of the precess, which 60 00:03:34,840 --> 00:03:37,920 Speaker 1: will lead to a lot more negotiation, bilateral negotiation. What 61 00:03:38,000 --> 00:03:41,200 Speaker 1: about the cost of uncertainty itself in this process of 62 00:03:41,200 --> 00:03:43,800 Speaker 1: President Trump trying to use tariffs to extract things out 63 00:03:43,840 --> 00:03:44,160 Speaker 1: of country. 64 00:03:44,200 --> 00:03:47,480 Speaker 5: I see two things about that. First, the White House 65 00:03:47,520 --> 00:03:48,560 Speaker 5: can't have it both ways. 66 00:03:49,440 --> 00:03:52,760 Speaker 4: Either of these taxes are a crowbar, These taffs are 67 00:03:52,800 --> 00:03:53,320 Speaker 4: a crowbar. 68 00:03:54,120 --> 00:03:57,120 Speaker 5: Or they're a source of revenue, but you. 69 00:03:57,120 --> 00:03:58,960 Speaker 4: Can't say they are a source of revenue, so we 70 00:03:59,000 --> 00:04:01,360 Speaker 4: don't need to worry about the deficit and then say 71 00:04:01,400 --> 00:04:03,320 Speaker 4: we're they're a crowbar because we're going to get rid 72 00:04:03,360 --> 00:04:04,680 Speaker 4: of them when other countries. 73 00:04:04,320 --> 00:04:08,080 Speaker 5: Reduce their tariffs. That's just contradicting yourself. 74 00:04:08,760 --> 00:04:13,320 Speaker 4: Look, all of us making decisions don't want to make 75 00:04:13,360 --> 00:04:16,240 Speaker 4: them when there are a whole bunch of cards that 76 00:04:16,279 --> 00:04:20,040 Speaker 4: are going to be turned over before too long. Whether 77 00:04:20,080 --> 00:04:23,279 Speaker 4: it's buying a washing machine, buying a car, buying a house, 78 00:04:23,440 --> 00:04:27,120 Speaker 4: or a business buying a factory. You want the situation 79 00:04:27,800 --> 00:04:31,080 Speaker 4: to settle down, and you want to have some sense of. 80 00:04:31,120 --> 00:04:33,560 Speaker 5: Certainty before you act. 81 00:04:33,960 --> 00:04:39,159 Speaker 4: How could anybody act with confidence when you don't know 82 00:04:39,200 --> 00:04:42,599 Speaker 4: what the price of steal's going to be, when you 83 00:04:42,600 --> 00:04:48,039 Speaker 4: don't know what the situation of your competitors is going 84 00:04:48,160 --> 00:04:54,719 Speaker 4: to be. So the traditional approach of policymakers is to 85 00:04:54,760 --> 00:04:59,120 Speaker 4: try to provide as predictable an environment as possible so 86 00:04:59,240 --> 00:05:04,440 Speaker 4: as to increase business confidence. And this new approach of 87 00:05:05,040 --> 00:05:10,720 Speaker 4: trying to maintain maximum flexibility probably is good for raising 88 00:05:10,720 --> 00:05:13,080 Speaker 4: the ratings of a TV show because you never know 89 00:05:13,120 --> 00:05:18,000 Speaker 4: what's going to happen next, but it's hard to believe 90 00:05:18,200 --> 00:05:22,000 Speaker 4: that it inspires the confidence that will be a basis 91 00:05:22,000 --> 00:05:22,680 Speaker 4: for investment. 92 00:05:23,720 --> 00:05:25,680 Speaker 1: We talk about systemic risk when it comes to the 93 00:05:25,680 --> 00:05:30,520 Speaker 1: banking system. What about systemic risk the overall global economic system? 94 00:05:30,600 --> 00:05:33,799 Speaker 1: I mean, apart from the individual tariffs and what consequences 95 00:05:33,839 --> 00:05:36,520 Speaker 1: immediate might happen, how big at risk is there to 96 00:05:36,560 --> 00:05:38,640 Speaker 1: the system? And I will say, in the past, we've 97 00:05:38,680 --> 00:05:41,960 Speaker 1: had some shakeups. I mean, Margaret thatcher Ronald Reagan shook 98 00:05:42,000 --> 00:05:44,920 Speaker 1: up a lot of economics. Is this that sort of 99 00:05:45,760 --> 00:05:47,760 Speaker 1: a transformation or could it be more profound? 100 00:05:48,560 --> 00:05:51,719 Speaker 4: I think a lot of, not everything, but a lot 101 00:05:51,760 --> 00:05:56,440 Speaker 4: of what Margaret thatcher Ron reign did was a necessary 102 00:05:56,600 --> 00:06:00,600 Speaker 4: corrective to various kinds of accesses. You know, we had 103 00:06:00,680 --> 00:06:04,520 Speaker 4: twenty percent interest rates in the United States. They had 104 00:06:04,800 --> 00:06:10,120 Speaker 4: piles of garbage twelve feet high on every street in London. 105 00:06:10,440 --> 00:06:12,640 Speaker 4: So I don't think that's the right example for thinking 106 00:06:12,680 --> 00:06:17,800 Speaker 4: about this at all. I think a better example is 107 00:06:18,400 --> 00:06:25,040 Speaker 4: the smooth Hawley tariffs that we saw. Now, the lore exaggerates, 108 00:06:25,440 --> 00:06:27,560 Speaker 4: but I think it's fair to say that the smooth 109 00:06:27,560 --> 00:06:31,640 Speaker 4: Holy tariffs contributed to making the depression great. 110 00:06:32,240 --> 00:06:35,279 Speaker 1: Even the issue of smooth Holly raises the larger issue 111 00:06:35,400 --> 00:06:39,719 Speaker 1: where are we on the likelihood or probability of recession 112 00:06:40,440 --> 00:06:43,279 Speaker 1: or stagflation. Obviously we don't know where we are yet, 113 00:06:43,640 --> 00:06:45,040 Speaker 1: but where is that headed. 114 00:06:45,760 --> 00:06:47,599 Speaker 4: I think the odds are on one side or the 115 00:06:47,640 --> 00:06:52,320 Speaker 4: other of fifty percent that we'll have a recession within 116 00:06:52,520 --> 00:07:01,880 Speaker 4: the next year. The indicators of sentiment, the psychological indicators, 117 00:07:02,360 --> 00:07:07,800 Speaker 4: are mostly running really very negative. The hard indicators on 118 00:07:07,960 --> 00:07:13,640 Speaker 4: what's actually happening are less negative, but they've had less 119 00:07:13,680 --> 00:07:18,280 Speaker 4: time to adjust and are more backward looking and are 120 00:07:18,440 --> 00:07:22,920 Speaker 4: less forward looking. So I think the odds of a 121 00:07:22,960 --> 00:07:27,080 Speaker 4: recession are probably fifty to fifty. And part of the 122 00:07:27,120 --> 00:07:31,400 Speaker 4: reason I think they're as limited as that is because 123 00:07:31,440 --> 00:07:35,560 Speaker 4: I think there's some prospect that, particularly if things turned downwards, 124 00:07:36,040 --> 00:07:37,760 Speaker 4: they'll be a reversal in course. 125 00:07:38,240 --> 00:07:40,840 Speaker 1: What does this do for some of our economic rivals? 126 00:07:40,880 --> 00:07:44,160 Speaker 1: I mean, during the first administration of Donald Trump, he 127 00:07:44,240 --> 00:07:47,960 Speaker 1: really focused on China, not exclusively, but really predominantly. This time, 128 00:07:48,000 --> 00:07:49,960 Speaker 1: maybe it's not quite so sure. But if you're sitting 129 00:07:50,000 --> 00:07:52,720 Speaker 1: in Beijing right now, if your president g how do 130 00:07:52,800 --> 00:07:54,080 Speaker 1: you react to these tariffs? 131 00:07:54,160 --> 00:07:57,120 Speaker 5: What does it do to your situation? You know? 132 00:07:57,160 --> 00:08:01,360 Speaker 4: I think it goes beyond the tariffs, David. In China, 133 00:08:01,840 --> 00:08:05,800 Speaker 4: the signal event in the lives of people your age 134 00:08:05,840 --> 00:08:10,720 Speaker 4: and my age in China was the cultural revolution, when 135 00:08:10,760 --> 00:08:17,880 Speaker 4: the government turned against all the traditional leading institutions of society. 136 00:08:19,040 --> 00:08:23,600 Speaker 4: And what I hear and see is that the Chinese 137 00:08:24,600 --> 00:08:29,280 Speaker 4: see that we are having a kind of cultural revolution. 138 00:08:30,200 --> 00:08:35,960 Speaker 4: They also see it as a huge opportunity because they 139 00:08:36,040 --> 00:08:40,360 Speaker 4: know better than anyone else how much damage a cultural 140 00:08:40,440 --> 00:08:44,920 Speaker 4: revolution can do to a society. And they see us 141 00:08:45,080 --> 00:08:50,120 Speaker 4: alienating all our traditional friends, and they see us increasingly 142 00:08:50,920 --> 00:08:58,280 Speaker 4: internally divided, and they see us focused on domestic vengeance 143 00:08:59,080 --> 00:09:03,840 Speaker 4: rather than global challenges, and they have to see that 144 00:09:04,760 --> 00:09:09,440 Speaker 4: as a very big opportunity and perhaps even as a 145 00:09:09,480 --> 00:09:10,520 Speaker 4: strategic gift. 146 00:09:11,000 --> 00:09:14,680 Speaker 1: Larry, you always admonish me and us not to overreact, 147 00:09:14,880 --> 00:09:17,280 Speaker 1: not to over predict what's happening. So I wander careful 148 00:09:17,320 --> 00:09:19,080 Speaker 1: not to do that. But what you're talking about really 149 00:09:19,080 --> 00:09:21,160 Speaker 1: goes to the rule of law, which sounds like it's 150 00:09:21,160 --> 00:09:24,160 Speaker 1: a really nice concept, but maybe we don't always remember 151 00:09:24,240 --> 00:09:29,680 Speaker 1: how that undercurds are capital markets the entire economy. Now, 152 00:09:29,720 --> 00:09:31,600 Speaker 1: as you say, we're not at the cultural revolution, but 153 00:09:32,320 --> 00:09:34,400 Speaker 1: even shaking it a bit in that direction. When do 154 00:09:34,440 --> 00:09:37,000 Speaker 1: we start to see that in barring costs the cost 155 00:09:37,040 --> 00:09:37,560 Speaker 1: of capital. 156 00:09:37,920 --> 00:09:41,600 Speaker 4: One of the things people have talked about is American exceptionalism, 157 00:09:42,160 --> 00:09:47,120 Speaker 4: and one aspect of American exceptionalism is that multiples the 158 00:09:47,320 --> 00:09:50,320 Speaker 4: ratio of prices to earnings are higher here. 159 00:09:51,080 --> 00:09:52,680 Speaker 5: And that's for many reasons. 160 00:09:52,960 --> 00:09:55,960 Speaker 4: But one of those reasons is that if you have 161 00:09:56,000 --> 00:10:00,400 Speaker 4: earnings today here, it's more secure than you're going to 162 00:10:00,440 --> 00:10:04,240 Speaker 4: have earnings tomorrow because you can count on your property rights, 163 00:10:04,280 --> 00:10:08,200 Speaker 4: you can count on being able to enforce contracts. And 164 00:10:08,240 --> 00:10:12,200 Speaker 4: if we start attenuating the rule of law, that starts 165 00:10:12,280 --> 00:10:16,199 Speaker 4: to go away, and that can take a turn two turns, 166 00:10:16,240 --> 00:10:21,160 Speaker 4: three turns off of price earnings ratios, and that's a 167 00:10:21,320 --> 00:10:28,080 Speaker 4: loss of trillions of dollars of investment. And so we 168 00:10:28,400 --> 00:10:35,400 Speaker 4: take for granted that we make investments with partners, and 169 00:10:34,840 --> 00:10:38,080 Speaker 4: we have lawyers who write contracts, and then we know 170 00:10:38,880 --> 00:10:40,839 Speaker 4: that contracts. 171 00:10:40,160 --> 00:10:41,880 Speaker 5: Will be enforced. 172 00:10:42,520 --> 00:10:45,680 Speaker 4: You know, one of the things I used to not understand, 173 00:10:45,760 --> 00:10:49,360 Speaker 4: and I think I understand better today is why it 174 00:10:49,480 --> 00:10:52,280 Speaker 4: is that in so many parts of the world you 175 00:10:52,480 --> 00:10:59,000 Speaker 4: have these family clan businesses that are in twenty different industries, 176 00:10:59,640 --> 00:11:02,560 Speaker 4: and we have so little of that in the United States, 177 00:11:03,440 --> 00:11:07,200 Speaker 4: And the answer is that if you don't have contracts, 178 00:11:08,040 --> 00:11:12,280 Speaker 4: then what you have is blood, and so you get 179 00:11:12,280 --> 00:11:16,320 Speaker 4: these clan businesses because you can't trust people outside of 180 00:11:16,360 --> 00:11:19,920 Speaker 4: your clan, and so you choose your cousin rather than 181 00:11:19,960 --> 00:11:24,640 Speaker 4: the best person. That's a price those societies pay economically, 182 00:11:24,679 --> 00:11:27,720 Speaker 4: and because we've been so good at the rule of law, 183 00:11:28,400 --> 00:11:33,439 Speaker 4: it's not a price that we've paid in the last century. 184 00:11:34,000 --> 00:11:40,520 Speaker 5: But we may be moving back a bit in that direction. 185 00:11:42,440 --> 00:11:45,640 Speaker 1: Coming up, as the US comes to terms with Trump tariffs, 186 00:11:45,760 --> 00:11:49,240 Speaker 1: Europe does an about face on defense spending. We talk 187 00:11:49,320 --> 00:11:52,200 Speaker 1: with Anna Botine of Santander about what it could mean 188 00:11:52,360 --> 00:12:04,920 Speaker 1: for her bank and potential reform of capital markets. This 189 00:12:05,080 --> 00:12:08,199 Speaker 1: is a story about two economies in transition. In the 190 00:12:08,280 --> 00:12:12,679 Speaker 1: United States, as President Trump shakes the foundations through tariffs. 191 00:12:12,320 --> 00:12:14,960 Speaker 2: Foreign nations will finally be asked to pay for the 192 00:12:15,040 --> 00:12:18,920 Speaker 2: privilege of access to our market, the biggest market in 193 00:12:18,960 --> 00:12:21,320 Speaker 2: the world, where right now the biggest market in the world. 194 00:12:21,360 --> 00:12:24,959 Speaker 2: We had a great country four years ago in terms 195 00:12:25,000 --> 00:12:27,840 Speaker 2: of the economics. We were doubling up when China we 196 00:12:27,840 --> 00:12:30,160 Speaker 2: were doing so well, nobody was going to catch us. 197 00:12:30,600 --> 00:12:33,880 Speaker 1: And in Europe suddenly facing the need for massive defense 198 00:12:33,920 --> 00:12:36,119 Speaker 1: spending it never really expected. 199 00:12:36,679 --> 00:12:39,960 Speaker 6: The era of the peace dividend is long gone. 200 00:12:40,520 --> 00:12:43,080 Speaker 7: The security architecture that we relied on. 201 00:12:44,480 --> 00:12:46,439 Speaker 6: Can no longer be taken for granted. 202 00:12:47,679 --> 00:12:50,520 Speaker 3: The age of spheres of influence. 203 00:12:51,840 --> 00:12:52,360 Speaker 8: And power. 204 00:12:52,400 --> 00:12:55,640 Speaker 6: Competition is well and truly back. 205 00:12:56,559 --> 00:12:59,839 Speaker 1: While the new administration in the US slashes regulations and 206 00:13:00,200 --> 00:13:02,559 Speaker 1: the size of the government to keep the country competitive, 207 00:13:03,040 --> 00:13:06,000 Speaker 1: the EU is dealing with a stalling economy that is 208 00:13:06,040 --> 00:13:08,000 Speaker 1: falling behind its western piers. 209 00:13:08,720 --> 00:13:12,400 Speaker 7: So the US has something really important, which is what 210 00:13:12,440 --> 00:13:17,000 Speaker 7: I call a growth mindset. So whatever government is in place, 211 00:13:17,520 --> 00:13:19,319 Speaker 7: it has always been more pro growth. 212 00:13:19,880 --> 00:13:23,600 Speaker 1: Anne Boutine is the executive chair of Santander Group, the 213 00:13:23,679 --> 00:13:27,920 Speaker 1: fourteenth largest banking institution in the world, with operations in 214 00:13:27,920 --> 00:13:32,080 Speaker 1: Europe and the Americas North and South. Thirty eight percent 215 00:13:32,120 --> 00:13:35,240 Speaker 1: of its net revenue comes from Europe and South America 216 00:13:35,280 --> 00:13:37,920 Speaker 1: comes in second, contributing thirty two percent. 217 00:13:38,559 --> 00:13:40,280 Speaker 7: You can see that in the growth of the last 218 00:13:40,320 --> 00:13:44,640 Speaker 7: decade than Europe. So it's early, but I believe that 219 00:13:44,640 --> 00:13:49,480 Speaker 7: that is a very positive sign. And as I like 220 00:13:49,559 --> 00:13:52,559 Speaker 7: to say, Europe is awakening and the alarm clock has 221 00:13:52,559 --> 00:13:56,400 Speaker 7: been President Trump because what I have never seen is 222 00:13:56,640 --> 00:14:01,120 Speaker 7: the President of the Commission saying that we're in extraordinary 223 00:14:01,200 --> 00:14:05,040 Speaker 7: times and we need to take extortly measures. So it's 224 00:14:05,040 --> 00:14:07,120 Speaker 7: not just good for the US, it's good for Europe. 225 00:14:07,840 --> 00:14:12,000 Speaker 7: What's happening is good for growth. It's good for citizens 226 00:14:12,080 --> 00:14:15,520 Speaker 7: and society, because I believe that is. I mean, there 227 00:14:15,559 --> 00:14:17,480 Speaker 7: are the factors that are not as positive, but this 228 00:14:17,600 --> 00:14:22,000 Speaker 7: is a very positive signal that businesses will be able 229 00:14:22,080 --> 00:14:24,920 Speaker 7: to do more, invest more and create more growth. 230 00:14:25,080 --> 00:14:26,840 Speaker 1: Are we seeing action yet and how much of it 231 00:14:26,880 --> 00:14:29,720 Speaker 1: is being triggered frankly by what's going in Ukraine and 232 00:14:30,040 --> 00:14:33,200 Speaker 1: European countries deciding they really have to step up and 233 00:14:33,320 --> 00:14:35,200 Speaker 1: spend more on defense. 234 00:14:35,640 --> 00:14:38,560 Speaker 7: It's a combination, I think geopolitics and what's going on 235 00:14:38,600 --> 00:14:43,160 Speaker 7: in Ukraine, but also the economic, let's say, policies of 236 00:14:43,200 --> 00:14:47,040 Speaker 7: the US administration. So I think both of those drivers 237 00:14:47,080 --> 00:14:50,440 Speaker 7: for what I see, as you know, the German awakening, 238 00:14:50,760 --> 00:14:54,760 Speaker 7: the lifting of the breaks on debt, Germany lifting the 239 00:14:54,800 --> 00:14:59,720 Speaker 7: brakes on debt. It's harder except when Europe isn't a crisis. 240 00:15:00,080 --> 00:15:02,800 Speaker 7: Feeling now in Europe is we are in a crisis 241 00:15:03,400 --> 00:15:06,160 Speaker 7: or we could get into a crisis, and unless we 242 00:15:06,240 --> 00:15:08,280 Speaker 7: do something fast, and so there is a sense of 243 00:15:08,360 --> 00:15:11,880 Speaker 7: urgency I have not seen before and this is good 244 00:15:11,960 --> 00:15:15,000 Speaker 7: also for companies and banks. I mean, we do business 245 00:15:15,000 --> 00:15:17,880 Speaker 7: in Europe. You know, one of our biggest markets is Spain. 246 00:15:17,920 --> 00:15:20,360 Speaker 7: Spain is going to grow at those two and a 247 00:15:20,400 --> 00:15:24,000 Speaker 7: half even three percent depends on who you ask. So yes, 248 00:15:24,120 --> 00:15:26,960 Speaker 7: I think what's going on is both structural but also 249 00:15:27,080 --> 00:15:30,200 Speaker 7: due to the pressure that we're feeling on both the 250 00:15:30,760 --> 00:15:32,280 Speaker 7: war and the economy. 251 00:15:33,400 --> 00:15:36,760 Speaker 1: It wasn't always a positive picture for Spain. During the 252 00:15:36,760 --> 00:15:40,040 Speaker 1: European debt crisis of the late two thousands, Spain was 253 00:15:40,080 --> 00:15:43,040 Speaker 1: among the five EU member states that were struggling to 254 00:15:43,080 --> 00:15:47,480 Speaker 1: repay their debt. Now it's economic growth outpaces Germany, France 255 00:15:47,600 --> 00:15:50,520 Speaker 1: and the United Kingdom. Part of the problem is a 256 00:15:50,600 --> 00:15:54,840 Speaker 1: European wide monetary policy coupled with fiscal policy run by 257 00:15:54,880 --> 00:15:59,200 Speaker 1: the member states, often in different directions. What about capital 258 00:15:59,200 --> 00:16:01,680 Speaker 1: markets in Europe, because it's been thought that part of 259 00:16:01,720 --> 00:16:03,880 Speaker 1: the driver of growth in the United States has been 260 00:16:04,160 --> 00:16:06,960 Speaker 1: the robust capital markets. So people want to raise capital 261 00:16:07,000 --> 00:16:10,440 Speaker 1: to invest in, for example, startups and tech companies. Can 262 00:16:10,480 --> 00:16:14,280 Speaker 1: you move in that direction to have more robust capital markets? 263 00:16:15,160 --> 00:16:19,080 Speaker 7: This is one of the big goals we've had for years. Again, 264 00:16:19,160 --> 00:16:22,360 Speaker 7: what's happened. The awakening that I can see in Europe, 265 00:16:22,720 --> 00:16:27,480 Speaker 7: led by Germany and possibly France, means that Germany will 266 00:16:27,800 --> 00:16:32,400 Speaker 7: invest one trillion euros one trillion dollars over the next 267 00:16:32,440 --> 00:16:35,440 Speaker 7: decade in defense and the way they're going to finance 268 00:16:35,480 --> 00:16:40,120 Speaker 7: that is through a common eurobond. So that effectively is 269 00:16:40,160 --> 00:16:43,960 Speaker 7: one of the potential drivers for this Common Capital Markets Union, 270 00:16:44,000 --> 00:16:46,400 Speaker 7: which we call it in Europe, which again is good 271 00:16:46,440 --> 00:16:47,040 Speaker 7: for banks. 272 00:16:47,520 --> 00:16:50,640 Speaker 1: What is the role of regulation in all of this? 273 00:16:50,880 --> 00:16:52,960 Speaker 1: I mean, when it comes to the United States. You 274 00:16:53,080 --> 00:16:57,560 Speaker 1: famously asked President Trump about deregulation at Davos earlier this year. 275 00:16:58,280 --> 00:17:01,080 Speaker 1: What are the regulations that can help or hinder what 276 00:17:01,160 --> 00:17:02,520 Speaker 1: you want to do? At Santadre. 277 00:17:03,920 --> 00:17:07,360 Speaker 7: So, regulations matter, That's why I asked the question. I've 278 00:17:07,359 --> 00:17:10,080 Speaker 7: been very vocal about this. It's about regulation, but it's 279 00:17:10,160 --> 00:17:15,159 Speaker 7: also about supervision, how the agencies interpret the regulation, and 280 00:17:15,240 --> 00:17:17,000 Speaker 7: this is one of the quick wins. That's why I 281 00:17:17,000 --> 00:17:21,800 Speaker 7: asked the question. So I see governments as enablers for business. 282 00:17:22,240 --> 00:17:26,080 Speaker 7: Businesses create wealth, you know, create companies and jobs. That's 283 00:17:26,119 --> 00:17:30,159 Speaker 7: where you know, we pay taxes. Government can deliver other services. 284 00:17:30,800 --> 00:17:34,920 Speaker 7: So just by getting the balance right on regulation. And 285 00:17:35,320 --> 00:17:38,280 Speaker 7: at the end, regulation is there to protect consumers, but 286 00:17:38,359 --> 00:17:40,840 Speaker 7: if you overprotect them, you don't grow. 287 00:17:41,680 --> 00:17:45,639 Speaker 1: The European Commission turned to former ECB President Mario Draghi 288 00:17:46,040 --> 00:17:49,360 Speaker 1: to study the effects of the single market and competitiveness 289 00:17:49,400 --> 00:17:52,840 Speaker 1: in the EU. In the report, published in September twenty 290 00:17:52,880 --> 00:17:57,680 Speaker 1: twenty four, Dragi says regulation should be designed to facilitate 291 00:17:57,800 --> 00:18:01,560 Speaker 1: market entry, not become a bear to Europe's goals. 292 00:18:01,920 --> 00:18:06,160 Speaker 9: A little over a decade ago, the US and European 293 00:18:06,240 --> 00:18:09,920 Speaker 9: GDPs were They weren't exactly on top of each other, 294 00:18:09,920 --> 00:18:14,359 Speaker 9: but they were pretty close sixteen versus fifteen roughly. And 295 00:18:14,400 --> 00:18:18,400 Speaker 9: now the European GDP is fifteen or sixteen trillion, I think, 296 00:18:18,440 --> 00:18:21,000 Speaker 9: and the US GDP is about thirty trillion over the 297 00:18:21,000 --> 00:18:23,480 Speaker 9: course of a little more than a decade. And that 298 00:18:23,720 --> 00:18:26,280 Speaker 9: is a function. Again, that's a function of a lot 299 00:18:26,320 --> 00:18:30,080 Speaker 9: of things, but it's a function of a lack of 300 00:18:30,359 --> 00:18:36,400 Speaker 9: investment in productivity and an over regulation of the European economy. 301 00:18:36,800 --> 00:18:38,840 Speaker 9: And just as I think that we could have a 302 00:18:38,880 --> 00:18:43,600 Speaker 9: significant effect on American growth by streamlining our regulation, I 303 00:18:43,600 --> 00:18:45,760 Speaker 9: think you could have an even more dramatic effect on 304 00:18:45,800 --> 00:18:50,479 Speaker 9: European growth if they were willing to undertake that deregulatory project, 305 00:18:50,600 --> 00:18:55,439 Speaker 9: some of which has been suggested recently by Mario Draghi. 306 00:18:56,280 --> 00:18:59,080 Speaker 9: In his report delivered to the European Commission. 307 00:19:00,040 --> 00:19:02,640 Speaker 1: During his tenure as Vice Chair of the Federal Reserve, 308 00:19:03,160 --> 00:19:07,640 Speaker 1: Randy Korrels dealt with policy recommendations for regulating financial institutions. 309 00:19:08,160 --> 00:19:11,520 Speaker 1: He agrees with drog these concerns that regulations have played 310 00:19:11,520 --> 00:19:13,680 Speaker 1: a part in holding Europe back. 311 00:19:14,400 --> 00:19:17,800 Speaker 9: They really haven't created a European wide financial regulatory system, 312 00:19:18,600 --> 00:19:23,879 Speaker 9: and that fragmentation contributes to a great deal of cost. 313 00:19:23,960 --> 00:19:31,040 Speaker 9: Where there are not conceptually dramatic, but material and important 314 00:19:31,080 --> 00:19:34,480 Speaker 9: differences from one jurisdiction to another within Europe with respect 315 00:19:34,480 --> 00:19:38,600 Speaker 9: to financial regulation that continue to increase cost. And so 316 00:19:39,119 --> 00:19:42,439 Speaker 9: from my point of view, the most important thing that 317 00:19:42,480 --> 00:19:46,160 Speaker 9: Europe could do would be to accelerate in advance its 318 00:19:46,720 --> 00:19:53,240 Speaker 9: europe wide framework for financial regulation, even more than some 319 00:19:53,320 --> 00:19:57,200 Speaker 9: of the important particular changes that they could make. If 320 00:19:57,280 --> 00:20:02,800 Speaker 9: Europe could refine its relation of capital provision. The venture 321 00:20:02,880 --> 00:20:06,480 Speaker 9: capital ecosystem in Europe, for example, is very underdeveloped, and 322 00:20:06,520 --> 00:20:11,080 Speaker 9: the provision of financing really of any sort to startup 323 00:20:11,119 --> 00:20:16,080 Speaker 9: companies is not terribly robust, certainly compared to America. The 324 00:20:16,200 --> 00:20:19,600 Speaker 9: reason that we have such an advanced tech sector is 325 00:20:19,640 --> 00:20:24,480 Speaker 9: that for decades we have had nurtured, tried to develop 326 00:20:24,720 --> 00:20:29,760 Speaker 9: a capital financing system that supports the provision of capital 327 00:20:29,840 --> 00:20:33,840 Speaker 9: to these risky startup enterprises. And Europe has not done that. 328 00:20:34,440 --> 00:20:37,440 Speaker 9: Were they to make changes to the governance of capital 329 00:20:37,440 --> 00:20:42,120 Speaker 9: provision that supported particularly that sort of financing, I think 330 00:20:42,160 --> 00:20:45,520 Speaker 9: you could, in a relatively short period of time, call 331 00:20:45,560 --> 00:20:48,240 Speaker 9: it a decade, make a big dent in that when 332 00:20:48,240 --> 00:20:53,159 Speaker 9: you consider how much the technological landscape has changed in 333 00:20:53,240 --> 00:20:57,640 Speaker 9: the United States, how different the technologies that are being 334 00:20:57,680 --> 00:20:59,960 Speaker 9: deployed now in the US are from what they were 335 00:21:00,080 --> 00:21:02,760 Speaker 9: ten or fifteen years ago, all of which supported by 336 00:21:02,880 --> 00:21:06,400 Speaker 9: our financing system. If Europe had had a financing system 337 00:21:06,440 --> 00:21:09,520 Speaker 9: that was as well geared as ours to supporting that 338 00:21:09,600 --> 00:21:12,879 Speaker 9: kind of innovation, they would have participated in that to 339 00:21:12,880 --> 00:21:14,359 Speaker 9: a much greater degree than they have. 340 00:21:15,200 --> 00:21:18,400 Speaker 1: Unifying capital markets is not a new concept to Europe, 341 00:21:18,640 --> 00:21:21,400 Speaker 1: but the idea has never really gotten off the ground, 342 00:21:21,800 --> 00:21:24,639 Speaker 1: and Quarrels thinks that the Trump effect might be what 343 00:21:24,680 --> 00:21:28,479 Speaker 1: Europe needs to start moving towards making the changes it needs. 344 00:21:29,160 --> 00:21:31,720 Speaker 9: I think it's true, nonetheless, that Europe has had a 345 00:21:31,760 --> 00:21:34,600 Speaker 9: wake up call and it's been very unpleasant. But I 346 00:21:34,640 --> 00:21:38,320 Speaker 9: have talked to a number of European policy makers over 347 00:21:38,320 --> 00:21:41,480 Speaker 9: the course of the last month that really hasn't been 348 00:21:41,560 --> 00:21:43,119 Speaker 9: much more than a month. That seems like it's been 349 00:21:43,200 --> 00:21:45,600 Speaker 9: much longer than that. Certainly seems like that to the Europeans, 350 00:21:46,119 --> 00:21:52,040 Speaker 9: and there is a intensity and practicality to what they 351 00:21:52,040 --> 00:21:54,800 Speaker 9: are now saying they would be prepared to do in 352 00:21:54,840 --> 00:22:00,000 Speaker 9: the way of accelerating regulatory change, accelerating investment in defense 353 00:22:00,480 --> 00:22:05,600 Speaker 9: that really never was there before. And again, well, it 354 00:22:05,600 --> 00:22:08,280 Speaker 9: has been unpleasant medicine, I think it could have a 355 00:22:08,359 --> 00:22:09,520 Speaker 9: very good result for Europe. 356 00:22:10,480 --> 00:22:13,359 Speaker 1: In a global economy, the race to grow is not 357 00:22:13,760 --> 00:22:14,880 Speaker 1: a solo sport. 358 00:22:15,680 --> 00:22:18,760 Speaker 9: Economics and economic growth is not a zero sum game. 359 00:22:19,240 --> 00:22:22,199 Speaker 9: When you have a vibrant Europe, that is you know, 360 00:22:22,280 --> 00:22:26,879 Speaker 9: that's better for us. There are many many win win 361 00:22:27,040 --> 00:22:33,160 Speaker 9: opportunities when you have two dynamic economies that are interacting, competing, 362 00:22:33,520 --> 00:22:36,960 Speaker 9: partnering with each other, and you know, we would be 363 00:22:37,040 --> 00:22:41,159 Speaker 9: much better off if Europe were economically healthier than it 364 00:22:41,200 --> 00:22:41,880 Speaker 9: is currently. 365 00:22:42,760 --> 00:22:46,880 Speaker 1: And Anna Boutein believes that opportunity for growth and scale 366 00:22:47,040 --> 00:22:51,359 Speaker 1: and diversification is the path forward for Santander as well. 367 00:22:52,000 --> 00:22:56,120 Speaker 7: Going back to the key competitive advantages of Santander Global 368 00:22:56,119 --> 00:22:59,200 Speaker 7: and in market scale one hundred and seventy three million customers, 369 00:22:59,200 --> 00:23:03,439 Speaker 7: one of the largest consumer basis in the world. The 370 00:23:03,520 --> 00:23:07,680 Speaker 7: second key strength is diversification. We do better when things 371 00:23:07,720 --> 00:23:12,160 Speaker 7: get difficult because we have geographies and businesses that tend 372 00:23:12,160 --> 00:23:16,240 Speaker 7: to compensate each other. Now, having said that, we obviously 373 00:23:16,280 --> 00:23:20,520 Speaker 7: factor geopolitical risk into our risk analysis, and this is 374 00:23:20,560 --> 00:23:22,840 Speaker 7: where being a bank that has been around for one 375 00:23:22,920 --> 00:23:26,280 Speaker 7: hundred and sixty eight years helps, right, So we've gone 376 00:23:26,320 --> 00:23:29,879 Speaker 7: through many crises, We've gone through Industrial revolution. You know, 377 00:23:29,920 --> 00:23:32,960 Speaker 7: we're going through another change in an era right now 378 00:23:32,960 --> 00:23:36,480 Speaker 7: with AI, and so we factor that into our processes 379 00:23:36,520 --> 00:23:39,280 Speaker 7: and that's one of the things that we do, I 380 00:23:39,359 --> 00:23:41,879 Speaker 7: believe better than others. 381 00:23:43,680 --> 00:23:46,719 Speaker 1: Coming up the story of how all that delicious tuna 382 00:23:46,800 --> 00:23:49,639 Speaker 1: you enjoy at high end restaurants makes it from the 383 00:23:49,720 --> 00:23:53,360 Speaker 1: sea to the table with a little help from private equity. 384 00:23:53,840 --> 00:24:05,879 Speaker 1: That's next on Wall Street Week. This is a story 385 00:24:05,920 --> 00:24:11,199 Speaker 1: about investing in fish. Those giant bluefin tuna favored by 386 00:24:11,240 --> 00:24:14,480 Speaker 1: the best sushi restaurants in New York and all around 387 00:24:14,520 --> 00:24:17,680 Speaker 1: the world. Our colleague Danny Berger went to the waters 388 00:24:17,680 --> 00:24:20,199 Speaker 1: off of Mexico to see where it comes from and 389 00:24:20,280 --> 00:24:23,080 Speaker 1: how private equity is helping to make sure we can 390 00:24:23,160 --> 00:24:26,000 Speaker 1: all enjoy it even as demand grows. 391 00:24:31,880 --> 00:24:34,800 Speaker 10: You can thank private equity for this tuna farm. In 392 00:24:34,840 --> 00:24:38,040 Speaker 10: November twenty twenty three, a group of investors purchased a 393 00:24:38,080 --> 00:24:41,560 Speaker 10: majority steak in Baja Aqua Farms, a producer of high 394 00:24:41,680 --> 00:24:45,400 Speaker 10: quality sashimi grave bluefin tuna in the Pacific Ocean off 395 00:24:45,440 --> 00:24:47,080 Speaker 10: of Baja California, Mexico. 396 00:24:47,359 --> 00:24:49,639 Speaker 8: This is the only farm in the world that is 397 00:24:49,680 --> 00:24:52,159 Speaker 8: being fed by a centralized figure. So there is no 398 00:24:52,240 --> 00:24:55,320 Speaker 8: other feeding vessel like this one in the world. So 399 00:24:55,359 --> 00:25:00,400 Speaker 8: this was designed by us in integration with Mexicanca Company 400 00:25:00,440 --> 00:25:04,199 Speaker 8: and a Chillian company that was working on the engineering 401 00:25:04,359 --> 00:25:08,080 Speaker 8: behind this. It's always looking for efficiencies. This vessel what 402 00:25:08,200 --> 00:25:12,240 Speaker 8: basically does It receives the sardines from the fishing vessel 403 00:25:12,320 --> 00:25:15,840 Speaker 8: that is pumps on the fishholds. Then we grabbed that sardines, 404 00:25:16,160 --> 00:25:18,199 Speaker 8: we put it in a big fishhold that we have 405 00:25:18,320 --> 00:25:22,480 Speaker 8: here on the main deck, and then with those the 406 00:25:22,680 --> 00:25:24,400 Speaker 8: sardines two different cages. 407 00:25:24,880 --> 00:25:28,199 Speaker 10: Baja story began in nineteen ninety nine with just a 408 00:25:28,200 --> 00:25:31,280 Speaker 10: few pens and when growing consumer demand was pushing the 409 00:25:31,320 --> 00:25:32,399 Speaker 10: industry to the brink. 410 00:25:33,240 --> 00:25:36,159 Speaker 11: If you look at this story of all these familiar 411 00:25:36,440 --> 00:25:40,399 Speaker 11: business which baff was not really a family business, but 412 00:25:40,520 --> 00:25:43,120 Speaker 11: it was really shape as a family business. 413 00:25:43,760 --> 00:25:47,160 Speaker 10: Manuel Vanscez, a veteran of Nastli and other food companies 414 00:25:47,200 --> 00:25:50,280 Speaker 10: around the globe, arrived at Baja Aqua Farms in March 415 00:25:50,320 --> 00:25:53,960 Speaker 10: of twenty twenty three as the company CEO this fishery. 416 00:25:54,240 --> 00:25:58,879 Speaker 11: For a long time, it was seen with very bad eyes. 417 00:25:59,240 --> 00:26:02,720 Speaker 11: I'm going back to twenty ten, okay, and at that 418 00:26:02,800 --> 00:26:06,080 Speaker 11: time the fishery was over fish. There were some indicators 419 00:26:06,080 --> 00:26:09,199 Speaker 11: that were saying that in general, all the countries that 420 00:26:09,240 --> 00:26:11,679 Speaker 11: are fishing these which is all the way from Japan 421 00:26:11,760 --> 00:26:15,680 Speaker 11: to America and Mexico, they were abusing a little bit 422 00:26:15,760 --> 00:26:17,879 Speaker 11: on the way that they were taking fish out of 423 00:26:17,920 --> 00:26:21,320 Speaker 11: the water. Hence it wasn't danger. We are not fishing 424 00:26:21,880 --> 00:26:24,359 Speaker 11: small fish, so we are giving the time for the 425 00:26:24,400 --> 00:26:27,280 Speaker 11: fish to reproduce several times before it gets caught. Right 426 00:26:27,840 --> 00:26:30,840 Speaker 11: and by definition, if you have an eighty five kilog fish, 427 00:26:31,200 --> 00:26:34,240 Speaker 11: you're talking about fish that is more than ten years old, 428 00:26:34,240 --> 00:26:38,000 Speaker 11: that has passed that process several times, and then you 429 00:26:38,080 --> 00:26:42,479 Speaker 11: can be one hundred percent sure that going forward then 430 00:26:42,560 --> 00:26:45,600 Speaker 11: there will be more. And this is really a cycle 431 00:26:45,720 --> 00:26:49,320 Speaker 11: that is virtuous and is reproducing, going on and on 432 00:26:49,359 --> 00:26:49,680 Speaker 11: and on. 433 00:26:50,440 --> 00:26:54,159 Speaker 10: According to Noah, US, commercial fishers harvested three hundred and 434 00:26:54,160 --> 00:26:57,320 Speaker 10: sixty eight metric tons of Pacific blue in tuna in 435 00:26:57,359 --> 00:27:00,520 Speaker 10: twenty twenty two, grossing more than two zero point two 436 00:27:00,600 --> 00:27:03,920 Speaker 10: million dollars on the dock revenue, which accounts for ten 437 00:27:03,960 --> 00:27:07,840 Speaker 10: percent of total Pacific bluefin tuna landings that year. Baja 438 00:27:07,960 --> 00:27:10,520 Speaker 10: is in the right place for the business. Japanese and 439 00:27:10,600 --> 00:27:14,280 Speaker 10: Mexican vessels harvest the majority of the annual catch. It 440 00:27:14,320 --> 00:27:17,360 Speaker 10: starts with the actual fishing. There are two commonly used 441 00:27:17,400 --> 00:27:21,440 Speaker 10: methods in the Pacific commercial and recreational fissures either use 442 00:27:21,480 --> 00:27:25,400 Speaker 10: hook and line or persains. Baja ops to use per sins, 443 00:27:25,720 --> 00:27:28,320 Speaker 10: which are massive nets used to capture the fish but 444 00:27:28,480 --> 00:27:29,560 Speaker 10: not lift them out of the water. 445 00:27:30,200 --> 00:27:32,639 Speaker 8: We are now working with the fine tunings, so we 446 00:27:32,680 --> 00:27:34,920 Speaker 8: have to improve this vessel. We have to bring another 447 00:27:35,000 --> 00:27:36,959 Speaker 8: vessel to the rest of the cages because we are 448 00:27:37,000 --> 00:27:40,320 Speaker 8: capable to fit twenty four here, but we have forty. 449 00:27:40,560 --> 00:27:43,520 Speaker 8: We're going to have fifty in the next July. So 450 00:27:43,520 --> 00:27:45,960 Speaker 8: we got to move fast because if we want to 451 00:27:46,280 --> 00:27:48,679 Speaker 8: keep all the benefits that we've been gaining with this 452 00:27:48,880 --> 00:27:51,639 Speaker 8: investment in the other cages, then we got to replicate this. 453 00:27:51,840 --> 00:27:54,080 Speaker 8: So the next thing is to come with another grid, 454 00:27:54,480 --> 00:27:57,280 Speaker 8: and then we have to bring another feeding vessel like 455 00:27:57,320 --> 00:28:00,960 Speaker 8: this one, and that requires money. 456 00:28:01,040 --> 00:28:04,280 Speaker 10: How much could you theoretically grow by double the size 457 00:28:04,280 --> 00:28:05,120 Speaker 10: of what you have here? 458 00:28:05,600 --> 00:28:09,359 Speaker 8: Yes, yes, we can go with double ba. 459 00:28:09,400 --> 00:28:12,520 Speaker 10: Aqua Farms hunts by air for schools of wild bluefin 460 00:28:12,600 --> 00:28:15,840 Speaker 10: tuna in the Pacific corrolse them and towes them to 461 00:28:15,880 --> 00:28:20,879 Speaker 10: their farm pens off the coast of Ensenada, Mexico. There 462 00:28:21,000 --> 00:28:23,919 Speaker 10: they feed and tend to the fish's environment until they 463 00:28:23,960 --> 00:28:27,440 Speaker 10: reach the ideal size for market, harvest them and bring 464 00:28:27,480 --> 00:28:30,719 Speaker 10: them to their processing facility on land. The fish are 465 00:28:30,760 --> 00:28:33,560 Speaker 10: graded for quality and either cut or packed hole for 466 00:28:33,640 --> 00:28:36,440 Speaker 10: shipment to customers enter private equity. 467 00:28:37,800 --> 00:28:39,440 Speaker 12: These are one hundred and seventy five to two hundred 468 00:28:39,480 --> 00:28:43,440 Speaker 12: pounds a piece, and most restaurants in the country didn't 469 00:28:43,480 --> 00:28:46,120 Speaker 12: actually need that much tune at one time. So what 470 00:28:46,280 --> 00:28:48,880 Speaker 12: restricted actually who the company could sell to. 471 00:28:49,480 --> 00:28:52,080 Speaker 10: Equity Group is the private equity investment arm of the 472 00:28:52,120 --> 00:28:55,760 Speaker 10: Zell family, founded by billionaire investor Sam Zell, who passed 473 00:28:55,760 --> 00:28:59,080 Speaker 10: away in twenty twenty three. It still invests cell family 474 00:28:59,120 --> 00:29:04,080 Speaker 10: assets target and not specific industries, but certain features. 475 00:29:03,680 --> 00:29:05,560 Speaker 12: Run companies, and I used to work at Coca Cola, 476 00:29:05,640 --> 00:29:07,360 Speaker 12: and I ran budget, ran a car, and I ran 477 00:29:07,400 --> 00:29:09,040 Speaker 12: a software company, which I think is a little a 478 00:29:09,120 --> 00:29:13,960 Speaker 12: typical for somebody as a president of an investment firm. 479 00:29:14,520 --> 00:29:17,400 Speaker 12: I think it's relevant because what's going on in private 480 00:29:17,400 --> 00:29:20,800 Speaker 12: equity right now. You know, there's lots of capital, and 481 00:29:20,800 --> 00:29:24,360 Speaker 12: there's lots of firms and a lot of competition. We 482 00:29:24,440 --> 00:29:26,920 Speaker 12: cut across a lot of industries. So we're in healthcare, 483 00:29:26,960 --> 00:29:30,800 Speaker 12: we're in agriculture, oil and gas, real estate. We have 484 00:29:30,840 --> 00:29:35,600 Speaker 12: a company that sells software to the NSA, so you 485 00:29:35,680 --> 00:29:38,800 Speaker 12: name it. We cut across a lot of industries. We're 486 00:29:38,880 --> 00:29:42,320 Speaker 12: usually looking for something about the industry and something about 487 00:29:42,320 --> 00:29:45,160 Speaker 12: the company where there's a barrier or some type of 488 00:29:45,560 --> 00:29:49,320 Speaker 12: structural advantage. So what that makes us do is actually 489 00:29:50,000 --> 00:29:53,960 Speaker 12: look across different sizes and in particular different industries. 490 00:29:54,600 --> 00:29:57,760 Speaker 10: In early twenty twenty three, rather unusually, a number of 491 00:29:57,800 --> 00:30:00,240 Speaker 10: investors heard about the promise of tune A Fie fishing 492 00:30:00,360 --> 00:30:02,440 Speaker 10: and Baja Aqua farms at the same time. 493 00:30:03,320 --> 00:30:06,680 Speaker 12: There's a lot of strong growth in the bluefin tuna market, 494 00:30:06,760 --> 00:30:09,120 Speaker 12: so inherently it's been growing for decades. And then on 495 00:30:09,160 --> 00:30:13,000 Speaker 12: the supply side in the industry, it's a regulated global market, 496 00:30:13,520 --> 00:30:17,440 Speaker 12: so there are quotas internationally. You can't just go out 497 00:30:17,480 --> 00:30:20,680 Speaker 12: and fish as much as you want. In each country. 498 00:30:20,720 --> 00:30:23,080 Speaker 12: There are concessions, so you have to have the right 499 00:30:23,640 --> 00:30:27,080 Speaker 12: and a concession to actually grow the tuna. And then 500 00:30:27,160 --> 00:30:30,400 Speaker 12: there's actually licenses that you need for the fishing boats 501 00:30:30,440 --> 00:30:33,640 Speaker 12: and the captains. So the demand's growing and the supplies 502 00:30:33,720 --> 00:30:37,160 Speaker 12: got some controls around it. So that's what we liked 503 00:30:37,160 --> 00:30:40,640 Speaker 12: about the industry. The company has got a few structural 504 00:30:40,640 --> 00:30:45,440 Speaker 12: advantages that we really appreciated, and they revolve around its proximity. 505 00:30:45,480 --> 00:30:49,600 Speaker 12: It's based in Mexico, and this industry, you can imagine 506 00:30:49,760 --> 00:30:52,160 Speaker 12: a tuna is heavy, right, two hundred pounds, and so 507 00:30:52,280 --> 00:30:55,680 Speaker 12: shipping a tuna, especially air freight, is very very expensive, 508 00:30:56,200 --> 00:31:00,560 Speaker 12: so are competitions in Japan and the Mediterranean. Mexico, so 509 00:31:00,600 --> 00:31:03,960 Speaker 12: the proximity to the US is a huge advantage for 510 00:31:04,040 --> 00:31:07,320 Speaker 12: this company to ship fish from Mexico into the US, 511 00:31:07,520 --> 00:31:10,120 Speaker 12: so that's one. The second one is the labor cost 512 00:31:10,160 --> 00:31:13,520 Speaker 12: in Mexico is cheaper, so there's an advantage there. And 513 00:31:13,560 --> 00:31:17,120 Speaker 12: then the third component is just the cost of feeding 514 00:31:17,200 --> 00:31:20,240 Speaker 12: the tuna. So you feed them anchovies, you feed them sardines, 515 00:31:20,720 --> 00:31:24,520 Speaker 12: and structurally it's been really a positive that where we 516 00:31:24,600 --> 00:31:26,960 Speaker 12: fish for the tuna off the coast of Mexico is 517 00:31:27,080 --> 00:31:29,400 Speaker 12: very close to where we fish for the sardines, so 518 00:31:29,480 --> 00:31:31,560 Speaker 12: that lowers the feed cost. 519 00:31:32,120 --> 00:31:36,320 Speaker 10: Conti, Cultiba Equity Group and Cassel Harlan purchased a majority stake, 520 00:31:36,680 --> 00:31:40,320 Speaker 10: leaving dry Powder in their arsenal for ongoing support. They've 521 00:31:40,360 --> 00:31:43,600 Speaker 10: also each sent an executive to Bajas board. The goal 522 00:31:43,720 --> 00:31:46,960 Speaker 10: is essentially the same as any other private equity investment, 523 00:31:47,360 --> 00:31:50,440 Speaker 10: grow the customer base, expand to new markets, and invest 524 00:31:50,480 --> 00:31:57,040 Speaker 10: in new technology, equipment and staff. 525 00:31:57,040 --> 00:31:59,200 Speaker 6: We have the best brothers them as we tried who 526 00:31:59,280 --> 00:32:02,120 Speaker 6: Growwindo Martin and as we have more supply now. 527 00:32:01,960 --> 00:32:05,080 Speaker 1: Because the colt that has increased. Now the real challenge 528 00:32:05,160 --> 00:32:06,320 Speaker 1: is to build those markets. 529 00:32:07,240 --> 00:32:10,560 Speaker 13: We are waiting the fish older, so after we grade it, 530 00:32:11,520 --> 00:32:15,280 Speaker 13: then they're cutting the tail and those guys over there, 531 00:32:15,280 --> 00:32:17,040 Speaker 13: they are going to win the fish. 532 00:32:17,240 --> 00:32:19,320 Speaker 6: So they are going to put again this camp with 533 00:32:19,480 --> 00:32:22,960 Speaker 6: the exact wave of the product before putting it into 534 00:32:23,000 --> 00:32:25,080 Speaker 6: the bus. So if it is going to Japan, and 535 00:32:25,160 --> 00:32:30,959 Speaker 6: we'll go to one side, Brazil, Colombia, Lubai, the state's 536 00:32:31,160 --> 00:32:32,880 Speaker 6: interial east coast, west coast and. 537 00:32:32,840 --> 00:32:38,880 Speaker 10: Make this incredibly huge logistics operation. It is it is fresh, Well, yeah, 538 00:32:38,920 --> 00:32:41,840 Speaker 10: it's fresh. It's so many different sizes. You're shipping it 539 00:32:41,920 --> 00:32:44,320 Speaker 10: literally all over the world and you have to, I 540 00:32:44,360 --> 00:32:47,760 Speaker 10: guess calibrate as each one comes in which client it's going. 541 00:32:47,600 --> 00:32:51,520 Speaker 11: To, Yes, indeed, and then we are tracking over there 542 00:32:51,520 --> 00:32:54,760 Speaker 11: and obviously the distance from one point to the end point, 543 00:32:55,400 --> 00:32:58,640 Speaker 11: so there's airports connections. Even the barcoo that you. 544 00:32:58,720 --> 00:33:00,960 Speaker 2: See over there in the mouth of the y it's 545 00:33:01,000 --> 00:33:01,760 Speaker 2: also ours. 546 00:33:01,920 --> 00:33:04,880 Speaker 13: It's just just a software that illustrated inside. There is 547 00:33:04,920 --> 00:33:09,200 Speaker 13: also a thermometer that is coming into the fish and 548 00:33:09,360 --> 00:33:13,080 Speaker 13: is tracking the temperature of the fish from that boy 549 00:33:14,120 --> 00:33:15,280 Speaker 13: until you up in the bus. 550 00:33:16,360 --> 00:33:18,920 Speaker 11: We will need to expand and that's a challenge too, 551 00:33:19,240 --> 00:33:22,440 Speaker 11: So it's a bit of testinal the promises. As you 552 00:33:22,480 --> 00:33:24,200 Speaker 11: can see, there's no machine but. 553 00:33:24,280 --> 00:33:27,920 Speaker 6: That can actually replace these labor because of these specifications 554 00:33:27,960 --> 00:33:29,600 Speaker 6: that we have in the product and what you have 555 00:33:29,720 --> 00:33:32,800 Speaker 6: on the value proposition through our consumer. But at the 556 00:33:32,920 --> 00:33:35,280 Speaker 6: end of the day, yeah, we will need to expand 557 00:33:35,320 --> 00:33:38,000 Speaker 6: and get more people and more production lines in order 558 00:33:38,040 --> 00:33:40,160 Speaker 6: to bring all this volume. 559 00:33:39,880 --> 00:33:40,600 Speaker 10: Into the company. 560 00:33:42,640 --> 00:33:45,280 Speaker 1: And that's where we turn next to how a private 561 00:33:45,320 --> 00:33:48,840 Speaker 1: equity firm founded by Sam Zell stepped up to provide 562 00:33:48,880 --> 00:34:05,840 Speaker 1: the capital and the expertise Baha needed to grow its business. 563 00:34:07,320 --> 00:34:11,000 Speaker 1: EGI joined with others to provide the capital Baja Aqua 564 00:34:11,080 --> 00:34:14,760 Speaker 1: Farms needed. How is that capital being deployed and how 565 00:34:14,880 --> 00:34:18,080 Speaker 1: is it changing the way Baja does its business. Dannie 566 00:34:18,080 --> 00:34:20,919 Speaker 1: Burger continues the story. 567 00:34:23,440 --> 00:34:25,840 Speaker 10: After nearly a year and a half with private equity 568 00:34:25,840 --> 00:34:28,760 Speaker 10: on board, Baja is putting its new capital to work. 569 00:34:29,760 --> 00:34:33,319 Speaker 8: We got an investment plan of around five millions per 570 00:34:33,400 --> 00:34:37,880 Speaker 8: year which is going entirely to fishing assets, to farming assets. Yeah, 571 00:34:38,040 --> 00:34:43,080 Speaker 8: so you keep things running right, so you have maintenance 572 00:34:43,200 --> 00:34:47,240 Speaker 8: kpex and then growing kepex. We have a plan for 573 00:34:48,120 --> 00:34:51,160 Speaker 8: eight millions this year which is a new vessel that's 574 00:34:51,160 --> 00:34:54,120 Speaker 8: going to be incorporated to the fishing fleet, and then 575 00:34:54,280 --> 00:34:57,640 Speaker 8: we have some growth kapex that's going to be here 576 00:34:57,680 --> 00:35:02,719 Speaker 8: at the farm. You see around mooring grates right, So 577 00:35:03,960 --> 00:35:07,200 Speaker 8: there's a big bound of cages there, thank cages there, 578 00:35:07,200 --> 00:35:11,440 Speaker 8: tank cages there all together in a solitary mooring system. 579 00:35:11,800 --> 00:35:15,840 Speaker 8: And also we have some solitary systems which is holding 580 00:35:15,960 --> 00:35:19,759 Speaker 8: one cage. So this year we're investing another million in 581 00:35:19,840 --> 00:35:23,200 Speaker 8: putting another grid. So we're putting gauges together like this 582 00:35:23,400 --> 00:35:24,760 Speaker 8: one to facilitate the feeding. 583 00:35:25,719 --> 00:35:28,680 Speaker 10: Equity group, along with the rest of the investor consortium, 584 00:35:28,800 --> 00:35:31,760 Speaker 10: owns a majority stake in Baja. The goals of private 585 00:35:31,760 --> 00:35:35,080 Speaker 10: equity in any investment are the same, grow the company 586 00:35:35,120 --> 00:35:38,440 Speaker 10: and get a return on the investment. But egi's timelines 587 00:35:38,480 --> 00:35:40,719 Speaker 10: are different from what you would expect when you think 588 00:35:40,719 --> 00:35:43,520 Speaker 10: of private equity. So you mentioned it takes some time 589 00:35:43,560 --> 00:35:45,480 Speaker 10: you have to capital into this business to get the 590 00:35:45,520 --> 00:35:48,719 Speaker 10: returns you want. What does an exit look like for 591 00:35:48,800 --> 00:35:50,719 Speaker 10: something like Baja Aqua Farms. 592 00:35:51,160 --> 00:35:54,400 Speaker 12: We don't put a time horizon on our investments. It's 593 00:35:54,480 --> 00:35:57,799 Speaker 12: actually something that's a little different, I think from most 594 00:35:57,880 --> 00:36:01,080 Speaker 12: pe firms. Most of them comes from Sam Zell and 595 00:36:01,200 --> 00:36:06,120 Speaker 12: his family, so we're a principal investor and we sell 596 00:36:06,280 --> 00:36:09,319 Speaker 12: when we've extracted as much value as we think we can. 597 00:36:09,480 --> 00:36:11,840 Speaker 12: We really haven't even begun to penetrate the United States. 598 00:36:12,560 --> 00:36:15,480 Speaker 12: There's new products that we can develop, and we're even 599 00:36:15,520 --> 00:36:19,480 Speaker 12: going to explore maybe potentially other geographies to ficient. So 600 00:36:19,520 --> 00:36:22,960 Speaker 12: there's a lot of growth potential here. We've held companies 601 00:36:23,000 --> 00:36:25,759 Speaker 12: for five years, we've held companies for fifteen. It's all 602 00:36:25,840 --> 00:36:27,640 Speaker 12: just a function of how much more growth we think 603 00:36:27,719 --> 00:36:28,360 Speaker 12: is out there. 604 00:36:29,440 --> 00:36:33,279 Speaker 10: Recently, private equity exits have taken longer and longer to execute. 605 00:36:33,760 --> 00:36:36,880 Speaker 10: According to a twenty twenty five Mackenzie outlook for global 606 00:36:36,880 --> 00:36:40,560 Speaker 10: private markets, average buyout whole times remain above the long 607 00:36:40,640 --> 00:36:43,800 Speaker 10: term average at six point seven years. That compares to 608 00:36:43,840 --> 00:36:46,200 Speaker 10: the average of five point seven years over the past 609 00:36:46,239 --> 00:36:49,160 Speaker 10: twenty years. Is there a way to get returns out 610 00:36:49,200 --> 00:36:50,879 Speaker 10: of the company? Do you look for ways to get 611 00:36:50,920 --> 00:36:53,080 Speaker 10: dividends of sorts and the lead up to the exit. 612 00:36:53,920 --> 00:36:57,680 Speaker 12: Yeah, no, for sure. That is actually a really core 613 00:36:57,719 --> 00:36:59,520 Speaker 12: part of what we do. Part of it is MEYBI 614 00:36:59,560 --> 00:37:02,520 Speaker 12: in an operation is very focused on that. We do 615 00:37:02,680 --> 00:37:06,239 Speaker 12: expect our companies to generate cash and it's just kind 616 00:37:06,239 --> 00:37:08,320 Speaker 12: of mandatory for us. Some of that is the investment 617 00:37:08,360 --> 00:37:11,680 Speaker 12: thesis understanding the type of business that we invest in. 618 00:37:12,320 --> 00:37:14,600 Speaker 12: But absolutely we're not going to hold something for ten 619 00:37:14,680 --> 00:37:16,880 Speaker 12: years and not take money out of the company. You know, 620 00:37:16,920 --> 00:37:20,239 Speaker 12: maybe the first year or two the company net isn't 621 00:37:20,239 --> 00:37:22,840 Speaker 12: generating cash because we're investing. We're putting in new technology, 622 00:37:22,920 --> 00:37:25,600 Speaker 12: new people, all the things I've talked about. But absolutely 623 00:37:25,640 --> 00:37:29,239 Speaker 12: there's an expectation that we're diving ending money out and 624 00:37:29,320 --> 00:37:32,440 Speaker 12: as the EBADAG grows, as the profits grow, will also 625 00:37:32,520 --> 00:37:35,680 Speaker 12: every few years recap the business and take money out. 626 00:37:35,719 --> 00:37:39,359 Speaker 12: That way, you know, our expectation is four or five 627 00:37:39,440 --> 00:37:42,239 Speaker 12: years in if things are tracking, we've got all our 628 00:37:42,239 --> 00:37:45,080 Speaker 12: money out of the investment that we've put in. 629 00:37:45,600 --> 00:37:48,800 Speaker 10: Equity Group's patient capital and holding times may be different 630 00:37:48,840 --> 00:37:52,720 Speaker 10: from their pepers, but one thing is the same. Private 631 00:37:52,760 --> 00:37:56,319 Speaker 10: equity ownership means big changes for the companies that they own. 632 00:37:57,120 --> 00:38:00,839 Speaker 12: The company was selling in the US, but they were 633 00:38:01,200 --> 00:38:05,240 Speaker 12: using one distributor, mostly in southern California. So we've helped 634 00:38:05,280 --> 00:38:07,759 Speaker 12: them roll out that we have now I think eight 635 00:38:07,840 --> 00:38:11,719 Speaker 12: distributors across the entire US. We're also not just using distributors, 636 00:38:11,760 --> 00:38:14,680 Speaker 12: we're actually building a salesforce going into the markets and 637 00:38:14,719 --> 00:38:18,279 Speaker 12: selling the restaurants directly. So there's things like that that 638 00:38:18,320 --> 00:38:21,040 Speaker 12: we help the company put in place, and that's going 639 00:38:21,120 --> 00:38:24,640 Speaker 12: to create growth in and of itself. Just at one point, 640 00:38:28,200 --> 00:38:31,240 Speaker 12: we've gone from three countries when we bought the company. 641 00:38:31,239 --> 00:38:33,800 Speaker 12: We're up to nine right now, and so we're expanding 642 00:38:33,800 --> 00:38:37,520 Speaker 12: in these other geographies. They've got their own consumer demand, 643 00:38:37,520 --> 00:38:40,319 Speaker 12: they've got their own regulatory environments, so there's a lot 644 00:38:40,360 --> 00:38:42,799 Speaker 12: of different issues you have to work through as you 645 00:38:42,920 --> 00:38:47,840 Speaker 12: roll into new countries. Another aspect, which is enormous is 646 00:38:48,920 --> 00:38:51,799 Speaker 12: when we bought the company and they sold tuna, they 647 00:38:51,840 --> 00:38:54,600 Speaker 12: would actually sell the entire tuna. So if you're a 648 00:38:54,680 --> 00:38:58,360 Speaker 12: restaurant and you wanted fresh bluefin tuna, you would have 649 00:38:58,400 --> 00:39:01,000 Speaker 12: to buy the entire fish. These are one hundred and 650 00:39:01,040 --> 00:39:05,320 Speaker 12: seventy five to two hundred pounds a piece, and most 651 00:39:05,360 --> 00:39:08,600 Speaker 12: restaurants in the country didn't actually need that much tuna 652 00:39:08,640 --> 00:39:12,840 Speaker 12: at one time, so it restricted actually who the company 653 00:39:12,840 --> 00:39:15,319 Speaker 12: could sell to. So we're working on a project right 654 00:39:15,360 --> 00:39:17,319 Speaker 12: now where we're going to sell loines, which is just 655 00:39:17,440 --> 00:39:20,840 Speaker 12: basically selling part of the tuna, and that's going to 656 00:39:20,880 --> 00:39:26,440 Speaker 12: open up probably tenfold as many restaurants as we're selling 657 00:39:26,440 --> 00:39:28,000 Speaker 12: to right now. 658 00:39:28,760 --> 00:39:31,960 Speaker 10: Jeffs Franklin Becker and Robbie Cook of coral Omakasse in 659 00:39:32,000 --> 00:39:34,799 Speaker 10: Point Seven in New York source tuna from Japan and 660 00:39:34,840 --> 00:39:38,280 Speaker 10: the East Coast of the US. Their merchants used similar 661 00:39:38,320 --> 00:39:42,400 Speaker 10: practices to Baja, no catching tuna and nuts, no antibiotics, 662 00:39:42,560 --> 00:39:47,960 Speaker 10: no hormones, native and national feed traceability and ECOGIMA. You're 663 00:39:47,960 --> 00:39:49,880 Speaker 10: a veteran in this industry. You've worked with lots of 664 00:39:49,880 --> 00:39:52,120 Speaker 10: different kinds of meat, different types of fish. Can you 665 00:39:52,200 --> 00:39:55,600 Speaker 10: just talk about working with bluefin tuna? About how special 666 00:39:55,640 --> 00:39:56,480 Speaker 10: and different that is? 667 00:39:56,960 --> 00:40:01,359 Speaker 14: Bluefin tuna. It's so unique because because it's just got 668 00:40:01,400 --> 00:40:03,840 Speaker 14: the right amount of fat and the right amount of 669 00:40:03,840 --> 00:40:08,480 Speaker 14: marbling throughout the structure the fish is is it's just 670 00:40:08,520 --> 00:40:12,000 Speaker 14: a beautiful fish at the end of the day, robust 671 00:40:12,040 --> 00:40:16,000 Speaker 14: in flavor, beautiful color. When you get down into the 672 00:40:16,120 --> 00:40:19,160 Speaker 14: chewturo and the o touro, which is the medium fatty tuna, 673 00:40:19,160 --> 00:40:22,279 Speaker 14: and the fatty tuna just melts in your mouth. 674 00:40:22,800 --> 00:40:24,640 Speaker 10: What do you make about this, this current moment of 675 00:40:24,880 --> 00:40:26,640 Speaker 10: the popularity of the fish itself. 676 00:40:26,880 --> 00:40:29,400 Speaker 14: You know, for a while it was overfished, and for 677 00:40:29,480 --> 00:40:33,719 Speaker 14: a while people were kind of avoiding it, including myself, 678 00:40:35,400 --> 00:40:38,640 Speaker 14: and thankfully the populations come back in a big way. 679 00:40:39,440 --> 00:40:42,880 Speaker 14: They also do a process called ikagema, which is basically 680 00:40:42,920 --> 00:40:46,840 Speaker 14: they stick a rod into its head, into its spinal 681 00:40:46,880 --> 00:40:50,319 Speaker 14: cord and they bleed it out that way, and that 682 00:40:50,440 --> 00:40:55,799 Speaker 14: prevents all the fish from basically atrophying the wrong way 683 00:40:56,400 --> 00:40:59,160 Speaker 14: and the meat becoming tough, so that kind of keeps 684 00:40:59,200 --> 00:41:02,600 Speaker 14: it really nice. 685 00:41:02,600 --> 00:41:05,960 Speaker 10: Point seven and coral omacasse are also examples of demands 686 00:41:05,960 --> 00:41:08,240 Speaker 10: for cuts of fish, not the entire bluefin. 687 00:41:09,120 --> 00:41:12,240 Speaker 14: If you're buying the whole fish, you're buying it because 688 00:41:12,560 --> 00:41:16,000 Speaker 14: a you have the storage space to handle it, which 689 00:41:16,040 --> 00:41:19,359 Speaker 14: is a huge commitment all on its own, you're going 690 00:41:19,400 --> 00:41:22,160 Speaker 14: to be able to turn it over. You have multiple 691 00:41:22,200 --> 00:41:25,040 Speaker 14: restaurants in my case, with a twelve seat o macasse, 692 00:41:25,239 --> 00:41:26,440 Speaker 14: it does not make sense. 693 00:41:27,520 --> 00:41:30,160 Speaker 10: Beyond the quality of fish. Fuel and growth at Baja 694 00:41:30,200 --> 00:41:34,719 Speaker 10: Aqua Farms meant new boats, more sophisticated and scalable IT systems, 695 00:41:35,120 --> 00:41:38,400 Speaker 10: net cleaning and other maintenance systems, a larger sales staff, 696 00:41:38,440 --> 00:41:40,240 Speaker 10: and crucially a new CEO. 697 00:41:41,200 --> 00:41:44,279 Speaker 12: We start with trust and transparency. I mean, if we 698 00:41:44,360 --> 00:41:47,920 Speaker 12: can't work together, that's going to be just a non starter. 699 00:41:48,840 --> 00:41:51,600 Speaker 12: We look for alignment. It doesn't mean we always agree, 700 00:41:52,120 --> 00:41:54,920 Speaker 12: But can we all see true north? 701 00:41:55,000 --> 00:41:55,560 Speaker 4: Can we all. 702 00:41:55,480 --> 00:41:58,839 Speaker 12: Agree that the direction we're going in makes sense? So 703 00:41:58,880 --> 00:42:02,480 Speaker 12: that's got to be there. And then look, you know, 704 00:42:02,960 --> 00:42:06,440 Speaker 12: leaders have to inspire. They have to hire good management themselves. 705 00:42:06,600 --> 00:42:09,640 Speaker 12: Have they built a good organization? Have they built a 706 00:42:09,640 --> 00:42:12,840 Speaker 12: good structure? Have they hired talented people to people like 707 00:42:12,920 --> 00:42:13,560 Speaker 12: working there? 708 00:42:14,239 --> 00:42:17,319 Speaker 10: New management comes with the territory. When private equity comes 709 00:42:17,400 --> 00:42:21,080 Speaker 10: to the scene with a one of a kind feeding system, efficiencies, 710 00:42:21,200 --> 00:42:24,080 Speaker 10: new products and markets. It's up to the CEO to 711 00:42:24,160 --> 00:42:27,319 Speaker 10: manage and execute growth. His goal is to add one 712 00:42:27,360 --> 00:42:30,600 Speaker 10: thousand more metric tons of tuna sales every year from 713 00:42:30,600 --> 00:42:33,759 Speaker 10: four and twenty twenty four to five thousand this year 714 00:42:33,800 --> 00:42:36,480 Speaker 10: and six the next. What do you think are some 715 00:42:36,480 --> 00:42:38,320 Speaker 10: of the biggest changes that have been put in place 716 00:42:38,320 --> 00:42:40,279 Speaker 10: since you and the investors have come in. 717 00:42:40,280 --> 00:42:43,200 Speaker 11: In order to have the same product with the same quality, 718 00:42:43,360 --> 00:42:47,480 Speaker 11: always right, with the same timeline, with the same freshness, 719 00:42:47,480 --> 00:42:50,840 Speaker 11: with the same everything, you need to have a process. 720 00:42:51,760 --> 00:42:54,520 Speaker 11: And in order to scale a business, you need to 721 00:42:54,600 --> 00:42:58,759 Speaker 11: have those processes all around the company, even from the 722 00:42:58,800 --> 00:43:01,960 Speaker 11: way that we fish, the way that we grow the fish, 723 00:43:02,280 --> 00:43:05,000 Speaker 11: to the way that we go and do the logistics 724 00:43:05,360 --> 00:43:09,480 Speaker 11: to the final restaurant that we have grow, grow, Grow growth. 725 00:43:10,440 --> 00:43:13,360 Speaker 11: Last year there was a significant change also because of 726 00:43:13,400 --> 00:43:14,960 Speaker 11: all these things that I'm telling you and the way 727 00:43:15,000 --> 00:43:18,280 Speaker 11: that we're fishing. So they increase fifty percent the quota. 728 00:43:19,000 --> 00:43:21,520 Speaker 11: That means that this year, for the first time. 729 00:43:21,520 --> 00:43:22,760 Speaker 3: On the last. 730 00:43:23,960 --> 00:43:28,160 Speaker 11: I would say, fifteen years, we are allowed to go 731 00:43:28,200 --> 00:43:32,560 Speaker 11: and finish more fifty percent more of what this stack 732 00:43:32,880 --> 00:43:37,600 Speaker 11: or this gap was allowing ones to get. As a 733 00:43:37,640 --> 00:43:40,200 Speaker 11: result of that, if you are bringing that supply into 734 00:43:40,280 --> 00:43:43,080 Speaker 11: the market, you need to grow the market very responsibly. 735 00:43:43,239 --> 00:43:47,160 Speaker 11: And for that we created three different segments now which 736 00:43:47,280 --> 00:43:51,160 Speaker 11: is ready to God, ready to serve, ready to eat, 737 00:43:51,880 --> 00:43:55,640 Speaker 11: to have an investor group that believes in that vision 738 00:43:56,040 --> 00:43:58,799 Speaker 11: and that is not only endorsing it, but it's facilitating 739 00:43:58,880 --> 00:44:01,640 Speaker 11: the way to go there much more fast. 740 00:44:01,840 --> 00:44:05,120 Speaker 10: What has been the biggest difference or surprise or change 741 00:44:05,160 --> 00:44:07,919 Speaker 10: for you to work with a company that's private equity. 742 00:44:07,600 --> 00:44:10,439 Speaker 11: Backed that is always the smarter people in the room 743 00:44:10,520 --> 00:44:15,040 Speaker 11: than me. Yeah, it's always challenging. Yes, And when I 744 00:44:15,080 --> 00:44:19,600 Speaker 11: am with this diverse group of people and I hear 745 00:44:19,640 --> 00:44:23,560 Speaker 11: all these ideas, there will always be things that I 746 00:44:23,560 --> 00:44:28,120 Speaker 11: have not seen or comments that I have not heard 747 00:44:28,560 --> 00:44:33,080 Speaker 11: or even ideas that I never thought of. But that 748 00:44:33,280 --> 00:44:37,040 Speaker 11: is actually very exciting. On the downside, I told you 749 00:44:37,080 --> 00:44:40,440 Speaker 11: what it was. On the good part of it is 750 00:44:40,440 --> 00:44:43,480 Speaker 11: that it's always keeping me at the edge and with 751 00:44:43,520 --> 00:44:47,440 Speaker 11: all this adrenaline and trying obviously to improve as a 752 00:44:47,440 --> 00:44:50,000 Speaker 11: person and also to try to grave all these knowledge 753 00:44:50,000 --> 00:44:52,319 Speaker 11: that is there out. We don't take a fish out 754 00:44:52,320 --> 00:44:55,160 Speaker 11: of the water unless it's already solved, which is very 755 00:44:55,239 --> 00:44:56,480 Speaker 11: very important for us. 756 00:44:56,719 --> 00:44:58,280 Speaker 10: What markets do you want to expand into? 757 00:44:59,160 --> 00:45:03,520 Speaker 11: South America? Very interesting and we are moving forward very 758 00:45:03,600 --> 00:45:07,520 Speaker 11: rapidly there. Middle East looks very interesting and we want 759 00:45:07,560 --> 00:45:13,319 Speaker 11: to also check that market, and specifically the East coast 760 00:45:13,360 --> 00:45:15,839 Speaker 11: of the United States is also very important to us. 761 00:45:16,239 --> 00:45:18,920 Speaker 11: We are very strong on the West, but if you 762 00:45:19,120 --> 00:45:24,919 Speaker 11: move east, then we start seeing some white spots. So 763 00:45:25,000 --> 00:45:29,160 Speaker 11: now we change that strategy. We actually got the country 764 00:45:29,200 --> 00:45:30,560 Speaker 11: in five different regions. 765 00:45:32,000 --> 00:45:35,480 Speaker 10: Almost exactly a year after the Investor Group acquired at Stake, 766 00:45:35,880 --> 00:45:40,000 Speaker 10: a new presidential administration won the White House promising tariffs 767 00:45:40,080 --> 00:45:44,040 Speaker 10: specifically aimed at products from Mexico. How do you think 768 00:45:44,080 --> 00:45:46,719 Speaker 10: about those costs and who they go towards? Do you 769 00:45:46,760 --> 00:45:48,840 Speaker 10: push that forward to the consumer? Do you push it 770 00:45:48,880 --> 00:45:49,839 Speaker 10: forward to someone else. 771 00:45:50,200 --> 00:45:53,200 Speaker 12: We're in a lot of industries that we hold companies 772 00:45:53,200 --> 00:45:56,520 Speaker 12: for a while and we see the environment change, sometimes positively, 773 00:45:56,719 --> 00:46:00,520 Speaker 12: sometimes negatively. So it could be the consumer. Could we 774 00:46:00,560 --> 00:46:03,560 Speaker 12: own a hospital chain and we owned it and managed 775 00:46:03,600 --> 00:46:06,560 Speaker 12: it through COVID, so we dealt with that, that's a disruption. 776 00:46:07,400 --> 00:46:11,200 Speaker 12: We own a warehouse company on the East coast ports 777 00:46:11,640 --> 00:46:16,000 Speaker 12: and we dealt with the Baltimore Bridge collapse. So you know, 778 00:46:16,480 --> 00:46:18,439 Speaker 12: and we're in cyclical industries. We're in oil and gas, 779 00:46:18,520 --> 00:46:22,440 Speaker 12: we're in real estate, we're in agriculture, so we see 780 00:46:22,960 --> 00:46:24,960 Speaker 12: most of our companies actually have a lot of ups 781 00:46:25,000 --> 00:46:29,000 Speaker 12: and downs. Tariffs are just, in my mind, another type 782 00:46:29,080 --> 00:46:34,240 Speaker 12: of headwind that a company potentially is going to face 783 00:46:34,280 --> 00:46:36,359 Speaker 12: for some period of time in terms of if there 784 00:46:36,360 --> 00:46:38,279 Speaker 12: are tariffs and how we'll manage it. Look, I think 785 00:46:38,320 --> 00:46:42,080 Speaker 12: the answer is going to be it's the cost is 786 00:46:42,120 --> 00:46:44,520 Speaker 12: going to get spread. We'll probably end up absorbing some, 787 00:46:44,520 --> 00:46:46,719 Speaker 12: some will get passed along to the consumer. If you 788 00:46:46,719 --> 00:46:49,400 Speaker 12: remember the value chain here, there's the consumer, there's the restaurant, 789 00:46:49,440 --> 00:46:53,600 Speaker 12: there's the distributor, there's ourselves. So there's a series of 790 00:46:53,840 --> 00:46:57,520 Speaker 12: different ownership groups all along the value chain. And I 791 00:46:57,520 --> 00:47:00,160 Speaker 12: guess is every part of the value chain absorbs or 792 00:47:00,520 --> 00:47:01,000 Speaker 12: part of that. 793 00:47:01,040 --> 00:47:05,359 Speaker 10: Cost tariffs aside, everyone along the food chain recognizes what 794 00:47:05,440 --> 00:47:07,440 Speaker 10: matters to consumers in the marketplace. 795 00:47:07,920 --> 00:47:10,600 Speaker 14: You can have a bad fish coming out of Japan 796 00:47:10,880 --> 00:47:12,520 Speaker 14: the same way you can have a bad fish coming 797 00:47:12,560 --> 00:47:17,319 Speaker 14: out of California or Spain or North Carolina. It all 798 00:47:17,360 --> 00:47:20,120 Speaker 14: comes back to the beginning. How is that fish caught, 799 00:47:21,320 --> 00:47:24,799 Speaker 14: how is it killed, how is it preserved? What did 800 00:47:24,800 --> 00:47:27,000 Speaker 14: they do? How long was it on the boat? All 801 00:47:27,040 --> 00:47:30,680 Speaker 14: of these things matter. It comes down to authenticity. It 802 00:47:30,719 --> 00:47:33,640 Speaker 14: also comes down to the fat content, and it just 803 00:47:33,760 --> 00:47:37,359 Speaker 14: melts in your mouth and it becomes this experience that's 804 00:47:37,440 --> 00:47:38,400 Speaker 14: almost religious. 805 00:47:40,400 --> 00:47:41,879 Speaker 11: I mean, that's it. 806 00:47:46,280 --> 00:47:48,120 Speaker 1: That does it for us here at Wall Street Week. 807 00:47:48,280 --> 00:47:51,399 Speaker 1: I'm David Weston. This is Bloomberg. See you next week 808 00:47:51,440 --> 00:48:00,800 Speaker 1: for more stories of capitalism.