WEBVTT - GM Commits Billions to Shareholder Returns as EV Push Stalls

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<v Speaker 3>O Business finance and tech news. The Bloomberg Business Week

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<v Speaker 3>Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio well.

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<v Speaker 4>Talking about kicking into high gear.

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<v Speaker 2>The stock The buyback plan news early this morning from

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<v Speaker 2>General Motors, announcing it it's biggest ever stock buyback plan,

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<v Speaker 2>ten billion in total. It also boosted its dividend thirty

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<v Speaker 2>three percent. Tim and reinstated earning's guidance after accounting for

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<v Speaker 2>costs of its new labor contract.

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<v Speaker 1>CEO Mary Barra promised to better days are ahead, stressing

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<v Speaker 1>confidence in the cast generation of GM, the execution of strategy,

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<v Speaker 1>and expectation of growth and strong margins. This carol despite

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<v Speaker 1>minimal EV sales, a troubled robotaxi business, and even more

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<v Speaker 1>trouble at its battery pack facilities that has kept EV

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<v Speaker 1>production in the low thousands.

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<v Speaker 4>That's right.

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<v Speaker 2>GM's ultimum battery pack was supposed to enable the company

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<v Speaker 2>to make multiple types of electric cars off the same

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<v Speaker 2>platform and beat competitors to market with a ton of vehicles.

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<v Speaker 4>Here's more for Mary Barra.

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<v Speaker 5>From an EV perspective, we have confidence in the portfolio

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<v Speaker 5>we have. We're a bit disappointed this year that we

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<v Speaker 5>were constrained by the automation to build modules. So this

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<v Speaker 5>is not something that is fundamentally an issue with Altium.

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<v Speaker 5>It was more manufacturing automation issue that we're working and

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<v Speaker 5>we'll be out of it by middle of next year

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<v Speaker 5>and making provement every quarter, all right.

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<v Speaker 2>That, of course, was the CEO of General Motors Mary Barrow,

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<v Speaker 2>talking earlier today on Bloomberg. Let's get a little bit

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<v Speaker 2>more into this story. Bloomberg News auto reporter Keith Noughton

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<v Speaker 2>is on Zoom from Detroit.

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<v Speaker 4>We love our auto team. They know this world so well.

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<v Speaker 2>Keith. Good to have you here with Tim and myself.

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<v Speaker 2>How do you make sense of the news today? I

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<v Speaker 2>mean the stocks up, shares of General Motors up nine percent,

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<v Speaker 2>doing a massive buyback and boosting your dividend. I get

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<v Speaker 2>it why investors like it. But what does it say

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<v Speaker 2>about the business if this is the best use of money?

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<v Speaker 6>Yeah, I mean it's really Mary Barrow kind of pleading

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<v Speaker 6>for patients in a very expensive fashion, of course, because

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<v Speaker 6>things have not been going so well on their technology bets.

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<v Speaker 6>As you noted, the EV ramp has been very slow

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<v Speaker 6>because of problems building batteries, and you know, Cruise, their

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<v Speaker 6>autonomous vehicle unit, has been a bit of a umpster

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<v Speaker 6>fire lately with all sorts of safety problems and the

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<v Speaker 6>CEO quitting abruptly a week ago. So and they're scaling

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<v Speaker 6>back because they're losing you know, seven hundred million dollars

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<v Speaker 6>a quarter at Cruise, so they really aren't getting the

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<v Speaker 6>payoff yet on these very large technology investments. As a result,

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<v Speaker 6>their stock's been down by double digits this year. So

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<v Speaker 6>this is a way to ask investors to give them time.

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<v Speaker 1>Okay, so how much time do they need and what

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<v Speaker 1>do they need that time for? Because Ford is running

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<v Speaker 1>into similar issues when it comes to evs. The F

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<v Speaker 1>one fifty Lightning isn't selling like it was in previous quarters.

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<v Speaker 1>The mock e electric Mustang, same thing. It's there's there's

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<v Speaker 1>this uh sort of shift in the way that consumers

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<v Speaker 1>are thinking about EV's.

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<v Speaker 7>What's going on, Yeah, there's a there's a few things

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<v Speaker 7>at work.

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<v Speaker 6>One on the production side, the legacy automakers are discovering

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<v Speaker 6>what Elon Musk discovered a few years ago when he

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<v Speaker 6>tried to go to mass production with Tesla. You might

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<v Speaker 6>recall him describing that as production. Hell, well, that's what

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<v Speaker 6>the legacy automakers are in right now. They're discovering that

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<v Speaker 6>building electric vehicles is harder than building internal combustion engine vehicles,

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<v Speaker 6>and so there are a lot of hiccups in both

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<v Speaker 6>battery production and the EV production itself. That's one problem,

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<v Speaker 6>so they can't get them out the door of the factory.

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<v Speaker 6>The other problem is this demand issue you're talking about.

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<v Speaker 6>There's still you know, rising demand for electric vehicles, but

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<v Speaker 6>it has slowed considerably because we've gotten past the sort

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<v Speaker 6>of early adopters who are willing to pay anything to

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<v Speaker 6>have the latest and the greatest, and now we've gotten

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<v Speaker 6>to that broad middle of the market and folks are

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<v Speaker 6>bulking at the price of electric vehicles which are higher

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<v Speaker 6>than standard cars, and the charging infrastructure which is still

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<v Speaker 6>very spotty.

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<v Speaker 2>In the Hey Keith our Bloomberg Intelligence team says the

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<v Speaker 2>move to offset the effects of higher costs from the

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<v Speaker 2>new year UAW contract adds confusion to GM's electrification electrification

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<v Speaker 2>strategy and is out of step with the practice of

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<v Speaker 2>conserving cash when demand is uncertain. Should they be conserving

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<v Speaker 2>cash right now?

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<v Speaker 6>Yeah, Well, you know, the electric vehicle business at GM

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<v Speaker 6>and the other legacy automakers is just burning cash right now.

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<v Speaker 7>So if you take ten billion.

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<v Speaker 6>Dollars and diverted into a stock buyback, yeah, that's money

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<v Speaker 6>that could have been spent to try and write your

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<v Speaker 6>EV business or your autonomous vehicle business, either of those

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<v Speaker 6>they both consume billions of dollars. So it is a

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<v Speaker 6>good question to ask, is this the best use of capital?

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<v Speaker 1>At this time, So what would be what are investors

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<v Speaker 1>saying could be better uses of capital?

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<v Speaker 6>Well, you can try and you know, buttress your EV

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<v Speaker 6>production and strategy and model offerings so you can become

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<v Speaker 6>a legitimate competitor to Tesla, which still controls more than

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<v Speaker 6>half the market and makes money selling electric keeples.

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<v Speaker 7>Keith, I just want to know.

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<v Speaker 1>Sorry, I want to sort of like cut you off

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<v Speaker 1>with my own with another one of my own questions here,

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<v Speaker 1>So apologies. But there was an article over the weekend,

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<v Speaker 1>I believe, in the Wall Street Journal about hybrids and

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<v Speaker 1>the way that some companies now are are sort of

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<v Speaker 1>you know, they said, you know, evs aren't necessarily the

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<v Speaker 1>way that we think the future is going to work.

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<v Speaker 1>We think it's going to be hybrids. Where where are

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<v Speaker 1>Ford and GM on that.

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<v Speaker 6>Board predicts that it's hybrid sales will quadruple over the

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<v Speaker 6>next four years, And they are pouring money into hybrids

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<v Speaker 6>now because they recognize hybrids are more cost effective and

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<v Speaker 6>they don't have the charging infrastructure issues, so they can

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<v Speaker 6>be this sort of bridge to electrification.

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<v Speaker 7>So there's this.

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<v Speaker 6>Renewed focus on hybrids out of Detroit and with a

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<v Speaker 6>lot of legacy automakers. Toyota never went away from hybrids.

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<v Speaker 6>They said the market wasn't ready for full EVS. Hybrids

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<v Speaker 6>is the first step you take on the electrification journey.

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<v Speaker 2>Well, you did that great story for Business Week they

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<v Speaker 2>talk specifically about hybrids, and I thought it was really smart.

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<v Speaker 1>I read it a business week before I read it

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<v Speaker 1>in the journal. Keith, I promise, okay.

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<v Speaker 2>Everybody, everybody follows what our auto team does. I'm just

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<v Speaker 2>going to say that no, but it was so smart

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<v Speaker 2>because it used to be hybrids and then EVS took over.

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<v Speaker 2>But it was fascinating to hear the reporting that you

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<v Speaker 2>did about what we are seeing when it comes to

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<v Speaker 2>the hybrid market and the growth that we're seeing, and

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<v Speaker 2>you do wonder is that does that continue? And you

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<v Speaker 2>know it was I think early October that you did

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<v Speaker 2>that story. Do we continue to see demand in the

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<v Speaker 2>hybrid space?

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<v Speaker 7>Thanks Carol for reading And.

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<v Speaker 6>You might recall from that story one of the people

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<v Speaker 6>I interviewed was this dentist who has a mobile dental practice.

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<v Speaker 7>She tows a trailer around.

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<v Speaker 6>Well, you know, you just can't do that with an

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<v Speaker 6>electric pickup truck because it'll deplete the battery too.

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<v Speaker 7>Fast. But guess what you.

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<v Speaker 6>Can do it with a hybrid, which is what she has,

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<v Speaker 6>because having the electric motor and the eternal combustion engine

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<v Speaker 6>actually gives you more cork the thing you need to

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<v Speaker 6>pull a trailer. So there are many benefits to hybrids

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<v Speaker 6>that people are really kind of rediscovering or discovering for

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<v Speaker 6>the first time.

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<v Speaker 7>And so and it does lower your carbon footprints, so it's.

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<v Speaker 6>A way to stay and start moving in that direction

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<v Speaker 6>without any of the you know things you sort of

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<v Speaker 6>have to give up to EV's Amber Labardi, that's.

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<v Speaker 8>How you did so well, go ahead, Kyl.

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<v Speaker 2>Well, so do we need to be worried about General

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<v Speaker 2>Motor and their strategy.

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<v Speaker 9>No.

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<v Speaker 6>I just think it's going to take longer to get there,

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<v Speaker 6>and that's that's the issue. And there was you know,

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<v Speaker 6>we're sort of entering this trough of disillusionment on the

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<v Speaker 6>way the EV ramp is going to happen. It's it's

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<v Speaker 6>not linear. There's ups and downs and run it down.

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<v Speaker 1>And does the does do hybrids provide that bridge or

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<v Speaker 1>do they displace evs.

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<v Speaker 6>I think the way the industry views it, and particularly Toyota,

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<v Speaker 6>the hybrid leader, is that it is the bridge.

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<v Speaker 7>You know, you just.

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<v Speaker 6>Take that step into electrification and you live with that

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<v Speaker 6>in a way that there's fewer compromises, and hopefully during

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<v Speaker 6>that period and by the time you're ready for your

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<v Speaker 6>next car, the price of evs have come come down,

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<v Speaker 6>and there'll be more charging stations throughout the country, so

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<v Speaker 6>you don't have to worry about running out of juice

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<v Speaker 6>and having nowhere to plug in.

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<v Speaker 2>I might have to have you talk to my husband

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<v Speaker 2>because he's waiting for hydrogen sales, fuel sales.

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<v Speaker 8>How long is he gonna be waiting?

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<v Speaker 9>Care?

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<v Speaker 4>But he's like, that's the answer.

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<v Speaker 8>I don't have a good question.

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<v Speaker 2>Keith Noughton, you are amazing. Thank you so much and

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<v Speaker 2>highly recommend I'll put that story out that Keith wrote

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<v Speaker 2>back in October about the hybrid marker because it says

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<v Speaker 2>so much about what's going on right now.

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<v Speaker 8>You send it to me too.

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<v Speaker 1>I will want to appreciate it.

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<v Speaker 2>If you could read a couple of stories you just kidding,

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<v Speaker 2>just kidding. Bloomberg's Keith Notton. Of course, he's Bloomberg News

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<v Speaker 2>auto reporter joining us on zoom from Detroit.

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<v Speaker 3>You're listening to the Bloomberg Business Week podcast Catch US

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<v Speaker 10>Well.

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<v Speaker 2>As pandemic worries have faded, the travel business has definitely

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<v Speaker 2>come soaring back, with airline traffic more than doubling since

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<v Speaker 2>its COVID era trough and waiting times for deliveries of

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<v Speaker 2>new commercial airplanes mostly stretching through the end of this

0:10:10.400 --> 0:10:13.360
<v Speaker 2>decade because of robust demand. But there is one travel

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<v Speaker 2>segment that seems a little bit stuck in a holding pattern,

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<v Speaker 2>and that is corporate owned jets so road.

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<v Speaker 1>Bloomberg's Thomas Black earlier this month, he reports on the

0:10:20.800 --> 0:10:23.079
<v Speaker 1>aviation space and noted that even though the number of

0:10:23.120 --> 0:10:26.360
<v Speaker 1>flights operated by the broader private aviation industry so that

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<v Speaker 1>includes charter, fractional, individually owned aircraft managed by third party

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<v Speaker 1>service companies pretty much all the ways that you fly

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<v Speaker 1>around Carrol totally. Yeah, it's almost nineteen percent higher than

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<v Speaker 1>it was back in twenty nineteen, that was the last

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<v Speaker 1>full year pre pandemic year. Company's in house flight departments

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<v Speaker 1>are flying about the same as they did.

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<v Speaker 8>Carol four years ago.

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<v Speaker 4>It's interesting.

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<v Speaker 2>That's according to data from wing exit's Hamburg based provider

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<v Speaker 2>of market data and analysis on the private aviation industry.

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<v Speaker 4>We've got a great.

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<v Speaker 2>Voice on this is back with us is Janiniannarelli. She

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<v Speaker 2>is founder and president of the private aircraft broker Paravian,

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<v Speaker 2>and she really sees daily what is going on, minute

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<v Speaker 2>by minute in the private aviation world. She's here in

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<v Speaker 2>our Bloomberg Interactive Broker studio. Welcome back, How are.

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<v Speaker 4>You delighted to be here.

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<v Speaker 11>Thank you for the invitation.

0:11:12.160 --> 0:11:14.320
<v Speaker 2>It's great to have you here. Tell me what you

0:11:14.360 --> 0:11:16.680
<v Speaker 2>said though, when you walked into the studio and you

0:11:16.679 --> 0:11:19.480
<v Speaker 2>were listening to our segment on the IPO market, which

0:11:19.520 --> 0:11:23.079
<v Speaker 2>seems like it's having a tough time getting going, and

0:11:23.120 --> 0:11:26.360
<v Speaker 2>how that kind of related to your industry.

0:11:26.480 --> 0:11:30.600
<v Speaker 11>Yeah, just take your last guest story and slash IPO

0:11:30.679 --> 0:11:32.160
<v Speaker 11>and insert the word jet.

0:11:32.320 --> 0:11:33.120
<v Speaker 4>What's going on?

0:11:34.160 --> 0:11:37.400
<v Speaker 11>That's a good question. What we have observed throughout the

0:11:37.400 --> 0:11:40.080
<v Speaker 11>course of twenty twenty three the buyers are sitting on

0:11:40.120 --> 0:11:43.880
<v Speaker 11>their hands and they've created excuses, and I would say

0:11:43.920 --> 0:11:46.800
<v Speaker 11>the trade has as well for them quarter over quarter.

0:11:47.040 --> 0:11:47.760
<v Speaker 4>So here we are.

0:11:47.880 --> 0:11:49.640
<v Speaker 11>We're at the end of the year. This should be

0:11:49.840 --> 0:11:53.760
<v Speaker 11>the busiest time of the year in the aircraft trading marketplace,

0:11:54.320 --> 0:11:55.720
<v Speaker 11>and it's relatively quiet.

0:11:55.840 --> 0:11:59.280
<v Speaker 1>Wait, I thought that we saw huge, huge announcements from

0:11:59.400 --> 0:12:05.200
<v Speaker 1>companies like net Jets buying many many Cessna citations for

0:12:05.240 --> 0:12:09.199
<v Speaker 1>example earlier this year. That doesn't count in a.

0:12:09.160 --> 0:12:12.040
<v Speaker 11>Way, no, because that's the fractional share and they need

0:12:12.080 --> 0:12:15.640
<v Speaker 11>to meet demand. Actually, fractional flying is up year over year.

0:12:15.679 --> 0:12:17.440
<v Speaker 11>I want to say the number is somewhere like seven

0:12:17.480 --> 0:12:21.720
<v Speaker 11>point nine percent, whereas private flying is down eight point

0:12:21.800 --> 0:12:23.520
<v Speaker 11>three percent year over year.

0:12:23.559 --> 0:12:26.160
<v Speaker 8>These are how can those things both be true?

0:12:26.240 --> 0:12:29.160
<v Speaker 2>And Thomas Black and his story said flights are fractional operators.

0:12:29.280 --> 0:12:32.400
<v Speaker 2>So we're talking about net Jets, Flexjet. They've increased, have

0:12:32.520 --> 0:12:34.880
<v Speaker 2>increased forty one percent from twenty nineteen levels.

0:12:35.080 --> 0:12:37.600
<v Speaker 1>You're still flying private when you use one of those operators.

0:12:37.600 --> 0:12:39.280
<v Speaker 1>So make the distinction for our audience.

0:12:39.440 --> 0:12:43.680
<v Speaker 11>So the private sector and the corporate sector is whole ownership.

0:12:44.080 --> 0:12:46.520
<v Speaker 11>These are individuals and corporations that go out and acquire

0:12:46.559 --> 0:12:49.240
<v Speaker 11>the asset and the management.

0:12:48.840 --> 0:12:50.560
<v Speaker 4>The crewing. It's the company jet.

0:12:50.679 --> 0:12:54.080
<v Speaker 11>It's the company jet. Where's to fractionalize?

0:12:54.120 --> 0:12:54.840
<v Speaker 4>All the time.

0:12:56.400 --> 0:12:59.640
<v Speaker 11>You're buying a piece of an airplane, and so you

0:12:59.720 --> 0:13:03.120
<v Speaker 11>have access to uplift pretty much on demand, but you

0:13:03.240 --> 0:13:05.520
<v Speaker 11>don't own the whole aircraft and you don't control the.

0:13:05.480 --> 0:13:06.240
<v Speaker 4>Operation of it.

0:13:06.360 --> 0:13:08.559
<v Speaker 1>This is exactly what our own Thomas Black wrote about

0:13:09.040 --> 0:13:12.240
<v Speaker 1>earlier this month. And the question is that I that

0:13:12.280 --> 0:13:15.840
<v Speaker 1>I have for you is is that era kind of

0:13:15.920 --> 0:13:19.199
<v Speaker 1>over when it comes to private ownership. We've seen pushback

0:13:19.679 --> 0:13:24.439
<v Speaker 1>from shareholders about flying private. So now about actually these

0:13:24.440 --> 0:13:27.480
<v Speaker 1>companies owning corporate jets because of the carbon footprint, So

0:13:27.559 --> 0:13:31.400
<v Speaker 1>companies are now not actually owning their jets outright and

0:13:31.440 --> 0:13:34.480
<v Speaker 1>instead using those fractional services which do offer the on

0:13:34.559 --> 0:13:37.160
<v Speaker 1>demand private flying, so the benefits of flying private without

0:13:37.200 --> 0:13:38.280
<v Speaker 1>actually owning that asset.

0:13:38.800 --> 0:13:42.720
<v Speaker 11>So it's a conundrum. I don't think demand has diminished,

0:13:43.160 --> 0:13:47.400
<v Speaker 11>it's just action has diminished. We really don't see people

0:13:47.440 --> 0:13:50.160
<v Speaker 11>pushing away from private jets and looking for other means

0:13:50.160 --> 0:13:54.480
<v Speaker 11>of transportation. It still is the most efficient form of

0:13:54.559 --> 0:13:57.920
<v Speaker 11>moving goods and service goods and people around the country,

0:13:57.960 --> 0:13:59.240
<v Speaker 11>around the world, but they.

0:13:59.200 --> 0:14:01.839
<v Speaker 2>Don't want to own it, not necessarily.

0:14:01.880 --> 0:14:04.920
<v Speaker 11>So I mean, I personally have not experienced people say

0:14:05.040 --> 0:14:08.560
<v Speaker 11>sell the jet because of all the issues that you

0:14:08.720 --> 0:14:13.120
<v Speaker 11>just cited. There are ways to reduce their carbon footprint.

0:14:13.160 --> 0:14:16.200
<v Speaker 11>You know, smart flying, direct flying in the United States

0:14:16.280 --> 0:14:19.080
<v Speaker 11>is going to lead the way. Operators within the United

0:14:19.120 --> 0:14:21.600
<v Speaker 11>States are going to lead the way to that goal

0:14:21.680 --> 0:14:24.960
<v Speaker 11>of twenty fifty. But I mean you brokeer deals, right, correct?

0:14:25.200 --> 0:14:28.440
<v Speaker 11>So how much is your deal flow down this year

0:14:28.480 --> 0:14:31.440
<v Speaker 11>from I don't know what's is it the peak post

0:14:31.480 --> 0:14:33.880
<v Speaker 11>pandemic that you measure against. I'd be curious about that,

0:14:34.120 --> 0:14:36.479
<v Speaker 11>and also where it was maybe twenty nineteen.

0:14:36.440 --> 0:14:37.840
<v Speaker 4>So good questions.

0:14:38.160 --> 0:14:41.240
<v Speaker 11>My business is off significantly, but I attribute it to

0:14:41.400 --> 0:14:44.600
<v Speaker 11>the aircraft that I'm actually offering. I mean, the market's sort.

0:14:44.440 --> 0:14:46.160
<v Speaker 4>Of you don't like your inventory.

0:14:46.680 --> 0:14:49.600
<v Speaker 11>I love my inventory, right, but it's not what people

0:14:49.640 --> 0:14:52.560
<v Speaker 11>will It's not in favor with the market today. The

0:14:52.600 --> 0:14:56.240
<v Speaker 11>most active segment of the business aircraft marketplace, I would

0:14:56.240 --> 0:14:58.960
<v Speaker 11>have to say, is the small jet. That is the

0:14:59.040 --> 0:15:04.400
<v Speaker 11>aircraft that initially led the decline and then started the

0:15:04.480 --> 0:15:08.400
<v Speaker 11>rise back out of the global panel.

0:15:08.560 --> 0:15:11.640
<v Speaker 8>What is this like a six person exactly?

0:15:12.320 --> 0:15:14.680
<v Speaker 11>I put it more in a dollar perspective, but six

0:15:14.720 --> 0:15:19.600
<v Speaker 11>to eight passengers somewhere two to seven million dollars, and

0:15:19.760 --> 0:15:22.000
<v Speaker 11>the aircraft range is going to be anywhere from about

0:15:22.000 --> 0:15:24.000
<v Speaker 11>a thousand nautical miles to fifteen hundred.

0:15:24.120 --> 0:15:25.480
<v Speaker 4>So what don't people want then?

0:15:26.240 --> 0:15:26.720
<v Speaker 9>Is it? Now?

0:15:26.960 --> 0:15:28.360
<v Speaker 4>Yeah? What is it that they don't want?

0:15:28.560 --> 0:15:31.080
<v Speaker 11>It seems to be the category that I would call

0:15:31.120 --> 0:15:34.080
<v Speaker 11>the super mid size and the ultralong range aircraft.

0:15:34.080 --> 0:15:35.000
<v Speaker 8>Why don't they want those?

0:15:35.640 --> 0:15:36.240
<v Speaker 9>It's a good.

0:15:36.160 --> 0:15:38.680
<v Speaker 11>Question, it's a really good question. So first of all,

0:15:38.720 --> 0:15:40.760
<v Speaker 11>if we talk about the ultra long range that that's

0:15:40.800 --> 0:15:43.480
<v Speaker 11>the pinnacle of the marketplace, and the price point for

0:15:43.520 --> 0:15:45.560
<v Speaker 11>those airplanes is anywhere from fifty million on.

0:15:45.720 --> 0:15:49.120
<v Speaker 8>This not be like a Golfstream G six fifty correct, Yes.

0:15:49.400 --> 0:15:52.120
<v Speaker 11>Tim's a little bit into planes, Ah, I can tell.

0:15:52.640 --> 0:15:55.520
<v Speaker 11>So that seems to have fallen out of favor. I mean,

0:15:55.520 --> 0:15:57.480
<v Speaker 11>there are there are buyers out there, and there are

0:15:57.520 --> 0:15:59.240
<v Speaker 11>plenty of inquiries. I mean, if I just look at

0:15:59.240 --> 0:16:01.480
<v Speaker 11>the number of inquiry as I've received, you're to date

0:16:01.920 --> 0:16:04.800
<v Speaker 11>on every single aircraft I offer for sale. It just

0:16:04.880 --> 0:16:07.800
<v Speaker 11>boggles my mind that not one person has stepped up

0:16:07.840 --> 0:16:11.120
<v Speaker 11>to make an offer. Maybe more interesting is let's say

0:16:11.160 --> 0:16:13.480
<v Speaker 11>I get two hundred inquiries over the course of three

0:16:13.480 --> 0:16:16.800
<v Speaker 11>months on an aircraft. My guess is ten percent are

0:16:16.840 --> 0:16:20.480
<v Speaker 11>really going to buy an aircraft, But less than ten

0:16:20.520 --> 0:16:23.160
<v Speaker 11>percent of that ten percent I've actually done.

0:16:23.000 --> 0:16:27.600
<v Speaker 1>Anything forgive me, But do interest rates matter? I mean,

0:16:27.640 --> 0:16:30.480
<v Speaker 1>when we're talking at this type of money, they don't

0:16:30.480 --> 0:16:33.800
<v Speaker 1>matter for real estate, but they matter for at least

0:16:33.800 --> 0:16:35.440
<v Speaker 1>that's what real estate, high end real estate mean.

0:16:35.480 --> 0:16:37.800
<v Speaker 4>Do they finance these deals? Like, Yeah, that's a good question.

0:16:38.160 --> 0:16:42.520
<v Speaker 11>So another good question my personal history is that I

0:16:42.560 --> 0:16:44.880
<v Speaker 11>can count, maybe on two hands, how many people actually

0:16:44.960 --> 0:16:47.160
<v Speaker 11>needed financing throughout my entire.

0:16:47.160 --> 0:16:52.560
<v Speaker 1>Cash to me versus using financing are two different things.

0:16:52.560 --> 0:16:54.240
<v Speaker 1>There are plenty of people who could pay, you know,

0:16:54.280 --> 0:16:57.000
<v Speaker 1>outright for a forty thousand or sixty thousand dollars vehicle,

0:16:57.200 --> 0:16:59.880
<v Speaker 1>but if they get zero percent financing, then they're going

0:16:59.920 --> 0:17:01.000
<v Speaker 1>to take the finance.

0:17:00.640 --> 0:17:01.800
<v Speaker 4>Side exactly that.

0:17:02.200 --> 0:17:05.040
<v Speaker 11>Now, I have a number of prospective buyers that they

0:17:05.080 --> 0:17:08.520
<v Speaker 11>may pay cash outright and then refinance later on. Most

0:17:08.600 --> 0:17:11.159
<v Speaker 11>of them do that with a financial institution that they

0:17:11.200 --> 0:17:15.080
<v Speaker 11>already have a business relationship with. The odd inquiry that

0:17:15.160 --> 0:17:19.640
<v Speaker 11>I may receive for aircraft financing, frankly, is a little

0:17:19.640 --> 0:17:21.840
<v Speaker 11>bit of a red flag for me, because they shouldn't

0:17:21.880 --> 0:17:22.399
<v Speaker 11>be asking me.

0:17:22.400 --> 0:17:24.920
<v Speaker 2>They already should have had that in place, right, It's right,

0:17:24.960 --> 0:17:26.720
<v Speaker 2>they've got their bankers they've got the bank that they've

0:17:26.720 --> 0:17:28.679
<v Speaker 2>been working with for years on everything.

0:17:28.480 --> 0:17:31.360
<v Speaker 11>End qualified, the case comes in everything.

0:17:32.040 --> 0:17:33.919
<v Speaker 4>It's interesting. I'm thinking about our audience.

0:17:35.480 --> 0:17:39.199
<v Speaker 2>So how do you then use what you are seeing

0:17:39.240 --> 0:17:40.720
<v Speaker 2>to maybe tell you what's.

0:17:40.520 --> 0:17:42.480
<v Speaker 4>Going on in the global economy.

0:17:42.560 --> 0:17:44.520
<v Speaker 2>Is it an indicator for you or is it just

0:17:44.800 --> 0:17:47.960
<v Speaker 2>maybe your business, Your industry is going through some changes.

0:17:48.080 --> 0:17:50.360
<v Speaker 11>I would say flip that and say business jets are

0:17:50.400 --> 0:17:54.640
<v Speaker 11>the indicator, and they always have been. Now I think

0:17:54.640 --> 0:17:58.560
<v Speaker 11>we're writing new history and have been since twenty nineteen,

0:17:58.640 --> 0:18:00.959
<v Speaker 11>because you could take the playbook throw it out the window.

0:18:01.840 --> 0:18:05.399
<v Speaker 11>Looking back over twenty three, I was musing over the

0:18:05.440 --> 0:18:08.480
<v Speaker 11>fact that we're going to chalk this year up to

0:18:08.520 --> 0:18:13.199
<v Speaker 11>a year of rebalancing, and I'm wondering if this was

0:18:13.320 --> 0:18:17.800
<v Speaker 11>not the downturn that always follows a great upswing. And

0:18:18.000 --> 0:18:20.080
<v Speaker 11>twenty four, because I'm going to use it to project

0:18:20.119 --> 0:18:23.119
<v Speaker 11>a little bit, is going to be relatively quiet. But

0:18:23.160 --> 0:18:26.119
<v Speaker 11>the driver for that is mostly the presidential election and

0:18:26.160 --> 0:18:29.159
<v Speaker 11>the uncertainty that comes along with who will be our

0:18:29.200 --> 0:18:32.800
<v Speaker 11>new administration and what policies will go into effect.

0:18:32.920 --> 0:18:36.400
<v Speaker 1>Well, President Trump was pretty friendly to private jets.

0:18:36.400 --> 0:18:37.560
<v Speaker 4>To a certain degree.

0:18:37.920 --> 0:18:40.840
<v Speaker 1>I mean some of those there were tax breaks that

0:18:40.880 --> 0:18:44.600
<v Speaker 1>were given to people who used private jets during the

0:18:44.640 --> 0:18:46.200
<v Speaker 1>coronavirus pandemic, for example.

0:18:46.280 --> 0:18:46.880
<v Speaker 4>Well, that's true.

0:18:46.880 --> 0:18:50.560
<v Speaker 11>The bonus appreciation was a huge driver to motivate people

0:18:50.600 --> 0:18:51.639
<v Speaker 11>to buy aircraft.

0:18:52.359 --> 0:18:53.000
<v Speaker 4>Twenty seconds.

0:18:53.520 --> 0:18:55.920
<v Speaker 2>What are you worried about in terms of the presidential

0:18:55.960 --> 0:18:58.199
<v Speaker 2>outcome and in terms of regulatory or overset?

0:18:58.280 --> 0:18:59.760
<v Speaker 4>And I've got to ask you to be very quickly.

0:19:00.320 --> 0:19:03.639
<v Speaker 11>I'm mostly concerned about tax implications. There's a lot of

0:19:03.680 --> 0:19:08.000
<v Speaker 11>those expiring in twenty five. That's really the bigger concern.

0:19:08.600 --> 0:19:11.439
<v Speaker 2>Really fascinating, right, you can talk about this al, I know,

0:19:11.480 --> 0:19:13.600
<v Speaker 2>I know, it's a world we love talking about. We

0:19:13.600 --> 0:19:16.320
<v Speaker 2>didn't even get into evtalls, which I know is a

0:19:16.320 --> 0:19:19.640
<v Speaker 2>big thing. Next time, come back soon. Love to continue

0:19:19.640 --> 0:19:23.760
<v Speaker 2>the conversation. Janine Jannarelli, founder president of par Avion, a

0:19:23.840 --> 0:19:26.520
<v Speaker 2>private aircraft broker. You can check out some of the

0:19:26.520 --> 0:19:29.840
<v Speaker 2>stuff that she is involved in on her website here

0:19:29.880 --> 0:19:30.359
<v Speaker 2>in studio.

0:19:30.440 --> 0:19:31.200
<v Speaker 4>Have a good holiday.

0:19:33.040 --> 0:19:36.640
<v Speaker 3>You're listening to the Bloomberg Business Week podcast. Catch us

0:19:36.680 --> 0:19:40.680
<v Speaker 3>live weekday afternoons from three to six Eastern on Bloomberg Radio,

0:19:40.880 --> 0:19:44.160
<v Speaker 3>the Bloomberg Business app and YouTube. You can also listen

0:19:44.280 --> 0:19:47.359
<v Speaker 3>live on Amazon Alexa from our flagship New York station,

0:19:47.800 --> 0:19:54.879
<v Speaker 3>Just Say Alexa playing Bloomberg eleven thirty telling you.

0:19:57.640 --> 0:19:58.000
<v Speaker 12>Stop.

0:20:00.080 --> 0:20:05.679
<v Speaker 2>Yeah, that's right, everybody. Santa Claus Is come to town. At

0:20:05.720 --> 0:20:08.200
<v Speaker 2>the most wonderful time of the year. The Aris Cris

0:20:08.240 --> 0:20:11.920
<v Speaker 2>Bloomingdale's has its holiday window display up. People are decorating

0:20:11.960 --> 0:20:14.600
<v Speaker 2>their Christmas trees and decking the halls, and a large

0:20:14.600 --> 0:20:18.200
<v Speaker 2>team of Santa's are coming to town, appearing at malls

0:20:18.200 --> 0:20:20.200
<v Speaker 2>and retail outlets around the country.

0:20:20.520 --> 0:20:24.120
<v Speaker 4>He's everywhere and sometimes she's everywhere. Explain that in a moment.

0:20:24.280 --> 0:20:26.800
<v Speaker 1>That's true. Hey, this year things are a little bit

0:20:26.840 --> 0:20:30.040
<v Speaker 1>different than years past, though. Demand for Santa's is actually

0:20:30.160 --> 0:20:32.399
<v Speaker 1>far exceeding supply, at least according to our next guest,

0:20:32.760 --> 0:20:35.800
<v Speaker 1>who knows quite a bit about goings on at the

0:20:36.119 --> 0:20:38.840
<v Speaker 1>Old North Pole. Mitch Allen is the founder and head

0:20:38.840 --> 0:20:41.679
<v Speaker 1>elf of Higher Santa It's a Santa Claus talent and

0:20:41.760 --> 0:20:44.800
<v Speaker 1>staffing agency, and what it does is it places Santa's

0:20:44.800 --> 0:20:47.960
<v Speaker 1>at events, parties, malls and more all over the US.

0:20:48.560 --> 0:20:51.280
<v Speaker 1>Mitch joins us on a zoom from South Lake, Texas. Mitch,

0:20:51.320 --> 0:20:53.520
<v Speaker 1>good to have you with us this afternoon. So the

0:20:53.560 --> 0:20:55.720
<v Speaker 1>Santa Biz. You went pretty well in twenty twenty three.

0:20:55.800 --> 0:20:59.680
<v Speaker 13>No, it sure is. We've had more demand for Santa

0:20:59.720 --> 0:21:04.000
<v Speaker 13>Claus entertainers than we've ever had before, and all types

0:21:04.040 --> 0:21:07.119
<v Speaker 13>of it, whether it be a home office, retail establishment, malls.

0:21:07.760 --> 0:21:10.840
<v Speaker 13>Everyone wants to associate themselves with Christmas through the use

0:21:10.880 --> 0:21:11.280
<v Speaker 13>of Santa.

0:21:11.560 --> 0:21:14.199
<v Speaker 4>Totally get it. I'm also a fan of Healfa on

0:21:14.200 --> 0:21:15.760
<v Speaker 4>the Shelf. Just going to put it out there.

0:21:15.680 --> 0:21:18.280
<v Speaker 2>Hey, Mitch, I mean, so our numbers up, demand is

0:21:18.359 --> 0:21:21.680
<v Speaker 2>up from what pre pandemic levels, like, what is I

0:21:21.720 --> 0:21:24.280
<v Speaker 2>don't know, Is it just been You've been seeing organic growth?

0:21:24.359 --> 0:21:26.320
<v Speaker 2>Has there been a recent peak? Give us an idea,

0:21:26.320 --> 0:21:27.240
<v Speaker 2>give us some perspective.

0:21:28.119 --> 0:21:28.439
<v Speaker 8>Sure.

0:21:28.680 --> 0:21:31.480
<v Speaker 13>So here at Hiresanta dot com, we've seen the demand

0:21:31.560 --> 0:21:34.600
<v Speaker 13>for Santa's people reaching out to us is up over

0:21:34.720 --> 0:21:37.200
<v Speaker 13>thirty six percent over last year, and last year was

0:21:37.520 --> 0:21:40.800
<v Speaker 13>record demand, even higher than pre pandemic. And that's turned

0:21:40.800 --> 0:21:44.600
<v Speaker 13>into more events. Our actual events that we've booked is

0:21:44.680 --> 0:21:47.400
<v Speaker 13>up over one hundred and fifty two percent over last

0:21:47.480 --> 0:21:51.119
<v Speaker 13>year and many times that over pre pandemic levels. So

0:21:51.200 --> 0:21:54.360
<v Speaker 13>people are using it. And what's interesting is we don't

0:21:54.400 --> 0:21:57.000
<v Speaker 13>necessarily have a Santa index, but that's what I'm calling it,

0:21:57.240 --> 0:22:01.720
<v Speaker 13>that small and medium sized businesses are really using Santa

0:22:01.800 --> 0:22:04.480
<v Speaker 13>this year. I think that's going to be a blockbuster

0:22:04.680 --> 0:22:08.320
<v Speaker 13>year for small and medium sized businesses. If the demand

0:22:08.359 --> 0:22:12.200
<v Speaker 13>for Santa Claus at these establishments is any indication.

0:22:11.920 --> 0:22:14.040
<v Speaker 8>How much does it cost to rent to Santa?

0:22:15.440 --> 0:22:18.360
<v Speaker 13>Yeah, so it really depends date, time, location, and how

0:22:18.359 --> 0:22:19.200
<v Speaker 13>long you need Santa.

0:22:19.320 --> 0:22:22.080
<v Speaker 1>Okay during the Christmas season, I'm not talking about it.

0:22:22.560 --> 0:22:23.280
<v Speaker 8>I'm not talking about it.

0:22:23.320 --> 0:22:26.680
<v Speaker 4>Your life Santa here, everybody's invited. We're talking about four

0:22:26.720 --> 0:22:27.720
<v Speaker 4>hours I need Santa.

0:22:28.800 --> 0:22:30.760
<v Speaker 13>So if you need sand to come your home or

0:22:30.760 --> 0:22:33.240
<v Speaker 13>office for just a couple of hours, you're talking about

0:22:33.359 --> 0:22:36.680
<v Speaker 13>two to four hundred dollars per hour for a Santa

0:22:36.720 --> 0:22:38.320
<v Speaker 13>Claus entertainer. Now, if you do it for a mall,

0:22:38.760 --> 0:22:40.680
<v Speaker 13>the hourly rate is obviously much less.

0:22:41.240 --> 0:22:45.280
<v Speaker 4>So do Santa's like do those who really look like Santa?

0:22:45.440 --> 0:22:48.000
<v Speaker 2>Sorry, kids, I hope we don't know the kids. You know, man,

0:22:48.040 --> 0:22:49.960
<v Speaker 2>we should have done a disclaimer. If there are kids

0:22:50.000 --> 0:22:51.640
<v Speaker 2>in the room, get them out of the room.

0:22:51.680 --> 0:22:55.040
<v Speaker 4>I'm sorry for everybody in the control room. Yes, yeah,

0:22:55.080 --> 0:22:56.159
<v Speaker 4>there is a Santa Claus.

0:22:56.240 --> 0:22:58.280
<v Speaker 8>Okay, I don't know where you were going.

0:22:58.480 --> 0:23:01.719
<v Speaker 2>I've gotta be really careful, but Mitch, I mean, so

0:23:01.800 --> 0:23:05.320
<v Speaker 2>for those who you know, really look like Chris Kringle,

0:23:05.400 --> 0:23:06.960
<v Speaker 2>do they get more money?

0:23:07.920 --> 0:23:10.960
<v Speaker 13>Absolutely so. At Hires, Santa are Santas, we like to say,

0:23:11.440 --> 0:23:14.600
<v Speaker 13>have a real beard, a real belly, and a real jolly.

0:23:14.840 --> 0:23:16.719
<v Speaker 13>You know, they've got that twinkle in their eye, that

0:23:16.840 --> 0:23:19.080
<v Speaker 13>love and joy of Christmas in their heart, and they

0:23:19.119 --> 0:23:23.639
<v Speaker 13>really do personify the image and personality of Santa Claus.

0:23:24.480 --> 0:23:27.720
<v Speaker 1>What about the demands the that you're getting right now

0:23:27.760 --> 0:23:30.280
<v Speaker 1>from different people across the country who are saying, well,

0:23:30.280 --> 0:23:33.160
<v Speaker 1>you know what, I don't actually want a Santa that

0:23:33.280 --> 0:23:36.440
<v Speaker 1>looks or sounds like the traditional Santa Claus. We're looking

0:23:36.440 --> 0:23:37.920
<v Speaker 1>for more diversity when it comes to.

0:23:37.880 --> 0:23:40.679
<v Speaker 4>Sand don't a Christine Clause rather than yeah, what do

0:23:40.720 --> 0:23:40.919
<v Speaker 4>you what?

0:23:40.960 --> 0:23:42.959
<v Speaker 8>Are you getting requests for Chris Kringle.

0:23:43.280 --> 0:23:45.720
<v Speaker 13>So, diversity is one of the big trends that we're

0:23:45.760 --> 0:23:49.359
<v Speaker 13>seeing in the Santa Claus entertainment space. You know, we

0:23:49.440 --> 0:23:52.520
<v Speaker 13>have a number of black Santa Claus entertainers as well

0:23:52.520 --> 0:23:55.399
<v Speaker 13>as Spanish speaking Santa's people are wanting to have a

0:23:55.480 --> 0:23:57.880
<v Speaker 13>Santa that looks and sounds like that.

0:23:57.880 --> 0:23:58.280
<v Speaker 8>They do.

0:23:58.720 --> 0:24:01.000
<v Speaker 13>We even have a deaf Sanda that we send around

0:24:01.000 --> 0:24:04.920
<v Speaker 13>the country. He's entirely deaf and it speaks asl American

0:24:04.960 --> 0:24:08.120
<v Speaker 13>Sign language. So we've seen the demand for We've seen

0:24:08.119 --> 0:24:12.240
<v Speaker 13>the demand for diverse Sanna's really grow up. And as

0:24:12.280 --> 0:24:14.840
<v Speaker 13>you pointed out, we actually have a couple of female

0:24:14.880 --> 0:24:17.040
<v Speaker 13>Sanna's who are terrific. You would not know that they

0:24:17.040 --> 0:24:20.240
<v Speaker 13>are females. They look and act like Santa and are

0:24:20.320 --> 0:24:21.600
<v Speaker 13>really great entertainers.

0:24:21.680 --> 0:24:23.560
<v Speaker 2>You mean, so they're not actually being a female Sanna,

0:24:23.640 --> 0:24:26.679
<v Speaker 2>they're actually being a female that is pretending to be

0:24:26.720 --> 0:24:27.359
<v Speaker 2>a male Sanna.

0:24:28.280 --> 0:24:28.720
<v Speaker 8>That's right.

0:24:28.760 --> 0:24:32.080
<v Speaker 13>You think of like tim Allen glue on beard. You

0:24:32.119 --> 0:24:35.560
<v Speaker 13>would not know unless you actually saw them outside this

0:24:35.920 --> 0:24:38.600
<v Speaker 13>suit that they were not actually Santa. But yeah, diversities

0:24:38.640 --> 0:24:40.800
<v Speaker 13>are one of the big friends. We also see experiences.

0:24:40.960 --> 0:24:44.480
<v Speaker 13>People just don't want to have their traditional picture with

0:24:44.520 --> 0:24:46.320
<v Speaker 13>their child on the knee of Santa. They want to

0:24:46.359 --> 0:24:49.080
<v Speaker 13>have an entire experience, and so many of our clients

0:24:49.160 --> 0:24:52.600
<v Speaker 13>are really increasing the experience where there's lots of sort

0:24:52.640 --> 0:24:57.360
<v Speaker 13>of instagrammable pictures and other types of experiences cocoa, hot

0:24:57.440 --> 0:24:59.600
<v Speaker 13>chocolate and those types of things along with.

0:24:59.680 --> 0:25:00.639
<v Speaker 12>The with Santa.

0:25:00.720 --> 0:25:02.359
<v Speaker 4>All Right, Mitch, is there a Santa School?

0:25:04.040 --> 0:25:06.240
<v Speaker 13>You know, this is one of the surprising things that

0:25:06.280 --> 0:25:09.879
<v Speaker 13>people don't realize. There is a vibrant Santa Claus community

0:25:09.960 --> 0:25:12.680
<v Speaker 13>out there, whether it be online or in person. Lots

0:25:12.680 --> 0:25:16.600
<v Speaker 13>of organizations. There's Santa schools and conventions around the country,

0:25:16.720 --> 0:25:19.480
<v Speaker 13>and that's where we go and recruit our Santa claus

0:25:19.560 --> 0:25:20.919
<v Speaker 13>is for higher Santa dot Com.

0:25:21.320 --> 0:25:23.480
<v Speaker 1>Hey, how seasonal is your business?

0:25:24.960 --> 0:25:29.480
<v Speaker 13>Well, the actual delivery of our service is extremely seasonal,

0:25:29.520 --> 0:25:33.000
<v Speaker 13>about six or seven weeks, but it's a full year

0:25:33.119 --> 0:25:35.800
<v Speaker 13>business at Hire Santa. The first half of the year

0:25:35.880 --> 0:25:40.040
<v Speaker 13>is really about seals. It's getting those large contracts, those malls,

0:25:40.080 --> 0:25:43.280
<v Speaker 13>those retail establishments we're working and then we're trying to

0:25:43.280 --> 0:25:46.720
<v Speaker 13>get those contracts as well as we're trying to get

0:25:46.760 --> 0:25:49.800
<v Speaker 13>more Santas. This last year we added over eleven hundred

0:25:50.040 --> 0:25:53.360
<v Speaker 13>Santa Claus entertainers to our database alone. And so it

0:25:53.440 --> 0:25:56.600
<v Speaker 13>is full season, but really it's go time. It's fourth quarter,

0:25:57.160 --> 0:25:59.560
<v Speaker 13>during the last part of November and of course all

0:25:59.560 --> 0:26:00.000
<v Speaker 13>of December.

0:26:00.200 --> 0:26:02.760
<v Speaker 2>All right, So what's interesting is you shared with us

0:26:02.800 --> 0:26:05.000
<v Speaker 2>some research that you guys have done, and some of

0:26:05.000 --> 0:26:07.399
<v Speaker 2>the Santa's talk about their best experiences of twenty twenty two,

0:26:07.480 --> 0:26:10.400
<v Speaker 2>which are incredibly heartwarming, But I want to go to the.

0:26:10.320 --> 0:26:12.680
<v Speaker 4>Worst experiences of twenty twenty two. What are some of

0:26:12.720 --> 0:26:13.720
<v Speaker 4>the rough experiences?

0:26:13.760 --> 0:26:15.960
<v Speaker 2>We have about forty five fifty seconds left, just give

0:26:16.000 --> 0:26:16.520
<v Speaker 2>us a couple.

0:26:17.240 --> 0:26:21.200
<v Speaker 13>Well, you know, the rough experiences are really when Santa

0:26:21.280 --> 0:26:23.760
<v Speaker 13>gets sick or injured. You know, every single year for

0:26:23.920 --> 0:26:26.680
<v Speaker 13>us we lose Santa Claus entertainers. You can imagine, they're

0:26:26.680 --> 0:26:31.840
<v Speaker 13>older gentlemen, they're susceptible to COVID and negative outcomes with that,

0:26:32.960 --> 0:26:36.560
<v Speaker 13>or we've had this year alone, Santa's already in a

0:26:36.600 --> 0:26:39.720
<v Speaker 13>car accident, a wife got sick. So those are really

0:26:39.760 --> 0:26:43.720
<v Speaker 13>heart breaking themselves as well as you really get the

0:26:43.760 --> 0:26:47.160
<v Speaker 13>touching things whenever our child is wanting something, they're sick,

0:26:47.240 --> 0:26:49.760
<v Speaker 13>or their parents are sick and they're wishing something for them.

0:26:50.119 --> 0:26:53.199
<v Speaker 13>But it's a wonderful time, and Santa's really enjoys spreading

0:26:53.280 --> 0:26:54.680
<v Speaker 13>that love and joy of Christmas.

0:26:54.760 --> 0:26:56.080
<v Speaker 2>I thought you were going to tell me about the

0:26:56.080 --> 0:26:58.720
<v Speaker 2>Santa that flubbed the lyrics to Frosty the Snowman at

0:26:58.720 --> 0:27:03.040
<v Speaker 2>a daycare. That's what I was opening for a little levity,

0:27:03.200 --> 0:27:04.080
<v Speaker 2>A little levity.

0:27:04.160 --> 0:27:06.719
<v Speaker 13>Yeah, yeah, we get that a lot too. And you know,

0:27:07.840 --> 0:27:10.560
<v Speaker 13>we've actually been on air and asked somebody Santas to

0:27:11.000 --> 0:27:17.960
<v Speaker 13>you know, name the reindeer, and they just froze.

0:27:17.720 --> 0:27:18.280
<v Speaker 8>A lot of them.

0:27:18.359 --> 0:27:21.640
<v Speaker 2>Mitch Alan, Merry Christmas, Happy Holidays, Founder and head elf

0:27:21.800 --> 0:27:25.520
<v Speaker 2>of Hire Santa joining us from Texas, where there Santas.

0:27:26.280 --> 0:27:29.880
<v Speaker 3>You're listening to the Bloomberg Business Week podcast. Catch us

0:27:29.880 --> 0:27:33.920
<v Speaker 3>live weekday afternoons from three to six Easter on Bloomberg Radio,

0:27:34.119 --> 0:27:37.399
<v Speaker 3>the Bloomberg Business app and YouTube. You can also listen

0:27:37.480 --> 0:27:40.600
<v Speaker 3>live on Amazon Alexa from our flagship New York station

0:27:41.040 --> 0:27:43.800
<v Speaker 3>Just Say Alexa, playing Bloomberg eleven thirty.

0:27:45.200 --> 0:27:47.159
<v Speaker 2>Every now and then a story hits so hard it

0:27:47.200 --> 0:27:49.560
<v Speaker 2>gives you the chills, and this is certainly one of them.

0:27:49.960 --> 0:27:52.920
<v Speaker 2>It's about deep fake pornography images that have been digitally

0:27:53.040 --> 0:27:57.000
<v Speaker 2>manipulated to depict an individual doing something they did not like,

0:27:57.040 --> 0:27:59.600
<v Speaker 2>in this case, posing naked, and about a group of

0:27:59.600 --> 0:28:02.560
<v Speaker 2>young women in a New York City suburb horrified to

0:28:02.640 --> 0:28:06.160
<v Speaker 2>learn that their photographs had been manipulated and posted online,

0:28:06.440 --> 0:28:09.800
<v Speaker 2>and they ultimately took matters into their own hands.

0:28:10.080 --> 0:28:12.520
<v Speaker 1>It's the cover of the new issue of Bloomberg Business Week.

0:28:12.560 --> 0:28:14.679
<v Speaker 1>It's out on newsstands later this week, but you can

0:28:14.720 --> 0:28:16.600
<v Speaker 1>read the story now on the Bloomberg terminal and at

0:28:16.600 --> 0:28:19.840
<v Speaker 1>Bloomberg dot com slash BusinessWeek. The story by Bloomberg News

0:28:19.880 --> 0:28:24.000
<v Speaker 1>investigative reporter Olivia Carville and a Bloomberg News cybersecurity reporter

0:28:24.240 --> 0:28:27.439
<v Speaker 1>Margie Murphy, both of whom join us now. Olivia here

0:28:27.440 --> 0:28:30.520
<v Speaker 1>in our Bloomberg Interactive Broker studio. Margie joins us from

0:28:30.520 --> 0:28:33.879
<v Speaker 1>our San Francisco bureau. Margie, excuse me. Also, here's the

0:28:33.960 --> 0:28:36.560
<v Speaker 1>editor of Bloomberg Business Week, Joe Weber here in our

0:28:36.600 --> 0:28:40.480
<v Speaker 1>Bloomberg Interactive Broker studio. Wow, Joel, How did this story

0:28:40.640 --> 0:28:42.000
<v Speaker 1>get on your radar?

0:28:42.080 --> 0:28:42.840
<v Speaker 8>Get on their radar?

0:28:43.120 --> 0:28:45.880
<v Speaker 12>Olivia and Margy pitched it, and from the moment they

0:28:46.480 --> 0:28:49.440
<v Speaker 12>brought the idea to us, we were mesmerized and then

0:28:50.000 --> 0:28:53.480
<v Speaker 12>more honestly horrified, and we felt like it was a

0:28:53.520 --> 0:28:55.520
<v Speaker 12>story that we had to do, and we needed to

0:28:55.560 --> 0:28:57.440
<v Speaker 12>do it on the cover to make sure that the

0:28:57.480 --> 0:29:01.920
<v Speaker 12>world found out about it, because it is perhaps frightening

0:29:02.080 --> 0:29:03.080
<v Speaker 12>sneak peek at the.

0:29:03.040 --> 0:29:04.800
<v Speaker 8>Future and the lack of.

0:29:07.560 --> 0:29:13.360
<v Speaker 12>Real common sense and laws about where generative AI might

0:29:13.520 --> 0:29:16.520
<v Speaker 12>possibly take us, and the beginning of the story is

0:29:16.560 --> 0:29:20.200
<v Speaker 12>like your worst nightmare, and Olivia, why don't you take

0:29:20.280 --> 0:29:21.960
<v Speaker 12>us there? Because it's ultimately where.

0:29:21.840 --> 0:29:23.040
<v Speaker 4>There's sort it's about Cecilia.

0:29:24.000 --> 0:29:26.720
<v Speaker 14>So the story starts in Livettown, Long Island, which is

0:29:26.760 --> 0:29:29.160
<v Speaker 14>an interesting place to start. This is the birthplace of

0:29:29.280 --> 0:29:33.680
<v Speaker 14>American suburbia, the first post War US suburb, And this

0:29:33.840 --> 0:29:36.320
<v Speaker 14>group of teenage girls who had all attended the same

0:29:36.400 --> 0:29:39.840
<v Speaker 14>high school, discovered that their photographs that they'd posted on

0:29:39.880 --> 0:29:44.480
<v Speaker 14>social media had been manipulated into deep fake pawn that is,

0:29:44.600 --> 0:29:49.640
<v Speaker 14>fake pornography created using deep learning models or artificial intelligence.

0:29:50.320 --> 0:29:53.800
<v Speaker 14>And Cecilia Luke, who opens the story, discovered this while

0:29:53.840 --> 0:29:56.120
<v Speaker 14>sitting in a car in a parking lot and a

0:29:56.120 --> 0:29:59.680
<v Speaker 14>strip mall and Livettown. And as she's looking through this

0:29:59.720 --> 0:30:02.280
<v Speaker 14>weird site that a friend had sent her who had

0:30:02.280 --> 0:30:08.160
<v Speaker 14>also discovered the photos, she sees images that horrified, disgusted,

0:30:08.360 --> 0:30:13.880
<v Speaker 14>really scared her. These are photos which showed her being

0:30:14.200 --> 0:30:19.960
<v Speaker 14>digitally undressed, very graphic images. Content on the sex site

0:30:20.120 --> 0:30:23.320
<v Speaker 14>included people posting about her being raped and murdered. In

0:30:23.360 --> 0:30:25.600
<v Speaker 14>some of the cases the images she was just a child,

0:30:25.680 --> 0:30:28.600
<v Speaker 14>she was five years old. And she also saw photos

0:30:28.640 --> 0:30:31.960
<v Speaker 14>of friends of hers who attended the same school, and

0:30:32.240 --> 0:30:34.320
<v Speaker 14>it was that night New Year's Eve of twenty twenty

0:30:34.400 --> 0:30:37.480
<v Speaker 14>that news of this website and these deep fake images

0:30:37.520 --> 0:30:40.160
<v Speaker 14>really spread across the suburb in Long Island.

0:30:40.360 --> 0:30:42.520
<v Speaker 4>Not them at all.

0:30:42.720 --> 0:30:46.760
<v Speaker 2>In other words, those images obviously altered and they knew it,

0:30:46.840 --> 0:30:48.440
<v Speaker 2>like they went through it, and they're like but.

0:30:48.560 --> 0:30:52.280
<v Speaker 12>Not obvious to anyone else exactly. And that's where the

0:30:52.320 --> 0:30:53.440
<v Speaker 12>horrifying part comes in.

0:30:54.480 --> 0:30:55.040
<v Speaker 8>Go ahead of it.

0:30:55.200 --> 0:30:58.560
<v Speaker 14>Yeah, I was gonna just say that for the woman now,

0:30:58.640 --> 0:31:00.440
<v Speaker 14>because they are twenty two to twenty three the time

0:31:00.480 --> 0:31:03.560
<v Speaker 14>they were eighteen or nineteen years old. And the scariest

0:31:03.640 --> 0:31:05.920
<v Speaker 14>thing was looking at these photos where they had been

0:31:06.080 --> 0:31:10.800
<v Speaker 14>undressed and realizing that they look real enough that anybody

0:31:10.800 --> 0:31:13.080
<v Speaker 14>else who sees them is going to believe it really

0:31:13.240 --> 0:31:17.040
<v Speaker 14>actually is their bodies. So for Cecilia, it was looking

0:31:17.080 --> 0:31:20.800
<v Speaker 14>at this nude image and knowing that the breasts weren't hers,

0:31:21.320 --> 0:31:24.640
<v Speaker 14>but also realizing that most people who saw this image

0:31:24.680 --> 0:31:25.800
<v Speaker 14>would think that they were.

0:31:26.040 --> 0:31:28.719
<v Speaker 2>So Margie, let's bring you into this. An incredible story,

0:31:28.840 --> 0:31:32.920
<v Speaker 2>so not a problem. You call the police and you

0:31:33.000 --> 0:31:36.720
<v Speaker 2>say this isn't me, and it's done, and they take

0:31:36.760 --> 0:31:37.560
<v Speaker 2>it down, right.

0:31:37.680 --> 0:31:39.920
<v Speaker 4>It's that easy. I'm being sarcastic.

0:31:41.960 --> 0:31:44.880
<v Speaker 9>Yeah, not quite at the moment.

0:31:45.040 --> 0:31:50.200
<v Speaker 10>There's no federal law prohibiting deepfake pornography. So the challenge

0:31:50.240 --> 0:31:53.840
<v Speaker 10>that these girls had were, you know, they were so

0:31:54.000 --> 0:31:57.920
<v Speaker 10>incredibly brave. They did this investigation mostly on their own,

0:31:58.560 --> 0:32:02.280
<v Speaker 10>figuring out exactly who had created these images of them,

0:32:02.760 --> 0:32:06.120
<v Speaker 10>and they took them to the police, and there was

0:32:06.280 --> 0:32:10.240
<v Speaker 10>very little legal recourse for them to get justice. And

0:32:10.280 --> 0:32:14.880
<v Speaker 10>in fact, it was only after searching through everything that

0:32:15.400 --> 0:32:20.160
<v Speaker 10>Patrick Carey, the former classmate who'd been posting these images,

0:32:20.920 --> 0:32:23.280
<v Speaker 10>looking through everything that he'd posted, they'd seen that he'd

0:32:23.360 --> 0:32:29.040
<v Speaker 10>actually accidentally posted real child sexual abuse material and that's

0:32:29.080 --> 0:32:31.000
<v Speaker 10>what they got him on. It wasn't on the deep

0:32:31.040 --> 0:32:35.720
<v Speaker 10>fake pornography at all. And that's an issue that's a

0:32:35.760 --> 0:32:39.600
<v Speaker 10>frustration being felt by women around the world. Even though

0:32:39.720 --> 0:32:43.200
<v Speaker 10>certain states in the US do have laws around deep

0:32:43.240 --> 0:32:46.640
<v Speaker 10>fake pornography, it's just so patchwork across the US and

0:32:46.720 --> 0:32:49.640
<v Speaker 10>internationally there are issues with the law as well, because

0:32:50.080 --> 0:32:54.000
<v Speaker 10>the technology has just advanced just at such a breakneck speed,

0:32:55.480 --> 0:32:57.960
<v Speaker 10>just lawmakers haven't been able to keep up with it.

0:32:58.680 --> 0:33:03.280
<v Speaker 12>What about the companies in the platforms on the AI front, Like,

0:33:03.680 --> 0:33:07.239
<v Speaker 12>what did we learn about what they can and can

0:33:07.440 --> 0:33:09.040
<v Speaker 12>do or aren't willing to do.

0:33:09.120 --> 0:33:10.360
<v Speaker 9>Margie right.

0:33:10.560 --> 0:33:13.640
<v Speaker 10>So the issue with a lot of the technology that's

0:33:13.680 --> 0:33:16.360
<v Speaker 10>around now and that from our reporting we saw was

0:33:16.400 --> 0:33:22.040
<v Speaker 10>really popular for creating deep fake pornography and even child

0:33:22.200 --> 0:33:26.480
<v Speaker 10>deep pornography, a lot of those tools are open source.

0:33:27.160 --> 0:33:31.040
<v Speaker 10>So there's this kind of divide in Silicon Valley. You've

0:33:31.080 --> 0:33:36.240
<v Speaker 10>got the developers who've created this really incredible image generation

0:33:36.400 --> 0:33:40.040
<v Speaker 10>technology that you know, they want to be used for good,

0:33:41.000 --> 0:33:43.640
<v Speaker 10>who believe that it should be kept out in the

0:33:43.680 --> 0:33:46.760
<v Speaker 10>open for everyone to use and not gate kept by

0:33:46.920 --> 0:33:51.080
<v Speaker 10>like big tech platforms who have typically provided services, and

0:33:51.120 --> 0:33:54.120
<v Speaker 10>you know, you might enter in a prompt and you

0:33:54.160 --> 0:33:57.000
<v Speaker 10>get your image back. Whereas with the open source technology,

0:33:57.240 --> 0:33:59.479
<v Speaker 10>anyone can go and interact.

0:33:58.960 --> 0:34:02.040
<v Speaker 9>With the code. Therefore you can play with it.

0:34:02.120 --> 0:34:04.480
<v Speaker 10>And even if a developer was to put a guardrail

0:34:04.520 --> 0:34:09.319
<v Speaker 10>in place, like prohibiting adult content, it's relatively easy for

0:34:09.360 --> 0:34:12.399
<v Speaker 10>someone to go in and change that. And so that's

0:34:12.440 --> 0:34:15.840
<v Speaker 10>opened this Pandora's box. We've got all these open source

0:34:15.880 --> 0:34:19.920
<v Speaker 10>technologies that even when a developer realizes a bit are

0:34:20.040 --> 0:34:23.160
<v Speaker 10>being used for bad, the cats out of the bag

0:34:23.239 --> 0:34:25.880
<v Speaker 10>and people are already exploiting it Olivia.

0:34:25.920 --> 0:34:31.120
<v Speaker 1>The story starts in Levittown, It's centered around Levittown, but

0:34:31.800 --> 0:34:36.160
<v Speaker 1>it spans the globe. What happens in New Zealand, what's

0:34:36.200 --> 0:34:39.760
<v Speaker 1>going on with a former police officer named will Wallace.

0:34:40.160 --> 0:34:42.080
<v Speaker 14>I think that was one of the most remarkable parts

0:34:42.120 --> 0:34:44.200
<v Speaker 14>of reporting the story is that it really is a

0:34:44.280 --> 0:34:48.640
<v Speaker 14>dual narrative. You have the girls in Leavittown investigating the

0:34:48.680 --> 0:34:51.920
<v Speaker 14>predator who is posting images of them online on the

0:34:52.040 --> 0:34:54.799
<v Speaker 14>sex site that an ex cop in New Zealand has

0:34:54.880 --> 0:34:59.400
<v Speaker 14>discovered has already been posting images deep faked images of

0:34:59.680 --> 0:35:02.200
<v Speaker 14>New z woman as well, and so he starts an

0:35:02.200 --> 0:35:05.719
<v Speaker 14>investigation into the man behind this website. And it's very

0:35:05.840 --> 0:35:08.400
<v Speaker 14>rare in journalism, or at least in my own career,

0:35:08.719 --> 0:35:11.960
<v Speaker 14>where you have a story that has this jewel narrative

0:35:12.040 --> 0:35:14.920
<v Speaker 14>where you can weave them together and see an investigation

0:35:15.080 --> 0:35:18.760
<v Speaker 14>unfolding in suburban New York and at the same time

0:35:19.160 --> 0:35:21.279
<v Speaker 14>in New Zealand, of all places, which happens to be

0:35:21.280 --> 0:35:24.439
<v Speaker 14>where I'm from, there's an ex cop trying to work

0:35:24.480 --> 0:35:27.640
<v Speaker 14>out who was behind this website. I remember one night

0:35:27.680 --> 0:35:30.799
<v Speaker 14>I was driving back from Levettown to New York and

0:35:30.840 --> 0:35:32.960
<v Speaker 14>I called Margie to talk to her about an interview

0:35:32.960 --> 0:35:35.440
<v Speaker 14>i'd just done with Anna, who was in the story,

0:35:35.480 --> 0:35:39.560
<v Speaker 14>and ultimately discovered the identity of Patrick Carey who been

0:35:39.600 --> 0:35:41.920
<v Speaker 14>posting the images, and took that evidence to police. And

0:35:41.960 --> 0:35:45.239
<v Speaker 14>I called Margie. I was excited because finally we had

0:35:45.280 --> 0:35:48.000
<v Speaker 14>this key piece of the story to tell her about it.

0:35:48.040 --> 0:35:52.000
<v Speaker 14>And that's when she responded, saying that she had discovered.

0:35:51.520 --> 0:35:54.200
<v Speaker 9>That there was also this whole other part to the.

0:35:54.160 --> 0:35:57.520
<v Speaker 14>Story where there were these vigilantes, this movement trying to

0:35:57.520 --> 0:36:00.520
<v Speaker 14>track down who was behind this website, and there was

0:36:00.560 --> 0:36:04.240
<v Speaker 14>an ex detective from New Zealand who had been leading

0:36:04.320 --> 0:36:07.600
<v Speaker 14>this fight to kind of combat deep deep fake pawn

0:36:07.719 --> 0:36:11.400
<v Speaker 14>and to take down this deplorable internet sex site.

0:36:11.920 --> 0:36:13.239
<v Speaker 8>So where do we go from here?

0:36:13.239 --> 0:36:17.160
<v Speaker 12>Because, as you mentioned, there's no federal law prohibiting any

0:36:17.200 --> 0:36:20.200
<v Speaker 12>of this, Marguie, But what happened in New York State.

0:36:21.840 --> 0:36:24.320
<v Speaker 14>So in New York State, we have seen the District

0:36:24.400 --> 0:36:27.560
<v Speaker 14>Attorney in Nassau County, which is where this case unfolded,

0:36:27.800 --> 0:36:33.440
<v Speaker 14>actually put forward or introduced new legislation trying to target

0:36:33.520 --> 0:36:37.160
<v Speaker 14>deep fakes. The problem is that, you know, what do

0:36:37.239 --> 0:36:39.960
<v Speaker 14>you focus on is it the companies that are releasing

0:36:40.000 --> 0:36:43.399
<v Speaker 14>this technology. Is it the regulators who can't catch up

0:36:43.440 --> 0:36:46.000
<v Speaker 14>to this technology, is it's being rolled out? Or is

0:36:46.040 --> 0:36:48.799
<v Speaker 14>it the predators and bad actors like Patrick Carrey who

0:36:48.840 --> 0:36:49.640
<v Speaker 14>are abusing it?

0:36:49.760 --> 0:36:54.000
<v Speaker 2>And and yes, no, and I do also wonder and

0:36:54.040 --> 0:36:55.960
<v Speaker 2>MARGI let's bring you back in. I mean in terms

0:36:55.960 --> 0:36:59.239
<v Speaker 2>of police and law enforcement, you know how high up

0:36:59.239 --> 0:37:02.000
<v Speaker 2>on the list is there in terms of prioritizing the

0:37:02.040 --> 0:37:03.120
<v Speaker 2>things that they focus on.

0:37:04.040 --> 0:37:04.320
<v Speaker 12>Yeah.

0:37:04.360 --> 0:37:05.000
<v Speaker 9>Absolutely.

0:37:05.080 --> 0:37:08.279
<v Speaker 10>One thing that was really interesting about Will Wallace, who

0:37:08.760 --> 0:37:12.920
<v Speaker 10>you know, you guys have just mentioned. He obviously deeply

0:37:12.960 --> 0:37:15.440
<v Speaker 10>involved in this website. It was a passion project of

0:37:15.480 --> 0:37:19.800
<v Speaker 10>his to kind of find out, you know, find help victims,

0:37:19.840 --> 0:37:22.080
<v Speaker 10>find the people that were posting these pictures, but also.

0:37:21.920 --> 0:37:24.239
<v Speaker 9>Uncover who the admin of the website was.

0:37:26.160 --> 0:37:28.960
<v Speaker 10>But because he has a background in the police, he

0:37:29.120 --> 0:37:32.360
<v Speaker 10>has this he really understands what it takes to be

0:37:32.440 --> 0:37:37.440
<v Speaker 10>able to actually gather evidence, bring a good tip to

0:37:37.560 --> 0:37:39.440
<v Speaker 10>law enforcement, and.

0:37:39.920 --> 0:37:41.759
<v Speaker 9>See that actually be followed through.

0:37:41.920 --> 0:37:45.600
<v Speaker 10>And he would say, he would tell me how frustrated

0:37:45.640 --> 0:37:47.400
<v Speaker 10>he was every time he would give a tip to

0:37:47.440 --> 0:37:50.480
<v Speaker 10>law enforcement in different local law enforcements all around the

0:37:50.520 --> 0:37:54.400
<v Speaker 10>world and not hear anything back, But he also understood

0:37:54.480 --> 0:37:58.879
<v Speaker 10>that it's so challenging when there are you know, there

0:37:58.880 --> 0:38:01.239
<v Speaker 10>are certain skill sets you need to be able to

0:38:01.239 --> 0:38:04.080
<v Speaker 10>investigate this kind of crime. There needs to be better

0:38:04.200 --> 0:38:06.920
<v Speaker 10>education so that when a victim comes forward in the

0:38:06.960 --> 0:38:10.799
<v Speaker 10>first person they're speaking to, that they understand that, yes,

0:38:10.840 --> 0:38:14.480
<v Speaker 10>there hasn't been a physical crime, but this cyber crime

0:38:14.600 --> 0:38:19.400
<v Speaker 10>is just incredibly traumatic and super damaging, and that person

0:38:19.480 --> 0:38:20.320
<v Speaker 10>is a true victim.

0:38:20.880 --> 0:38:23.960
<v Speaker 9>And additionally, you know, when the laws aren't.

0:38:23.800 --> 0:38:27.719
<v Speaker 10>Robust, laws aren't in place for prosecutors to deal with

0:38:28.800 --> 0:38:32.440
<v Speaker 10>people once they've found a suspect, that all is just

0:38:32.640 --> 0:38:36.040
<v Speaker 10>it's incredibly hard for police officers to do their work.

0:38:36.480 --> 0:38:40.240
<v Speaker 2>When Patrick Carey, when it finally did come down on him, Olivia,

0:38:40.600 --> 0:38:42.600
<v Speaker 2>Tim and I were talking about this before we got going,

0:38:42.600 --> 0:38:45.480
<v Speaker 2>before you guys came into the studio. So you ultimately

0:38:45.800 --> 0:38:51.080
<v Speaker 2>was sentenced six months in prison, ten years probation, lifetime

0:38:51.120 --> 0:38:54.680
<v Speaker 2>status as a sex offender, can on a smartphone anymore,

0:38:55.080 --> 0:38:57.520
<v Speaker 2>or any device with a camera, or be withinred a

0:38:57.560 --> 0:39:01.040
<v Speaker 2>thousand feet of a school or a playground. Six months,

0:39:01.080 --> 0:39:03.600
<v Speaker 2>but he was out in four for good behavior. I

0:39:03.640 --> 0:39:05.680
<v Speaker 2>don't seen in a good behavior here that to me

0:39:05.760 --> 0:39:07.880
<v Speaker 2>is not even a slap on the rest. So it

0:39:08.040 --> 0:39:11.440
<v Speaker 2>just kind of speaks to law enforcement not really necessarily

0:39:11.480 --> 0:39:14.520
<v Speaker 2>respecting the severity because you talked to these women and

0:39:14.600 --> 0:39:18.640
<v Speaker 2>they definitely felt harm and pain and there was an impact.

0:39:18.840 --> 0:39:21.120
<v Speaker 14>Oh yeah, there's no doubt about that. I mean a

0:39:21.120 --> 0:39:25.040
<v Speaker 14>lot of these women have sort out therapy since this.

0:39:25.239 --> 0:39:29.440
<v Speaker 14>One lost twenty pounds from strees, one dropped out of college.

0:39:29.760 --> 0:39:33.279
<v Speaker 14>Three I talked to Carrie Pipper spray in their handbags,

0:39:33.360 --> 0:39:36.280
<v Speaker 14>and two carry knives with them. Now, they're so scared

0:39:36.840 --> 0:39:39.200
<v Speaker 14>of what was done on the website, not only what

0:39:39.280 --> 0:39:43.279
<v Speaker 14>Kerry was posting, but the hundreds, if not thousands of

0:39:43.800 --> 0:39:47.319
<v Speaker 14>strangers in the world who saw those photos and tried

0:39:47.360 --> 0:39:49.840
<v Speaker 14>to reach out to them. One of the craziest parts

0:39:49.880 --> 0:39:53.520
<v Speaker 14>about this case is that Kerrie also included the girl's names,

0:39:53.600 --> 0:39:58.360
<v Speaker 14>addresses social media information, so they had these awful messages

0:39:58.400 --> 0:40:02.320
<v Speaker 14>and phone calls coming through them, people harassing them for months,

0:40:02.640 --> 0:40:04.839
<v Speaker 14>and one of the threads on the site had over

0:40:04.960 --> 0:40:09.520
<v Speaker 14>thirty thousand views. That's thirty thousand people looking at a

0:40:09.560 --> 0:40:12.680
<v Speaker 14>fake porn image of you where they're writing about you

0:40:12.719 --> 0:40:15.680
<v Speaker 14>being raped and murdered. You know, the fear was real

0:40:15.800 --> 0:40:18.279
<v Speaker 14>when I was talking to these young women, and there

0:40:18.360 --> 0:40:21.799
<v Speaker 14>is a deep seated frustration and live itt town from

0:40:21.840 --> 0:40:26.120
<v Speaker 14>their families, teachers at the school, the girls themselves. That

0:40:26.200 --> 0:40:29.160
<v Speaker 14>Carrie only received six months. He was out within four

0:40:29.200 --> 0:40:30.919
<v Speaker 14>months and he's back in the neighborhood now.

0:40:31.760 --> 0:40:35.760
<v Speaker 12>It's amazing, I think the greater thing here And obviously

0:40:36.120 --> 0:40:41.960
<v Speaker 12>the circumstances of this particular story are totally frightening, but

0:40:42.160 --> 0:40:44.839
<v Speaker 12>it also does just speak to this greater challenge that

0:40:44.920 --> 0:40:46.279
<v Speaker 12>we're going to be living through.

0:40:46.360 --> 0:40:46.640
<v Speaker 3>Now.

0:40:47.239 --> 0:40:51.319
<v Speaker 12>We have a technology that the world is not prepared for,

0:40:51.560 --> 0:40:54.600
<v Speaker 12>and this shows you how unprepared we are for it.

0:40:54.640 --> 0:40:56.600
<v Speaker 12>And sure there's a lot of good that can come

0:40:56.640 --> 0:41:00.520
<v Speaker 12>from it, but there's also your total nightmare. And you know,

0:41:01.080 --> 0:41:04.080
<v Speaker 12>props to Olivia and Marty for being able to tell

0:41:04.120 --> 0:41:04.879
<v Speaker 12>this story.

0:41:04.680 --> 0:41:06.600
<v Speaker 2>Well and coming off of Open AI and the debate

0:41:06.600 --> 0:41:09.800
<v Speaker 2>within that company about the ethics and the concerns about

0:41:10.080 --> 0:41:11.439
<v Speaker 2>generative AI, where at.

0:41:11.520 --> 0:41:14.920
<v Speaker 12>Almost the perfect time for Aline, you did it once again.

0:41:15.000 --> 0:41:16.680
<v Speaker 12>It does they did it once again.

0:41:16.719 --> 0:41:19.600
<v Speaker 2>You guys did do it once again. Olivia Carvell investigative

0:41:19.640 --> 0:41:23.160
<v Speaker 2>reporter at Bloomberg News. Margy Murphy, she's a cybersecurity reporter

0:41:23.160 --> 0:41:27.239
<v Speaker 2>at Bloomberg News. Incredible story, the cover story, most read,

0:41:27.280 --> 0:41:28.839
<v Speaker 2>the Bloomberg Big Take, and.

0:41:28.800 --> 0:41:31.680
<v Speaker 4>Our thanks to Jill Weber. This is Bloomberg.

0:41:32.960 --> 0:41:39.040
<v Speaker 2>Brother Marc, a journal How about you let me drive?

0:41:39.560 --> 0:41:43.600
<v Speaker 3>No, no, no, no, honey, please, I'll do.

0:41:45.840 --> 0:41:46.560
<v Speaker 7>I want to drive.

0:41:48.840 --> 0:41:49.720
<v Speaker 15>It's a question.

0:41:53.520 --> 0:41:59.920
<v Speaker 3>This is the Drive to the Clothes Well on Bloomberg Radio.

0:42:00.239 --> 0:42:03.160
<v Speaker 2>All right, everybody getting ready to wrap up the Wednesday trade.

0:42:03.200 --> 0:42:05.800
<v Speaker 2>Just about seventeen and a half minutes left in today's

0:42:05.840 --> 0:42:09.600
<v Speaker 2>trading session. We have got when I look at the

0:42:09.640 --> 0:42:11.400
<v Speaker 2>S and P five hundred, kind of half of the

0:42:11.400 --> 0:42:14.600
<v Speaker 2>major industry groups are higher, half are lower. But it

0:42:14.640 --> 0:42:17.000
<v Speaker 2>really is once again about what's going on in the

0:42:17.040 --> 0:42:20.000
<v Speaker 2>treasury trade because we are down again.

0:42:20.040 --> 0:42:22.399
<v Speaker 4>I'm looking at a ten year you know, four point

0:42:22.400 --> 0:42:24.000
<v Speaker 4>twenty six. Who to thunk?

0:42:24.520 --> 0:42:27.240
<v Speaker 1>I mean, we were talking a tenure at five percent

0:42:27.400 --> 0:42:28.239
<v Speaker 1>just a few weeks ago.

0:42:28.480 --> 0:42:30.640
<v Speaker 4>Six percent. People were talking about, you know, for even

0:42:30.760 --> 0:42:31.600
<v Speaker 4>like you know, the current.

0:42:31.719 --> 0:42:33.600
<v Speaker 1>We should have Katiekminski back on and see if she's

0:42:33.600 --> 0:42:34.279
<v Speaker 1>still sticking to that.

0:42:34.400 --> 0:42:36.680
<v Speaker 4>We should bring her back. That's a really great idea.

0:42:36.760 --> 0:42:38.280
<v Speaker 2>All right, let's see what our Drive to the closed

0:42:38.320 --> 0:42:40.760
<v Speaker 2>guest has to say about all of it, Amy Magnota.

0:42:40.840 --> 0:42:44.360
<v Speaker 2>She's co CIO at the independent investment advisory firm Ata

0:42:44.440 --> 0:42:49.120
<v Speaker 2>Gino's Capital. She is on Zoom from Pennsylvania. Amy, good

0:42:49.120 --> 0:42:52.320
<v Speaker 2>to have you here with us this yield trade.

0:42:53.000 --> 0:42:53.840
<v Speaker 4>Let's go there.

0:42:55.200 --> 0:42:57.200
<v Speaker 2>Would you go as far to say we are at

0:42:57.320 --> 0:43:02.000
<v Speaker 2>peak yield on the US Treasury yield curve? And uh,

0:43:02.719 --> 0:43:05.640
<v Speaker 2>you know, and does it mean that ultimately we get

0:43:06.920 --> 0:43:09.719
<v Speaker 2>to some kind of recession? Does the economy slow down

0:43:09.760 --> 0:43:10.280
<v Speaker 2>that much?

0:43:12.320 --> 0:43:16.840
<v Speaker 15>Our view is that we're expecting the economy is growing

0:43:17.040 --> 0:43:21.480
<v Speaker 15>pretty solidly. So we had the GDP revision come in

0:43:21.520 --> 0:43:25.200
<v Speaker 15>today up to five point two percent real GDP growth

0:43:25.200 --> 0:43:27.960
<v Speaker 15>in the third quarter, and we're running about two percent

0:43:28.320 --> 0:43:32.400
<v Speaker 15>for the fourth quarter, So that's pretty solid, especially given

0:43:32.480 --> 0:43:35.160
<v Speaker 15>what you know the FED has done to try to.

0:43:35.080 --> 0:43:35.920
<v Speaker 4>Bring down inflation.

0:43:36.160 --> 0:43:40.359
<v Speaker 15>So our view is more in mid twenty twenty four

0:43:40.760 --> 0:43:43.400
<v Speaker 15>that we might hit some sort of soft patch or

0:43:43.520 --> 0:43:48.200
<v Speaker 15>mild recession with just given the lag effects of these

0:43:48.280 --> 0:43:51.239
<v Speaker 15>interest rate hikes on what that means for the consumer.

0:43:51.320 --> 0:43:53.960
<v Speaker 15>And then we also have an unemployment and then we

0:43:54.080 --> 0:43:56.879
<v Speaker 15>have a stimulus that's kind of run out.

0:43:56.960 --> 0:44:00.520
<v Speaker 1>Amy Magnotta, what is the uh evy vidents that you

0:44:00.560 --> 0:44:04.239
<v Speaker 1>see today? End of November, end of being almost the

0:44:04.320 --> 0:44:07.920
<v Speaker 1>end of a pretty incredible rally in bonds and stocks

0:44:08.239 --> 0:44:11.000
<v Speaker 1>so far for the month of November. What's the evidence

0:44:11.040 --> 0:44:13.400
<v Speaker 1>that you see out there right now to lead to

0:44:13.840 --> 0:44:16.120
<v Speaker 1>your conclusion that we'll see some softness in the second

0:44:16.160 --> 0:44:16.879
<v Speaker 1>half of next year.

0:44:17.920 --> 0:44:21.120
<v Speaker 15>I think there's some weakness, so our view just to

0:44:21.120 --> 0:44:25.280
<v Speaker 15>be clear from now to kind of year end early January.

0:44:25.280 --> 0:44:27.920
<v Speaker 15>We're still pretty positive on the equity markets, and a

0:44:27.960 --> 0:44:31.960
<v Speaker 15>couple of reasons for that. Seasonality is very strong. November

0:44:31.960 --> 0:44:35.760
<v Speaker 15>December tend to be very strong periods for equity market. Returns,

0:44:35.800 --> 0:44:41.040
<v Speaker 15>breasts been pretty solid, momentum has been building, and credit

0:44:41.120 --> 0:44:44.359
<v Speaker 15>spreads have been making new lows. So I think that's

0:44:44.360 --> 0:44:47.200
<v Speaker 15>all very supportive for equity markets for the next eight

0:44:47.239 --> 0:44:49.279
<v Speaker 15>eight weeks or so. I think our concern is more

0:44:49.320 --> 0:44:52.960
<v Speaker 15>as we hit twenty twenty four, could see some weakness

0:44:52.960 --> 0:44:57.160
<v Speaker 15>in the consumer, could see some you know, there's a

0:44:57.239 --> 0:45:01.120
<v Speaker 15>number on the confidence a consumer Confident and survey yesterday

0:45:01.120 --> 0:45:04.040
<v Speaker 15>that job's hard to get increased a little bit, so

0:45:04.080 --> 0:45:06.840
<v Speaker 15>we could see some maybe softening there and the employment

0:45:07.719 --> 0:45:10.120
<v Speaker 15>in the labor market, and maybe some weakening in the

0:45:10.120 --> 0:45:12.759
<v Speaker 15>consumer as we get through to twenty twenty four.

0:45:12.880 --> 0:45:15.360
<v Speaker 2>You know, it's funny, it's interesting to listen to you,

0:45:15.400 --> 0:45:17.120
<v Speaker 2>and I feel like it's kind of you know, you

0:45:17.200 --> 0:45:18.720
<v Speaker 2>hear it even among the FED speakers.

0:45:18.719 --> 0:45:21.920
<v Speaker 4>There's not just one narrative. Some of those FED.

0:45:21.760 --> 0:45:23.560
<v Speaker 2>Speakers that we are just even hearing over the last

0:45:23.560 --> 0:45:25.440
<v Speaker 2>couple of days, some are saying, Okay, we're good. You know,

0:45:25.480 --> 0:45:27.960
<v Speaker 2>we think we're done the bets we die and they're saying, yah,

0:45:28.000 --> 0:45:29.920
<v Speaker 2>maybe not that inflation isn't weird it to'd be I'm

0:45:29.920 --> 0:45:32.880
<v Speaker 2>hearing a lot it. I's could in your conversation and

0:45:33.239 --> 0:45:35.360
<v Speaker 2>I get it because I think, as we talked with

0:45:35.400 --> 0:45:39.320
<v Speaker 2>our Mike McKee, it's not an exact science in terms

0:45:39.480 --> 0:45:41.600
<v Speaker 2>of getting of managing the.

0:45:41.560 --> 0:45:43.600
<v Speaker 4>Economy if it doesn't have a ton of tools.

0:45:44.040 --> 0:45:46.000
<v Speaker 2>And like I said, it's not like you just step

0:45:46.040 --> 0:45:49.560
<v Speaker 2>on the brake and everything stops. There are delayed effects

0:45:49.600 --> 0:45:53.240
<v Speaker 2>and cumulative effects. So having said that, you have conviction

0:45:53.360 --> 0:45:56.640
<v Speaker 2>that maybe stocks continue to rally into this year, what

0:45:56.719 --> 0:45:59.879
<v Speaker 2>else do you feel like you have strong conviction about

0:46:00.080 --> 0:46:01.880
<v Speaker 2>when it comes to the investment environment.

0:46:03.520 --> 0:46:06.560
<v Speaker 15>So we're as I mentioned, we're pretty positive on equity markets.

0:46:06.800 --> 0:46:11.000
<v Speaker 15>There's some other areas where when you look at equity markets,

0:46:11.120 --> 0:46:14.960
<v Speaker 15>you're to dates certainly been driven by the index returns

0:46:15.000 --> 0:46:19.080
<v Speaker 15>kind of mask underneath it's been driven by large cap

0:46:19.400 --> 0:46:22.840
<v Speaker 15>megacap cup growth companies. So we're finding some opportunity in

0:46:22.880 --> 0:46:28.360
<v Speaker 15>other areas as well, Like what so US infrastructure is

0:46:28.719 --> 0:46:33.719
<v Speaker 15>one area that we like today. We've had the Infrastructure

0:46:33.840 --> 0:46:37.560
<v Speaker 15>Investment and Jobs Act in twenty twenty one, some allocation

0:46:37.800 --> 0:46:41.399
<v Speaker 15>to infrastructure projects in the Inflation Reduction Act last year,

0:46:41.680 --> 0:46:44.040
<v Speaker 15>and that money is just really starting to be allocated

0:46:44.640 --> 0:46:47.480
<v Speaker 15>and spent. So we think that's an attractive area.

0:46:47.600 --> 0:46:52.880
<v Speaker 2>What specifically within it? So what specifically within infrastructure and

0:46:53.000 --> 0:46:53.520
<v Speaker 2>the way.

0:46:53.360 --> 0:46:56.720
<v Speaker 15>We allocate portfolio, So we're acid allocators and we build

0:46:56.960 --> 0:47:00.520
<v Speaker 15>you know, total portfolio solution for our clients. So we're

0:47:00.560 --> 0:47:03.640
<v Speaker 15>going to allocate to a broad based ETF that's targeting

0:47:04.480 --> 0:47:07.839
<v Speaker 15>companies that can benefit from from that increase in infrastructure spend.

0:47:07.920 --> 0:47:10.400
<v Speaker 1>That's an interesting thought on macro, on macro trends. What

0:47:10.440 --> 0:47:11.960
<v Speaker 1>are some of the other macro trends in where you're

0:47:11.960 --> 0:47:12.880
<v Speaker 1>allocating capital.

0:47:14.320 --> 0:47:18.040
<v Speaker 15>Japan is another theme that we like today in Japanese equities.

0:47:18.480 --> 0:47:22.080
<v Speaker 15>A couple of reasons for that. Fundamentals have been improving

0:47:22.160 --> 0:47:26.880
<v Speaker 15>earnings growth is improving a lot of the shareholder friendly

0:47:27.000 --> 0:47:29.920
<v Speaker 15>policies that companies that we've been talking about for a

0:47:29.960 --> 0:47:33.520
<v Speaker 15>number of years are really getting put into play in Japan.

0:47:33.600 --> 0:47:37.840
<v Speaker 15>So that's also positive. Relatively loose monetary policy compared to

0:47:37.840 --> 0:47:40.200
<v Speaker 15>some of the rest of the globe, and valuations are

0:47:40.200 --> 0:47:43.000
<v Speaker 15>pretty attractive, so that's another area where we liked. We've

0:47:43.000 --> 0:47:45.640
<v Speaker 15>seen the dollar sell off a little bit here more recently,

0:47:46.160 --> 0:47:47.880
<v Speaker 15>which could benefit international equities.

0:47:48.200 --> 0:47:50.720
<v Speaker 2>Yeah, and then the ni kid definitely has had quite

0:47:51.239 --> 0:47:55.319
<v Speaker 2>you know, a bounce back certainly this year, certainly from

0:47:55.360 --> 0:47:57.920
<v Speaker 2>some of the lows we saw earlier this year. When

0:47:57.960 --> 0:48:02.840
<v Speaker 2>you talk about Japanese equities by the broader market or again,

0:48:02.920 --> 0:48:05.800
<v Speaker 2>do you start to get picky about some specific sectors

0:48:05.840 --> 0:48:06.879
<v Speaker 2>within Japan.

0:48:08.040 --> 0:48:11.200
<v Speaker 15>For us, again, this theme we feel is pretty broad based,

0:48:11.200 --> 0:48:15.359
<v Speaker 15>so we're going to allocate more broadly through a broad

0:48:15.400 --> 0:48:18.560
<v Speaker 15>based ETF in the Japanese equity markets.

0:48:19.120 --> 0:48:22.320
<v Speaker 2>Natural resources also a favor we just a favorite of yours.

0:48:22.880 --> 0:48:24.840
<v Speaker 2>We've just got about forty five seconds left here. What

0:48:24.960 --> 0:48:27.879
<v Speaker 2>specifically when you think about natural resources.

0:48:28.520 --> 0:48:31.440
<v Speaker 15>Sure, I think another area of the market that is

0:48:31.480 --> 0:48:35.840
<v Speaker 15>attractably valued relative to the broad SMP five hundred companies

0:48:35.840 --> 0:48:39.480
<v Speaker 15>there again better capital allocators. More recently, we still think

0:48:39.520 --> 0:48:44.080
<v Speaker 15>some structural supply demand that's favorable, and then more short

0:48:44.200 --> 0:48:46.640
<v Speaker 15>term with some turmoil in the Middle East might also

0:48:46.719 --> 0:48:50.920
<v Speaker 15>cause a problem. And then just the regulatory environment is

0:48:51.800 --> 0:48:55.200
<v Speaker 15>pretty tight for energy related companies and we think that's

0:48:55.280 --> 0:48:55.880
<v Speaker 15>a positive.

0:48:55.960 --> 0:48:59.040
<v Speaker 2>Does that mean like the major integrated oil companies, the drillers,

0:48:59.080 --> 0:49:01.399
<v Speaker 2>just real quickly, okay, yes, so you like the big names,

0:49:01.640 --> 0:49:04.080
<v Speaker 2>the household names, yes.

0:49:03.960 --> 0:49:06.239
<v Speaker 15>The larger and so again we're allocating through a broad

0:49:06.239 --> 0:49:09.160
<v Speaker 15>basingf but about eighty percent of that is energy companies.

0:49:09.200 --> 0:49:12.200
<v Speaker 2>All right, Good to know, Good to know, Amy Magnotta,

0:49:12.360 --> 0:49:16.799
<v Speaker 2>she is Cocio at Atha Ginos Capital. She's joining us

0:49:16.840 --> 0:49:18.000
<v Speaker 2>on zoom from Pennsylvania.

0:49:18.600 --> 0:49:23.239
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