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Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. We had first one massive story this week, as President Donald Trump imposed the steepest American tariffs in a century. That caused another massive story, a global stock sell off. I laugh, but it wasn't funny, and it included the biggest single day plunge for Apple since March sixteenth, twenty twenty.
At the beginning, you might recall the COVID shutdown. Ahead, we get into how Apple found itself squarely in the crosshairs of Trump's new tariffs.
Also, speaking of tariffs, the drug industry want to reprieve, though it could be short lived. We'll talk about that and the job cuts of the Department of Health and Human Services and how that could affect us.
All and later in our next hour, why Tesla's best days may be behind it. All of that to come, We start with the top story this week. President Donald Trump, as telegraphed, imposed tariffs on US trading partners worldwide, his biggest assault yet on a global economic system he has long bemoaned as unfair.
President Trump has imposed steep tariffs on all exporters to the US, with rates ranging from ten percent to over fifty percent, to counter large trade imbalances with the US. For more on what this may mean for American businesses, their access to global markets and ability to make decisions,
we turned to Rebecca Humkuss. She's faculty at Duke Corporate Education, a lecturer at the London Business School, and former fellow for the White House's President's Council of Economic Advisors under George W. Bush.
CEOs have been rethinking their global supply chain since twenty twenty, which I think we forget in some of this conversation. If the MATH worked to bring supply chains back to the US, we won't have already done it. All of those mass and models were ran in twenty twenty one and twenty twenty two with that global supply chain shock, so a lot of factors were already in place and decisions have been made. Honestly, at this point, the news was not great. We like to say markets hate bad news,
but they hate uncertainty more. We got a little bit of both. We got much worse news than we expected and a lot of uncertainty. We left the door open enough that maybe these will change. So most CEOs are still, unfortunately waiting to learn more.
I think one challenge that executives have, and look, I'm not an executive making decisions about a supply chain, but a lot of these companies spent many years moving out of China and moving into other countries like Vietnam during the first Trump administration. Now to be hit with blanket tariffs in every single country that is that they operate in,
that they manufacture products in. What's an executive to do in a situation such as this is their only choice to either raise prices or move to the United States, which, as we know, for retail companies, could be easier said than done.
I think it's for all companies that it's very difficult to move back. I can't emphasize enough even if you made the decision that you wanted to move any sort of manufacturing back to the US. This is a multi year, multimillion, sometimes into the billions dollar decision. No board is making that kind of capital decision in the current environment of chaos that we have. You know, chaos has a cost, and that cost is manifesting itself in very slow decision making.
Now.
CEOs have lots of options, and most of them on this since last summer into last autumn. They are looking to kind of make a more robust supply chain. They're looking for changing some inputs, They're looking to do some different things in warehousing. You certainly have more options. This is not a binary choice, but any hope this will be that second boom back of American manufacturing unfortunately doesn't really understand the math and some of the complications behind what doing that would take.
But is it fair to say, I mean, the United States since World War Two has really benefited right by being helping in the rebuild, right, helping with so many different policies to get Europe back on its feet, and as a result, had a lot of leeway right in terms of its role in the world and what it got to do. But it also meant, you know, a lot of opportunities too for its global companies. So I do wonder that the more closed off we get, the
pushback pullback on globalization. I mean, are we wrong to even say that there's a pullback on globalization because it certainly feels that way.
Every indication of what we've been talking about the last couple of months had been a push back from globalization. That is, though a push from the administration. You are not getting that same push from publicly traded as well as private organizations. We have global supply chains, global customer bases, and global talent basis. So this push is an administration push. It's not coming from the leaders of our top companies.
They are some scrambling, some a little bit ahead, trying to figure out what to do about this.
You know it It makes me wonder about if we could see a change in policy from the administration. And look, nobody can read the mind of the as president. We know how he feels about tariffs. He was open about that in his first term and also during this campaign. But given what we're seeing today, do you foresee any change in policy from this White House? Or are these levies here for as long as his administration goes?
You know, that's a really good question, and certainly myself and my colleagues don't try to make a business how to forecasting what this administration is going to do next. I try to focus on how executives can create value from it.
It did really take away.
That they were still leaving the table open for negotiation. So I think that's unfortunately what CEOs are sitting on this morning man, instead of getting news that they could actually start planning and forecasting around. It seems like maybe these will change as well, and we have the previous two months of tariff's coming on, going off, and deadlines changing. So even though we had news, I don't think it's enough that we can actually make decisions on. So I
do think there is some room here. What we don't know if this was a come out strong to be a power play and a lot's going to be pulled back, or if they're going to stick with this at least midterm elections. Most executives are assuming this is going to be at least another eighteen months through the midterms. Of this amount of volatility, and many are holding off the big decisions and tell then.
Are a lot of executives you think at this point pulling in their teams and say, folks, let's get ready for recession or something along those lines.
The R board is certainly coming up a lot more in the past two months than I had beforehand. But CEOs I think have built a lot more robustness in and certainly the ones that I am talking to are really looking to make a change in cross strategy to do other ways around it. For many organizations. I can't emphasize this enough. This changes the how, not the what. What they're trying to do to create value remains the same. Is this is tactically they need to change some things,
and pricing will come and play. There's much bigger macroeconomic implications. We know the inflationary effects of this, but I don't see a big change in many strategies.
This is a change in the how. All right, great stuff, look forward to next time. Catching up with you. Doctor Rebecca pumcasts on the faculty at DO Corporate Education. As we said, also a former fellow for the White House's President's Council of Economic Advisor. So much more too, also of the book Survive, Reset, Thrive.
You're listening to the Bloomberg Business Weekdaily podcast. Catch us Live weekday afternoons from two to five pm Eastern Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
All right, so when we think of global supply chains, we have to talk about Apple and its massive and efficient one. President Trump's new tariffs heavily impact apple supply chain in China and other countries where it manufactures products.
This even after a year's long effort by Apple to insulate itself from trade wars and supply chain disruptions, as the global nature of the tariff rollout has undercut efforts to shift production away from other countries, particularly in Asia and so on Thursday, Apple shares posted its single biggest day plunge since March sixteenth, twenty twenty.
For more, we spoke to Bloomberg News Managing editor for Global Consumer Tech and our Apple guru, Mark Germitt.
Apple has the pricing power, the consumer insols, the economic influence they have, the supplier relationships. They have a lot of leverage over their main manufacturing partners. Where I don't think Apple's going to need to eat the majority of the cost here. I think they're gonna really split it between themselves just a little bit they're gonna split it with the consumer, and they're gonna make their suppliers pace
out of it. Right. Don't forget it's fox Con and some of their other final assembly suppliers that are exporting these things into the US, and they have so much margin. They have a little wiggle room to play with from the get go. Anyways, Now, the big picture here, though, is that Apple has spent years diversifying its supply chain in an effort to try to avoid situations like this. I'm not saying it backfired, but it didn't work out as they probably would have hoped. The tariffs against the
people had expected for years. They're not really China centric, right, China's just one piece of the pie.
Here.
You have major terrorists I'm sure you've been talking about all day in India. You have them in Vietnam, you have them in Malaysia, you have them in Thailand, Taiwan. All the players here in the Apple supply chain are impacted.
So let's think about this from the perspective of prices that hit consumers. Mark If you say it's going to sort of be buffeted by by everything, do you expect Apple to raise prices as a result of these tariffs.
I do think that Apple will raise prices, I really do. I do think ultimately all of the consumer hardware players are going to need to raise prices to at some point. The question is when they're going to do it and how much they're going to do it, not if they're going to do.
It, Okay, when typically do they raise prices? If you're talking about the iPhone, would prices like, do they ever raise prices mid cycle for something? Has that ever? I don't want to say has that ever happened? But typically yes, it has happened, It has happened, Yes, it has happened.
How does that?
How did that happen last time?
Hey? It's the thing that I have to step back and be very clear about. This has not happened in the US, Okay, right. This has happened in Japan, This happened with Brexit in the UK, MP been with Australia, this happened with other countries in the European Union. So there is precedent for out of cycle price changes, just not in the US.
Does it mean China's business? Apple's business in China is even more threatened right now?
Does it mean.
Apple's business in China is even more threatened. I actually think it means a little bit of the opposite. I think it means that Apple's business in China is even more important to them because these things are being built in China and they're being exported. Now they're not having to be exported. They're being built in China and sold in China. So really, you want to sell even more stuff in China right now to make up for the impact externally.
I am curious what you make of you know, if there's anything more CEOs in this case, Tim Cook and Apple can do. I mean he showed up the inauguration. I believe personally donated to the inauguration. Earlier this year, we talked about investing what like half a trillion dollars in the US over the next four years. We talked about that because I think there was already money committed,
I mean, not enough. What is it that the president is maybe looking for these from these companies or it has nothing to do with them, I mean, does he care about the health of a company like Apple.
It's mind boggling. So putting in these tariffs they start on the ninth right, these these big tariff increases start on the ninth. Okay, that's one thing to impact here, but it takes a lot of time to make these supply chain adjustments. The whole point of these tariffs is to get people to build things in the US, but there's not enough time to have those movements be made in the supply chain.
Does go ahead, Carol, No, it's just no, no, no, it's just it's just kind of fascinating. Like I said, you know, to I just think of the inauguration and all those tech CEOs there and very visible, very prominent, and then you know, just wonder about the relationships the conversations do we assume do you hear that that Apple is continuing to have an ongoing conversation with the administration at.
This point where I'm sure that Apple is trying to get exemptions here, right, I'm sure they're having these ongoing conversations. But there's a point where you're just going to have to raise prices and not in order to not eat into your margins and screw up your quarter, right. I mean, these are very important times for Apple right now, and so I think definitely there are going to be price adjustments.
What about the cash cushion that that Apple has. If they view this as temporary, could they just eat into the cash cushion that they have.
I don't think they should eat into it. Yes they have high margins, Yes they have a cash cushion, right, but they also have a business to run, and they don't want to adjust their business. So I think that you're going to have to see price increases. It is amazing just to take a step back here, that Apple has not increased prices over the last several years in
the US, given the inflationary pressures, given everything else going on. Right, So really we're in a territory in a time where Apple probably should be raising prices anyways, right from a business standpoint, So this gives them a perfect excuse to do it.
Well, I'm going to say, is my husband's like, I think I'm going to hold off and buying another phone.
What does he have he's got?
I think is a few you back?
Because just a reminder, Carol Masters, the first Apple Watch, I actually stop using it.
He keeps telling me you need to replace it.
Yeah, I don't know. I can't believe it still works.
It doesn't work that well.
Mark Garvin, thank you so much, so glad you were you know last night? Top of mine wanted to talk to you, so so appreciated.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern up on Apple car Play and the Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa played Bloomberg eleven thirty.
Among the stocks that sold off following President trump sweeping tariffs were those in the consumer discretionary space whose supply chains are likely outside the United States.
That included Wayfair, which dropped twenty five percent on the tariff announcements. For more on how the news may affect the specialty retailer Wayfair, which calls itself the destination for all Things Home, we caught up with Wayfair CFO Kate Gulliver, who joined us from Boston.
I do think this is where Wayfair is different. We operate ultimately a marketplace model, and so this means that we work with twenty thousand suppliers across the US and around the globe, and we have an ability to pivot across these suppliers, you know, as demand and needs change and Our opportunity here is that you know, we can show the customer what the best product is for them
based on price, quality, et cetera. And that can really dynamically move, you know, as potentially wholesales change and as terrors change.
So can I just ask you then, Kate, So since you have a global supply chain different markets, does that mean some of the markets that you operate in or you get your goods from that they did not have tariffs imposed on them.
Well, we've seen virtually, you know, every country x US have some level of terrorsts. We work though with domestic suppliers as well, so we have a strong domestic supplier base, and then we work with suppliers across the globe. And I think what's a little bit different though versus somebody who has, say a product that is built to spec in a specific geography right where they have designed the product, they have a manufacturer that they work within that geography, they have a contract.
For how much they're going to procure.
Is we're not buying the inventory and we don't have products built a spec. We also sell a lot of very similar, highly substitutable products. So for example, if you're looking for a barstool. We may have barstools from several different geographies, and our suppliers are going to be focused on how do they get that top slot in this sort of home page as you get into it, so that they get the most conversion on that product. And
part of that comes down to price. And so we create a naturally competitive dynamic through the marketplace and we're able to sort of lean into where prices are most efficient or where lean out of maybe where they're less efficient.
Kay.
Products that are bought on Wayfair right now, what percentage of them come from inside of the US or versus outside of the US.
Yeah, we actually haven't given a breakdown by geography because of it's so dynamic, right, So it moves around quite a bit based on where you are in the short order. So what happens is as the wholesales changed, our take rates stays the same. As the wholesales change, your product may move up or down because it's perceived as more
or less attractive to the consumer. And within that then you might see changes in what supplier is getting more volume, and then therefore what geography is getting more volume.
So it moves around quite a bit.
I'm wondering about comments that the President has made in the past. He's I believe, and I don't have the comments in front of me, but he said something along the lines of what happened to the American furniture industry. We used to make so much great furniture, and I believe he called out in North Carolina as a state where we made furniture. Is it realistic in your business to buy more products that are made in the US.
Is it possible we see a return to manufacturing furniture in the US high and furniture still is, but let's be real, not a lot of the furniture that American Americans buy is made in the US.
Yeah.
So we operate obviously a mass market brand right Wayfair sales, you know, for the average American consumer. We do have a high end brand called Paragold. They're sourcing, can you know, be a little bit different than Wayfair as a whole. What we're focused on is being able to source and show the best products. So if that product is more competitive in the US, then we can show that.
Product to our customer.
If that product is more competitive in a different geography, then we actually have the capability to get that product to the country, delivered efficiently to the customer. You've seen, you know, obviously huge improvements in logistics. We have a US you know, logistics infrastructure that allows us to do that. So you know, certainly if you saw us manufacturing return, we would be able to continue to work with you know,
US suppliers there and potentially continue to expand there. But we want to focus on what delivers the best value for consumer. That is our you know, manihacal focus, and it's what allowed has allowed us to take share over the last several years. It's been a very disruptive period for the category as a whole, and we've continued to be a share gainer, and we do that by continually offering the customer the best value proposition.
So on that because you have thought about the customer and putting them first so often. And I am curious, Kate, will you guys have to raise prices at all? Will any of this that's happening in terms of tariffs, Will you have to pass higher costs along to your customer?
Yeah, that's great question.
So the way that our pricing model works is because we're not taking the inventory the supplier of that product sets the wholesales and then we apply a take rate on top of that, right, and so if wholesales go up and the take rate stays the same, you may see differences in prices. That's where it's really our responsibility to work with that supplier and help them understand the demand impact of that, because we sell, as I said,
you know many barstools that might look similar. If one supplier raises price, and one supplier keeps price competitive, right, keeps wholesale competitive, they will get more demand. More demand will crue to that supplier, which may be better for that supplier overall.
So it's really important that our team.
Work very closely with the suppliers to help them see this data, be very transparent, understand otherwise they grow volume with us. You know, we recently launched our Wayfair Verified program that's designed to make the shopping experience easier for the consumer.
It points out to her products that we.
Have vetted that we know to be high quality and really meet the bar. That's a great way for you to consolidate demand in a category. If you're a supplier during a period like this of disruption, and so we think that there will be suppliers that you know, win out in the marketplace in this model.
How are you dealing with these new tariffs? Like, what are the conversations you're having with suppliers, what are the changes you're making to your business?
Yeah, we're really trying to help the suppliers understand here's how this might you know, impact your demand.
Right, so here's yours how to.
Think about, you know what wholesale price increases could result in retail prices. Here's how to think about other ways that you can stimulate demand in this environment. And here's how you're positioned relative to other folks you know that are selling similar products or quite transparent about that data. You know, we've operated the business for over twenty years. It's a tech enabled business, and many of these suppliers we've worked with for quite a long time, so we
have very deep relationships with them. And this is a moment where that advantages us because we're actually able to call them up, get on the phone with them and help them think this through and help them think what tools they want to use. Right, you know, are you going to use price? Are you going to use promotions? Are you going to use you know, verified, are you going to use you know our supply chain, you know,
our US logistics network to help consolidate demand. But how can you make sure that you're getting demand even in this environment?
Are you concerned? I know earnings are about I think a month away. I think you guys report on May first, if I have my okay before the market open. In terms of P and L profit loss, like, is this going to is any of this going to impact the balance sheet?
Yeah?
You know, we've actually been taking a lot of steps over the last several years to continue to position us well during periods of uncertainty, and the focus really has been one on gaining market share, which I think we've done quite effectively. We've gained share for the majority of our twenty year history, but during the period of disruption post COVID, we've gained share every quarter since Q four twenty two, even in a category that's been down.
We've taken out actually.
Nearly two billion of cost, you know, so pretty significant restructurings over the last several years, and we've improved our balance sheet significantly to the extent that we feel really good about the position that it's in now. And so I think actually much of the work that we've done over the last few years.
This has been very challenging work.
It's obviously tough on teams and you go through this level of restructuring, but I think it does position us well to navigate a period of uncertainty, both from a cost perspective, from a share game perspective, a cost perspective, and from the balance sheet perspective.
You know, I'm so glad we had an opportunity to talk with you, Kate, because I am also curious heading into this what have you been seeing with consumers in terms of maybe pulling back a little bit, are being a little bit more discretionary in terms of their spending, Because we certainly have talked about consumer sentiment numbers, even spending numbers in terms of some pullback, What have you seen specifically, Yeah.
Obviously I can't speak to the recent quarter. What we did share sort of on our last earnings call was, you know, the consumer sentiment has been challenged over the sort of near term period, and where we saw consumers leaning in was where they saw, you know, great opportunity for deals. So promotions continue to be a way that consumers want to lean in, and we use that really as a marketing tool to bring them to the site. Actually on the on promotion, they end up you know,
mostly buying products that are not on promotion. Only about thirty percent of the revenue during a promotional period is on discounted items. So what we're constantly looking for is when the consumer sort of feels like the categories out of favor, you know, pulling back, how do we get her attention and how do we get her excited about coming to the site, hendy, And how.
Do you get her to pay more if demand is already low, if demand is pulling back during a time of perhaps strain, big ticket you know, home purchases are big ticket purchases, and when spending falls, discretionary items get hit harder.
Yeah, that's you know, And again, as we said, the category has actually been compressed for several years now. So the category itself, by our estimates is actually you know, at twenty nineteen levels or below on a revenue basis, So obviously on a unit's basis is even lower. Right, So the category has taken compression every year since twenty twenty one. So I think you're already operating from a category that's you know, been quite compressive as consumers have
shifted dollars away. Our focus right now is how do we get that product in front of her that's exciting and appealing to her. You know, Over time, as the housing sector improves, that obviously improves the category quite a bit because the category has been compressed because the housing sector's you know, been held up. That's a key factor in sort of driving that compression.
Ah, it's only two now, four months in, Kate, three months in, it's only three months. I can I ask you do you feel like if visibility to the end of the year are not yet?
You know, really most of our playbook remains the same, right, and so I think that's actually what's important to remember in this position is we are focused on the long term.
We know that this is a period of disruption.
We believe that retailers that focus on delivering for their customer, managing costs quite tightly, having a strong balance sheet will navigate through this effectively. And so our focus is on delivering that value for a consumer however best to do that and maintaining very tight.
And efficient cost controls.
And that, I think, you know, is what we've been doing over the last several years and says this up quite nicely going forward.
Well, we so appreciate time. We know it's been a crazy day for you, a crazy year already for you, as it has for all of us. So to get some time with you. Kp Well, Kate Olliver, she's wayfair. Chief financial Officer, joining us on this Thursday from Boston.
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Although pharmaceuticals were spared from sweeping tariffs announced this past week by President Trump, there's still significant uncertainty on how future tarifts for the industry might be implemented.
On top of that, the Department of Health and Human Services began dismissing workers, including senior leaders who oversaw drug reviews, tobacco products, and scientific research, carrying out Secretary Robert F. Kennedy Junior's goal to shrink the agency.
That followed the resignation of top FDA regulator Peter Marx, which caused vaccine and biotech stocks to plunge, casting deep uncertainty about the future of vaccines and cutting edge gene therapies.
For more, we caught up with two members of our healthcare team, Bloomberg Intelligence Senior pharmaceutical analyst Sam Fizzelli and Bloomberg News health reporter Madison Mueller. We should note we spoke to them before Trump's big tariff announcement on Wednesday.
These changes are huge and sweeping, and I think we're still grappling with the impacts and who's affected and how this is going to affect the industry is and the industry is grappling with that right now too. I mean we are still like information is trickling in still as we're trying to figure out which divisions are being cut, who's being laid off, exactly what it is being impacted, and so that's something that's like information is still actively coming in.
What's the relationship, Madison, with the government public health people who work in the government and then the private sector and the development of drugs that ultimately get put into the pipeline and approved years later. What do we know about that relationship and how one affects the other.
I mean, they're critical, they work together in research, in drug approves, drug development, like the government is so important in.
All of that.
Obviously, the FDA, the US Food and Drug Administration, is viewed as sort of the gold standard regulatory agency for approving medications in the world, and and a lot of other countries look to the FDA.
The FDA is usually.
The first to approve drugs. Americans are typically the first to get access to new innovative medications. It happens more quickly here, and so I think, you know, other countries, other regulators are also looking at what's happening in the FDA, you know, in the US and at the FDA and thinking how does this impact US as well? Companies. We have companies that are you know, have padu FA dates that are expecting drug approvals and that's that is a
sort of an expected drug approval window. And Sam could probably speak to this more, but we we sort of use that to to gauge when drug approvals are going to happen. We'll see, we'll see what happens with those. It's kind of all up in the area.
Now.
It's just this stuff that we just take for granted right that it's just going to work, because it's just the world that we've lived in, grown up in and seen for multiple generations. Sam, I thought about when we were going to have this conversation with the two of you. How many times throughout COVID we reached out to you and I would listen to you early in the morning, you know, with either our surveillance team or other teams.
But like, how are you thinking about what you're seeing happen in government and what it might mean for us in terms of healthcare in the United States?
Oh, how long do you have?
We got a little bit of time, we can hang.
But I am thinking, like, right, these things that we take for granted.
HHS, the Health and Human Services, which is run by RFK Junior. It runs quite a lot of these important institutions, or at least decides and a budget, et cetera. So the CMS centers for Medica services, so that includes Medicaid, Medicare, and medicine steppy in any time you fancy, right y, Yeah, You've got the FDA, which we've just been talking about,
and you've also got the CDC, et cetera. So pretty much the health of the nation is in the hands of this institution and they have to decide whether they want to continue to support vaccinations and be, for example, very positive about saying you got to go and get your vaccines and not say but it's a personal choice because vaccines don't save lives. I've said that this morning also, vaccinations saved lives. You've got to get it in the arms.
If only eighty percent of people take you, do you remember her immunity and yeah, yeah, totally for measles that's critical, which is why you see these pockets.
Sam.
You spend here visiting us in New York, which we love. You're usually in London, you spend a lot of time in France. You have this global view, As Madison said, the FDA is the gold standard for approvals. Does the world have to look somewhere else? Does it have to look to the NHS? Does it have to look to another regulatory body? Now I think I'll come back to.
You with the word uncertainty.
I don't know.
I don't think so.
And is there an institution out there that is akin.
To the European Lisson's Agency the MHRA in the UK they are all great. MHRRA is one that does its own assessments and the Europeans tend to or at least and maybe the UK also tend to rely on the depth of work that the FDA does. The FDA gets literally rolls up its sleeves and looks at raw data and makes its own analysis.
Then the companies present.
That is so interesting, So come on back. In medicine, like I do think about like collaboration right on a global scale, what typically happens. I mean, again, these are things that I don't think anybody ever thinks about, but I'm assuming that there is data sharing, especially when it comes to important medications and so on.
Yeah, and I mean even with vaccines like you were talking about there, we've seen some back and forth of there are global regulators and health experts that meet to decide on what the flu vaccines will be for the season.
And we saw some pullback with the US deciding whether or not to attend this meeting, which has happened, you know, every season for I don't know how many, a long time and so yeah, decades, and so it's there is so much collaboration that goes into it, and you know, whether or not the US is going to be participating in that going forward is a question right now, because we don't even know who's left at the agency is quite frankly at this point, So.
We did have that uncertainty. Yeah, and at least a little silver lining is that they did decide. They did phone line with what the who said, They looked at their view and so we now know what we're all hopefully going to get for our flu vaccine this coming winter. So things do happen, and the FDA, let's face it, it's causing major uncertainty. You look at the share prices for biotech companies, farmer companies, they're all fully farmer. On top of it's got this Tario Fisher, which I'm sure
we'll talk about. The interesting thing, of course, is that the FDA isn't infallible. They have done things that we've all both questioned in the past five to ten years. However, it causes uncertainty. We don't know what shape this FDA is going to be when it comes back to life.
And this is what's just one thing I wanted to bring up to be fair, I think there are some that would say with certain drug approvals or certainly for testing for people who maybe have no other choices, like, there are things that could be better. And I just I'm assuming that you both would agree that there are some improvements that you could make in this department. It just feels like things are being done in an uncertain way, in an uncomfortable way, that it's not necessarily helpful, right.
And I think the part of the problem is, I mean, RFK has said and this administration has said that obviously these cuts and sort of restructuring is a priority. And RFK has laid out restructuring for HHS, But the bigger picture of what exactly they're trying to do here is not clear. And I don't think that that has been communicated to the public, not to us, not to people, you know, staffers at these agencies. So people are just kind of like, what's going on.
We're going to talk about the tariffic you in just a minute, but I want to get one more question into both of you before that. Madison, you went to the JP Morgan Healthcare conference in San Francisco middle of January. You came back here and you told us there was this optimism about M and A. There was optimism despite
the fact that RFK was coming in. Canter Fitzgerald Biotech analysts slam the leadership of RFK, calling on the Trump administration to reevaluate his role after this top vaccine official step down. This is Canter Fitzgerald, This is Howard Latinix firm that we're talking about the Commerce secretary. Is that optimism still there?
I mean that was a really striking comment, and I think departure from what we've seen in sort of these more like soft comments, soft criticism. I think people are being really careful with what they're saying publicly, and they're
not saying that they're not optimistic anymore. But there are concerns about what the greater plan is and what's happening obviously at AGHS, what's happening with tariffs, and I think that some of the power and influence that these companies and trade organizations and I'm talking about pharmaceutical companies have
had in the past is being tested. And you know, they are They thought that they were going to, you know, be talking about the Inflation Reduction Act and IRA and drug pricing with the administration, and that is not then the priority so far. And you know, I think this this administration is moving fast and the companies and are sort of scrambling to keep up.
The problem with biotech is more than just this recent issue. Every it's been about four years, every JP organ I felt just a little bit of a twinge of optimism, and you come back and things fall apart. The reality here is that this is this is the peak of uncertainty at the minute. Maybe maybe it's the peak of uncertainty. Let's let's see.
Okay, let's get to tariffs. What do we have to know about the way generics could be affected with this?
Yeah, So the reason generics are particularly at risk is that they have their little margin. They price low, like big farmer companies have got a lot of profit, the prices are high, they can usually eat the tariffs and not put the prices up, whereas generics. You know, the whole point of a generic is that you end up getting some of these drugs eventually for cents on the
dollar per pill. And once you get hit by a twenty five percent increase in your basic cost of goods, so you know, your your raw material or your active ingredient that goes into it, then it eats your margin. So you can't help but pass that price increase on. Whereas in the world of large farmer with more expensive, more highly valued branded drugs, you can absorb some of that.
It does get your EPs hit, but nowhere near a BMW or a Mercedes Benz with a having a EPs potential forecasts maybe two or three percent, depending on how they're calculating their transfer pricing, et cetera. And then something gets manufactured in Ireland gets transferred here, so they're they're exposed, but not nowhere near as much as the generics.
I am curious. Just one last final question that you know, you guys are talking to companies, people in the industry, and I just think about the stuff that's coming from government. Let me ask you first, Sam, I mean, are people able to even companies able to access the White House, get to the administration find out what's going on? Are they getting I know there's a lot of uncertainty. Are they getting any information? I think kind of what's coming down.
On trips to golf courses and I think they've been a good few dinners. I think there is communication. The problem is you can be communicated, but the direction changes the next day, or there is a if. No, there isn't that if some will be exempted, No, they won't be. You know, it's very hard to plan. However, all the companies are really taking it in this right.
Yeah, I do get a little nervous about We've talked about companies cutting back on like Capex, but you wonder how much that might potentially slow down some r and d of just not wondering how the system is going to work or not work. God, this is I think my favorite moment of the day.
Thank you, say to everyone.
I will I will know, I will promise. No no oh, I don't say that to everyone, but I will tell everyone. You guys, thank you so much. I really appreciate that important story important to the country. Bloomberg News Health reporter Madison Muller, along with Bloomberg News Senior pharmaceutical alis Sam Fazzelli, doko back to your.
How you stand with.
Us until Thursday.
Okay, we'll get you back.
Thanks Garding, be here for tariffs.
Rock stars. Truly, truly, so appreciate it.
You're listening to the Bloomberg Business Weekdaily podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Applecarplay and the Android Auto with the Bloomberg Business app, or watch us live on YouTube plenty.
Head on our second hour of the weekend edition of Bloomberg Business Week, as promised, taking a break from the tariff news and subsequent market sell off from this past week, be sure to check though the Bloomberg and Bloomberg dot com for the latest on all of it.
Coming up this hour, we'll hear from the former CNN reporter who's helping women take charge of their financial futures. The author of What's Up with Women and Money joins us a bit later, Plus.
We take you to Irvine, California and the billionaire developer who controls most of it everything from apartments to newspaper stands and where the police department drives cyber trucks. And we've also got what to watch, read, or head to the theaters for this month, courtesy of Bloomberg Pursuits.
First up this hour Tesla, which, despite its recent struggles like a collapsing stock price and political backdrop against founder Elon Musk, our Bloomberg intelligence researchers gave the company a rosy outlook, and this.
Week Tesla investors shrugged off the company's worst vehicle sales since twenty twenty two and bid up its shares and hopes that Elon Musk will step back from his work for the Trump administration. Yet gotta say not everyone is convinced of a Tesla rebound.
One of those people is Sean Tucker. He's editor of Kelly Bluebook. It's the vehicle valuation and automotive research company. We should note that we spoke to Sean before it report that suggested Elon will step aside from Doge sooner rather than later.
Sean explained why Tesla's best days maybe in the rear view mirror.
Because its peak in terms of auto sales was in February of twenty twenty three. We weren't able to call the peak at the time because we weren't sure that the decline would last. But what we see now is if you look at Tesla's as a percentage of the new cars sold in twenty twenty three, they hit four point twenty nine percent, and that's their peak, and in twenty twenty four they were back down to three point ninety five. So it was already falling before this political controversy began.
What is the issue. Is it political controversy or is it the fact that this is a space that a lot of competitors have gotten involved in and I think Americans This is not on Americans radar, but byd and show me those vehicles blow away anybody who gets behind the wheel. How big of an issue is that?
It's absolutely huge for Tesla. But for a moment, if you could imagine if we could take elon Musk out of consideration for this, what you would have is a company with an aging lineup. You know, the Model QUE, the Model X. The platform underneath those was introduced in twenty twelve. That is ancient by auto industry standards. There's nothing new in the pipeline, at least nothing particularly high volume new in the pipeline, and sales peaked back in
twenty twenty three. Then you add in the fact that they've got all of this new competition and they're not innovating any I don't know that they would be doing well without the political controversy. Stack the political controversy on top of that, and you just you have what you see today.
So and I have to counter just because earlier in our last hour, we talked with a member of our Bloomberg intelligence team are Tim Craighead, and we've got a story out in Bloomberg BusinessWeek about the ten companies to watch for good or bad, reasons for better for worse, and Tesla was a company that was singled out for better. And basically what they talked about is that several positives to look forward to. Orders for Tesla's newly revamped Model
Y are accelerating, notably even in China. Production rates are poised to increase quickly. Meantime, the company's battery sales to utilities, which generate higher margins that autos appear underappreciated as a profit driver. So that's more of a corporate overview. But I am curious about, you know, the Model Why, and I think there's also a subcompact right that could start in June, widening, you know, kind of Tesla's reach and appeal. So what would you say to that.
The Model Why refresh is essentially a visual refresh. It's it's basically the same car underneath that it's been since about twenty seventeen, So we kind of question whether that's really going to generate much of a sales spike. Absolutely, it's their best selling model. I believe it was one of the top five best selling models in the United
States last year. But I don't think there's a lot of opportunity for growth with that, and then you pile Musk's troubles on top of it, and I'd be very surprised if you see sales actually increase anywhere outside of China, And then in China you've got BYD to contend with. As for you know, battery sales, that's a little bit outside of our scope, is Kelly book, But I wouldn't
know that Musk. Musk is fond of saying these days that Tesla's not a car company, and if he's right, and he's got significant plans outside of cars, then that changes the equation. But he needs to be right because as a car company, it really sales really peaked a little over two years ago.
Yeah, maybe he's betting it all on the humanoid robot and the robo taxi. Where does the robotaxi come into your analysis?
Many of the Tesla's rivals have attempted to make a sort of robotaxi project work. Several of them have gotten out of the business. When in the last few years, it's possible that Tesla has secret sauce that nobody else has and will make this profitable. But it's proven to be a very difficult business to profit.
In you're in Washington, d C. I believe you're going to start getting weimos soon in Washington, d C. Have you been able to ride in one outside of DC?
I have written in a zooks, but not a WEIMO.
How what was your experience, just as somebody who is in this world day in and day out with a driver on the radar, what was your experience without a driver?
You know, I'd drive fifty two different cars a year. As I get a new car wants a week to test drive. And I have really come around on the concept of self driving cars over time. They may be nervous to begin with, but the truth is now I look around me in traffic and I see so many people tapping on their phones that I would rather drive where at least the car was paying attention.
I love. I completely agree with you, Carol knows my trip to San Francisco a few months ago. My life was like turned upside down with this just my first experience in a WEEIMO. I think it's fantastic. I wish this stuff was all over because these things follow the rules and they're not texting and driving. But realistically, in your view, do you see that world existing, it's going to take.
A lot longer to get there than some of these technology companies. What have you believe? There are significant regulatory challenges because right now this is regulated by the states, So even if you can make the technology work, you'd have to work through fifty sets of liability laws and different legislatures.
Maybe started, maybe, but not if Elon Musk has his way in terms of regulation. With Sean Duffy at the helm of the Department of Transportation.
Which is one of the more interesting proposals he put He's put out there. The other thing I'll put out is that when we start to master self driving cars and actually get them functional, you open a whole new questions we've never run into before. Mercedes has the most advanced system for sale in the United States. It's a legal lawn right now, only in Nevada and California, and they have proposed, just to give you one example, that the industry adopts teal exterior lights as a signal that
the self driving system is on. Because how are police supposed to know whether the driver's distracted, If it's okay for the driver to.
Be distracted, what was the signal? You said?
And exterior lights and colored and teal.
Does that work? Does that exist now.
Only in testing? And again that would be a legal issue. You'd have to get fifty states to agree to that. The point is just to say that even once the technology works, we've got a whole public policy system that we'd have to work through a lot of new questions.
But that's none of that has to do with the Actually a lot of what you're talking about do with policy and with sort of the way that law enforcement looks at this stuff. In your view is the tech, is the tech there.
It's getting there. But Tesla has more significant challenges than most of its rivals in that way. Elon Musk is very insistent on doing self driving with nothing but cameras and the systems that have surpassed Tesla, like that Mercedes system that's the only Level three approved anywhere in America uses radar, cameras and leadar. If Tesla can't adopt additional technologies like that, it's going to take them longer to get an effective self driving car.
All right, Sean, I just was like, wait a minute, I got to ask you something. Are you saying Mercedes is better than Tesla when it comes to self driving.
The automotive industry uses a system of five levels to describe self driving cars, from level one just your basic smart cruise control, up to level five being a car with no steering wheel. Almost every automaker has a level two system right now, including Tesla, and Mercedes has the only Level three system that's approved anywhere in the United States. What that means is that legally you can look away from the roadway while it's working. Some Mercedes has that.
It's only Nevada and parts of California right now, but there is currently a Mercedes system you can buy that will let you settle back and read a book in a car, and Tesla doesn't have anything like that.
I have to say, I am a little bit familiar with Mercedes and just their safety systems are like blown away where you can take your hands off the wheel, and especially like on away.
Not even a brand new car that you're talking about, yeah experience with right.
Yeah, I have one and it's old, it's over ten years old. But the safety systems are unbelievable in terms of what you can do and how it just tracks and just keeps you safe. And what I also do wonder sean that if we're not kind of quite ready to just look away and let the car drive, do we just continue to see the safety systems get better and better on these cars, because I almost feel like Cinems amount of highway you know, you put on basically
cruise control, and these cars are tracking. It almost feels like with one another. And in that regard, I feel so much safer where my car. If I get distracted, it's going to stop the car if I miss the car stopping in front of me, And that's pretty amazing.
And those are essentially the same technologies. Yeah, the technologies that will ultimately result in self driving cars. The first thing they do is give us those safety systems, and when all those safety systems can work together and talk to each other, you end up with a self driving car. That's also how the industry is going to have to
get people comfortable with it. Triple A did a study, I believed just a month ago in which sixteen percent of Americans said they would get into a self driving car. That's the public challenge that they face in terms of approval. Sixteen percent don't.
So I don't buy that number. And here's why. The only reason I got into it in San Francisco. It wasn't even on my radar. And then I met up with a friend who was like, Hey, did you go in the Waimo yet? And I was like no, and she's like, Oh, it's so awesome. Just download the app and do it. And I did it. And I'm a
true believer. I'm converted. And I think it's just like word of mouth, and just because people haven't been around this technology means they're going to answer that question a certain way.
Well maybe right, But I think that as people get more accustomed to the safety systems, they get more comfortable and more comfortable with the car making certain decisions like that. That's how we eventually get to a world where most of us are willing to get.
In our thanks to Sean Talker, the editor of Kelly Bluebook.
We should also point out, while talking about Elon, there was a lot of other news and some speculation courtesy of a report in Politico that President Trump had told us inner circle that Elon Musk would be stepping back from his advisory role in the coming weeks, of Politico citing three people close to the president.
And we should note too that Caroline Levitt after this report in Politico came out, called it garbage and said that Elon will stay on until the work is done at DOGE. Vice President Jady Vance, though said in an interview on a Thursday with Fox News that Elon Musk will remain an advisor to President Trump after he leaves DOGE. He also said that Musk's work is quote not even close to done.
It's really kind of interesting, right, kind of the pushback, and we will say that part of the reason we saw a rally, even on a day when Tesla sales some news came out that was pretty negative, that the stock rallied on expectation that maybe Elon was leaving the White House sooner rather than later and coming back to the company because we've seen how many stories have we done about kind of declining sales for Tesla, the political backlash, and so almost a call for Elon to come back
to the company.
I think the question is if he does, and when he does, and look go back in what sense, right, He's still involved in the company, still the company CEO, but absolutely taking a more active role, and would that actually help Tesla at this point because how much of the decline in sales that we've seen in recent quarters is the result of the association that people have with Elon politically. Certainly, that's a big issue outside of the US too.
Yeah, and if he continues, even if he leaves the administration in some official unofficial role, right, if he's still doing things politically for the President and Republicans, right, that political backlash probably doesn't go away.
Hey, speaking of cars, buying a car, negotiating for a car, it's one of the topics that is approached in the book by our next author. She wrote What's Up with Women and Money, and she experienced some of these lessons the hard way. She joins us on the other side.
This is Bloomberg.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and the Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, just Say Alexa played Bloomberg eleven thirty.
Researchers from McKinsey recently determined that women spend less time on the job than men in comparable roles in career paths. Eight point six years for women versus ten years for men, and that they were more likely to make decisions putting them in roles in industries that were dying. It's really grim. Yeah, large career gaps, especially during child rearing years, and the
desire for more flexible work took a toll. Listen to this, Carol, Time and career choices they said, docted women's lifetime pay by a cool half million dollars.
That's a lot.
Women, they urged, need to choose careers in fast grown fields and spend more time on the job.
Rab that's a strong message. Yeah, I mean that's a big difference. And if you think about people living longer and like maybe on their own, like how do you support yourself?
Simone Foxman writing about this for Blueberg News. Check out that story and more if you're interested.
All right, curious what Alison Kasik has to say about all of this. She's the author and journalist who has worked at CNN and is a freelance correspondent for ABC News. Equal payge just one of the things she tackles in her deeply personal new book. It's entitled What's Up with Women in Money? How to do all the financial stuff you've been avoiding, She joins us from Long Island. You know, we've been talking about your book, and you know very
deeply personal your story. You go there right in the beginning of the book, tell us about and share with our audience why you said about writing this.
Yeah, great to be on your show, Thanks for having me. So I've wrote this because yes, I was CNN's business correspondent, often reporting from the New York Stock Exchange. But at the beginning of my time there, I wasn't involved in my own financial life. I let my husband handle all things financial, and that was that was not a good decision because when the marriage went bad, when you know I wanted to get out of the marriage, I felt stuck.
I stayed in the marriage longer than I should have, years longer than I should have, because he kind of knew where all the money was and how to handle all the money things. And I had two kids under the age of ten at the time. You know, what if I made a mistake, what if I lost all of our money. The difference is that I just didn't
have the confidence to make those big financial decisions. I didn't have the experience of making the decisions over the course of my marriage, and that in essence cut down on my confidence in my ability to make those decisions. But as I got through that, I realized that there are a lot of women, different kinds of jobs, high income scale to low income scale, Mary, divorced, widowed, single, who feel the way I felt that. You know, they don't have any kind of involvement or as much involvement
as they should have in their own financial lives. And it's not something that women talk about because you know, we don't want to be seen as unintelligent. There's also a lot of embarrassment and shame around it as well.
Why do you think men are the ones who end up doing this stuff in a lot of relationships? Like you have a chapter in here on how to buy a car with confidence, understanding insurance, negotiating in your words like a man. Why do men? Why are men the ones who usually do this in relationships?
You know?
I think if I could answer that in one reason only, there are I think there are many reasons, but I think the biggest reason is that it is cultural. There's a cultural aspect that women have with money, and I think it starts early when we are girls, and we like it or not. Girls and boys are socialized differently. And it's not that girls are told not to care
about money. It's just that boys are often introduced to the family finances earlier, They're encouraged to be financially independent earlier. And so you've got these girls who grow up being uninvolved, and they can grow up to be women who avoid money issues. And that avoidance can be compounding in the way that you avoid something long enough, you become fearful
of it. And so lack of interest can lead to a lack of information, and that lack of information can lead to a lack of confidence in being able to manage all things financial, you know, whether it's managing your spending, managing your debt, being able to invest, and being able to negotiate your salary, all of that hits confidence. And I think, I think, if I'm going to answer it in one answer only, I'd say, it's the culture. It's got to be the culture.
So, you know, it's interesting. Carol mentioned this is a deeply personal book, and I mean it really is. You're not just you don't just talk about your relationship and your marriage that prompted you to write this, but also your upbringing in your relationship with your father, and I think a lot of people would say that that was really challenging. I'm wondering, though, as a parent now, how you make sure that your kids are equipped to make these decisions independently.
Very good question. I'm not a perfect parent, and I've got two kids once nineteen, my son is nineteen, my daughter is twenty two. They are invested in the market. Yes, I've taught them how to do it, and I've encouraged them to consistently invest as much as they can. I've explained to them the difference between savings and investments and what the difference is, and why it's important to invest your way to wealth, because you can't save your way
to wealth. You know. The thing is, these things are not taught in school, so there's only so much parents can do. And really, I think so much of this is is really just taking the effort to learn it on your own or through osmosis, or hopefully you've got parents to guide you. I'm certainly trying to guide my kids as much as possible.
You know, it's interesting, Allison. We talk about this a lot here, and I feel like you've obviously you know, you're a journalist, And I know this topic has come up over the years, and I would say for those of us who've been doing it for a while, just like yourself, I feel like I could go back ten years and have this conversation. Twenty years, I could have this conversation. I think about CEOs, female CEOs who've come in and talked about even that in their households to
some extent. So I'm wondering, you know, why haven't we we've talked about financial literacy forever. Why isn't that happening? What is it that we are missing? Because you can teach stuff at home, right, But I wonder if we made it part of our curriculum from kind of a younger age, teaching kids about money, the importance of money and all that good stuff, how different things might be.
Oh, I am one hundred percent with you, And to be honest with you, I don't know why this stuff isn't really being taught. And I think it's actually beginning to be taught. It's being thrown into the curriculum. I don't know how much, really, And I'm wondering if maturity has a lot to do with it, because can you imagine getting into all the finer details of investing with a fifteen, sixteen year old, there's a I think there's also maybe a mindset here of younger of younger people.
I know when I was younger, and it may have just been because we didn't have access to investment platforms.
Like we do today.
Right in fractionally investing, you.
Know, I think that I think that you think that you have got, you know, fifteen years old. Let's say they bring it into the schools at fifteen the curriculum at fifteen years old, you'll pay attention. But I guess how seriously will the kid take it because they think they've got forever to start investing. And I think unless the curriculum really hits home about the importance of investing early and consistently, but investing early, maybe then it'll catch on.
But I think you make a really good point. And I did write this book through a journalist lens, So not only did I get through the tips and tools of financial literacy, I wanted to tell stories, so not just inspirational ones through the celebrities that I interviewed, but also names you wouldn't recognize a lot of these people, a lot of these women are anonymous because they are
ashamed that they're in this situation. So, for example, I interviewed a venture capitalist who described money as something that she was fearful of. And she at fifty three years old, she hadn't invested in one retirement account, didn't know the basics of personal financing, and really was felt overwhelmed. And this is a woman in venture capital, in the venture capital space who is highly, highly successful, but she had not invested in herself because she didn't have the confidence.
I mean, it is really amazing that we can be badasses at our jobs, but then in our own life there's this connect that's really inexplicable.
Yeah, and I guess what I would say in terms of I agree with you, like a teenager, they're gonna be like yo, uh, you know investing, you know, Warren Buffett, like all that stuff might go past, but just the idea of debt versus not debt savings versus, you know, just kind of those kinds of things or like you know,
you even talk I love this idea. I think I even remember my parents like having an envelope in the drawer of cash that was like the cash for the month or something, and we don't really do that anymore, right, everything's digital, but having that concept of like a digital envelope of this money is my spending money, this is my savings money. Like those concepts are really clean and pure and I think make a lot of sense. And I do think about even today of giving a kid
and saying here's some spending money. That's it, You've got it for the month, figure it out, Like that's teaching them to budget.
Right right and getting them involved. And as parents, you know, your kids are watching you. They're watching if you're piling on debt onto your credit cards, they're watching you know how you how you shop around for things if you broke, if the refrigerator is broken, do you just buy whatever? Or are you taking them with you to go shop around and get the or at least online to shop around and get the cheapest price.
You know.
I think involving children in money details is really a first step. It seems so simplistic, but it really is a way to get them involved.
Okay, we have been talking about your book in the newsroom and you coming on, and I have a bunch of questions actually from one of my producers. But if you've got two four oh one K plans from different employers. How do you determine whether to merge it or just leave it alone.
I've been told, I've been told to merge them. But you're asking the wrong person. I'm not a certified financial planner. I can't even I can't even give you financial advice. That is not my realm. I So, like I said, I approached this book as a journalist. I did research and interviews to get these to get these topics on paper. And yeah, they'll have to go talk to their at CFP.
All right, that's fair.
Actually great advice.
Actually, that's great advice. And she's a journalist too, and I know she'll end up doing research. There's a lot in the book. It's very usable, it's really fun. What's one piece of advice you want to leave our audience with, just quickly.
Ladies, be involved in all things financial in your house. Have great visibility onto what's happening. Know what your assets are, know your debt, know who your beneficiaries are on your accounts, know the passwords to your accounts, and especially know how much debt you are caring and get involved in the tax process as well. It's so as We're nearing tax time here, be involved in filing your taxes.
All right, really fun, Good luck with everything. Alison Kassick joining us her new book, What's Up with Women and Money? How to do all the financial stuff You've been avoiding. Joining us from Long Island.
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Irvine, you know, it's a city in Orange County, California, at south of Los Angeles, home to some major tech companies such as gay Maker, Blizzard Entertainment, and Rivian. It's also the state's most planned city, with one company owning most aspects of it, from apartments to shopping centers to a golf club, solar panel installation business, even the community newspaper.
We're talking about the Irvine company and the secretive developer behind it, Donald Brenn, who's the wealthiest real estate developer in America. That's according to the Bloomberg Billionaires Index, a fortune of seventeen point four billion dollars to his name. Michael Waters is a Bloomberg BusinessWeek freelance contributor. He joins us to explain who this secret of billionaire really is.
So Donald Brenn is the CEO of the Irvine Company, and he is one of the wealthiest real estate magnates in America. And essentially the Irvine Company historically was owned by the Irvine family, so they essentially consolid this vast pot of land in Orange County. At its peak, the Irvines owned one hundred thousand acres of Orange County land, and eventually they decided to convert that land into a
city and develop housing on top of it. And so the Irvine Company was born out of this inherited land and in the starting in the seventies and continuing to
the eighties when he took full control. Donald Brenn, who is this developer from the area, entered the orbit of the Irvine Company, and he started out as a partial owner of the new company and eventually took over and took this company that had been created by the Irvine family and pushed it really to new heights under his leadership, Donald, do.
I want to live there? I mean, no cannabis shops, no cemeteries, no almost what do you know?
A cemetery for what do you did? A cannabis shop for us?
No above ground cables. You've know you've left the city when you start to see telephone polls. One person that you guys talked to for the story, a professor driving through. She says, you know, once in a while she'll make a turn and there's this very spooky feeling like, oh my gosh, where am I now? Because it all looks the same. I mean, do we want to live there?
I mean it depends on I think there's a lot of different opinions on it, but it's certainly the result of meticulous planning. And I think that's why, you know, like the Irvine family when they own the company and now Donald Brenn as the owner, like think about the smallest details. I mean Donald Brenn himself is known to drive around the city and like look at his property
and like ask for really specific aesthetic changes. And you really feel that in the city everything is just the way that someone thinks it should be and is you know, many people I spoke to described it as variations on boring.
I think other.
People just feel it's very clean, you know what I mean? It's different perspectives, but it's the result of this really phenomenal sort of like top down control over so much of the city.
So Donald Brann is ninety two years old and he's got no announced successor. You guys just describe him as the one man hoa what happens when he's gone.
Yeah, no one knows.
The Irvine Company says they have a plan for what happens after brand nothing has been announced, and you know, some of the people we spoke to, you know, are just really not sure what's going to happen. Certainly, it
will be consequential for the city of Irvine. So while the City of Irvine, you know, they obviously have their own city council and governing structure independent of the company, the Irvine Company is has such a large amount of control over just like housing and commercial real estate in the city that you know, who runs the Irvine Company really has a big effect on what the city will
look like. And you know, this is an issue around affordable housing for instance, Like you know, the new mayor of Irvine who just came into office this year, wants to negotiate with the company to cut rents on housing. It's a very expensive place to live. And you know, so whoever is in control of the Irvine Company will
have a big downstream impact on the city itself. But you know, as of now, Donald Brenn is still in charge, he still has the top title, and no one really knows what's going to happen next.
You know, it's so interesting. I feel like over the years we've talked so much about urban planning and the development you know that are needed today. I mean, is this considered a success in terms of urban planning or maybe or a miss on some on some aspects, I.
Think that it is by far the most successful master planned city. So, like I mentioned, you know, Irvine, California. It started out as it's just like vast plot of inherited land owned by this one family and was converted into what is a very thriving city. It's the sixty third largest city in America. It's a very expensive place to live now, and so I think, you know, I think on one level, there is no larger master plan
city in America. So the fact that this sort of empty space was then converted into such a thriving city is to some, I like, to some, a hallmark of success. Then On the flip side, it's also a very exclusive and expensive place to live. And you know, some might say like lax character in certain key ways, as as we litted to earlier, and so I think that is kind of dependent. But certainly there's no other larger example of a city that was really conceived of from the ground up like this.
The cops drive cyber trucks. Michael, Yeah, oh for sure.
I mean I think there it's kind of like there's a part of it that's like tech utopia and then also tech dystopia. I think it's well, you know, you see like plenty of.
Other to that point. To that point, you you too write about the notion that you know, yes there's an Apple store, Yes there's a Capital One cafe. But if you're a local business, you got to follow and play by the rules. What are some of those rules?
Yeah, I mean, I think they really want certain kinds of businesses only, you know, like businesses that they feel are like family friendly in different ways. They also, you know a lot of stores in Irvine are chain stores
or have like locations elsewhere. I think they really like these like bigger stores that already have followings and bring in new people, and also just the way that the contracts are structured is that the Irvine Company takes you know, you have your like maintenance, your base rent, and then a percentage. The Irvine Company takes a percentage of revenue from a lot of those business owners. And you know they,
I mean they have a lot of control. If you want open a business in Irvine, you most likely will do it by renting from the Irvine Company, and so they have a lot of ability to sort of set those terms.
Well, the history of this development and then this individual who has accumulated so much wealth and how he's been able to stay under the radar is just kind of mind blowing. A great read. Incredible read, no doubt about it. So appreciate it. Michael Waters and John Gilson writing this story for Bloomberg Business Week on Donald Bryn Check it out, guys. Interesting. Thanks so much, Michael, So appreciate it. This is Bloomberg.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern up on Apple car Play and the Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Also from our Bloomberg Business Week team, Things to watch, read and go see this month.
Bloomberg BusinessWeek Arts columnist James Tarmy has the enviable job of picking and choosing which movies, TV shows, theater, books and more to feature for April. Does he really watch and read all of this?
Yes? Actually I do.
Yeah.
I mean it's it's in the job title. I'm so impressed.
Well, do you sit at your desk and read a book?
No, I don't say it's not a good look to sit at yours. It's after ours activity.
But via a desk, nobody says anything.
Well, you know, maybe someone says something and you haven't heard of it.
That's I think it's the correct answer.
Listen to me. All I'm saying is it's not working in a coal mine. So I wouldn't exactly describe this as I wouldn't overvalorize what I do. Let's put it that way.
Okay, where do you want to start? Do you want to start with something you watch, something you go see, or something you read.
Well, I have to say that the thing that I am most excited about is something that I haven't seen a liar of myself. It has yet to open. There is a David Hockney massive exhibition of David Hockey in Paris at the Fund. You've got to go there.
I do, And you just want to go to Paris.
Well, the two things are not mutually exclusive, but I would really like to go to Paris to see this. It's over four hundred artworks. It is called the title of it is David Hockney twenty five, but it's also a historical show. But it really emphasizes the work that he's been doing in the last twenty five years. It's almost certainly going to be the most important David Hockney show to ever be put on under during the artist's lifetime.
But then there's a lot of other things where you don't have to travel to Paris, even if you would like to travel to Paris.
But there's something equally as difficult to get tickets for.
I think, honestly, I think I put two things. It was sort of perverse of me to put the two most impossible shows.
Can I tell you something. It's really annoying to live in New York, I know. And then to also get constant reminders of how good cultural events are and then not be able to get tickets for them because they're like eight hundred dollars for a seit.
Have relatives come from out of town.
Like I want to go see it?
Do you see this? And I'm like no, because I have a mortgage to pay. Like it's crazy.
Honestly, I suggest you move into a studio rental and go see all the.
Culture or do what I used to do when I didn't have kids, which was like go line up to try to get the lottery tickets. Guess how many times I was able to get none. It was the biggest waste of time ever. We're talking about good Night and good Luck.
We're talking about good Night and good Luck, which is almost a word for word recreation of the tooth in five.
Saw that one movie.
Ye, good movie, great movie, Yes, And so Clooney has adapted it for stage and he is apparently fantastic, apparently to the extent that it is the hardest ticket to get in New York City right now. Prices are selling for catastrophic sums for in terms of resale. It is very very very very popular. But there's something else to do in New York City that costs a lot to us.
But he plays Edward R. Murrow this time around, which hes in the in the film. Okay, now what else can we do.
The thing that is not on this list, but which I have also written about is the Frick Collection is reopening, and it is reopening after a very very long movie about the Well, yes, there was a lot of back
and forth. I mean they first, So for people who are listening who are not familiar with this, the Frick Collection is this historic Gilded Age mansion on Fifth Avenue that was built and resided in by Henry Klay Frick, who is an investor and also he was a very rich man and he bought a ton of absolutely spectacular art. The Frick Collection has three vermirez for instance, I mean the goyas, the menets, they've got, they have an incredible collestion.
But the mansion that his was turned into a museum was this jewel box.
Right.
You walk in and you feel like you're in this kind of special other time. And so when the Frick announced way back in twenty fourteen that they wanted to do an expansion not of the museum itself but everything around it, people lost their minds. I mean, there were thousands of signatures from very famous people that were like stop the Frick. Everyone didn't want the Frick to change in any way, but the Frick wanted to change for a lot of different reasons.
I mean, to be fair, it was a pretty cool intimate place you could go and see amazing art.
Well, the good news is, having been back before the opening, I can tell you that it is still an incredibly cool intimate place to seeard. And the things that they have changed. They've changed the way that. First of all, they buried underneath the guard an auditorium underneath the guard, and it's exquisite. They did a very discreete addition, this is all done by the starchitect, Annabel Zeldorf, who is
a really thoughtful, very canny person. They kind of bumped up the space where the music room was and turned that into this vestibule and there's a cafe now. And they also opened up the second floor of the Frick so that you can go and you can go into the bedrooms which were once offices and now our bedrooms again, and so you get more of a run place. It's more fricky than the Frick was before.
You know, I'm going to go to this. I can go to and I did go to the Frick before the renovation.
It opens April seventeenth. It's very close to us. Go runs out. I don't, but I would bet that is less than twenty dollars. But that's a bet.
Cheaper than going to see cleaning up on stage.
Well, it is cheaper, indeed, so highly recommend. And then there's books, but I don't know if you have enough time, don't books? Unfortunately, you know you always have me on at the end. I should take up the entire segment.
Next week, you can, you know, a half hour forty five Army Okay, that's what we want, Army time, with.
Tons and tons of time with.
PTARMI look, the alliteration spills out. The people want it terrific tons of time for it. I'm sure terrible time.
That's what that's. Bloomer Regards column James Tarmy. Check out this and more in Bloomberg Pursuits We're Freaky.
I like that.
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