Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy, plus global business finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio.
Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. Carol is off this week. Bloomberg News cross asset reporter Emily Graffeo joining me for most of our conversations over this past week, and it was a week where companies were still reporting for the most recent quarter, more than
a dozen retailers reporting earnings. Geopolitics also front and center, as President Donald Trump hosted European leaders on Monday to discuss an end to the Russia Ukraine War, and then of course, the Kansas City FEDS annual gathering in Jackson Hole put monetary policy front and center again for the latest head on over to Bloomberg dot com. With the backdrop of monetary policy and how the Fed is planning to react to this economy, this hour, we take a
look into consumer spending in this new world of tariffs. Also, we'll look into President Donald Trump's new brand of economic state craft. Plus the Finance Minister of New Zealand visits our studio to discuss US trade, the country's golden visas, and its economic outlook. All that to come, We begin with the batch of news from retailers this past week.
Home Depot is raising its prices due to tariffs after previously saying it didn't plan to target, named a new CEO in hopes of breaking its sales slump, and Walmart profit missed expectations for the first time in three years. It overshadowed higher sales. It's just a handful of the
companies that reported this past week. For the roundup of all things retail, Bloomberg News Equities reporter Nora Melinda and I Lee, Don Jen Bartasha's Bloomberg Intelligence Senior Retail Staples and packaged food analysts, and Bloomberg News Consumer reporter Jenet Newman.
I think overall that the US consumer is actually doing okay. I think there's there's a note of caution looking forward because a lot of what's been sold in the in the last couple of quarters price price increases has not hit those goods, and so there's concern about when price increases really do start to flow through, what how consumers
will will react. I mean, Walmart did have a profit miss that's very rare, that had to do with some claims, but they actually raised their sales guidance for the year which was already which was already pretty high. So that shows that there they do have some confidence in the consumer in the year in the year ahead.
Hey, Jen, come on in here, because we spoke with the CFO of Kava, Trisia Toliver joined us and she said there's this fluid macroeconomic environment that these are her words. She said, it creates a fog for consumers and during those times they tend to step up off the gas. Would you say that that's the view you have at Bloomberg Intelligence about the consumer, that it's foggy and as a result of that fog, consumers are pulling back a little bit.
Yeah.
I think that's a pretty good insight. You know, when we look at the consumer and you look at sort of the bigger numbers in terms of the economy, the consumer is hanging in there. But the consumer has been conservative for a long time. It really started when we had high food inflation, and as soon as that started to roll back, we had pressure from tariffs, and there's just uncertainty. And when that consumer is uncertain, they still
buy the things that they need to buy. They're still going on vacation, but they're just being a little bit more prudent. And until we have a little bit more clarity, we're not expecting that to really change.
Jen, what is the bifurcation that you're seeing at Bloomberg Intelligence when it comes to consumers those at the higher end of the income spectrum versus what those at the lower end of the income spectrum are doing. And we've talked a lot for years about the K shaped recovery, and it kind of sounds like we're still there. Maybe it's even more pronounced.
It's pretty pronounced. You know, lower income consumers continue to be pressured. When you look at retailers that really have a lot of those customers in their base, and that would be the Walmart's of the world, it would be Dollar Generals of the world. You know, you see that the spending and the average ticket and the traffic into those stores in some instances is a little bit pressured. At the same time, you know, higher income households are
almost kind of going along as normal. They're still seeking value, but they're taking advantage of all the value that's being offered out to the broader economy and they're saving money that way. So it's an interesting thing to track and how those two different parts of the consumer base are really behaving a little bit differently.
And everybody loves the deal, right and Walmart has actually, you know, to what Jen's saying, Walmart has has been hitd from everyone loving a deal and is attracting increasingly more higher income consumers and that's part of what's helped boost its its sales. And that's been a strategy. You know a lot of those consumers went to Walmart during the pandemic to get groceries and then have increasingly kind
of bought more and more. Walmart is stepping up, you know, it's clothing offering and so that's also you know, that's helping, that's helping Walmart.
Are those consumers sticky with Walmart?
Yes, they are, They are sticky, and that's been that's been part of the that's been part of Walmart's success because they go to the grocery, they go in, they get the groceries, and then they see, oh, actually, like Walmart has great genes. Now Walmart has knows that these consumers.
That was an American Eagle reference, wasn't it.
Know.
We're not gonna definitely, we're not gonna get We're not going again talking.
Okay, not moving on, sorry, go ahead, chapter, next chapter. And that that also is you know, Walmart has been seizing on that and Target has been missing out. Target has not been doing well. They obviously just appointed a new seat. He's an insider.
He was an amazing story. It is an amazing story.
It is an amazing story.
But the market's not that impressed though. That's what we're seeing. But I mean, you also come for companies like sday Lauder. We talked about Walmart. Of course, we know that has a lot of those consumers staples opportunities there. But when we look at Esta latter and a lot of competitors like that on the more luxury end, what are the contours of consumer spending in that space?
Right now?
You know, Beauty overall is doing okay again, kind of still slowing down a little bit, but still writing a post pandemic boom when we all got into you know, lots of different lots of different beauty beauty products at one at one time. But Stay Lauder is not doing that well. So that's kind of like even though the consumer right now is okay, a little bit conservative, like like Jen said, but Walmart is doing overall really well. Target is not doing great. That's also because of differences
with the with the two companies and how they're run. Similarly, Loreal, huge beauty company, obviously is actually doing really well. Stay Latter No. Their sales in the most recent fiscal year that just ended, we're down eight percent, and those are kind of internal internal problems that they've been that they've been dealing with.
Jennifer, I want to bring you back into the conversation here. Are we seeing any sense of consumer fatigue right now, especially when we know inflation is super high and if you were to ask the average person, they do think that things are kind of tight right now.
I don't know that we're seeing a lot of fatigue. I think people have sort of adjusted to what is sort of almost a new normal, and that's a little bit post food inflation. They've seen prices come down in different ways, especially on the grocery side and some of the general merchandise, like entry level fashion, and so I think that gives the perception of a little bit of relief.
So I don't think people are really pulling back anymore, but they're not also simultaneously really loosening the purse strings. It seems like we've sort of settled into kind of this new normal, this new normal range. One other note
on Walmart that I think is pretty interesting. When you're talking about retention, you can't not talk about Walmart Plus, which is a huge loyalty program and they're generating a lot of incremental revenue off of it, and people who get in there, they keep renewing, and it just locks in loyalty and locks in spending, and we're seeing that across all income cohorts.
Wait, wait, can you talk a little bit more about that? And I think I think what this is not an ad for American Express, but I will say if you have a certain American Express card, you can get a free membership to the program.
Which one do you want to.
I think it's the Platinum card. I believe, Yeah, I believe that's what it is. Thanks for calling you actually.
Just completed a survey of one thousand Walmart Plus subscribers, and what's really interesting is that eighty three percent of Walmart Plus subscribers also have an Amazon Prime membership, but that doesn't stop them from maximizing their Walmart Plus value. And so I think that it really illustrates how Walmart has very uniquely carved out a service and a recurring
revenue stream that is really pretty remarkable. And that the fact that a lot of the people who are in that program are making digital orders, that's driving their digital revenue for advertising, and it's really adding to just the overall flywheel of Walmart. So there's a lot of really interesting things happening that are really stemming from some of these intelligent decisions they made maybe five years ago to introduce that Walmart Plus program.
That's a fascinating thing to hear because it was always sort of an owl also around when it comes to Amazon Prime. So it's interesting to hear that. Jen Janette, I want to bring you back in here and talk a little bit about Target. You mentioned the CEO change the news we got earlier this week. You said investors didn't love it. A lot of the conversation around Target over the last couple of years, well actually really over the last year or so, has had to do with
backlash against DEI efforts. And to what extent in your view that actually a affected company sales or the image of what that looked like for consumers. What do we know about this?
The company executives at Target have said that the backlash, like black black consumers not shopping at Target, has had an impact on sales. They have not quantified that, and so we don't really know. These kinds of boycotts don't often have a huge effect, but they have said that
it had that it had an effect. And I think also more more importantly, even in some of the analyst notes and you hear investors talking about the staff at Target, we've had some reporting it's nearly sixty percent of staff at Target are people of color, and so the staff itself has been, you know, upset by everything that's been going on with with Target pulling back on DEI, and that is that is something that some people think is kind of behind some of this tumult with with staff.
Job in retail is so difficult, and you need especially great especially now, and you need great staff, and you need people who are going to stick around and they know how the stores work, so that has also so been a problem, whereas you don't hear those same complaints from staff at Walmart, for example. Excuse me. They've also been increasing the salaries that they're paying their their top employees, so that is also an issue at Target. Is the issue with staff.
Well, we love talking retail and the consumer with both of you. Thank you so much for joining us. Jenet Newman, Bloomberg News Consumer Reporter, and Jennifer bartashas Bloomberg Intelligence Consumer Team Leader and senior Retail Staples and Package of Food analysts. Check out Janette's reporting on the Bloomberg Terminal and Jennifer's research on the Bloomberg Ternaminal. Also, of course, at Bloomberg dot com.
You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five eastering. Listen on Applecarplay and Android Atto with the Bloomberg Business app, or watch us live on YouTube.
He didn't campaign on it, it wasn't even broached during
his first administration. He criticized his predecessor for it, but this month President Donald Trump made clear He's willing to use the full force of the US government to directly intervene in corporate matters to achieve his economic and foreign policy goals, so writes Bloomberg Economic Statecraft reporter Joe Doe on the Trump administration taking a more active role in US companies seeking to collect fifteen percent of the money generated from sales of AI chips to China by Nvidia
and AMD, the US government potentially taking a stake in Intel, a golden share in US Steel, and a DoD investment in a rare Earth's firm. This has investors, lawmakers, and trade experts raising concern and in some cases optimism. Joe Doe joined us with more, Yeah.
You have the President of the United States in his entire administration, which by the way, has a number of Wall Street pros in it, saying why don't we use the full force of the United States federal government to take direct involvement in corporations that we deem crucial and central to national security? Tim, I mean, I know you and I have sat here many times and talked about the imp materials deal and where that stands today. I mean the AMD Nvidia fifteen percent cut of Chinese AI
chip sales that goes to the federal government. I mean that's massive. And then now the reporting that we've had from Bloomberg for the past five days that and now confirm by how this administration is looking to take an equity stake in Intel. I mean like to say, this is off the beaten path.
I mean under.
States just how wild this is and how new this is even to Washington policy pros and Wall Street pros who've been doing these jobs for decades.
We'll talk to us about that, Joe. What makes these actions so unprecedented and so unlike different kinds of you know, government intervention in companies that we've seen before in the United States.
I mean, if you think about it, we can look back to the financial crisis where we saw the bailouts of the banks, of AIG of GM. I mean, these were under extraordinary circumstances, right There was real fear in the federal government and in the markets that you could have a complete collapse of the financial system if the US government didn't step in to provide liquidity to the market.
This is different. This is companies that they're not on the verge of bankruptcy that were taking equity stakes in and then we're taking cuts of sales supposedly. I mean, we'll see how they follow through on it. Typically, what we have seen, even with the Trump administration the first summer around was well, let's do things through trade, right, Let's use three oh one terraffs, which are country level tariffs. Let's do two thirty two terraffts, which are sectoral tearfs.
These were written into US law even though they hadn't been used in years or sometimes decades, they were there, and they had been used before. I think this is starting to push the boundaries of those legal questions.
So did the word nationalism or nationalizing companies come up at all in the reporting here? And in the folks you spoke to, You go into some detail about the so called Chinese model, but there's also you know, Argentina comes to mind with nationalization in the past.
Yeah, totally, Tim When you talk to people, and again, this isn't just like a couple of guys on Wall Street or like one guy you know sitting in a law firm. This is this is across the spectrum, and you hear over and over again uncharted territory, Chinese model, and like you said the question of nationalizing companies, like, I had one source say, listen, there are ways the federal government can step in and direct the actions of companies, and you can do that without taking a stake in
the company. You start doing these things, and it does spread worry, right, It spreads worry among investors who say, well, wait a minute, if you're going to choose national champions, that you're just going to wake up one morning and say we're taking a stake in this because we think it's critical to US national security. That changes fundamentals of making bets on companies, right. I mean, one person mentioned
to me, you have high valuations already. What happens if you have the federal government starting to get involved with some of these these high valuation companies. I mean, those are the kind of conversations I was having that really became the idea behind America Inc. And seeing for the first time President of the United States taking direct action in corporate America.
Yeah, what have investors said so far? I mean I'm thinking specifically about Intel on like whether this is good for the company or not.
I think when you look at all this, we are in what a number of these people told me, which is uncharted territory. Is it good? Well, some people would say, listen to compete with China, because let's be clear, one of the things that the White House said to us in our story was, you know, semiconductors rare or steel. These are national security issues long have been for the President of the United States. Those often also happen to be issues that are directly tied to China, something that
the administration sees itself in direct competition with. Steel has been an oversupply for a long time out of China. That's one of the reasons the President moved in his first term to put up trade barriers on steel. Now, this time around, the trade war between the United States and China centers around chips and permanent magnets, and the permanent magnet story is already told. MP Materials gets a four hundred million dollars preferred equity stake from the DoD.
That's what you really have to start looking at, which is like, what else does the President of the United States consider central to this national security question? In particular, maybe with China.
That's exactly where I was going to go. So based on your reporting, the folks you spoke to what's next here? We have US Steel, we have MP materials, right, we have Intel, we have news around AMD and Nvidia. What do investors need to be prepared for the next shoot a drop?
I don't know, Tim, I don't know.
Would it be like a do autos going and get on your radar at all?
It's hard to tell.
Listen.
Bloomberg has reported, particularly around the MP Materials deal. We've reported that IMP Materials looked like something was being lined up by the DoD and it wouldn't just be the only one.
Some of the.
Reporting we've had is that the Intel situation may not just be a one off, right, Like the things I have heard are this administration is keen on taking home run swings and not just on one thing, right. So I think at this point the market is looking into the question that you're asking, Tim, like what is next? I think it's hard to know what's next. I mean, so much of this, it's important to say, is so fluid.
The conversations are just ongoing, and what they might be talking about today might completely change in the next twenty four hours.
Joe Doe, we know whatever comes you will be on it. It's one of the most read stories on the Blueloomberg terminal. President Trump targets America Inc. With a new brand of US statecraft. Joe Doe is Economic Statecraft Reporter.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern on Applecarplay and 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.
And we stick with Joe Doe and the race for Greenland's riches. We've been hearing a lot about rareth minerals, you know, the critical materials used in everything from missile defense systems to smartphones, and now they're at the heart of renewed US interest in Greenland, where some of the world's richest untapped deposits can be found. The Trump administration has made no secret of its geopolitical curiosity about the island, and the minerals may be a big part of why.
To break it all down. Bloomberg Cross Asset reporter Isabel Lee and I were joined by Joe Doe, Bloomberg News Economic Statecraft reporter, who visited the icy island.
This was really the thesis I wanted to dig into, right. I mean, we spent the first three months of the Trump, the Trump two point zero administration, focusing on let's buy Greenland again, let's take it over. We're not going to rule out military force. And you know, I'd been talking to people kind of in the background who said, you know, what's really being discussed here is the national security and
the potential for investments within the island. So I met up with Drew Horn, who was a former Trump administration official. He worked in the DoD Defense Department and the Defense excuse me, the DOE, the Energy Department. He was on Trump's team in twenty nineteen that was tasked with figuring out a way to own Greenland.
I guess.
And so where we came down on this was we took this trip with Drew to kind of see this behind the scenes of like trying to invest in Greenland.
So take us there, because you went to Greenland. Well, first you went to Denmark, I believe, and then you yeah.
I went to Copenhagen for a day.
Yeah, well Greenland is I guess. I scouldly Greenland is part of Denmark. But first you went to Denmark proper, that's right, Hagen to then fly to Greenland. What was it like? How'd you get there? Was it all snow? Just break it down for us partly? Yeah, I mean it was really difficult. People had warned me before I went to Greenland, hey, like, actually, my neighbor is a flight attendant and said to me, hey, some of my flight attendant friends have been stuck for like three.
Days in Greenland. And this was literally a week before I went there, and I said, oh my gosh, okay, and other people had warned me, listen, whatever days you think you're flying in and out of Greenland, just like, assume it's going to be a day or two difference. And that turned out to be the case. I mean, I flew out of Newark on a Tuesday. I got into Copenhagen the next morning, no problem there, and then
the day after that. So this is third I took a flight four and a half hour flight direct to Nook. I didn't realize at the time that something like twenty percent of the direct flights from Copenhagen to Nook there's only one per day, had been canceled or turned around or something to that effect. We got in, I thought, no problem. A day later, we fly out to Southern Greenland, which is where this actual mine was located.
We flew on a plane, a helicopter.
We flew on a plane to get down there. It was a prop plane, which was kind of cool. We landed and within moments of landing, it's like the densest fog I've ever seen in my life just started to settle in. And we were supposed to be up the next day in a helicopter to get to this mine. Because getting to the mine from this kind of base camp that we had in Southern Greenland, it was either like a two and a half hour three hour boat ride or a helicopter ride that takes you fifteen minutes.
There's no driving, there's there's no other options. Those are the options. The next day we woke up and it was snowing and it was a fog. I mean, I feel like the fog ceiling was like twenty feet above us. I mean it was straight out of like Harry Potter, you know, when he's like at the end of the whole movie and he's just in this densely fogged area and none of it makes sense. It felt that way does it?
And you know there's a big take podcast that you did with David Gura. It'z great. You have some sound from the French the helicopter pilot. Yeah, Pierre explaining to you, you know, about the percentages that you were going to actually get off the ground. I'm not going to give the whole thing away, but it made me think when I was listening to that and reading your story, the actual extraction and processing of this stuff, it's got to be pretty challenging in environments such as this.
Yeah.
Part of that story was just pointing out how hard it was to get to the mine itself. So you add that on top of it is in a type of rock that has still not been processed at commercial scale. It is in a place that currently has no port. There's no there's no equipment there right Like, it's not like there were roads and early stage equipment. There's not even like a small campsite of people on the site. It's just a mound of dirt on a mountain. So you have to imagine that from that point on, you
need to somehow get all the equipment in. You somehow need to basically build out like a small camp to begin digging into the ground and this mine tanbreeze. The deposit is well known as being a serious deposit of critical minerals, specifically rare earth. And you know, one of the things we put out in the story is that Chinese officials have been to the property before asking about
the potential of buying it. We've also heard that Russian officials had been there before, so it's known, but to get it to work, it is still unclear actually how you will get it to work.
One of the tidbits that I learned from your story, among the many, is that rare earths, in spite of their name, tend to be abundant as other industrial components. But I guess I mean extracting them is a different story altogether.
Yeah.
So we know that Trump floated by in Greenland in twenty nineteen, a move back then which was widely mocked. But given the island's rare earth reserve, strategic location shipping potential, was Trump actually ahead of his time, ahead of the curve?
I don't know for sure, Like I think maybe the way I kind of phrase it is, you know, it seems like the president gets information in front of him, and the way he kind of communicates it maybe is cut up and spliced as to what the reality is. I think people like Drew Horn and others who have been around Greenland now for years finally felt like the attention by the President of United States on this on the rare earth on the island give it a business opportunity.
Because the sense from Drew Horn, and he said this to me on the trip, was like, if investors feel like the full faith and credit of the United States federal government is behind a project, they will suddenly give it a chance and that will be the thing to see here. Like one of the things we pointed out was so we found Drew Horn finally made it to Tanbreeze and he got to see it, and later that week he got out of Greenland and went down to mar A Lago to talk to Trump Aids about it.
And then within weeks after that, the Export Import Bank in the United States gave a letter of interest of a fifteen year loan for the mind. Now, the key thing here is that's a letter of interest. It's non binding, it technically means nothing, but it does mean that it's now on the radar of the US federal government. So is that enough to convince investors like this is a
good bet. I don't know, but it does say to investors, okay, so it's probably not a complete no show, Like maybe we should at least sniff around it because there's a potential that Trump just says, let's throw some money at it. But I think that's that's where we get into this territory of like, whoa, what are we really doing here?
I've covered mining for ten years at Bloomberg, and one of the things you run into all the time are these junior exploration companies or these junior miners, and you don't you don't write about them because they're.
Nothing, because they haven't done anything.
They haven't done anything, and typically kind of the rule of thumb is like they aren't really anything until a major miner comes up and buys them, you know, fifty percent of them or the entirety of them, and then it's like, Okay, this is a real deposit. It's going to get developed by serious people with investors and you know, the companies with good bonds. But this, this tanbreeze still does fall within that junior miner, junior exploration company.
So then what challenges technical financial or regulatory still stand in the way, all of them.
Of yeah, I mean all of them, all of them for sure. One of the things pointed out to me in Greenland was like, hey, the thing about Greenlanders is they're open for business. They love that idea.
So locals were open.
Well, open, but so long as it doesn't hurt the environment. Right, So we don't want our fjords polluted. We don't want very nice green mountain side with a big hole in it suddenly. Right, if you're able to do it responsibly and sustainably, the understanding was that would be okay, But then it's it's it's still not clear that that would necessarily happen with tanbreeze.
Can that be done? Joe?
Can?
Can mining happen? Can mining of rares happen in a sustainable way that doesn't scar the earth, that doesn't destroy or affect these fjords?
The Tanbres folks would say yes, they would say, modern mining, technical capabilities, we're able to figure it out. We're able to make this sustainable and clean. But again, like anything else, it is you enter a period of show me. You know, investors need to see that you can actually do it.
Does the US buy Greenland. Does it need to buy Greenland?
No? No, I mean, let's be honest, it does not need to buy Greenland. It's not going to buy Greenland. Greenland is still a part of Denmark. One of the most interesting parts of the story for me was I sat in the home of a local politician who said, listen, for me, it's not about being owned by the United States. Like, right now we're owned by Denmark. We don't want to be owned by Denmark. We don't want to be owned by anybody. We want to be ourselves. We want to
be our own country. We are Inuit, we are Greenlandic. There's a real history there. So I think that's another important part is it's not a oh, the US would be better. It's like, no, we don't want to be owned by anybody. And I think that bit has often gotten missed in the discussion over Greenland.
He's the economic Statecraft reporter for Bloomberg News. Check out his Big Take It's on the Bloomberg Terminal and at bloomberg dot com. Also check out the Big Take podcast of him along with David Gura of Bloomberg News.
You're listening to the Bloomberg Business Week Daily podcast. Catch US live weekday afternoons from two to five Easter and listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch US live on YouTube.
Earlier this month, the Trump administration increased its tariffs on imports from New Zealand from ten percent to fifteen percent, a move that has rattled New Zealand farmers, manufacturers, and trade officials. It's a move that threatens billions and economic ties and raises tough questions about how New Zealand navigates a trade relationship with both the US and China. On top of that, the Reserve Bank of New Zealand cut
its policy rate by twenty five basis point. It's to a three year low of three percent, flagging ostalled economy and warnings of domestic global headwinds for more. Carol and I recently caught up with the Finance Minister of New Zealand, Nicola willis Well.
I think that there's considerable uncertainty in weld affairs today. Where there were once things that were given and were very predictable, we are now seeing more volatility and policy decision making, which has implications for investors and for sovereigns in terms of the way that we go about things. For our part in New Zealand, we tend to want to be a beacon of stability amidst all of that, to say, you know what, We're going to continue to
be rules based. We have low, stable inflation, we have declining interest rates. We're going for growth. We trade with many countries around the world and wish to continue to pursue freer trading relationships. We have prospects for growth, and so we aim to be stable, predictable. We have secure institutions, and we think those things will be at a premium in the coming years as there is more volatility.
Mister Willis, whenever we have officials from other countries visiting the US, which is a big part of your job, we always ask the question about a particular trip, why are you in New York right now? Why are you visiting us right now?
We're here because we value very much both our economic and security relationship with the United States, and I'm pursuing more economic growth for New Zealand and New Zealanders, and we believe it's in the interests of both of our countries to forge stronger trade and investment ties in pursuit of that.
So how does that work in an America first environment, In an environment from Washington, d C. Where the communication has been very strongly This is an administration that is looking at the priorities of the US, whether or not it affects other countries in a negative way.
Well, quite simply, our proposition is it's in the United States interests to have a strong and growing relationship with New Zealand. We're part of the Five Eyes security partnership with Canada, the United Kingdom, and Australia, and we continue to believe that's very important for the United States. We
also have a very complementary trade relationship. We export primary products tech services which Americans value, and equally, we import significant amounts from the United States and will continue to do so. We, like many countries, are increasing our investment and defense, and it's likely that some of the kit that we will be purchasing in future will be manufactured in the United States. Similarly, when our national Airline replaces its fleet, it's likely that some of those planes will
be produced in America. We have very strong and longstanding people to people ties. Our two countries have gone along well for many, many decades, and we think it is in the interests of both countries that New Zealand continue to be a strong relationship that the United States could look to and rely on.
So is this White House so impacting the relationship, the strong relationship that New Zealand has had with the United States in any way we.
Can tinue to view the United States as our friends. Now. Of course, we would prefer not to be facing additional tariffs. Find me a country that says, yeah, we really like additional tariffs.
And we're not in that.
We're not in that situation, and we have a history of pursuing freer trading agreements. We have very very low trade barriers for United States and ports, and we feel we've treated American exporters very well, so we would pre prefer to be on a lower tariff rate. We've ended up at fifteen percent as a base rate, which reflects the fact we have a small trade surplus with the United States. We're talking very marginal New Zealand dollars five
hundred million, so it isn't big. We don't really think.
Disappointing that it wasn't maybe the ten percent that dooks for thinking it.
We would have preferred that we understand the rule that's been applied. But it's hard to conceive that New Zealand, a country of five million people, is any kind of threat to the manufacturing or industrial base of America.
Does it lead though? And I guess we're trying to figure out. We talk a lot about the geopolitical world war being changing around. We talked about if the present was just asked about maybe closer ties between China and Latin America. China already has a presence, we know in Latin America, but maybe they are increased as a result of what's going on. Are you forging different relationships because of some of the strained relationships out of the United States or strained relations out of the US.
I wouldn't characterize it that way. New Zealand has always looked to forge relationships around the world and to reinforce the rules based system wherever we can, and to work through multilateral institutions because we're small and our voice will
never be the loudest like the United States. We have a strong and important economic relationship with China that we've been able to maintain while also taking very different points of view on many matters, and we've been able to balance those two things.
So not strengthening them with China because of maybe what's going.
On, No, I would not characterize it that way, but continuing to lean into our relationships where we have inst So we are members, for example, of the CPTPP trade relationship, and we have welcomed the EU's interest in becoming a dialogue partner and looking to reinforce that trade arrangement. We've recently signed free trade agreements with the United Kingdom, with the European Union. They're important with the GCC, the UAE,
and we're pursuing a trade relationship with India. We think it's very important as a small exporting country that we have options and who we trade with and wherever possible, try and open more doors. We've got a grand history of doing that. We were one of the first countries in the world to drop subsidies to ensure that we were genuinely open to the world. We won't get rich selling to ourselves, we're too small for that, so we do well when the world welcomes our goods and services.
Mister Willis, are you meeting with any US officials on this trip?
Not on this trip thirty six hours only. I'm afraid, but I look forward to returning to Washington later this year for some the annual meetings, and at that point I would hope to meet with some people from the administration.
At that point, do you will part of your job be to try to reduce the fifteen percent tariff on goods from New Zealand.
Well, look, we're realistic about the fact that the Trump administration have set a clear parameter that countries that have surpluses are unlikely to get reductions in their tariffs. But we will continue to advance our case, which is that we have a very complementary trade relationship with the United States, built on a security partnership in a very long history, and we will press the case for our exporters that we would we think be fairly facing a lower rate.
And we will continue to share that message with our friends in the United States to make sure that if there is reconsideration of the current tariff regime in future, that we're front of the line for reconsideration. We think we should be. We're keyws, we play fair, we play by the rules. We sell you Sauvignon blanc tourism experiences and lean red meat that Americans love and we would like you to be getting it at fair prices into
the future. And a lower tariff right supports that we expect to continue buying huge amounts of American goods into the future. So there's nothing to fear from giving New Zealand a lower tariff right in the future.
You're also great sailors. I'm just going to point it out we as a fellow sailor myself, we're talking with you Alot Willis, she's Minister of Finance of New Zealand here in our studio at Bloomberg Headquarters in New York City. What are you go doing to encourage foreign direct investment? Yeah, well, we're very big on this.
So we've set up a new entity, Invested New Zealand to connect international investors with New Zealand. We're reforming our legislation to make it easier for foreign investors to make investments, and administratively, we've sped up the process by which they can do that. Particular, we've introduced golden visas the Active Investor Plus, which means that investors can get residency rights in exchange for making investments either actively or passively. In New Zealand assets.
Is it working.
It is working. We've been delighted by the response, a really high degree of interest. Hundreds of people have applied for those visas within the first few months, pledging over a billion dollars in New Zealand funds. And I think that reflects two things. One, New Zealand is a safe, secure place in a world that increasingly is less so, and people like the idea of having that residency in New Zealand. But second, they can see that many of
our investment opportunities are currently undercapitalized. Investing in New Zealand is a good bet.
Can they buy real estate in New Zealand though if we get residency.
Not currently that is excluded. Our government, which is comprised of three parties, has been in discussion about loosening those regulations so that those who get an active investor visa may in future be able to purchase a proper.
How far is the future? What are we talking about for a timeline here?
Those talks have been underway and you would expect that a decision would be made by our cabinet in the coming.
Weeks, Okay, in the coming weeks, So Carol, get ready.
Your little slice of paradise.
You know, we're surrounded by a big, fat option. I know we have huge amounts of land. It's beautiful. I think the world should be looking at New Zealand. We have great prospects.
Will the US tariffs impact growth in your nation?
Well, as I said, we'd always prefer not to be facing those tariffs, but as a proportion of our overall trade, it is actually quite small. The more significant impact for US is the same as it is for many other countries, which is a lower rate of global growth resulting from tariffs and retaliatory too.
You're worried about a global recession, then.
Not a recession, but just a lower rate of potential growth would have otherwise been the case, particularly out of our trading partners. That then effects prices for our goods and demand for our goods.
It's just enough to feel like a recession.
Well, it can slow enough to feel like we're not meeting the potential that would have otherwise been realized. And that's been reflected in our forecast for the New Zealand economy, and which we did peer down our growth expectations for the future based on what was developing with tariffs. You know, obviously there's a lot of water to go into the bridge to see how all of this does play out globally, how countries are affected, and what it means for New
Zealand's part. We continue to forecast strong growth, low inflation. That will remain the case, but a teriff free world is one in which we grow faster.
Do you think that might come back if there's a different president in the.
Way it is.
I think countries will always continue to pursue their own interests as they should, and that's why I will keep singing the song for freer trade, because that is in New Zealand's interests.
So glad to get some time with you. Thank you so much. Tom and I both enjoyed it. Nicola well as she's Minister of Finance for New Zealand right here in our studio.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm e's during on Applecarplay and Android Otto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York season Just Say Alexa play Bloomberg eleven thirty.
Plenty ahead in our second hour of the weekend edition of Bloomberg BusinessWeek. From Subways to Superchargers, more insights from the c suite, including the CFO of New York's Metropolitan Transportation Authority on addressing fair evasion, keeping the city's public transit budgets on track, and the agency's nearly two billion dollar investment in a subway line. Plus the founder and CEO of spark Charge wants to bring mobile ev charging
everywhere you go. We discussed the company's plans to accelerate ev adoption all across North America. That's coming up later this hour, but first. The digital payments company Block formerly known as Square, earlier this month raised its full year profit guidance. This after second quarter earnings came in well ahead of Wall Street expectations. It was fueled by strength and its cash app lending business and resilient payment volumes. The company now expects to generate ten point one seven
billion dollars in gross profit this year. That's up from a prior forecast of nine point nine to six billion. We've got with us am Rita, USA CFO and COLO of Block. She joins us from Palo Alto, California, actually from Hillsborough California. Excuse me, I'm Rerida is going to be featured in an upcoming edition of the Bloomberg CFO Briefing newsletter. You can sign up for that at Bloomberg dot com slash CFO Briefing. Also with us is a
Nina Trentman, Bloomberg News Senior editor. She writes the Bloomberg CFO Briefing newsletter. She joins us here in the Bloomberg Interactive Brokers Studio. Welcome, Welcome, everybody, and Rita, I want to start with you. I almost said Square at Block you've got a great view of what the consumer's doing because of transactions, because of what's happening with.
The Cash App.
How would you describe the US consumer right now?
Yeah?
Well, first of all, thank you so much for having me. It's great to be here. You know, look, we have real time data across our two at scale ecosystems, Square that serves sellers small businesses, and across that we see hundreds of millions of buyer cards consumer cards, and then Cash App, which serves individuals fifty seven million monthly active accounts and Cash App across the United States. So between these two businesses we get to see a lot in
terms of consumer spending and consumer health patterns. Overall, what we've seen is resilience. From a square perspective, we see strong retention. This is the growth or seam store growth for a small business on our platform remaining steady and strong. And we see strong new customer acquisition, which we think is a sign of strong small business as well as
the growth of our platform. And then from a cash app perspective, we see continued growth in spending and in earned wages on our platform, which again is an indication of the engagement of our platform, our ability to command share of wallet, as well as the resilience of a consumer.
Man, Rita, thanks for joining us.
Just following up there in terms of your business, you also have a buy now, pay later component. I'm wondering how delinquency rates have evolved in that business and also how you're thinking about underwriting in this somewhat uncertain crow environment.
Well, we think the product attributes of our three lending products enable us to be pretty nimble and be able to pivot quickly. To the extent we do see a turn in repayment rates, which, as you heard on our call, we haven't yet heard. We have three primary lending products.
Square loans that serve small businesses, as you note by now pay later, which serves customers at a point of checkout when they're buying something and they can pay in for that transaction, and then cash that borrow, which enables you to get a line of credit that often bridges people. We know so many millions are living to effect a paycheck and this helps smooth their cash flows. And across each of these three lending products, we've seen strong and
healthy repayment behavior. Now we're ready to the extent that that changes. We have the ability to update our underwriting machine learning based underwriting models in real time, but we also want to be there to support customers as their needs arise, and we think that our products can do that effectively.
Just following up in terms of signals that you're looking for specifically on performance of the business and whether any of the micro uncertainty is feeding through. What are the metrics that you're specifically looking for.
Sure, So from a cash app perspective, we look at things like inflows per active that's the amount of money that customers bring into cash app, and that held a growth rate on inflows proactive in the second quarter for US with cash up was at eight percent, showing again strong engagement with our platform and resilience of the consumer. We also look at things like commerce volumes. Our commerce volumes over the last twelve months within cash app grew
sixteen percent year over that year over year. That's the amount of money that people are using our platform to conduct commerce, whether it's by now, pay later, cash up card, or cash up pay. We also look from a square perspective at things like growth on our discretionary verticals, so our food and beverage GPV, which you can think of as discretionary. We serve a lot of quick service restaurants. Full service restaurants grew fifteen percent your rear in the
second quarter. Retail GPV also oftentimes discretionary vertical for uscrew ten percent your reear. Again, these are healthy rates of growth, but we're very watchful. We look at this data on a daily basis, and we want to be there both to protect our business but also more importantly serve our customers to the extent that you know, in this dynamic environment, anything were to change.
I want to pivot a little bit to crypto because block holds roughly eighty six hundred bitcoins worth almost a billion dollars, and crypto treasury companies have been getting a lot of attention. You guys own bitcoin. Are there any plans to add Ether to the company. What's the journey been like on that crypto planet? Yeah, Ether plans at all.
No plans to add anything beyond Bitcoin from a crypto currency perspective to our balance sheet. We believe that if the Internet is to have a currency, Bitcoin is the most likely contender. It's the longest lived, it's resilient, it's an open developer ecosystem. All the rules are understood, and it is effectively an open source platform, an open protocol
for money. We think ultimately, if the Internet does have a currency, and that is Bitcoin, that enables us as a company to move at the speed of the Internet as we think about our business more globally. So a world in which Bitcoin succeeds is a world in which companies like ours can move more efficiently and more quickly to serve our customers. That's the sort of purpose the strategic alignment that we have with bitcoin. All sorts of different ways that we as a company are learning about
how to operate in a bitcoin world. One of those is by holding it on our own balance sheet as a corporate to have bitcoin in our treasuries, and we've been doing this for five plus years now, and it's something where we get to learn the insurance aspects, the buy sell aspects, the custody aspects, the protection around that, and how we think about the accounting and the tax
elements for bitcoin. So we're learning a lot as a company as we do that, just as an individual would or another institution might, and I think it's something that a lot of other corporates will begin to consider more and more.
We're speaking with Amrita, who'sha CFO and COO of Block and Rita on the bitcoin question, the buying and selling. Do you have plans to buy more bitcoin to add to the treasury.
We have a program in place where we dollar cost to average our bitcoin purchases. We have a gross profit that we generate from bitcoin and our customer oriented products, so we sell bitcoin through cash app. We've sold over fifty eight billion dollars worth of bitcoin to our cash app customers. We also have a product that we're launching in the back half of this year for bitcoin minors around the infrastructure, the hardware, and the integrated software for that,
and we have a self custody product, bitkey. We have said that ten percent of all of the gross profit that we generate across our bitcoin products, we will invest back in the bitcoin. And so we're in the market every single day buying that ten percent worth of our gross profit back into bitcoin.
Mam Rita, we are running out of time, just very quickly. Just wandering from a CFO perspective, you said, if you've held bitcoin on your balance sheet for five years, you've seen the fluctuations. That's basically what I'm hearing from CFOs as to why they don't want to hold bitcoin. How is the company navigating the ups and downs in the price, even though most recently we've seen more increase than decrease.
You know, there's been fluctuations in a number of different assets, different asset classes. You have to be transparent with your investors as to what's driving various elements. The updated accounting standards for bitcoin treat it like any other asset that you may own, where you write it up at the end of the quarter. If the value goes up and you write it down at the end of a quarter, if the value goes down. The prior standards which to get into some of the accounting wonkiness were as an
intangible asset. We're very very strict and you can only ever write down the value of bitcoin. So now with these updated accounting standards that look like any other asset you may hold on your balance sheet, we think that that has the opportunity to create clarity for investors and for companies, and to bring more people into the bitcoin ecosystem.
I'm Rita, who's a CFO and COO of Block. Please do come back and join us soon on a Bloomberg Business Weekdaily. Really appreciate your time. Once again. I'm Rita, who's just CFO and COO of Block joining us from Hillsboro, California. Also with us Nina Trettman, Bloomberg News Senior editor. She writes the Bloomberg CFO Briefing newsletter. Sign up for it at Bloomberg dot com slash CFO Dash Briefing.
You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekly afternoons from two to five eas during Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
The MTA runs New York City subways, buses, and commuter trains that six million people rely on each weekday, and on Monday, board members approved close to a two billion dollar contract to expand the Second Avenue subway line into East Harlem. Jpitzel is the CFO of the MTA. She's charged with quite the task, which I think is fair to say many would find unenviable, charting a sustainable path through one of the agency's most financially trying periods in
its six decade history. She joins us here in the Bloomberg Business Week studio. Jay, Welcome, how are you.
I'm good, how are you? Tim? Thank you for having me.
Yeah, thanks so much for joining us. I want to start with the numbers and just ridership.
Here.
Weekday subway ridership is still twenty five percent below pre COVID levels. In your modeling, does that ever come back to where it was?
I you know, we have a financial plan that's a five year period, and originally we were projecting that we would see our subway ridership up to ninety percent, but a couple of years ago we revised that because we weren't seeing that. But We're hopeful we see an eighty percent by twenty twenty nine ridership recovery for subways, But
on the railroads, we're seeing that recovery even higher. Today we see eighty five percent ridership recovery on our railroads, which is amazing, something that we thought was going to be slower our railroad customers than our subway customers originally coming out of pre pandemic.
So is there a way to tap into that growth financially, perhaps with higher prices for those commuters rather than here in the city for subway and bus riders.
So you know, what we have is very small, predictable far increases that help balance the financial plan, and so we don't want to burden one rider or over another. It's really about distance space and commuters, and so we keep that equitable. You know that we do a two percent fair increase every other you know, every other year, and that keeps our financial plan and balance.
How do you plan to get that number, I think you said eighty percent ridership? How do you bring people back into the subways?
We bring writers back by providing reliable on time performance right, our service matters to customers and delivering the service that we promise and schedule is something that we strive for, but also safety. Our customers need to feel safe safe,
and our customers feel that right. We've had the lowest safety you know numbers or crime numbers in July, and so our customers are telling us that by taking the subway, but also our customer surveys right tell us that customers are satisfied with the service that we're providing.
The MTA phases that combined one point one billion dollar deficit over three years starting in twenty twenty seven, it already owes close to fifty billion dollars that needs to spend sixty eight billion dollars more for vital improvements. There's some federal aid that's up in the air. The Trump administration is trying to roll back congestion pricing. What's the backup plan if the aid evaporates and the President is successful in rolling back congestion pricing.
You know, Tim, I would be remiss if I didn't mention that. Back in twenty twenty three, we were the first transit agency to solve our fiscal cliff. Thanks to Governor Holcal, chairliber and the legislature, we were able to come out of a deficit unlike any other transit agency today. You've heard SEPTA's facing deep cuts Chicago, but we were the first to say we need state, federal and local aid, and we got our state federal funding for us. We
also as the MTA, contributing to our solving our deficit. Right, the MTA contributes five hundred million to operating efficiencies, and those deficits that we have in twenty seven and twenty eight and twenty nine are very small compared to our operating budget, and we are committed to doing our part in saving money to help ensure that we can balance our budget in the out years.
We were talking a little bit about the base fares of subways increasing regularly. I'm wondering if there is there a set area within the MTA that that revenue goes toward. Because the base fare for a subway in New York City it's expected to increase to three dollars in January.
Correct, So our fares help our operating budget, right, So they seventy percent of MTA's cost our labor and fringe, and so that pays for seventy thousand employees, and then the small fraction is for the non labor contract, so every fair contributes to operating cost.
On our side, let's talk about fares and fair evasion. Usually when we talk fair evasion, I think of people jumping over subway turnstiles, and I know there's been some mitigation efforts in place. But I took the bus to
LaGuardia on Thursday. It was a great experien So when I got on the SBS and Queens, I got on it was like an articulated bus, so you know, it was a long when I got off and on in the back and out of like more than half a dozen people, I think I was the only one who paid, And I was thinking to myself, I didn't know it was optional to pay to get on the bus. What are the numbers there?
So it's not optional right to pay the fair. We are encouraging every customer to pay our pay their fair share.
To but there's no enforcement on the bus.
So there's a couple of things that we're doing for fair evasion. And our chair has been tackling this first when he became chair. So on the subways you've heard of us talking about we're doing fins, sleeves, gate guards, enforcing the exit gate, which is the fair you know, evasion highway. And so we've made great strides on the subways. We've reduced fair evasion in over a year by thirty percent.
We've dropped that rate from a high of fourteen percent to nine point eight percent, So we know those efforts are working. On the buses, it's a little bit more difficult, but we're also working there. We've decreased fair invasion on our buses as well in the last year from fifty percent to forty four percent because all the tactics the
President of New York City Transit is employeing. We have eagle teams that are looking, you know, on different bus routes to make sure that they are enforcing the pay your fare right. Our bus operators do their due diligence, but really our eagle teams are enforcement out there riding different routes and making sure customers fair pay their fare or they're getting a summons or they're getting off the bus. And that's how we're working.
How does that work?
Because I heard of a friend who was on a bus and someone had come around and like scanned their phone to see if they had paid the fare. Is that how it works explain to us.
So right now what we are doing is if you're boarding the bus, you have to pay, because there's two different ways you can pay right today is the Metro card and the OMNI, And when we go to full OMNI next year, there's going to be proof of payment. And so what you can do is European style proof of payment for customers is you can tap their phones or credit cards the method of payment to see if they paid their fare and if they didn't pay their fare.
That's something that we will work with on a summons or you know, you need to pay your fare for our customer, and so that's something that's coming. We're really excited about that for OMNI and proof of payment, but right now there's two different methods and so we're working on different ways to combat fair evasion.
I want to talk a little bit about proposals from mayoral candidates or in Mumdani. For example, it's proposal to make all New York City buses free. What do you think of that and does it create a sort of a two tiered mass transit system where people who ride buses don't pay for it, but then people who ride the subway do and then kind of offset like people not necessarily taking the right mode of transit for their destination.
We've heard the mariial candidates proposal for a fair free buses. What I'd like to emphasize again is fairbox revie. He is important to the operations of the MTA. It's twenty six percent of our revenue, and buses is about a billion dollars in the out years of revenue for the MTA bus for the MTA, excuse me, and that's important to us, and so we want to make sure revenues equal service. And that is something that's hypothetical right now, but we rely on fairbox revenue.
So you said a billion dollars in revenue is what it brings in. Momdanni estimates that's about seven hundred and fifty million dollars annually to make buses free. Is that an accurate assessment on his part?
I think there's pieces that he's he's looking at just the New York City Transit bus fair We have MTA bus that we also a run that the city contributes to, and that is also fairbox revenue for buses.
So what would take away that revenue from the MTA due to the authorities finances or would it just be I mean, look again, it's a proposal, you said, it's something that you know is not a plan yet. But to be fair, he is by far the favored candidate, and there are a lot of questions about what power he has to actually follow through with a campaign promise such as this. But this is certainly a central part of his campaign, so you got to be looking at it closely.
We are looking at it. But one thing that I would like to emphasize right right now in New York City, fares are affordable. We make transit and buses the most affordable at two dollars and ninety cents, and it's affordable with fairfares, reduce fair for our customers. But you know, it is something that we will look into as the mayoral candidate has proposed.
What about mitigating climate issues that affect particularly the subway stations. You go online, you see videos of flooding in station, trying to.
Get home and on a raading day.
Right and water in the subway station. Do you guys have, at least as part of the upcoming capital plan, a plan in place to update the infrastructure.
A couple of points on that right. A couple of the issues that arise in the subway systems are not the MTA's fault. New York City contributes to the flooding issues that we face in the subways, whether it's through dep manholes, the sewage. So that is one aspect of the flooding that you see on the New York City Transit. But our historic capital plan that sixty eight point four billion dollars does have climate resiliency of hardening the system in certain stations in proposed And therefore.
Let's talk a little bit about congestion pricing. Not as hot of a topic as it was a few months ago, it seems like it's died down a little bit in your view. Is it working?
Congestion pricing is working. It is reducing traffic by eleven percent. What does that mean? Seventy thousand cars are off the road every single day. What else is it doing. It's moving our buses faster, it's moving people faster. We've seen a change in ridership, but also we've seen safety increases. There's a fourteen percent decline in pedestrian crashes. And on top of it all, it is bringing in the revenue that we had projected originally.
It's being watched very closely, not just by proponents and opponents of it, but also by other cities that might want to put this into practice. Have you or has the MTA heard from other cities about congestion pricing, about the model and about questions about implementing it in their own cities.
The MTA has heard from other cities and transit properties and engaged with them to have conversations about the process that New York implemented for the successful congestion pricing program that we're having. So they're looking at it at us as a model.
We have to ask about the second Second Avenue subway expansion as well. Just walk us through some of the plans for and the timeline here, because this has been something that's been in the work, something that any New Yorker who's lived in New York for the.
Last ford how many years, forty.
Decades, fifty yards fifty I think we've talked about that at our special board meeting. You know, the contract that our board just approved is almost one point nine billion dollar contract to start boring, right, what does that mean? It's starting the tunneling for the three stations that are vital to Second Avenue Subway Phase two, and we are committed to expanding Second Avenue Phase two here at the MTA, and we think it's going to be a great service
to our customers. It's going to serve about one hundred thousand customers in addition to the two hundred thousand customers that's Second Avenue Subway Phase one serves today.
Do you have a timeline or an expected timeline.
I think the.
Twenty thirty two was the service date that we have said publicly.
It's a very like I said at the beginning, it's an enviable task that you have ahead of you. Some people would argue, I would imagine that you spend quite a bit of time studying other transit systems around the world, what's worked and what hasn't worked. If you could wave a magic wand here in New York City to overcome some of the barriers that the MTA has experien whether they're financial barriers, whether they're CAPEX barriers, what would those
be like? What is the biggest obstacle to making the service even better here?
So I think tim one thing that I would say is MTAs a leader and being the largest agency in North America other agencies look to US. I think I said this before we led with the fiscal cliff, we lead with our capital program as well. We have started to do things differently since Janel Lieber took over for cn D and now Jamie Torres Springer. We do design, build,
We do faster, cheaper and better. But we're employing definitely different ways of doing capital programs as well as operating for US to be better.
I want to go back to congestion pricing and some financial questions around that, specifically about selling debt off of revenues. Do you have plans to sell debt off of revenues from congestion pricing?
As you know, the congestion revenue is dedicated to the twenty to twenty four capital program. It is expected to generate fifteen billion for that program, and once we see a stable market in the revenues coming in, we do plan to issue debt. We've talked about it. That's not sometime until twenty twenty six for US. Once we see
a comfortable stream of revenue. We've projected five hundred million for the next three years, and we want to make sure that we see that revenue and the markets are comfortable issuing that debt for us.
You've talked about fair increases on MTA services, what about increases in congestion pricing? And what is the timeline for that?
So as the governor has said to us, right, it's the toll will continue to be nine dollars for three years, then it'll increase gradually to the next three years at twelve dollars, and then in the final the seventh year, it'll be a fifteen dollars use a toll. So we've already had that phased in based on the schedule we approved.
Can you just bring us another litigation around this with the federal government and with the state, But can you just take us into conversations that you've had with counterparts at the Department of Transportation over the last few months about making sure that the MTA stays on a sustainable financial path.
So I think you know what I would say is the federal government contributes two billion dollars to the MTA, and that's a revenue source that we rely on to keep the system in the state of good repair, and so we would continue to want that funding. You know, MTA moves forty percent of riders across North America, but receives only a fraction of federal dollars from Washington, and so we continue to rely on the federal dollars that we get and it's important for us.
But what's the backup plan if that evaporates?
Yeah, we're confident, right that the MTA and the federal government, the federal judge that is designed right, we're confident that we would win that lawsuit. You know, Judge Lineman issued a positive finding for the MTA just a few months ago. And congestion pricing is, you know, continuing to operate and we're generating the funding.
JA, thanks so much. Oh go ahead, Well, I was just going to ask one more question.
Just I mean, I imagine you know, you get a lot of people who hear these numbers. Congestion pricing is on tractories five hundred million. They say, wow, that sounds like a lot of money. Why are you know, why are the subways still the way that they are? Delays, crime
on cleanliness? Help us just understand. I know that you said that a lot of those fares go towards paying workers, But a number like this, a number like five hundred million, what does it mean in the context for the broader MTA organization is that a lot of money.
So I'll give you context. Our operating budget every every year is about twenty billion dollars, right, That is to run subways, buses, commuter rails and the services for six million commuters every day. But in order for us to keep that system running, you have to maintain it, right, and so sixty eight point four billion dollars a good majority of that funding is to keep it in a
state of good repair. That means new railcars, new buses, new signal upgrades, track maintenance, and everything else that goes with operating a system that's so vast in size. So five hundred million dollars is just one stream of revenue that generates when we leverage it fifteen billion dollars to continue with the capital side of the world, but the
operating side has different funding sources. But we're confident that we, you know, move six million customers every single day, and we're happy to do that safely.
Jpittel, CFO of the Metropolitan Transit Authority, joining us here in the Bloomberg Business Week Studio.
You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five these during this listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Some big news in the EV space this past month. Bloomberg reporting that Ford is unveiling plants for a new line of budget universal evs and a five billion dollar bid to achieve mass appeal. And then the US Department of Transportation revived the five billion dollar National Electric Vehicle
Infrastructure Program, which was suspended back in February. So while Ford and the Department of Transportation poor billions into EV manufacturing and charging infrastructure, one company is providing an alternative to EV charging. Spark Charge provides off grid scalable charging solutions where they bring the charging power to you. The company recently raised over thirty million dollars in capital to
accelerate mobile EV charging adoption. For more. Carol and Bloomberg TV anchor Matt Miller caught up with the founder and CEO of spark Charge, Josh Avive. Matt is widely known at Bloomberg as a major car enthusiast, always driving something new. He kicks off the interview by explaining whether he is ready to make the transition to a full EV.
No, because I'm a gearhead. I like to work on my cars myself. I like old American muscle. I like cars to be loud and smell like gasoline and vibrate a lot. But but lately I've been driving a ton of evs. I drive a new car every week for my podcast it's called Hot Pursuit with Hannah Elliott, and the acceleration, the handling has gotten so much better. There's so many more to choose from that. It's not just boring looking Tesla's with spartan interiors that it's It's become
almost a preferred motor transportation for me. The one problem I have still charging the charging network is so bad.
Yeah, so we have a guest just got a front row seat to it, so let's bring him in. Josh Aviv is founder in CEO of Spark Charge. He's out there in Massachusetts. Josh, good to have you here with Matt. Get ready for a grilling, because it is Matt Miller.
We're ready, We're ready.
Listen.
Your company reminds us that it is the world's largest EV fleet charging network. Lay it out for us where it is how many who's using it give us some size and scope.
Absolutely, so, spark Charge is the world's largest off grade evy fleet charging network. We have operations across all fifty states and recently just launched in Canada and Mexico. What makes us special is that we bring the power to the fleet. So we show up with our off grid
mobile battery chargers and mobile power hubs. We can get going without any grid connection, which means we get fleets up and running and charging and as little as three to seven days versus them having to wait as much as two to three years for infrastructure to catch up.
So you're the biggest off grid ev charging network.
What does that mean mean?
Meaning you're not the consumer chargers that are build up in malls or next to a Starbucks. You're you're working with like Ford pro kind of customers to charge their trucks exactly. So you're wringing with construction fleets, with plumbers, with electricians, with anybody, with anybody who's Amazon fleet.
Yeah, Amazon fleets.
Like Amazon last mile delivery rideshare fleets as well construction fleets, rental car fleets, school bus fleets. Think about the problem that consumers have where they're like, hey, I need to figure out how.
To charge one car.
Fleets have the issue of how do I charge twenty cars one hundred cars, and how do I do that every day to keep my business going? And we step in and we basically get them up and running quicker than any other electrification option on planet. Or if we can get a full fleet up and running in as little as three days fully electrified, and those cars out on the road.
Dude, that is such a great business. How did you start this?
Yeah, so we started it when we realized that a lot of fleets were waiting anywhere from two to five years before the grid would catch up and allow them to electrify. And we said, well, how what happens if we bring the energy to you, or if we get power set up to where we can use our batteries to get you charging almost immediately. What we realize is
that fleets still incorporate fifty cars. They'll incorporate twenty cars, but then they'll have the issue of going to the grid and saying, hey, we want to get these cars electrified, but the grid.
Can't handle the demand of all these vehicles.
And so we show up, We get them up and go out with from mobile battery chargers, which means they're charging from a giant battery connected to charging stations and then they're able to get up and running a lot quicker, and then they also have a smoother service.
Right there's no such thing as.
Grid delays or power outages, especially when it's being battery backed.
All the energy is there.
Wait, so you just kind of bring a massive battery to places and that's how you do it?
Is it on eighteen wheels? How do you transport that?
Yeah?
So some of them are trailer based, some of them are container based, but basically we can get that fleet set up operating off that battery and then they can begin charging from those charging stations immediately. We also have power hubs that use basically clean energy like hydrogen and things like that. They can also get a fleet up and run in and quickly as well.
That's what I was going to do. So how do you charge your battery? That's what I'm curious, Like, where are you getting the power and how do you make sure it's cost efficient, especially when there's such a power grab right now with all the AI going on.
Absolutely, so we're pretty much energy agnostic. So that means that we can grab energy from solar, which a lot of times, that's what we'll do. We'll swap the battery out, so we'll basically have a battery recharging from a solar partner. We'll bring it in, we'll swap it out with a fresh battery, and then keep that fleet going twenty four
seven three sixty five. To the fleet, it looks like limitless energy and we're managing all the power on the back end, which means they never have to worry about downtime or any operational efficiencies. We're constantly swapping that battery out or hooking it up to solar to keep them going.
I'm normally pretty skeptical, but I was like, Wow, what a cool company with a great idea.
And now it realized what he's just a great pitch man.
Also, right, I didn't see until now that you got a million dollar investment from Mark Cuban and Lorie Grinder on Shark Tank. You won various awards too, So you're great at selling these businesses, Josh, what's.
Your There has to be demand otherwise you don't have a bill for sure.
No, it's huge, and I mean, look at how well Ford Pro has done with that unit. It's just unbelievable to growth. But what's your exit? I mean, are you looking at IPO this company? Will you sell it to a bigger company? How do you how do you get Mark Cuban is money out?
Yeah?
I mean right now we're really just focused on execution. We're having an amazing year, thank god, and we're really seeing fleets come to us and say, hey, we want to get going a lot quicker. We don't want to wait, and so we're having an amazing year. I think for us, the right exit will present itself, but right now we're focused on scale. We're focused on making sure our customers are happy and making sure that we're onboarding a new fleet.
Keep in mind, because we're not waiting on the grid to catch up because we're able to service these fleets. We're almost onboarding a new fleet every week. So you know, while we don't don't come out there and say it, we're probably one of the fastest growing ev charging networks out there as well.
Wait execution, no offense. It's a pet pee for me. When an executive says execution, I don't know what that means. It's like everybody dumps things into that.
One want to grow their business, you know, and they don't want to tell you what their exit is.
So tell us, I mean, what does that mean? What do you need to do? What do you need to hit what targets in order to really be successful and sustainable longer term?
Absolutely, so for us, success is making sure that when we get a fleet operational, we're getting them operational to where they can actually grow their fleet. A lot of times fleets will come to us and they'll say, hey, I'm starting out with ten cars, but my goal is to get to one hundred cars and the grid can't keep up with that growth. Plus the time to install is going to take me three to five years at
that number of vehicles. So for us, execution means, hey, get this fleet up and running in three to seven days, get them fully electrified. And then now that they're fully electrified and they want to grow their fleet, let's grow with them. Let's allow them to go from ten vehicles to twenty twenty to fifty to fifty to one hundred and see long term growth with that fleet partner over a number of years as they continue to grow and operate.
And because we're getting them up and running quicker, we want them to see a better ROI than if they had to wait on infrastructure to catch up.
All right, So we're speaking right now with Josh Aviv. He's the founder and CEO of Spark Charge. I know that you're focused on the pro unit, the commercial fleets, but you must also love cars. I've been in a ton of evs lately. I was in a Chevy Blazer EVSs. I was in a Dodge Charger daytona scat Pack, which I loved. Right now I'm in a Cadillac Vistic, which I'm also just really positively surprised by. What do you drive? What's your d d Josh?
I drive a twenty twenty six Cadillac Vistic.
The Vistic is pretty sick, isn't it. I was truly impressed by this vehicle.
Love it.
I didn't love the Escalade IQ as much, which is the bigger EV. It's massive, it's a it's a giant, It's like a giant house one. But the Vistick is relatively snappy for a car that can still hold like seven people. What do you do for your for your charging when you're on the road, when you're going around, you know, to make work trips and you can't just be charging at home every night. What's your experience been with the US consumer charging network.
Yeah, so I'd say, you know, when it comes to road trips and things like that, one of the things that I love about the Vistick it's got I think, you know, real world mile is roughly around three hundred and thirty miles of range, and so I've been able to go from basically Boston down to New Jersey and almost all the way back on a single charge. I'm about having to stop and I love it. I love it.
I love the super crews on it.
It's it's a it's probably, in my opinion, one of the best evs I've driven, and I I've owned I think close to ten evs in my lifetime.
So love that car. I think when it comes.
To you know, travel charging, you know, I've typically used the Tesla Supercharger network or Electrify America, any of your standard EV charging networks.
So what what do you make of the state of kind of evs in America under this administration which seems to have been pulling.
Back There's a lot of backlash. It seems like YEP flows down. But what do you, is there any doubt in your mind, Josh, that we're all driving EV's in ten years.
There's no doubt in my mind.
I think, Look, I think what it's going to come down to is the economics of owning an EV Right. I think that's really and I think that probably should have been the focal point from day one.
Right.
Look how much money you're going to save when you're charging at home.
Right.
Look at the time save not having to go to the gas station.
Right.
Look at the experience of just.
Being able to plug in when you pull in to your driveway.
Right.
I think that is really going to come down to it. And if you think about it, the low cost of maintenance.
Right.
I can't remember the last time I went to a mechanic for an oil change. I can't remember the last time I went to a mechanic because the engine what came on.
I didn't know what that meant. Right.
The low cost of ownership for an electric vehicle is ultimately going to push more people to own electric vehicles. And I think that is why in the next ten years we're all going to be driving evs, is because they're going to save so much money to the consumer.
Carol will switch when they drive themselves. She wants her own personal Weymo at her house in Jersey City.
I do love WEIMO, but I do like you. I do like the idea of EV's. I don't want to, you know, I'm concerned about the environment. Hey, Josh, stay in touch. Josh a ve founder in CEF Spark Charge, joining us from Massachuset.
You got to get him on my podcast now, Hot Pursuit with Hannah Elliott.
No, yes you could. Yeah, we'll share, We'll share.
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