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The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. Well what a week. Our first five day trading week, full week of twenty twenty four. It felt like the world was alive. Big banks kicking off us earnings. We got another read on inflation coming in a bit hotter than expected, although the Fed's favored super core inflation gauge
little change. Geopolitics still front and center. And then Tim, We've got a really big reminder of how compromised social media account can catch us off guard.
You know the story.
It all had to do with the SEC approval for the first time of exchange traded funds that invest directly in bitcoin.
Everybody, come on, turn on two factor authenticash, and that's all you got is do is well that false post on Tuesday followed by the real one on Wednesday, ARC and Vast among those getting the green light, and ARC founder Kathy Wood joined Carol as the news was unfolding. That's up in our next hour.
Coming up this hour, why twenty twenty four could be a year of grave concern. Also what you need to know about the rebels in American politics. It's all in a new book by Bloomberg Business Weeks Josh Green.
Plus tech spending, trends in healthcare with Amy shellhard at Wellsky Ai Anyone I.
Feel like Gay already a big theme this year.
All of that to come. We begin, though, with a world at war, as Ukraine and Russia entered their third year of fighting, and as escalating attacks continued in the Middle East.
Bloomberg Opinion International Affairs columnists Mark Champion writes that wars are becoming existential, like it or not, and that global citizens need to be ready for a world with new kinds of wars. So what exactly does he mean by existential?
Well, it's really the difference between the kinds of wars that we're more familiar with in the post Cold War period the US thankcuse invasion of Iraq that were in Afghanistan. These are wars essentially of choice, uh, and they require you know, a certain set of tools, a lot of special forces, a lot of air power, you know, air transport, all these kinds of things, not a huge number of number of tanks, artillery, the sort of or massed troops that you would need in the kind of intensive conflict
you're seeing in Ukraine. And the point that I was trying to make regarding Israel was there, this is you know, going to be These kinds of wars are difficult to end.
You can't just walk away. They're very hard to end because the sides, at least one of the sides, you know, normally two of them, see them as existential, so they tend to get fought until once I just can't fight anymore, and they require you know, a whole different view, much more familar to the earlier part of the twentieth century, about you know, what an armed force is for how many people you need, whether you need conscription or you can get away with just a volunteer army as most
of us have now, And then what kinds of equipment you're going to have to have, and how much of it, how much ammunition, how many artillery pieces, how many tank divisions, et cetera. So it's you know, when these kinds of wars, when you know when it changes and you have to
prepare for them. Not saying that you know the Europe or the US is about to fight one of these, but that you know, it's clear that we're going to have to start preparing for them, and that requires a lot of decisions by governments, a lot of explanation to their populations about, you know, why you might have to have conscription for example, and why they might need to be paying more tax.
Hey, Mark, can you before we get to that, I just want you to explain with some historical context, how in existential war what happens after an existential war ends. What are the consequences of a war being existential? I mean it sounds like it's pure destruction.
The consequences are mainly about how they are fought. So, you know, the two sides are if you look at the war that's going on in Ukraine at the moment, you know, the Ukrainians will will throw everything into it, and you know they are trying to mobilize. You know, at the moment Presidence Selenski is talking about mobilizing another
five hundred thousand troops. You know, Russia has had several rounds of partial mobilizations and you need a lot of manpower, and the way they are fought, there's a much higher tolerance for casualties, casualties among your troops and casualties among civilians on your side on the other side. And you know, this is one of the things that you're seeing in Israel where it's really see this as an existential fight.
They see what Hamas did on October the seventh. Hamas of course, is you know, publicly committed to the destruction of Israel, that this is what the destruction of Israel would mean. And therefore, you know, there's a kind of disconnect between the outside world when they see what's going on in Gaza and the way that Israelis see it. But it has big implications for you know, how long these things will tend to go on, and how they will be fought, how they end, or what happens afterwards.
You know, that's that's a slightly different matter. But you know, we have several you know, you have the example, we all you know, historically lived through it. In World War One, World War Two. These were all existential wars.
Right I think about you know, my dad and his three brothers all fought in World War Two in some way or another, and his youngest brother really wasn't of age, but because his other brothers were there, he just went and signed up and they took him because he's like, we're all in this together and we've got a fight.
Having said that, I do think about out, you know, the willingness of some countries and their soldiers willing to fight to the bitter end, is what you're kind of saying versus other countries.
Because does the US and your view.
And some of the developed European nations, do they have that will to fight to the bitter end?
Well, this is the thing. You know at the moment, you know, this is a war being fought. These are two wars, right, So one is being fought between Ukraine and Russia and the other is being fought between Israel and Hamas. And you know, in neither case is the US or you know, Britain, nor France or Germany directly involved. But they do take a side. They're supporting them and are committed to do you know what it takes to
make sure, for example, that Ukraine you know, succeeds. But there you have this disconnect is very important because there is a big question as to whether and we're already seeing it happen as to whether you know, countries that aren't actually facing their existential threat are willing to make the kinds of pay, the kinds of prices and costs. The countries that feel it is as essential and are involved in the fight directly, are willing to make. But it makes you it is very important.
It makes me wonder too. There's a line in your column. Appetite to take on US interest and allies is growing in a multipolar world where countries such as China are on and Russia now have greater means to do so, at least in their own backyards. And I do wonder does it put some nations, including the United States and others at risk because of that unwillingness to fight to the bitter end.
Well, the US is in a very privileged position in the sense that it has two large oceans between it and any rival power. So this is something that has been more of a wake up call for Europe because you know, Europe doesn't end at a particular point in Russia is parts of Europe. You know parts of Russia are parts of Europe, is part of Europe, and you know there is a sort of understanding that this we're entering a different world here and that there can be
a threat. You know, these things are very you know, history is difficult to predict, so you know there is a different view. You just had the Internal Markets Commissioner
of the European Union. He just went to the parliament yesterday, European Parliament and said, I think we need one hundred billion dollar or euro rather one hundred billion euro fund to fund greater defense production and to do more of that together so that we're you know, getting more bang for our buck, precisely because we can't rely on the
US to always be there. He specifically talked about the possibility of Donald Trump getting a second term and also because you know, the threats that we face are clearly.
Changing, right And I know there's an individual who spoke to in the story that you highlight of Mcryan, a former general in the Australian Army, who says politicians everywhere need to understand themselves and explain to their citizens of the next half century will be different from the last half century and that they are going to have to prepare. So you're talking about different levels of taxes, defense spending, and mobilization, a very very different environment that we have
gotten accustomed to really globally. Very thoughtful piece, and so appreciate you Mark. I know it's a little bit later out there in London, so really appreciate that you would share that with our audience. Mark Champion, Bloomberg Opinion International Affairs columnists. Be sure to check out his story and more from Bloomberg Opinion on the Bloomberg Terminal, of course, at Bloomberg dot Com Slash Opinion.
Yeah, check out this piece. It talks a lot about the tolerance for casualties and how that's higher because it's an existential war, very.
Different feeling and mode than what we've been in.
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When it comes to risks overall, engaging and analyzing their impact, the Erasia Group is always a go to, and the companies report on top Risks predictions for twenty twenty four points to a year of grave concern. So let's get into it and to some of the risks with you. Eurrasia Group Chairman Clip Cupchin. He is at the Bloomberg News Bureau in Washington, d C. Cliffs. So nice to have you here with Tim and myself. I want to say welcome and happy new year, but I feel like
it might not be a good year. There's lots of reasons out there. Is that a fair assessment? And is it more than any other year in recent time? We just dealt with a global pandemic a few years ago, you know, go back in eight we had a global financial crisis. We've had some really big things that we've had to deal with as an individual, as an American, as a global citizen.
I think what separates this year from recent years is the number of wars going on. We have two kinetic wars going on Ukraine and Israel Amas, and that's a lot of wars. I think we have to after ourselves why to kinetic wars? But in addition, and the way we like to think about this report, there's really three wars.
It's the two I've mentioned and about to begin is the US against itself, which in many many ways will be the world's more serious war because it pertains to the world's long remaining superpower, three wars with no guard rails, three wars that we think have no leaders that can really fix the problem, and three wars where the two sides don't even necessarily agree what the war's over. And
that's really pertains the United States. So yeah, I think risk is a thing that we always worry about, but this year it's got a real edge to it.
Does it feel like investors are ignoring the risk out there? I mean, we're almost at all time highs on the S and P five hundred right now.
I think on the potential for escalation in the Middle East, there's a bit of a head in the sand thing going on. I mean, for instance, I would be surprised if the US didn't hit the houthies pretty soon in Yen. Wow, how's Iran going to react? You know, don't think they'll do much, but I sure hope they don't. I think that's one aspect in which investors have their head in the sand. But the bigger one is what's about to
go on in this country. We're about to see President Trump get the nomination in a couple of months, and then you know, we're in a new era. We're in an era where he gets the media, he controls the funding, he controls the TV. You'll pressure on Biden to do something on Iran because Trump will be to the weight of the right of him on Iran. The Ukrainians are going to wonder if they're ever going to see another dollar from this country again, which I think is a
very good question. So I think the main risk that at least over the medium term, US isn't going to tang anytime soon. But if we see another Trump presidency, I think everybody's going to ask themselves is the US good for its promises? Is the US the haven the safe haven for money that has been since the Second World War? Those kinds of questions They're going to.
Be honest, Cliff, I've got to say, you know, this whole idea of the US, you know, basically at war with itself against itself and really the division and questioning American democracy, And I do wonder what happens on the other side. And we're a young nation still, right, and I look at some of the older countries there are oftentimes where they're questioning kind of what is going on internally?
Is there something from history that you think we can draw upon to kind of figure out and say, well, this is kind of normal in a young country's history, and try to figure out and maybe make some conclusions about where it goes from here.
I can't think of a democracy. Look, I mean this is kind of unique. You know, we have a guy running for president, you know, a democracy who tried to curtail to be nice to him democracy. Last time we saw this movie, I think the only analogy, and it's not from distant history, but what happened to Hungary after Victor orbon really got his mitt around it? Well, you know he's Hungarian democracy? Ever going to rebound Polish democracy? Did Hungarian democracy?
I don't know.
I don't know. So there's a real question as to how much we can absorb, how much damage the US can take the second time around. I don't think history is a very good guy, because this is really very ahistorical and rather unprecedented.
What would be your message to politicians who see no problem with another Trump administration?
First, I would say, don't take what you have for granted anymore. This is a very fragile democracy that was invented by a bunch of geniuses. When you think of how they sort of controlled human nature and the greed that's within all of us, but set up these chunks of balances and nobody can really get away with it. But it's fragile, and it's fragile to a huckster, to a really good politician like Donald Trump, who can you know, kirk, who can feed, who can feed scared people and make
them induce them to vote for him. So I would tell politicians to sort of get real and be very jealous of what you have, first of all.
But secondly, I think the.
Rest of us here have to really respect wouldn't be the word, but be very cognizant of what's going on in this country.
That you know, I go home to Wisconsin.
When I go home to central Wisconsin and talk to people, and of them vote for Donald Trump. And these are church going, god fearing, good people. Give them their money at night and give it all back in the morning. They're very honest people. They're scared, they're misguided, they get bad information. But I think all of us have to sort of see this guy's legitimate and then sort of look within ourselves and say, how did we get here? Because we're not a very good We're not a very good place.
I felt that way about the uprising and the siege at the capitol, Like I want to understand these people, Why are they doing this? Why are they kind of want to understand why someone thinks that way. I don't walk around in their shoes, and they don't walk around in my shoes, but I kind of want to understand how do we do that?
Though?
Where people in terms of how they get their information, it is often a chosen source, one source, which can lead to kind of this vacuum, and it can potentially be a vacuum of misinformation.
Well, we all got to make an effort, and I didn't you join you today, come on to radio or tell stories. But I'm going to share one quick second one with you. So I was on vacation during COVID. It was in West Virginia, and I called the Central Committee of the Republican Party of Xyz County. It was a real county and it was a real conservative and I kept my fifteen year old son. We met with him for lunch and it was the most fascinating three hours I think I've had in a long long time.
These far right Republicans felt like they had succeeded from America, felt like nobody in Washington cared what they thought about and they said I was first first washing they'd ever seen. And you know, I think there's an actual conversation to be had somewhere what he's trying. These aren't necessarily bad people, they're scared people, But I think there's got to be some kind of trust between these two polls that are
just widening and widening and widening. There's got to be someplace in the middle where we can have a conversation because we all are decent people, we all come from the same founding fathers. But nobody's trying right now. We're all just getting further and further into our nativistic corner. So the trend line's not good. I don't think it's inevitable, but it's not good.
Well, you may have not come on to tell stories, but we certainly wish you did, because we feel like it's very realistic now in terms of what's going on and really resonate in place to some of the risks, as you say, the number one risk that you guys have identified as the US versus itself, which is just well, come back soon, come back so do you think we'll get twenty seconds come out in a better way or it's fifty to fifty at this point.
Well, let me say that there are really good stories out there, and Mexico after the Shinbaum is going to be I think a really good president of Mexico. Mode's gonna get reelected. India is headed in a good direction. There are good stories, and I think we should you know, next time I come back, maybe we can do the good news, because there's good news.
All right, Okay, promise, promise you open invitation. So appreciated you as your group chairman. Cliff Cupchin joining us from our bureau in Washington, DC.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg eleven thirty.
All right, everybody, he is He's not necessarily rebel. I don't know about that.
We'll talk about that.
But he is the number one New York Times bestselling author Devil's Bargain Steve Bannon, Donald Trump and the Storming of the Presidency. His new book takes a look at the other side of the political spectrum, chronicling the rise of economic populism and the Democratic Party in the wake of the global financial crisis and collapse, if you will, in two thousand and eight. This play is a big role, if you will, in terms of his thinking and in the book.
The new book, I got it in my hand right here. It's called The Rebels Elizabeth Warren, Bernie Sanders, AOC and the Rise of the New Left. Very please at back with us our colleague Josh Green. He's BusinessWeek national correspondent. He's here in the Bloomberg Interactive Brokers studio. Josh, talk about timing. You know, we're going to get to the book in justice second.
We're going to come in.
We're going to get to the book in just a second. But first, the breaking news about Chris Christy exiting the race. He's actually caught disparaging Nikki Haley and Rondo Santis as he exited the race. You wrote a big profile of Chris Christie back at the end of last year, August of twenty twenty one, I should say, talking about how he's absolutely totally one hundred anti Trump for now. From the beginning, it was a long shot presidential candidate. But let's get your reaction.
Yeah, I mean, to me, Christy was always kind of the most interesting guy in the race, always going to be a long shot, but you know, blunt, obnoxious, unafraid to kind of speak truth to power, and just from a kind of a journalistic standpoint, super entertaining guy and fun to be around.
So I actually went out.
And traveled with him. I was in North Carolina, all right, sorry, New Hampshire, South Carolina, kind of watching how people reacted to him, and I got to be honest, Even then, you could tell what his problem was going to be. You know, you'd have these town hall events and people would flock to them, and I'd go talk to them after, and like half of them were Democrats. Like, the problem is the appeal that Chris Christie has is not a hardcore Republican primary voters. It's to people who don't like
Donald Trump. And yes, that's a narrow sliver of Republican voters, but what it mostly was was kind of aggrieved Democrats who liked to hear a Republican beating on Trump.
Who'd have thunk when you or did you think when you wrote your first book that, I mean Donald Trump, was he just going to be kind of a one off? Or was he going to be something that was so pivotal to the Republican Party and really such a part of I feel like every political conversation.
I mean, by the time I wrote my first book of twenty seventeen, Devil's Bargain was about the rise of Trump and Bannon in that campaign. You know, Trump was in the White House and it was pretty clear, like to me anyway, this wasn't going to be a one off thing. I mean, Trump and trump Ism are here to stay. I mean, whether whether or not he avoided you know, indictment or this or that or could could like when reelection, I think was and is an open question.
But such a powerful force of personality. You could see already the way he's dominating Republican politics in a way that's made it just impossible so far for challengers, including Chris Christy to knock him off his throne.
Is it just the personality?
What is it?
Because I was trying to think, is there somebody of another politician, you know, in our lifetime that obviously maybe didn't cause what someone would say the chaos, but was also just so charismatic and just had that personality.
In a very very different way I think Barack Obama did for Democrats. I mean it was almost like this kind of religious ecstasy when you would go to Obama events when he was first running, even back when he was still a senator, and people were just so excited about that. It's a similar phenomenon when you go to Trump events that this isn't you know, the people in the crown, This is not just another politician, This is someone special in being here, seeing them as like some
kind of a quasi mystical experience. There have been others, but it's really really rare.
Josh. If we were areded to make comparisons to your first book, Devil's Bargain about Trump and about Steve Bannon, together with this book, which is about sort of the same thing happening on the left, the first thing that comes to mind for me is that Republicans have been so much more successful it seems like in embracing the extremist portion of their party, that is the Donald Trump wing up the party. I mean, look, Mike Johnson, a speaker, for example, exactly.
Yeah, No, I think look when Trump's version of right wing populism was so intrinsically appealing to Republican voters that like it took over the party in the span of a month. I mean, I remember actually traveling, you know, down to the border with Trump and Bannon when he was first running, and at the time still this kind of controversial, quasi crazy seeming guy. He seemed like he'd be a fun news cycle, maybe a flash in the pan, and then like a month later, he's dominating Republican polls
and he's never looked back. Not quite the same experience on the left, I mean, there was definitely a similar populist phenomenon in the sense that there really was this left wing backlash to Obama and the financial crisis among Democratic voters. You could see it in the rise of Warrant, and you could especially see it in the rise of
Bernie Sanders's presidential campaign in twenty fifteen. He too, really kind of caught fire and suddenly had these big national audiences, somewhat in the way Trump did with Republicans, but he never took over the entirety of the Democratic electorate the Democratic Party in the way that Trump did on the Republican side.
We're talking about Josh Green, his new book Out the Rebels, Elizabeth Warren, Bernie Sanders, Alexandria Ocasio Cortes, and the struggle for new American politics. What's interesting, Josh is I feel like so many conversations we still have around this table, political or other business. We talk about the pandemic impact right and kind of where we are, where we were, and how it continues to affect us as a society.
But the two thousand and eight financial crisis is such a crucial part of your book, and I think you write one event that shaped recent American politics more than any other. Talk to us about the importance of that event and how it continues to shape us.
So to me, as a kind of middle aged Washington reporter slash author historians who's been on the scene for a while, the two thousand and eight financial crisis is the tectonic event in modern American politics. And it was clear at the time it was going to be a big deal. But I don't think we understood the aftershocks from that earthquake. And you could see it initially in the rise of the Tea Party movement and Occupy Wall Street,
both at which I covered. You could see it in the rise of the populist right, Donald Trump, Steve Bannon, outlets like Breitbart News, the way that took over the Republican Party. But what interested in me for this book was that there was really a similar phenomenon on the left and like the one on the right, I think it really stemmed from economic issues, that broad sense of anger and economic dislocation, not just from the crash, but from the austerity and job loss that followed in the
recovery that really shaped American politics in twenty sixteen. Weirdly enough, the book is kind of bookended by a second economic crisis, the COVID crash. But what's happened since then, I think has been less economic driven and more cultural driven. And partly that's because Trump and Biden both instituted a very successful economic response to the COVID crash. Big stimulus is all kinds of middle class support, Wall Main Street. It was more more Main Street than Wall Street this time around.
I think you see that in the robust economic numbers we're seeing today. But rather than have Americans be super happy and gratified and eager to reelect Joe Biden. Instead, the big political fight is shifted on a cultural terrain, and COVID really drove that with mask mandates and vaccines. Uh, you know, in Trump and Democrats fighting and Anthony Fauci, and that's where we are today, you know, economically better off, but still as Americans kind of angry in each other's throats.
Do you think in any world, Josh, there could be a singular candidate who could unite both populist wings of each party.
You know, I used to, but I really don't because of the cultural because of the cultural angle.
Yeah.
I mean, look, you can look today at Donald Trump's policies and at Joe Biden's policies, and on economics, there's real populist overlap. You know, Biden kept Donald Trump's tariffs and you know a lot of the thing China policy, right, Trump for his entire presidency said, you know, this is going to be infrastructure week, This is going to be infrastructure week. It never was, but Joe Biden got a lot of that passed and instituted. So there are certainly
areas of overlap on economics. But as you said, culturally, I think the two parties are farther apart than ever.
If the two thousand and eight financial crisis hadn't happened, where might we be politically?
Would we have seen this wave of populism.
I can't imagine that we would have, you know, to me, I mean, my analysis doing all the reporting and all the kind of you know, historical digging I did for the rebels was that we've seen this kind of populous backlash before, after the Great Depression in the nineteen forties. But if there hadn't been a crash in two thousand and eight, I don't know what event would have been
there to kind of generate that backlash. Maybe it would have been, you know, maybe would have been about something else, but I don't think it would have been an economic populace.
And then Donald Trump had made his way to the White House.
It's like, it's funny, it's hard for me to imagine he would, but you know, I wouldn't rule it out, because I mean, Trump is such a natural entertainer not to go off on too big a degression. In the last book, Devil's Bargain, about the rise of Trump, I did a big chapter on how Trump, you know, when he was on TV, had huge appeal to black audiences,
to minority ornis is they love the Apprentice. So I could imagine an alternate universe in which Trump had run as this kind of bipartisan, centrist, entertainer, celebrity figure who just got everybody excited and united the country. But that obviously is not the world we've wound up in.
I mean, what is so wild at the end of the day is Trump is hardly the picture of the populist who he is set to appeal to. I mean, this is a guy who's inherent exactly you know, flies on private jets everywhere, calls himself a billionaire. Whether that's true or not can be debated. Hey, speaking of characters, I want to get to a couple of the characters that you highlight in The Rebels Elizabeth Warren, Bernie Sanders, Alexandro Casier Cortez and the Struggle for a New American Politics,
your new book that came out yesterday. I want to go to aoc because it was such a shock in twenty eighteen when she ended up beating Crowley in the Democratic primary and essentially becoming the new face of at least for young Democrats out there progressive politics. What is her future in the party?
Boy, you know, it's a good question. I mean, she's such an interesting narrative thread in the book because you can trace her genesis from the Occupy Wall Street movement. Like a lot of the people that surrounded her and helped organize that original campaign to knock off Joe Crowley and got her elected were Occupy Wall Street veterans, And so you can trace a line from that economic discontent
on the left to her congressional career. I think the path forward for her is really tough to see because she doesn't strike me as someone, at least not right now, who could really hope to win statewide office in New York senator, governor. I think she's coded as kind of being too radical.
Oh that's interesting, I do, so the obvious.
Path forward to me, And she's kind of hinted and alluded that this might be in the future in twenty twenty eight, maybe she runs for president. It's kind of a Bernie Sanders style factional Democratic candidate. Certainly she would be the one that would stand to inherit that mantle and that movement, if that's what she decided to do, but I think she's still trying to figure out what
exactly she wants to accomplish. And I think whether or not Joe Biden wins, and how that winner loss is interpreted after the fact, will do a great deal to kind of shape the world in which she's going to have to run if she decides that that's what she wants to do.
What's important in terms of the world. And I think about our audience who are listening and watching understand about Elizabeth Warren and her role in all of this.
I think really that she is the one that helped shift the Washington Democrats in the direction of this kind of democratic populacem Bernie Sanders had been in, you know, around saying these sort of things like since I was a little boy, and nobody really listened to it before two thousand and eight, he would. He was kind of a gadfly, you know. But but Warren came in and very skillfully used her platform versus the tarp oversight cop that kind of bailout before she was in the Senate,
just to shift the whole public conversation. I mean, I tell a long I have a long chapter in the rebels about how Warren kind of came on the scene and was one of the first people in Washington to leverage YouTube and social media to help shape media coverage. She was a darling of John Stewart and The Daily Show back when like that was the show that everybody watched, and it really helped change what the Democratic elector had cared about and talked about in a way that forced
Democratic politicians to respond. So I think she's been instrumental in kind of shaping the broader contours of the modern Democratic Party, even though she ran for president in twenty twenty and lost.
How much does Joe Biden you think listened to her.
I think he listens to her a lot. I mean, all you have to do is look at a list like the roster of who's staffing the upper echelons of his administration. A lot of them are Elizabeth Warren people. And I talked to a former Biden official in the book very much as centrist, not a not a lefty, who said, look, Warren and Sanders were not controversial people in Joe Biden's White House. We spend all our time worrying about Joe Manchin and Kirsten Cinema the centrists who
gave Biden so much headache. So I think that's a good measurement of just how far the Democratic Party has shifted in this left populist direction, at least on economics.
Hey, Josh, we got forty seconds left. What happens to the rebels If Joe Biden loses.
Boy, that's a great question. I think that it will discredit in the public sizes are certainly in the democratic political world's eyes a lot of what they've done, and I think it will and a real problem for Democrats moving forward, because if you just look at the raw economic numbers we see today, it's really been a remarkable recovery in America from that COVID crash. So a lot to be said, I think on behalf of robust government
response to kind of recessions things like that. But if Biden loses and it's attributed to high inflation and government spending in the policies of people like Warren Bernie and AOC, then I think most Democrats are going to reject that going forward, the same way that Democrats rejected Jimmy Carter and his brand of politics in the nineteen eighties.
So it's so wild, given that the policies aren't that removed from one another. It's the cultural stuff.
History is so contingent.
Yeah, great stuff. Thank you so much.
Thank you guys, appreciate all the time.
Of course.
Bloomberg Business Week National correspondent Josh Green. His new book is The Rebels Elizabeth Warren, Bernie Sanders, AOC and the Rise of the New Laft really the struggle for a new American politics.
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All right, so we're gonna switch gears a little bit. Talk a little bit about the healthcare world. According to the Centers for Medicare and Medicaid Services, US healthcare spending grew four point one percent in twenty twenty two, for a total of four and a half trillion dollars. That's about thirteen point five thousand dollars thirteen thousand forget ninety three, Sorry I saw that number a per person. That's a lot.
It is.
We spent way like when you have a kid.
You spend a lot more.
Yeah, major subirth of the kid.
You spend a lot.
I was like, oh, we spent way more than that last Well, fortunately we didn't. Our insurance company did.
Yeah, exactly, Carol.
Spending on healthcare accounting for seventeen point three percent of US GDP. Needless to say, there is a lot of money in healthcare.
Right next us comes to us from well Sky It's a B to B tech company. It provides tech services for healthcare providers, insurance companies, social services providers, and a lot more. It is backed by the private equity firms TPG and Leonard Green and Partners. The company Tim has a great read on the money flows throughout the complex healthcare ecosystem and where efficiency can be found. I'm hearing it spending.
Yeah.
Amy Shellhard is Chief Solutions Officer at Well Scott. She joins us on Zoom from Springfield, Missouri. Amy, Happy New Year. How are you?
Thank you? Happy New Year? I'm great, Ready for wonderful twenty twenty four.
Thanks for having me so explain for the layperson what exactly well skypowers.
Well will skypowers, as you said, technology services and analytics that support over twenty thousand clients, and to sort of put that in perspective, it's about two thousand hospitals one hundred and thirty thousand providers. So if you think about care being provided in the home, it's one in three home care based providers utilize our system over five million caregivers. So a lot of the technology, again, the services and the analytics that help them do their jobs every day.
Well, I said to our producer this morning when we were getting ready and prepping for our show and we're talking about your company and you coming on, I said, so.
It's like back office. Is that what it is?
Or is it infrastructure? Tech? Infrastructure?
It's actually all of that, right, So when we think of back office, we think of things that power the operations. Right, think of a home health agency of back offices. How do they do scheduling, how do they do billing? Right those pieces our solutions do those, but also how do they deliver care.
In the home.
How do they engage with patients via tell health of video visits, how do they determine how to assess a patent and what types of content that they need to provide the patient. From an educational perspective, we run the full spectrum of all of those, both in home as well as in specialty care areas like l tax and sniffs and home infusion. Really all of posts acute care and our solutions also power discharge planning in hospitals as well.
So talk to me about what you're seeing from the hospitals, from the insurance companies at the end of last year and going into this year. I mean, Carol said it spend certainly a big part of this. How are the how is spending right now?
Well, it's a huge piece of it. Right as you mentioned, healthcare spend really in our country continues to be something we're all challenged with. I think what we're seeing from our providers is they want to make sure as the spend increase, that they're getting more ways to augment and support their very limited staff. And so that sort of thinking about the trends of what are our clients saying, Look, their most costly expense is their staff, and staff are
becoming harder and harder to come by. We're seeing shortages both in skilled and non skilled care. In fact, in the next five years, we're expecting to see a shortage of three point two million essential low wage healthcare workers, and so they're really looking to us as technology services and analytics providers to help them with technology solutions that
allow them to work with less people but process more patients. So, if you ask, you know what's happening as we look at from last year, Feminine, in this year, we're still seeing our healthcare systems, you know, heavily utilized, still dealing
with large volumes of COVID patients. We're seeing increased discharges to skilled nursing facilities, increased discharges to home health, which means that patients are coming out sicker, they're not able to just go home on their own, They're needing to have follow up care, skilled care, either again in skilled nursing facilities or the home. So a lot of pressure on the healthcare system in general.
What's cool with talking about this with someone like yourself? You know, your title is chief Solutions Officers, so you're obviously working with companies to kind of figure out how you guys can help them with some of their back office or our IT spend and needs, if you will. Having said that, you know, Amy, we're at this interesting point new year. We're kind of thinking and trying to figure out what comes ahead. There's a lot of questions about that in terms of the economy, what the FED does,
how that impacts growth potentially. So having said that, IT spend is always an important indicator. We always feel how would you compare the IT spend and what you're getting from some of the clients that you work with in figuring out solutions. Is it going down compared to I don't know what's the smart metric the past six months, the past year. Is it slowing down? Our companies thinking really hard before they do an additional IT spend right now here on January third, twenty twenty four.
You know, that's an interesting question. We are seeing more scrutiny. So I think that to that point, we are seeing more scrutiny of the spend. We're being asked to deliver more outcomes and value, which frankly we embrace. And what I mean by that is they know they have to spend the dollars because they have to solve these problems like these staffing shortages, problems in the higher volumes of
patients that they're seeing. So what they're saying to us is, as we spend this money, we want in some cases share bris so tell us what kind of outcomes we're going to achieve with your technology, and go at risk with us so that if those outcomes don't emerge, you have a little bit of a skin in the game. We see longer cycles for making decisions. We're seeing some of that longer decision making cycles. But I would say in general, they're still spending money. They're just being more
scrutinius in terms of what the expectations are. I think, in a really good.
Way, help that in a recessionary way.
I will tell you that while we have seen the cycles take longer, we're still we're still having those effective sales processes. Okay, but the conversations are getting tougher, and again I will give them credit for that. Conversations getting tougher around. Show us the outcomes, show us the.
ROI great count the ROI we're going to get.
Yeah, it's interesting.
Yeah, Amy, Thank you so much. Amy Shellhart, chief Solutions Officer of at Well skyt jetting us on zoom from Springfield, Missouri. Conversations on it spend getting harder. That's my thought for the day.
This is Bloomberg.
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US regulators for the first time approving ETFs that invest directly in bitcoin. This is a move heralded as a landmark event for the roughly one point seven trillion dollar asset industry, the digital assets sector that will broaden access to the largest cryptocurrency on Wall Street and beyond. The SEC, whose three part mandate includes investor protection authorized eleven funds
to begin trading on Thursday. Let's now go to Carol Masser, who's standing by with Kathy Wood, the CIO, CEO and co founder of ARC invest.
All right, so, Kathy, what do you think about in this moment of time, as we said, this has been in coming.
Yes, Well, when you're talking about institutions that you know, have been very fearful of this space, I think they're going to tread lightly. I don't know if you saw, but Gary Gensler put out a piece and he just denigrated the whole crypto space, and I was just like, I couldn't believe it. So anyway, it's with that kind of trepidation that institutions are going to have to, you know, work through and do all of their due diligence. However, I do think that a lot of investors have been curious.
And you'll see we've been from a marketing campaign. We've been using this tagline, aren't you a bit curious? There
are so many people who are curious out there. Of course, a lot of our existing clients know all about bitcoin because we have owned it since twenty fifteen, but there are a lot of people who really have a hunger to know, and we can see that as more and more people read our research, tune into our Bitcoin Brainstorm that we do with Rod and Bitcoin Park in Nashville, Tennessee, read our bitcoin monthlies, we are getting all the curiosity.
I think that's why we started, so we know a lot of people are waiting and believe it or not, Carol, the curious extend to state pension funds and state treasurers we're talking to.
It's a really broad swap well catch people.
And I do wonder what you think success will be out of the gate in terms of investment flows, which your goal or estimate in terms of bringing investors into the fund.
Well, it's very interesting.
I was speaking to Eric Beltunis, your colleague, and according to his estimates, there's four billion dollars waiting in the wings, and I said to him, well, from your lips to God's ears, that would be amazing, and we hope we
get our fair share of it. I mean, we've certainly done a lot to educate the community, and we experience a lot of gratitude for that too from the innovation communities, including the bitcoin community, but also from the financial community, those who really are trying to find the net big idea. The old guard basically throw out there all kinds of risks, and you know, some people call it fear, uncertainty and doubt.
It happens every time, Carol, And I'm not saying it's a bad thing for people to really do their homework. They should do their homework, they should understand the risks. But this is par for the course in disruptive innovation. This is completely new DNA, and so it's the old DNA basically bashing the old new DNA. But truth wins out. Truth wins out ye.
And one thing I want to ask you is as like yourself, all of us here in the newsroom, you know, watching just you know, new things come into the market over decades, and this is certainly interesting, but we are still wondering about the real case use I mean that no one has really demonstrated a real life use case when it comes to bitcoin.
We think about it all the time.
Our first paper, white paper, was all about could bitcoin serve the three rolls of money means of exchange, store of value, unit of account. Most people are thinking store of value right now. But I'm going to plug one of our bitcoin brainstorms if you want a mind blowing experience. And I am lucky to be able to ask questions on these brainstorms, which was about the convergence of bitcoin and artificial intelligence. And we had on people who are
toiling to make all of this happen. And I have to tell you what's going on in the emerging markets and the division of labor, the redefinition of labor a little bit like what happened to the gig economy here, but put that on steroids.
Put that on steroids. It's already starting to happen. So I would.
Highly, highly highly advise anyone interested in trying to figure out how the world is going to work listen to that Bitcoin brainstorm, because it's already starting to work in the emerging markets where they need it so desperately.
Kathy, what's the advantage of the arc spot Bitcoin ETF over the others who also got approved? You know, we've been reporting a lot about this kind of war on fees. So what's the advantage of going with you versus a black Rock or a Fidelity or some of the other players who are out there?
At least three advantages? Carol.
First, we selected our partner very carefully. Twenty one Shares is the largest peer play crypto ETP provider in the world with two and a half billion dollars in assets. So what does that mean. That means with their forty funds before we launched with them, with their forty funds launched over five years, they have battle tested their infrastructure over booms and busts, over crises, over havings, over four kings.
This is not normal for the ETF world, and we think the other ETF providers have a lot to learn, and I'm sure they are and they will as we go through these different kinds of experiences and they have economies of scale, believe it or not, that have enabled us to drive down our fees. This way, we have more economies of scale because of the infrastructure that twenty one shares have built out.
So that's the first.
The second is research. Both of us give our research a w for free. Our research started in twenty fourteen. We were trying to understand the technology, and then when Chris Berniski took over, we fast forwarded into understanding bitcoin is money and then a new asset class. So we have been taking our clients' perspective. Clients, anyone who wants to read our research, this journey with us through deep,
deep research, and it's getting deeper under Yassin's leadership. So that's the second and then the third, and this one is not to be underestimated us, especially when it comes to the wirehouses like the Morgan Stanley's, the Merri Lynch, the ubs Wells Fargo. Our salesforce, our distributor has had our etf specials. Specialists have had to understand bitcoin since
we struck our partnership in twenty sixteen. Story Rebecca Burke, who's our most senior ETF specialist joked with me the other day she said, do you know when I was coming to interview to I looked up what is bitcoin? And we all laughed about it because now she not only understands it, she believes in it. Her conviction is how she's able to share that message and hold client's hands when bitcoin goes through some of the volatility that we see it go through regularly. So I think those
three we have the infrastructure and operations. We have the research, deep research, and we've been doing it longer than anyone else. And three we have a support team a sales team that I don't think anyone else out there can beat because we've been doing it together for seven years already. And the same for twenty one Shares. More on the institution side, they have been working with their clients for five years.
One of the things we wondered about, Kathy, what is the recourse if a custodian who holds the keys to bitcoin loses them, you know, are they're hacked. What's the investor recourse?
You know what we have with us on those call Ophelia and Hanny, who are the founders of twenty one Shares this. You're talking about infrastructure operations. This is what I'm talking about. May I open up the floor to them.
Aphelia, you want to come in on that.
You are a partnership. You know it's a partnership with you.
At our absolutely, what's your thought on that in terms of concerns that if something happens, if it is hacked, what's the investor recourse?
So people are completely right to be concerned. This is the whole point. This is not like stocks and bonds. This requires a very different level of infrastructure, and so I think the first step in this discussion is very clearly prevention. You need to billed as robust of a setup as possible, and you need to battle test it. So we've been battle testing our implementations with custodians, our technical infrastructure, in the way in which we safeguard assets
for five years. That's the entire point. You can't treat this like any other asset in the world. It's a bearer asset and it's held in a very technical way. So one of the things that we do is we obviously we use a concept called cold storage. That means is that these assets are held offline in wallets, that have never been brought into the Internet, so you've never used them before, which means that they are the information related to the private key doesn't exist on the Internet.
It's sort of you can think of it as the diametric opposite of cloud storage. You essentially end up with a private key that's been charted, so it's been split into multiple pieces, and you need to bring multiple pieces
online at the same time. Those pieces are held in vaults that are geographically distributed in order to control access to these products, and then we obviously have a really robust set of controls around that in terms of how you initiate transfers and how you actually move assets, because the most dangerous part of custody is actually very much the point at which you access it right. Very frequently, you know, when people say, oh, somebody took over my
exchange account, the underlying wallet's not being hacked. What's actually happening is that their security and access protocols are being compromised in some way. And so it's really important how you actually secure these assets and why you need to go with a provider that's actually going has a track record of doing this and knows what they're doing through a variety of market conditions because this is actually a very very technical space.
I appreciate that Ophilias Night, our co founder president of twenty one years, and of course offering up the Bitcoin ETF with our investments, Kathy. One thing I also think as concerns about the price of bitcoin, the volatility. The last three full year returns means of three hundred and five percent twenty twenty up another sixty twenty one, followed by a loss of sixty four percent twenty twenty two. It's a market that can move around. We saw a
little bit of a pop at bitcoin. Will volatility continue to be a risk or something that investors have to be very much aware of? And I'm curious, what is your price forecast at this point now that you've got the SEC approval for bitcoin.
The volatility, this again is natural for disruptive innovation that is taking market share in any market. So it's it's normal, Carol. You've seen from our funt how disruptive innovation can can be affected by exogitiveness factors that don't have anything to do with the share they're actually gaining. In fact, we know that during tough times, innovation gains more traction because it's better, cheaper, faster, more productive, and so forth and this,
And you saw this during the regional bank crisis. The regional banks imploded, the krry index imploded, we saw bankruptcies, and bitcoin shot up forty percent.
Why, it's a flight to safety.
It will not be a victim of counter of counterparty risk the way the banks will. So it's it's actually as time goes on and we go through more and more crises, and it seems the way government spending and monetary policies go, you know that that is not going to change. I think bitcoin is going to prove it's worth you know, one thing in terms of price, and then I'd like to just talk about fees because that's
so contest. Yes, so our price target, our our bull price target, and I would say institutional money moving in makes our bull price target more likely. Now is one point five million dollars in twenty thirty and you can see and big ideas are big ideas from last year ar at ark dash invest ourdash invest dot com. How we the building blocks for that number, and institutional is one of the biggest reasons in terms of fees. You'll
notice twenty one that's a very special number. First of all, those are our partners twenty one but also twenty one million units, our twenty one million bitcoin. That is the total number that will be printed or minted right there. It will not go past twenty one million. This is called this is called a rules based monetary system. And so the fee, we thought that was clever, and we were going to start out with that one, but we knew what was going to happen, so we ended up there.
But I want to bring back something I mentioned other before. We already have the economies of scale that others do not because of our partner twenty one shares, and so we've been able to negotiate down service provider fees in a way that we would not have been able to if we had done this by ourselves. And the other thing I want to emphasize we are not looking to maximize profits with this. We are looking at bitcoin as
a public good. It is a financial super highway and we want to increase the access to bitcoin, and one of the ways to do that is this low fee product. We have other actively managed strategies where we can do more on the profitability side. Right, it is not our objective.
Here, Kathy, just one last question and that I'm glad we got that thirty seconds is to wrap up. I mean, what does success look for you guys in a year from now with this particular product.
Well, I think I think we will be a part of the success of bitcoin broadly. I think this opens a new chapter for bitcoin, and I would like to believe we would we will be within the top top three or two top providers of bitcoin through this Bitcoin ETF.
All right, just lastly, as you know I like to squeeze and stuff fifteen seconds. Is there new cryptocurrent products ETFs that might come out from you guys as well in the near future.
Well, we already put with twenty one shares out five futures products.
Those are strategy.
One last thing I'd like to I'd like to honor all of those who have toiled to make bitcoin happen through this ETF.
I want to reassure the community, the bitcoin community.
That.
Self custody, self custody and an etfre are not mutually exclusive. We want to see this eco system continue to decentralize, but we want to bring billions of people into the ecosystem. And this is why twenty one basis points.
ARKB.
Kathy, I so appreciate you including me on this platform, Kathy would Arc invest founder CEO Cio.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on.
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I always be hey, did you know that Bloomberg Intelligence tracks some two thousand companies in sectors ranging from finance to food.
They watch a lot of stuff.
We got a great team. It's like the in house analysis group Bloomberg Intelligence.
It absolutely is.
And you know what they did, tim They found fifty companies.
Yep, that weren't a closer looks Onbi's list a focus idea.
I knew this because it's an annual tradition that Bloomberg BusinessWeek does. It's a deep dive at the beginning of the year. It combines contrarian views and upcoming catalysts for change, such as new leadership, asset sales, or acquisitions. Perhaps plans for new products and services too well.
The future is in the upcoming New Year Ahead issue of Bloomberg business Week available on newstands later this week, already online and on the Bloomberg terminal. Let's get to a Tim Craighead, Senior European strategist and director of Research Content for Bloomberg Intelligence out there in London. Jill Weber is the editor of Bloomberg Business Week. He's right here in our Bloomberg Interactive Brokers studio. Jill always do love
this list and how it comes together. Remind our world who are watching and listening, how it does actually come together, how these names are chosen.
Many conversations, and the analyst said, Bloomberg Intelligence just a great team to work with and effectively, if I could condense what this project is, they take their whole universe and then squeeze it through a spreadsheet and what you're looking is what comes out on the other side. These are not by cell recommendations. We're not going to go go there, but we do think they're ones to watch. And we've been doing this project for years with this team.
It seems like it gets better and better every single time we do it. We do quarterly updates now. A lot of these are these focus ideas that the team has a ton of conviction about uh. And we're looking often for like things that appear like catalysts, especially as we go through the year and do these quarterly updates.
Which would be good for a name or bad or bad.
Yeah, and there's something that feels almost like a trigger this group, though this is as big as we get. We do these fifty and it really feels like we're trying to reach around the globe, give you some discoverability. Like there will be companies that I think we're going to talk about right now that you will have never heard about, Carol, I expect you to chime up when that happens. And then there are other ones that you're like, Okay, what I know this name alphabet?
But why the year?
But big thanks to Tim and company in advance. One of the things that I think we would be foolish not to consider is coming off of last year where artificial intelligence became such a dominant theme, there's a whole group of companies within the fifty that sort of are first and foremost going to be AI stories. Tim, So why don't we just start with that. We have not when you come to this online or at the terminal, this list of companies is just going to be alphabetical.
But we did a little bit of a courtesy here, some modest groupings so that we could kind of talk through some of these companies. So alphabet and artificial intelligence is that they're not the front runner right now, right Tim.
Yeah, Well, I have to say it's really interesting, thanks for having me on. Artificial intelligence had such hype in twenty twenty three, you kind of think, Okay, so what's left? Why is this a big deal now? And you might think of about that chart of the Gartner type cycle, and you know, are we're right at the top before it crashes into you know, overdone. We don't think so.
And there's two elements to this. And actually we just published a pretty important Chief Information Officer CIO study survey over the last couple of days that stignaled that companies were just modeling things in twenty twenty three, and they have significant plans to accelerate actual implementation in twenty twenty four and twenty five. At the same time, we had a tech spending cycle that was in a lull in twenty twenty three that we think also will accelerate later
in twenty twenty four. And you can take those things together. Companies that are in the eye of this opportunity are a big deal and there's a couple of elements that play into this and it is the biggest bucket, if you will. Across the fifty. There's infrastructure companies like applebet they are creating the infrastructure Barred for example, or Gemini in terms of different programs and whatnot that you can
use generative AI with your business. Amazon you think about their retail, but actually one of the biggest businesses they have is there're a cloud business that supports AI applications for companies. Accenture is a big IT services company and they're a consultancy that executes on programs with companies that need the advice and counsel. So that's one level and not to go too crazy about this. But then you've also got applications that you think about get into it.
You know Turbo tax, if you use that to do your taxes. They're starting to implement AI within their programs to make tax prep easier. We all know how complicated that is. Match Okay, this is a fun one tender.
Hinge.
If anybody's listening who uses these dating apps, there's AI applications being folded into tender for better photo selection. So there's all sorts of stuff going on here from AI that we think will gather steam.
Well, can't wait for the matchmaking.
Selection.
Really careful what you wish for. I just want to point out and video is not on that list, but it's already the sixth best gainer in the s and P five hundred, number six on the list, which was you know, the top gainer. But you do have a name in that list which will all take us back to the seventies or some of us back to the seventies. Disco.
What have you heard of Disco? Well, yes, but have you heard of the company Disco?
Who are they?
So? Disco is in the stemic inductor equipment business. It's a Japanese company, And essentially, as you make the semiconductors that fold into Nvidia solutions and other advanced semiconductors that support AI, you have to have special equipment to make those semiconductors, and Disco is one of those key key companies in the equipment spycle, along with some others. But we think that this is one that is not quite appreciated for the opportunity in front of them.
I just love that there's this whole suite of companies in artificial intelligence that you know, suddenly a chatbot comes along, and now we're talking about you know, three, five, ten years out. These are some of the companies that I think you're going to be talking about a lot more.
Okay.
Another big theme tim as we look into next year is these expected rate comes cuts from the Fed. But they're Feds out alone. There's also going to be some pivots at other central banks. Who are some companies that could be winners and losers out of that?
Yeah, i'd sell you. This is another interesting one where we had interest rate stories last year, as you might recall, but they were margin expansion stories because industrates were going up and that's generally good for financials like banks. This year, with the prospects of the US Federal Reserve or the Bank of England or the European Central Bank pivoting to start lowering interest rates, then it's the opposite. So we actually have a broad industry negative focus idea on margin
or profitability prospects for European banks. And Barclay's, one of the big UK banks, is a poster child of that. It also plays into the insurance business, and we have
ACXA on the list. And not only do you have the falling interest rates, but there's also some industry regulatory changes that are occurring that should make insurance companies more interst rates sensitive, and so if you do have a reduction in interist rates, it's more likely to flow through into your earning since we think that complicates the insurance
industry or access case. And point that said, on the flip of that, housing across elements of Europe and certainly the UK specifically have been under pressure and home builders have suffered housing starts or down a lot. A company named Percentment is on the list under the idea that it's likely to do better than what's anticipated from consensus as interest rates fall and how home building starts to pick up. Again.
That was a name I had not heard before the list. Well, I love the project. It's like do you like your Simmons? I do, but you know you plies there, but.
The adr trucks of the United States.
That's truly, it's just like one of these things you would have never probably ran across the company like that, And in the middle of it all is a little bit of analysis.
Tim, I got some Uh, there's some companies on here too that I think we're all familiar with. Aston Martin is a company that is categorized as releasing new products. Talk to us about why Aston Martin is one to watch.
Yeah, I'll tell you if you if you look at Aston Martin that iPod back a couple of years ago, and it's been a bit of a of a dud. They've disappointed. Even though you know the company and you can you can visualize the cars in a James Von movie and they're super cool. It's not quite executed the
plan of what was hoped. And as we look into twenty twenty four, they've got new sports cars come up, and they've got great names, the Advantage twelve it's a twelve cylinder car, or the valk here and there's others. They got an Sue, yeah, Astmark and Suv and these are all we think accelerating growth. They're super high margin products and we think that you know, that's yet to be Uh. You have to be fully baked into what the market's thinking.
Okay, So let's see we've got some M and a how if that goes down? If we you know, deals were not exactly high on the list in twenty twenty three if twenty twenty four looks better, like who's to watch?
Yeah, So the ones we have on here from an M and A perspective are taking advantage of transactions either that have lined up or that they have planned. So in the world of energy, Exxon made a very large purchase towards the end of last year to increase their exposure to the Permian Basin, you know, big old production field in the US, and this is going to be a year where they can start to execute on that.
And you know, they have have underperformed in terms of their financial performance the likes of Chevron in various ways, and you know, this should be an opportunity for them to step things up energy transition and all that sort of stuff. Setting aside, Stavic Middle Eastern petrochemical company has also had a big steel business, so they're getting out of their steel business, which should allow them to focus
in on petrochemicals specifically. And we do think that there's a fundamental upcycle they are going through the year, in particular in the second half. So those are a couple of elements there.
Well, Hey, Tim just got about a minute and half left here consumer products. We're all focused on the consumer. Can they keep spending? But there's been a couple of companies I think about St. Laura that's been trying to kind of figure its way forward. You're watching that, Diagio Aritzia. Just quickly give us some thoughts on those.
Yeah. So they're a whole host of good, big, quality brand companies if you think about the products himself, stay Lot Cosmetics across all of their brands, DAJO owns a number of high end spirits, and they've come under pressure over the course of the past six nine months for a variety of reasons. Stay Lauder had excess inventory in Asia,
Diago had too much inventory in the US. We think that this is a year where that gets normalized and the underlying business of quality, high end product will play through with those two companies and they'll play catch up.
And I have to Sayeah, that's super puff Parker. My sisters, you got it. My daughter had to have it. It comes into many, many different colors.
Yeah, very expanding rapidly across the US from a Canadian base.
Really cool stuff.
M hm.
This list well, last last little piece of the puzzle.
Energy transition.
We're gonna be short on time, but first solo byd Glenncore On that list, there's many, many, many more categories and companies. What's so great about it is you just get through this and then you go back to it at several points this in the year and you're.
Like, oh, wow, look what they were talking about at the beginning.
Of the year.
So pay attention to us. Yeah, you know that's what the thing. We're actually smart, humble, bragg well, the Bloomberg let's not get ahead of ourself. So it's the Bloomberg Intelligence team is business Week. You know they're the smart ones.
All right, great stuff. Check it out online on the Terminalis and the upcoming new issue of Bloomberg Business Week. Then you're a head issue, so appreciate it. Joe Webber, of course, editor of Bloomberg Business Week. In Tim craighead of our Bloomberg Intelligence Team. It's a killer list.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship new York station, jo Say Alexa play Bloomberg eleven thirty.
The story.
First of all, it's based on a most read story on the Bloomberg Ternal. Today's about the Wall Street analyst who can deadlift more than four hundred pounds, who has the ear of JP Morgan, Chase's CEO, Jamie Dimond, someone who's gotten a handwritten letter from none other than Warren Buffett. And it's an analyst who has taken the covened top spot in the Institutional Investor Paul, a key barometer for Wall Street relevance the past four years.
We're talking about none other than Wells Fargo banking analyst Mike Mayo, the subject of a profile Carol by none other than Shrinota Rajen and Bree Bradham. Mike Mayo joins us on the phone from New York City. Shrees here to Carol in the Bloomberg Interactive Brokers studio. He's senior, He's Bloomberg News senior finance reporter.
All right, First of all, Street great, great, great story. Everybody's reading it. Mike, so great to have you here with us. You are a closely followed voice when it comes to the big banks, which as we highlighted, has created some very unique and rare experiences for you. Letter from Buffett Jamie Diamonds. Listening to you what for you sometimes has you even saying, Wow, this is a pretty amazing access that I have in recognition. How do you feel about all of this?
Well, first, I'd say wow to the power of Bloomberg Media and what the research journalists dug up with me and the comments they came back with. But I will say it's a right and it's a responsibility. I have the right to call it the way I see it, but they also have a responsibility to do it in
a balanced way. But in response to the article, to all the companies that I've analyzed that didn't like my conclusions, or didn't like how I highlighted the shortfalls, or didn't like when I talked about compensation, or didn't like when I go to stareholder annual meetings and ask questions the management in front of their bosses, the boarder directors, or just didn't feel like I was on their side. What I say to all those people and all those corporations
is sorry, not sorry. My job is not to win a popularity contest. My job is to call a stade a spade.
What did you want to write? I mean, we know where you wanted to write about Mike. We talk about him when he has a call, But what was it that you wanted to get into street?
I mean, arguably, he's one of the most interesting personalities on Wall Street. And here's someone who's been doing bank analysis, right, he's been a bank analyst for more than thirty years, in his fourth decade now. But more importantly, here's someone whose tales go back all the way from the shame of private jet travel with John McCoy, the original dean of Wall Street CEOs, to jousting with Jamie Diamond in
twenty twenty one, twenty twenty to twenty twenty three. He's still there, He's still very relevant, and it doesn't matter what these bank CEOs have to say about him. Privately, they do grumble. They say he has a pension for grandstanding. They feel he's a bit of a showboat. They feel he's doing things to just needle that three.
M's here right now. I want you to know, Mike, I'm room.
I would tell you I know Mike and I have had several conversations about this. Mike would completely agree that is how they perceive him. Is yet the fact that he's called back for all of these operating committee meetings at these banks, for the management committee meetings to talk to their senior leaders to try and explain to them what they can do better to improve their stuff set that tells you all about his staying power, Mike.
Is that perception that she described some analysts or some executives think of you? Is that wrong?
This idea? I'm glad we have point counterpoint here in terms of you're welcome anyone, you know, in terms of grand stay in ing, show, voting, and some of those other adjectives that corporations use. That's what I've heard now in my fourth decade as a Wall Street analyst. That's what I've heard from corporations when they're trying to control the narrative, when they're very closed minded. So they don't
necessarily say that to my face. So I will say, I've been fired kind of three and a half times in my thirty plus years, and I have asked CEOs and CFOs directly, like what I was fired from credits please in two thousand, what they were saying about me, And they would just say, I just don't think. I think you're too independent for the new firm, And that's exactly what they said when I got fired then. But I would just say everyone's not It's not one size
fits all. So some banks get it. And so the one line I liked in the article I didn't like at all as the critical and that's, you know, that's the way journalism goes. I get it. But the one line I like came from Jamie Diamond, and Jamie Diamond said, differing opinions are okay. And guess what when you have differing opinions, that's called candor, that's called culture, and in the case of Jason Morgan, that's called success. On the other hand, you have a worst in class bank. Going
back is City Group the last twenty five years. Most of that time, especially the first fifteen years, it was a very closed minded culture, a group think culture, you know, don't challenge the leaders enough. And you see what has happened to City Group Now. I think City Group has
turned the corner. So if that's what you're saying behind the scenes, they're not always saying it to me directly, but over my thirty plus years, I have heard it indirectly or through consequences such as, like I said, being fired three and a half times.
One little thing. In a world where it's hard to express different opinions, it's really kind of refreshing to hear you say that. But should come on in because I know, I'm sure you've got a million questions.
No, but just to Mike's point, I will I'd like to remind everyone. And this is now going back, you know, more than two decades. But right when Jamie Diamond was coming on to become Sea of Bank one, I believe Mike had put out a report saying even hercules can't fix it. And at that time that bank felt Mike was rude and not sensitive to their needs, and they tried to ban access and not have him on various calls. Jamie Diamond came in and said, that doesn't make sense.
We need to have him on his calls. You can't just revoke access. And oh, by the way, everything he's saying is probably right. Later on, when the JP Morgan Bank won merger happened, it was an investigate in person. Jimmie Damon actually looked at Mike May and said, Mike, where are you stand up admit you were wrong. That is the kind of banter that the two of them have had. People have called them frenemies over the years. It's not like Mike is always complimentary about Jimmie Diamond.
It's not like he's always hostile to him. But he calls it as he sees it, and that's perhaps one of the reasons why he's been relevant for so long.
Hey, Mike, I wanted to talk a little bit about health and about exercise, and because part of the story talks about the powerlifting that you've gotten into just in the last few years. I did not know about this now, so Shre and bree right that you got to this after twenty twenty one, after learning that you had osteoporosis and realizing that he'd broken fifteen bones over the course
of five years. Can you just talk a little bit about, you know, your routine and sort of how powerlifting has improved your life and sort of the balance between athletics and banking and thrill.
I want to get into that, but I just want to mention a headline the SEC granting approval for bitcoin ETFs. So Mike, feel free where you want to go. You can talk about your workouts, but you can also talk about kind of the changing landscape of the financial investment landscape, because I'm wondering if you have any kind of comment on that.
Well, I would say that the job of a Wall Street analyst can be very intense, stressful, dynamic, sometimes with long hours when you least expect it. And so you know, I now work at a Wall Street division of a main street bank at Wells Fargo, and you know, they encourage a work life balance and I need it, and
so this is my outlet for that. And I was raised during the seventies when it was all about the book of running, and I ran marathons and I did cycling, and the last few years, as your body talks to you, you adjust and my bones are a week and I needed to strengthen my bones and do a pivot. So my pivot was to get into strength training and specifically powerlifting. And you know, I guess I'm that very typical personal Wall Street like, when you go into something, you go
all the way. And so I wasn't enough for me just to do this. I had to go ahead and compete. So I competed in my first meet a little over two years ago, and I got disqualified. I failed, I missed my first three attempts, but then I went back and I went to Nationals last year where I played second and broke broke into a thousand pound clubs. That's
a lot bench in deadlift. But you know, the average person loses half their muscle mass between the ages of forty and eighty, and so you know, as you know you age in, it starts to get you to fight back. And I'm hitting pr personal best records even as I get older. And so I think this story about strength
training has been underrepresented in our society. I feel like can be bandalists for spring training and power listing and all that comes along with it, but they're the genesis of that is the need to have a work life balance when you work totally hard hours on Wall Street.
And I will quickly add that I think Mike's biggest disappointment in the story was we mentioned his performance at the Memphis Feat Memphis Meet and not his personal best that game a few months earlier, when he did break into the thousand pound club.
Well, a fun read, and Mike, I'm so glad that you could join us as well. Of course, Mike Mayo joining us Wells Fargo banking analysts with our own Shrinat Raja. Here at Bloomberg News.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen.
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Indian Creek Village where the billionaires are pricing out the millionaires, which in itself is leading to a host of issues. So let's get to it. Jordan Fitzgerald and Felippe Marquez, who wrote about the story about Indian Creek Village and one of the most read stories on the Bloomberg term. I'll say Jordan joining us. She's Wealth Team reporter for Bloomberg News. She is here in our Bloomberg Interactive Broker's studio. First of all, how did this get on your radar?
Well?
After Bezos bought his two houses, which Bloomberg was fortunate enough to break. Basically, tons of news outlets were saying, look at this crazy island where all of these billionaires live, and Filipe and I were looking out and at it and saying, okay, yes, this is a crazy place where lots of billionaires live. There's lots of pockets of that in Miami. So how can we use this place to tell a story about Miami and about South Florida right now?
So you raised your hand and you said, I'll do it. I will go to Florida. I'll go to Indiana where me and you went.
I did go.
Did you get across the gate?
I did. I got across the mod You I can't reveal. I might get someone in trouble. I swear to God, I made a promise.
I cannot.
Confess.
But you have to know something you have to get. You have to get.
Someone who is allowed it.
So they bring you across.
Yes, describe what it looks like. I mean, this is like the most.
When you cross the bridges that go.
Basically you wouldn't even know it's there.
You're just driving through surfside north of Miami Beach, beautiful community, and then you just come across this little roundabout where there's a guard tower and a little bridge, and you drive up. And the reason the roundabout is there so people can very easily exit if they get turned away. But they check the idea of the person heading in. They have to give a reason prove that they've been invited. And then into Valhalla.
What was it like?
It was beautiful?
Like, yeah, I feel like that's really obvious. It's so coveted, it's so popular. It's in Miami. Of course it's gorgeous, but it was breathtaking. The island is just forty one lots surrounding a massive golf course, and so it is green and lush, and so many of the property owners have like fantastic sculptures right outside it just it kind of is amazing.
As you moved along, could you pick out like, Okay, that's where Avanka and Jared are, Like, yeah, is the person who you were with or whomever?
That a little bit, But I'd also I'd done enough research before, looking into property records on shell companies to figure out who owned what house.
So we said the five wealthiest property owners alone control fortunes of some one hundred and ninety one billion, according to our Bloomberg Billionaires Index. Talked to us about the properties and what they've been going for.
Yeah, So we talked to a realtor who's done a lot of sales on Indian Creek, and she said, before the pandemic. Twenty million dollars was a big sale. They'd have a bunch of sales a year. And now, I mean, like you said, Bezos just bought two properties for a total of one hundred and fifty million dollars billion dollars million dollars nearly sorry about that that compares with his
net worth. But yeah, and one of his houses he'd bought from a Venezuelan family that had owned it since the eighties and they paid one point four million dollars. So there's a crazy return on investment here and transformation just in the past couple decades. I mean, Jamie Glenski, a Colombian baker, owns five properties on Indian Creek right now, and he paid a total of eighty million dollars for five properties, which is about what Bezos paid for a single one.
Is that I mean, is it going to turn into like the Bezos compound.
There's forty one lots. If Bezos gets all five that he wants, Glincy also has five, that means the two of them would have I mean, heen of forty.
One lots, bit of like twenty five percent of.
The loss exactly.
It's kind of one when Jared and Evoca owned.
Jared and Ivanka owned, they are there. She was spotted just strolling around. They recently built sidewalks in Indian Creek. That was one of their big development projects since COVID.
I guess what.
About this exclusive club?
Yes, so there's the golf course is controlled by the Indian Creek Country Club. You do not have to be a resident of the island to belong to the country club. They have a finite amount of memberships and you have to be referred to one. But so it's kind of like the only homeowners who can really get onto the island are those who belong to the club or are going with members of the club.
I love carl Icon. He's got to feel pretty good about what he paid for his properties.
Carla Icon constantly, I think feels good about his investments.
It's really really true.
It's really fascinating, and I guess I just wonder like when we you know, I feel like everybody's moving to Florida, but I feel like a lot of really really really rich people are moving to Florida. You know, there's no properties left though, right, It's a limited amount of properties.
Yeah, I mean, for example, with Indian Creek.
It's an island.
There really is a finite amount you can't build out, and so that's why we thought it was a really good place to look at how Florida has been changing. It really is attracting all of these very, very wealthy people, and they are kind of displacing the people who've made that their home for years.
We'll talk about that a little bit because it is sort of a microcosm of what's happening on a larger scale in Florida. So even though we're talking about billionaires, I mean, we're talking about the wealthiest people in the world here. How does what's happening there sort of paint a picture of the bigger picture of Florida.
Yeah, So if you have, for example, Ken Griffith, who notoriously moved to Miami in recent years, when you have Ken Griffin move there, and when you have Ken Griffin bring Citadel there, you're having him bring all of these Citadel employees who are very very highly paid executives who want to come in and want to buy up properties and build big houses and drive up property values. And when they do that, the people who don't make as much as a Citadel executive, which is really the majority
of the world. They can't afford to live in the places they may have called home for years upon years.
Ken Griffin not Indian.
Not an Indian Creek. Ken Griffin lives on a different, very wealthy island in Miami. But the difference between other enclaves in Miami and Indian Creek is that Indian Creek is its own town. It is not technically an island in Miami. It is Indian Creek, Florida. And because of that they are really able to have their guard tower and have their moat and keep people out.
It's a great story. And there's more in there about Jeff Bezos when he was looking for his properties, right, like kind of knocking on the doors of people. Yes, yeah, he probably wasn't knocking on the doors.
No.
I think Jeff Bezos has other things he's interested in doing, but he went after properties he did, and if you've seen the pictures of him paddleboating, he clearly is dedicated to the environment down there.
Yeah, there's that yacht too, yacht Jordan Fitzgerald. This is really fun, so appreciate it. As we said, among the most read stories on the Bloomberg Terminal. She by the way, Wealth Team reporter. Here at Bloomberg News, you're listening to Bloomberg BusinessWeek.
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