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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 Stenebek on Bloomberg Radio.
Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast twenty twenty six. Definitely often running. It's about one week since we found out that one of the pillars of US economic governance was again under attack after fedchair J Powell announced that the Central Bank was served with a grand jury subpoena from the Department of Justice. It's not the only time the US Central Bank was caught in the crosshairs of a president or investors for that matter.
And on that and what we can learn from our financial past. Returned to the New York Times best selling author of Too Big to Fail in nineteen twenty nine, Inside the greatest crash in Wall Street History and how it shattered a nation, Andrew Ross Sorkin will join us.
All that to come. We begin, though with the real world impact of tariffs. Nearly a year after they were imposed by the Trump administration.
The Supreme Court did not rule on challenges to President Donald Trump's AJIPA tariffs this past week for a second time, leaving the world to wait until at least this coming week, possibly to learn the fate of his signature economic policy.
Again.
Possibly it could be even longer before we get some kind of ruling from the Supreme Court on this.
Someone paying really close attention apart from us to that decision is Rick Woldenberg. Rick is CEO of Learning Resources in Hand to Mind. They're two educational toy businesses based near Chicago. Rick, back in April of last year, sued the Trump administration to invalidate the tariffs as exceeding the president's authority. Rick joined us alongside Bloomberg New Supreme Court reporter Greg store Well.
Taris have had a dramatic effect on our business. The imposition of these taxes on our company, with no advanced warning and with seemingly no limit through our supply chain administration completely out the window. We had to rebuild our supply chain on the fly. It was a significant disruption in how we manufactured our product. And so we had an enormous diversion of labor in our office, maybe up to thirty percent of our man hours were shifted towards surviving.
That change also obviously created a huge cost, well in excess of ten million dollars in twenty twenty five, up from zero in the prior year, and so it affected our cash flow. It affected our costs. We had to raise our prices, and it's an economic depressant, a massive tax like that. It's like wearing ankle weights in a sprint. You slow down. And so we're a little smaller as a result of this huge tax.
So, Greg Store, I want to bring you in. This is a great story as you do so well, and it's I feel like a Bloomberg does it like reminds us that there are big stories. There are headlines, but there are people and companies being impacted, and in this case a lot of small and mid sized companies. I think it's safe to say that Rick's story not unique.
It's not unique, and in fact, it is the smaller companies that have launched this challenge. There are two different cases there before the Supreme Court, and the other ones also small businesses, actually smaller than Rix the bigger companies. While they have subsequently filed some lawsuits to try to get refunds in case the Supreme Court strikes down the tariffs, they didn't want to be out front in challenging these.
So, Rick, why did you choose to speak out? Why are you speaking publicly about this? Why did you file this lawsuit? Doesn't Yes, they're certainly upside, but there's also a lot for you to lose. Like we've seen the way that this administration has been punitive in some cases.
Well, I think that the things that I was afraid of losing were the relationship I have with our customers, the dependents that our employees and their families have on our company. Ours is a family business. I'm third generation, my kids are fourth generation. You have a very strong sense of how the health of your business affects the community that you live in. And so we just couldn't walk away from those folks. And I'm I'm very American
in my outlook. I want to take control of what's happening to us, and I wasn't going to let a politician ruin what we've built up over one hundred years. We're also mission driven business, there's lots of families like yours who use our products and depend on them to help educate their children. That means a whole lot to us. So we felt like we had a lot of reasons to stand up, and I was more concerned about not doing something than doing something.
You know, the President Rick and Detroit said quote to be anti tariff is to be pro Chinese, and the tariff challengers at the Supreme Court are China centric, and he alluded to the idea of people who are challenging tariffs as anti American. How do you respond to that?
You know. One of the things I've done in this lawsuit is I've tried not to go tit for tat and to point fingers in saying that mister Trump points fingers at me. But I'm not sure that I make my point more strongly by engaging in finger pointing back. I would just simply say that mister Trump has no legal right to have impoosed this tax on us. It's hurt our business, and we've asked the court to adjudicate that he has has no right to do this, and no American wants to or feels exposed to the risk
of paying attacks that's not legal. There are means for him to put taxes on us. He has to go through the House. That's what James Madison wants and that's what we need to do, so he can't do it. He has no idea if we're China centric or not. I would tell you we're child centric and we're trying to help children get a great start in life. That's our orientation.
Yeah, what a story, A stark story. And Greg, you know, I look at your story on this and you you know, you say, and you remind us that the president has wielded tariffs to try to get Canada and Mexico to crack down on illegal immigration, Brazil to stop to drop the prosecution of ex President Bolsonaro, and India to stop buying Russian oil. He has used this tool a lot in this administration in his first year. Come Onian on the conversation, and you know you brought Rick to us.
I'd love for you to ask Rick a question as well.
Well.
Carol.
One thing you're putting out there is that the terriffs that he has imposed under the laws that's at issue at the Supreme Court known as IEPA. There are other teriff authorities that he's used that are not before the Supreme Court. And so actually my question for Rick is, you know, the President has said that even if he loses the Supreme Court case, he's going to turn to these other authorities and try to replicate the tariffs. And
I'm actually really interested in terms of your business. Are how concerned are you that even if you win at the Supreme Court, you're just going to see a whole different variety of teriffts, maybe ones that force you to kind of shift your business plans again and shift where you're manufacturing some of your products.
Of course, that's the risk, and mister Trump has a track record of changing the rules on a very rapid cadence, which makes it hard for us to run our business. It's a little difficult to respond to like what he might do or what he might not do. All the other provisions in the law that give him the rights in post tariffs come with a lot of strings attached, so it requires a lot of fact finding hearings. It's a slow process. He can't do it by fiat, he
can't do it by true social tweet. So I think it's better to wait and see what he actually does. I'm not aware of a legal mechanism where mister Trump can be a taxing body. He's not allowed to do that. The Constitution is quite clear on that. So as much as he wants to do it without going through Congress, he can't. The law says he cannot. And so I don't want to overreact to threats made on TV. I
think the Constitution provides the answer to that. Ultimately, at the end of the day, it's going to be a lot harder for him to build a tariff structure going around Congress. The law doesn't provide for it. And so we'll see what he does, and when he does it will figure out how to respond.
Rick. The story that Greg wrote back in November talks a little bit about in the beginning of this kind of game of whack a mole, moving production from one country to another, only to find the tariffs have been imposed in this country. Also that was China to India and the like. At the end of the day, the president wants teriffs because he wants this stuff made in
the US. So is there a way that you foresee in the future you could ever just make all the products or a good portion of the products that are made overseas right now, you could make them in the US.
Certainly, no, And I've answered the questions many times. The answer is still no. And there's no evidence in the marketplace that anyone really disagrees with me. I think, unfortunately the way this is being dealt with is that our industry and companies like ours are considered a sacrificeable rounding error. They don't really have any idea what we do or how we do it. They want cars made here, they want cell phones made here, they want chips made here,
and so they've come up with one own rule. That's what their intent is. I want to bring back pharmaceuticals, and like, if something bad happens to us, it's not believe their problem. We don't move the needle economically, and so they don't care. And I don't think they care about our employees. And I don't think they care about
your families who use our products. We're rounding error. And I just can't look at the people who work here, the people who use our products and say, I think you're a rounding error.
I don't, yeah, And I.
Think that we create great jobs. Greg has been through our facilities. He can tell you that, like We're a massive consumer and user of technology of technology. I think that our business season, the way we run our business is an exemplar to other companies. We are what you want here, we just don't make a high tech product.
Yeah, you know, Greg should apologize.
Greg.
I think Rick makes a really good point. We talk so much about small and mid sized businesses being the backbone of the US economy and putting American workers to work, and he is certainly an example of that.
Greg.
We're now focusing on next week. Third times, maybe the charm in terms of whether we get the Supreme Court to rule. What should we be watching out for and are we likely to get it?
And just quickly, well, we don't know even though that we're having opinions at all next Kay, we'll probably find that out on Friday. If we don't get the tariff opinion next week, the Court's not goes on a four week recess. They're not scheduled to take the bench again until February the twentieth, and normally that's how they release their opinions. So if we don't get it next week, we could be in for our fairly long week.
Are you surprised it's taking so long, just ten more seconds.
You know, I'm not sure I've been saying. I still stand with this. I'm not surprised either way. Court has tried to expedite it. But this is a big case. It's going to take a while, all.
Right, so appreciate it. Great story as always, Greg Store, Bloomberg News Supreme Court reporter and Rick Woldenberg. He is CEO of Learning Resources and hand to Mind, a favorite of Tim's kids. It turns out.
You're listening to the Bloomberg Business Weekdaily podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
There's no chance that you're gonna have that kind of problem, but there are chances to have a problem somewhere, somehow, you know. The biggest unknown is geopolitics.
JP Morgan Chase CEO Jamie Diamond this past week with Bloomberg host and Carlisle co founder and co chair David Rubinstein at the US Chamber of Commerce in Washington.
D C.
JP Morgan, by the way, featured very prominently in a new book out on the nineteen twenty nine market crash, and this feels like kind of the right conversation to be having at this moment in time when certain investing narratives dominate US financial markets, AI, private credit, transparency concerns, crypto prediction markets, and more questions about whether these narratives are the right ones that lead to longer term gains
and prosperity for investors and for the country. There's a lot of questions out.
There, yeah, stuff about exuberance as well. Could it lead to a crisis or to a crash? It does lead us to nineteen twenty nine, a book that takes us inside the greatest crash in Wall Street history and how it shattered a nation. The book by New York Times bestselling author of Too Big to Fail, who also happens to be an award winning journalist for The New York Times. He's the founder and editor at large of Deal Book. He's co anchor of Squawk Box on CNBC. Andrew Ross Sorkin joins us now, welcome.
Thanks for having me, guys.
Yeah, thanks for joining me here. You know, it's funny. Jamie Diamond was asked about just now by David Rubin Sigin about the financial crisis and about whether or not we could have another big financial crisis. Our question for you is, in this day and age, could we have another nineteen twenty nine like stock market crash? Or is the structure just completely different? Are the protections now in place? Could it happen again?
So yes and no, I can explain I know, and then if you'd like, I can get you there if you want to get if you want to go there. Look, the good news is the world is very different today
from a technology perspective. One of the reasons that nineteen twenty nine ever even happened was literally the stock exchange was oftentimes off, meaning the numbers that you saw on the big board were three four five hours behind the actual the actual numbers, and as a result, people were just selling indiscriminately because they just thought the whole thing
didn't even work. I mean, one of the reasons youo'y see the famous pictures of people down the New York Stock Exchange, and actually the reason they're there, the reason they're all in the street, is these are people who come from all over New York and the rest of the country to try to find out, like, what's happened to their money, so that piece of it you take off the table because you can get the numbers right here and off of your terminal and everything else. There's
an SEC Insider trading is not legal. It was legal then, so all the manipulation that was taking place, there was no FDIC, so you had bank runs that took place in the aftermath of this crisis. You know, we could talk about Glass Stiegel and what that either representator didn't or whether you think it's come back or not. But here's a bigger one. Capital requirements for banks there were none zero back then. So there's a lot of reasons you'd like to believe that we can't have another crisis
of the magnitude we did. And by the way, it's also worth noting the crash in nineteen twenty nine wasn't preordained that when that happened that we had to have a great depression. That was really the first domino of a series of dominoes, and then a series of frankly terrible policy choices, the Federal Reserve basically doing nothing, the implementation of tariffs. We can discuss what that means today.
You know, there was a gold standard, so there was a question about how much money you could throw into the system, austerity, all of that that worked against things that led to twenty five percent unemployment didn't have to happen, if you will.
I have to say that was one of the things in reading your book that I was like, wait, I think there was just an assumption that it was the market crash that caused the Great Depression.
Oh yeah, everybody thinks using like there's one bad day and then somehow there's a great depression.
But there's so much in between.
You know, listen, so many people on your book tours like everybody's like this nineteen twenty nine happen again. And I do wonder, is there a better, smarter question that we should be asking you, having done all this research and taken us back there making us feel like we were in the room when it happened, You know that we should.
Be asking you, well, look, it didn't happen, and.
Then can nineteen twenty nine.
I'll tell you, I'll give you actually how you could get to nineteen thirty two today, and that that sort of maybe speaks to this. So one of the lessons that came out of nineteen twenty nine, it was actually the lesson that Ben Bernanke learned when he was doing his Great His thesis on the Great Depression at Princeton is when there's a crash or a crisis or a panic, the playbook is to throw money at the problem. Maybe
politically unpopular, but that is the lesson. And he did it in two thousand and eight, and by the way, we did it again during the pandemic. And I think we now think that there is a playbook. And by the way, there's also therefore a put on the market because we now we have the playbook. The one thing that's different this time is if you genuinely believe every financial crisis to some degree is a function of debt. Too much debt in the system. So far we're all
talking about corporate debt. Really back then, there was in nineteen twenty nine there was a budget surplus in America. Now we have thirty eight trillion dollars. The question is, let's say we have a crash and the government says, you know, we're gonna write check for five trillion dollars. That's the put. And whether you believe that there is some kind of invisible line that turns into a red line for the bond market where they say, you know what,
we like you guys in America. We'll happy to lend you money at three or four times the rate that we do today. And that's the interest that you're going to pay. And then all of a sudden you actually do get into some kind of austerity spiral and then you're living at a twenty five percent unemployment rate in the country. That's I mean, when you really started trying to get through the permutations, how do you get there in this day and age.
That's one way.
One other thing that's interesting today is the technology, as bad as it was then, in some.
Cases, could even be too good today.
And I think we learned that with the Silicon Valley Bank of Failure, where someone goes on Twitter and says, I'm pulling my account now that information's accurate. Everybody does it over the weekend on their Everybody does it. I used to think, oh, this device is so great because if there was a bad piece of information, it could be corrected very quickly. But if there's an accurate piece of information that's not good.
Right, people act on it quickly.
Well, So let's talk more about the technology today and sort of parallels and the idea of maybe irrational exuberance and signs of irrational exuberance right now. In reading the book. In the nineteen twenties, there were certainly a lot of that, but it seemed like it was, you know, more on
credit and people buying on margin. Nowadays there's the idea of crypto Some of that has been kind of pulled back, and in just a couple of months actually since you published the book, we've seen some there is.
A lot of debt in the crypto market, I mean shocking amount of leverage.
So there's there's that side of things. There's prediction markets and sort of the money that's going into those, the excitement around those. The private credit and concerns about private credit that we've seen in the last couple of months, any signs of anything there.
Look, the private credit business has always concerned me because of the transparency of it, or frankly, lack of transparence.
I think if you were to talk to J.
Powell, he would tell you that, you know, even the Federal Reserve doesn't have a full grasp of how inter linked all of the debt and credit is in the private credit market. Having said that, depending on what numbers you're looking at. You could argue, it's only two trillion dollars, two trillion dollars a lot of money, but it's not. It's not the entire market, its stem So I don't know if it's I don't know if it's systemic. By the way, I might worry more today about short term treasuries.
I mean, by the way we the United States have been trying to sell short term treasuries like crazy because we think that we can get a cheaper rate that way. That's also a much more complicated place to be if in fact you actually have to pay it back more quickly.
One of the questions we were kicking around when we're thinking about having our discussion with you, is is Wall Street greedier today?
I don't know if it's greedier today. Frankly, I always argue, agreed, Look, I think.
There's greed bad necessarily.
I think the lesson for me of writing this book in some ways was that they didn't use the phrase back then. But this idea of fomo, which by the way, is driven in part by this phone and TikTok and people seeing all sorts of things, by the way, I think makes inequality. Actually, I don't know if it makes it worse, but the perception of it and just the visibility of it. But I do think the sort of
fomo greed envy, I think that's what's driven. That is what's driven people for you know, the test of time, and that's.
What it is.
Is it Is it worse today than it was before? I don't know, except and maybe this gets to the inequality piece. I think there are more people who think that they're effectively unable to actually make it, and therefore more willing to take risk and more willing to sort of try to grab this lottery ticket as opposed to sort of make it over time slowly.
So so on that the ultra wealthy today versus the ultra wealthy back then, And reading the book, there's a lot of you know, people have their yachts and in some in some cases actually sailing to work in Lower Manhattan on the yacht. Absolutely today, the wealthiest people today, how much different are their lives versus the ultra wealthy back then, and not with the technology, but I mean what they were able to do versus what the normal
person is able to do. I mean, you have you know, billionaires, going to space.
Now, I think there's a there is a distinction. But look, I think you go back and I think of JP Morgan's son. He was building the biggest, the biggest yacht at the time people would have thought that's like, you know, the Gates or Bezos, Yeah, whatever yacht you're thinking of.
I think that there was a distinction. But I remember having an interesting conversation I've enough to drop a name with President Obama, interesting on maybe two thousand and fifteen about the idea that and I think this is true in the twenties, but really true even just twenty.
Five years ago. I think CEOs people.
Of means were oftentimes living in the same neighborhoods with the people who worked on the factory floor of their companies, and as a result, their kids went to the same schools, and they went to the same temples and churches, and ran into each other at the same restaurants and markets. And I think that there's a cohesion there that's important for our culture. And I think that increasingly that has come apart.
We were talking with Andrew Ross sork In. The book is nineteen twenty nine Inside the Greatest Crash in Wall Street history and how it shattered in nation. You know, politics got in the way of regulating banks and markets back then, and I think it was kind of fascinating to see some of that. Is there a parallel to that today when you look at the activities Andrew coming out of the White House on things like cryptocurrencies, regulatory oversight, Like, I just wonder how you see that.
I'll give you actually a parallel that may seem like not like a parallel, but to me is which is we're all talking about right now, the politicization potentially and
independence of the Federal Reserve. I actually remember, as I was working on this book, looking at the diaries of a lot of the people who worked on the the Federal Reserve on the board, and it was still such a new institution born in nineteen thirteen that they were concerned about the political implications of either raising or lowering interest rates at any given moment.
They actually cared about the politics.
Now.
It wasn't that Hoover was telling them exactly what to do, but they were so scared not that they were just going to get hauled up in front of Congress from making the wrong choice, but that the entire thing which people still called back then the experiment at that point that Congress could effectively disband this very idea, And so I raised that only because it's clear to me that
actually the independence of the FED matters. In fact, one of the reasons I think that they didn't act more forcefully in nineteen twenty nine and in nineteen thirty and after that was in part because there was their own concern about the politics, putting aside whether the White House was telling them one thing.
To do or the other.
Do we have that today, I think less so, or at least up until recently less so. I think that maybe in the same way that clearly those governors of the FED back then were cognizant and nervous about the politics. I mean, I don't think this FED things are going
to be disbanded, but I think that they're cognizant. They are very aware, very aware of what the President's saying, what their reputations are going to be like as a result, what people are saying about them, whether they have to do certain things to demonstrate their independence.
I mean, that's the thing.
The idea of demonstrating your independence effectively means you might even make a decision that might not be the decision you'd otherwise make, but you're doing it for your own reputation. So yes, I think that all that is not healthy.
Does the FED keep that in a few months when Jay Powell is no longer that chair, And look, we can't see the future. We don't know who will be nominated.
I have a view that is maybe a contrarian this in this space, which is there's a board and there's a number of people on that board. I've never believed that the entire FED is controlled by one human being.
It just isn't.
And so I think it's very important who is running it. I'm not telling you it isn't. But I do think there will be people on that board, those who care also about their own independence, right, who will By the way, another reason I think Jay Powell may ultimately stay on.
That board for that reason that you went there.
Because we're hearing that a lot, right, Because we keep.
Waiting, we're going to expect to hear an announcement. It just keeps getting pushed off, and I just think there's.
A lot no.
No, by the way, it's not that I think that Japa is going to be in this role for forever.
They're going to let him stay.
No, but just that you know, he can stay for another two years after this on the board, and I think it is more likely that he will stay. And in fact, to the extent that the President would somehow like to use that spot for somebody that he'd like to nominate, I would argue this whole thing has backfired.
In fact, you know, I was talking to Harvey Schwartz at at the New York Economic Club yesterday from Carlisle, and he made the point most people, most taxi drivers, people in the street didn't care about the the idea of FED independence at all. A week ago, they didn't even know. I mean, this has been an academic conversation for the most part. Now it's like a thing, and people constituents across the country all of a sudden care about this issue. They may start to call their Congress.
I mean, it's very interesting. What's happening.
Yeah, I was actually I've shared this story before, but I was with a friend's Sunday night who he follows the news, but he's not in financial news or anything, and he picks up his phone. He's like, have you seen this video from Jay Powell? I was like, why why do you care about Jay Powell? And that's how big of a deal it was over the weekend.
And so to me, that's why in some way I think Harvey Schwartz is probably right. The idea of fetting dependence may may have actually become more important and potentially even stronger, at least in the short term.
Hey, I want to ask you about the process. I remember reading Too Big. Default loved it, and you know, reported through it and was able to I think, like you talk to some of the people who were in the room when it all happened. I remember dring to John mack on a panel of course, formerly a Morgan Stanley and getting that actual physical tech from Mitsubishi. It felt like it felt like, excuse me, you were in the room like the way I read it, So tell me how you did that. What was the box of
things that you got? You're like, oh my gosh.
So unfortunately all of these people were not alloted.
No, and you really.
I spent about eight years, really, you know, just combing through boxes and boxes and materials, some at libraries, some from families that were involved in this universities. I was able to convince after a lot of knocking on doors the Federal Reserve in New York to give me access to the Board minutes. That was something that they haven't given out over the past one hundred years. They, by the way, interesting on their website today you can get
you know, last month's board minutes. You still can't get the nineteen twenty nine of board minutes. But that sort of became a treasure map for me. But a lot you know, when you see two people talking to each other in a room, what's oftentimes happening is I'm finding.
A series of depositions.
For example, where Charlie Mitchell, who's the main character of the book, ran National City, which becomes a city group. You know, he would be interviewed in the deposition or in a civil case. There were also criminal cases where they would ask him, you know, where were you when X happy and said, well, I was walking down the street and I got to sixty fifth Street and what did you say to so and so? And I said
such and such. And then they would interview his colleague and they'd say, well, you were standing on the corner, what did you say to it? And he would say, this is what I said. And then they'd interview his wife, and so when.
Though all of those quotes are real.
And then oftentimes I would go and try to find the architecture plans or a photograph of the room so I could really try to put you in it, and I try to understand what the weather was that day and what you know, whether it was light out or not, all these sort of little things so that again, if you're trying to as a narrator narrator, you can sort of feel like you're there.
Was there a time when you were, you know, in some sort of archive over the last ten years doing this where you got this sort of treasure trove of correspondence between two people and you were like, Okay, this is what I needed, This is the ticket, this is going to illuminate.
You know what it was? One of it was like or is it just so peaceful? No, it was like it would either be raining, like you're in the rainforest and it was fabulous, or just like the desert for months, and you'd know because you'd go to these places looking for stuff and then you'd go through all these boxes and there'd be nothing, and then you'd be so depressed
and then magically something would happen. I mean, I will say there was one moment for me still that I think was just like a true aha, which is one of the main characters the book is Carter Glass, of course Stiegel. He was a senator in Virginia, and I think I had an impression going in you know today, it's off of that that bill is often held up by Elizabeth Warren other people. Is this sort of pure effort to really break up the banks for all the
right reasons. And I found a trove of correspondence that showed, I think, maybe for the first time, that in fact, parts of that bill were actually written by another banker trying frankly to screw over JP Morgan. And you think to yourself about, you know, money in Washington and lobbying, and I thought, oh, the good old days, they didn't do things like that. And it's no different.
Yeah, exactly what I want to.
Talk about Evangeline Adams. Evangeline the character that everybody wants to talk about. Well, we should explain who she has for people.
Ev Angeline Adams is an astrologer. She had an office up at Carnegie Hall on fifty seventh Street, and every banker in town would go visit with her. She had a newsletter. I mean, I like to think deal Book is successful. She had a newsletter with one hundred thousand prescribers. Back then, people would go visit with her. They'd pay fifty dollars an hour to sit with her, and they she would ask her what's going up to the stock market and she would tell them. They would go off
and make their trades. And it was just She's just an unbelievable character even believe that something like that existed and that serious people were really engaged with what she was saying and doing.
It was almost like she was a confidant for some of these people, which was pretty surprising to me.
I almost think of her as a psychiatrist, like a therapist for people back then.
Yeah, yeah, I mean just the similarities, Like I think about kind of the Wall Street South that existed right with folks in Florida and we have that today.
Well, Tom Springs, I mean, when I learned that mar A Lago happened to be owned by who If Hutton, which was just such an indication of what was going on in America at that time. And by the way, ef Hutton had also moved in I don't know if you saw it to the Plaza Hotel. The famous Oakroom, which is a bar during progression, has become a brokerage house.
So do you feel like you have a better understanding of what would cause? Like Jamie Diamond said, we may not get another great financial crisis, but there will be a problem. Like, do you feel like you know? I think because everybody keeps saying could we get this again? Is it likely? Or do you get a better indication of like what we should be watching out for in terms of what marks? Is it leveraging?
Is it's always leveraged.
It's just it's just it's like a one word answer. It's probably boring. Leverage is the match that lights the fire every single time. You could have all the bad actors you want on stage doing all the bad, greedy things you could possibly imagine, but there isn't the leverage piece. It's very hard to have a true systemic problem, you know.
I was shocked to know that at the end of nineteen twenty nine the stock market was only down steven venteen percent, and I actually think that was a headfake for a lot of politicians who were looking at the market and saying oh, looks like things are better, But most people didn't appreciate that during the fifty percent downdraft that had happened prior to that, it wasn't just that equities had fallen fifty percent, is that people had taken
out loans, oftentimes ten to one. So they didn't just ow, oh, what the equity was that had fallen. They were getting margin calls saying you've got to sell your house, and so it's that. And I think we saw that again in two thousand and eight with the subprime crisis, and I mean, you can it repeats.
Well, it's funny, you know the Joe Kennedy thing about like when is it your shoe shine guy?
Right?
And I always think about before the GFC, being on a yoga retreat in Mexico and everyone was talking about buying real estate, and I thought, this is, like, this is just weird, like those little snippets of things as an indicator that things are just exuberant irrationally. Perhaps is that fair?
I think it's fair.
I think Look, I think all of.
These are with all the d that we have right to look at all these are.
Red flags being thrown on the field, but just because maybe I should say yellow flags being thrown on the field, and the question is when do they turn red? And I think that's the hard part to know you Famously, here we are started the segment coming out of Jamie Diamond's interview in two thousand and eight. His daughter had come to him, as this is all happening and said, Dad, what's a financial crisis? And he said it's something that
happens every seven or eight years. And so I think the truth is, well, check your calendar.
We might be due.
We're speaking with Andrew Ross sork And, author of nineteen twenty nine Inside The Greatest Crash in Wall Street History and how it shattered a nation? Does Herbert Hoover get a bad rap?
So?
I have maybe more empathy for Herbert Hoover than others. It's not that I think he made the right decisions. In fact, he made a series of very poor decisions. It's just that I think, at least historically, the narrative that's been disc i him is that he didn't even understand what was happening. I think he understood very well.
What was happening.
I think he had some of the wrong people in his ear, including Andrew Mellon, who was his treasure secretary, who had a terrible, unfortunately relationship with early on. I think his decision on tariffs was completely misplaced. Why did he do that. He did that, by the way, for political reasons, because in nineteen twenty eight is he's running around the country desperate to get farmers to vote for him. He's pledging to them vote for me, I'll help you.
Wait, wait, wait, are you talking about two thousand and twenty years and so?
But when he hits you know, and by the way, nineteen thirty rolls around every economist in America, all the bankers are saying, please, don't do this, mister president, and he says, well, I have to do it because I pledge these folks that I would. So you see these sort of repeat things. And it's not that he didn't know what he was doing. I think he just didn't understand. He was also, unfortunately for him, a terrible, terrible communicator. And I will say maybe this is true of all presidents.
He had this view that he could jawbone people into believing that things were better than they really were. And I think we're seeing that now, by the way, with the last illustration that is a bipartisan tactic by the White House.
What's your biggest takeaway from doing this? My understanding is you wanted to do this because people used to ask you, you know, nineteen twenty nine versus two thousand and eight.
Tell me.
I wanted doing this.
I mean selfishly, I felt like I now understood what actually happened, just as a student of history. I actually just genuinely wanted to really get it. I want to know who the people were. Wouldn't understand their incentives or their motives were, why they were doing what they did. And I think ultimately the truth is that we are all human beings. Maybe it's fomo, maybe it's envy. Maybe we all want more, and that's for better or worse.
What seems to drive people? And then the question is when people get a little too confident, you know, can you have the humility effectively to step back and realize eyes that maybe that confidence could be misplaced?
You right, that the anadote to irrational exuberance is not regulation by itself, nor skepticism, but humility, the humility to know that no system is full proof, no market fully rational, and no generation exempt. Do you see that humility out there today.
I said it better than the book said.
We have the full screen for it. I see there's humility today. I see that humility among some Look. I think, you know, we're also talked about Warren Buffett. Jamie Diamond and David Rum said, we're talking about Warren Buffett.
I think.
I think Warren Buffett has a remarkable humility, and when it comes to sort of even his own confidence, he has humility about then. I think there are a number of business leaders and investors who absolutely do. And then there's a number of business leaders and operators and investors who clearly don't. And I think anybody who walks in the door and sits down at this table and can tell you exactly what or it thinks they can tell you exactly what's going to happen.
Probably do.
I think they believe it that.
Thank you so much, Thank you so much for having me.
Yeah, we really appreciate Andrew Ross Sorkin. The book is nineteen twenty nine, Inside the greatest Crash in Wall Street History and how it shattered a nation. I've learned a lot.
Yeah, Andrew, thanks so much for Johnny, Thank you appreciate it.
You're listening to the Bloomberg Business Weekdaily podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including skiing outdoors and indoors with the CEO of Snow Partners. You've done both, have you?
I have?
Yeah. I've been to Big Snow at the American Dream Mall once.
Did you actually ski down the slope?
I did? Yeah, But it's a great place to bring kids.
Yeah.
Not super steep and very short, of course, but guess what, it's.
Open in the summer, and it was fun.
It was fun. It's never not fun. Plus from Japanese Prime Beef Star chefs working the Counter and large format Martiniz, We've got the most exciting US restaurants to check out this year.
Also, while some top chefs are turning your leftovers into tasting menu gold, first up this hour prediction markets. They are being fueled by platforms such as Kelshi and Polymarket, where users make predictions tied to real world outcomes, but you can kind of bet on just about everything.
The idea is simple, Prices move based on collective relief, turning crowd sentiment in a real time forecast, and sometimes big money on the line.
A recent Bloomberg Big Take highlighted how prediction platforms are pitching themselves as tools for insight, but I catching bets on real world events are raising questions about access, integrity, and regulation.
Bloomberg spoke with economists, US politicians, and heads of trading firms and hedge funds to understand really what's at stake in the prediction market's boom. Tanisa Sikova and Lydia Bayoud are part of the team behind the story. Danitza is Bloomberg News Cross Asset reporter. Lydia is Bloomberg News Financial Regulations reporter. Denisa Here in our Bloomberg Interactive Broker studio,
Lydia joins us from Bloomberg's Washington DC bureau. H Lydia, I want to start with you in Washington because you cover financial regulations prediction markets. Is it fair to call it gambling?
I think these days people increasingly are seeing a blurredline there to your point about marketing speak, the companies are very keen to describe themselves one way. But certainly within Washington, I don't think a lot of people are seeing much of a difference. And for sure in the sports gaming world, they see them as direct competitors.
Yeah, it's interesting gaming gambling. What exactly is this denis to come on in for those who maybe have been living under a rock, which is kind of fine. I like to kind of hibernate every once in a while. Remind us what these prediction markets are all about. Who are the big players?
Yeah, twenty twenty five was a year of prediction markets. We had two big firms kind of dominate the space of cos Kaushi and Polley Market. Their valuation went through the roof. They started from like one to two billions and both end of the year in the double digits off billions, So.
Really really rapid growth.
And we're not only those tech city convoling names. We're seeing a lot of traditional finance names. We're seeing CEMI, We're seeing a lot of those traditional finance players getting involved in the space. So clearly this is interest more beyond city convuli.
The volumes are crazy, So.
But tell us how it works, Like can tim or I can we go out and place the bet like how who determines who can do what on the platform?
Super simple, super easy. So obviously sports betting you have to be twenty one for this.
Eighteen is enough. It's very accessible. You go the bet is like as cheap as like a few cents or a door and you just go and create it.
Just very shrimple.
Yeah you can.
Create the beat.
No, you cannot create the bat. You can place that, you can ask it.
Oh yeah, there is a way to claim a market, but of course it's up to the platform to create. But as we have seen in recent months, there is a lot of variety of bets on things that you know, anywhere else you cannot bet from the bet on Nicolas Maduro being outed to any time of pop culture thing and.
Any top artists on Spotify this year is on culture.
Now of course that's very popular any type of mentioned market. People are watching like politicians stole on TV and betting on every word they say, every twist like people are even making fun of this. We famously had the coin based CEO knowing that people are watching what he says on the earning code, so he was he was crashing the market.
So that's where I want to bring in Lydia, because when you're in a world Lydia Bayud, where there is one person in control, like a CEO of a company like Elon Musk, if the number of tweets that he sends between a certain period of time, that's a bet on poly market right now, or prediction on poly market that one can make. What is the slippery slope that opens when one person is in control of the outcome here.
So that's something that I think regulators and policymakers are really grappling with. Particularly, I think the Maduro example that we highlight on the story has really made that so salient for everyone right now. Generally, federal rules prohibit UH federal employees from trading on non public information for their
own financial game. I think Representative Richie Torres is planning to introduce legislation if he hasn't already this week, that would like very clearly prohibit that type of trading UH
on prediction markets. But really we're kind of facing like a different regime compared to how I think a lot of people think about insider trading that is regulated in equities markets or markets overseen by the securities in exchange composition, cause you know, if you're in the derivative space and you are an energy producer, an agriculture producer, you're expected to trade on knowing you know, my crop's really great this year, or we're pumping so much uh oil and
gas out of out of the ground. You know, I'm I'm able to hedge my position and sort of let my knowledge that I have inform both me and then the market. You know, there's kind of a market utility argument that is made in those traditional markets, and we're seeing that again sort of these blurred lines shift into prediction markets, and people sort of grappling like okay, well,
what's okay insider information? Like what benefits everyone to have insiders trading and kind of you know, as they like to say, drawing on the wisdom of the crowd and doing price improvement, but.
So not exactly your machines.
Right, Well, that is the big debate about how are you gonna draw that line about you know, if you are Elon Musk in your there are mention markets, and what you might say to your you know, not to pick on Elon anyone, any executive, right and you're gonna you know, there are mention markets and what you might say in your quarterly call. Do you swing a market
just for funzies? Do you swing it knowing that you know your buddy's buddy's buddy might have some money writing on the line, And then how does anyone catch that?
Should they be catching it?
There's so many open policy questions that are being asked, I think around Washington right now because of these markets.
Yeah, there's an interesting you know, I'm just going through call sit you could spend I know both of you did this, Like you get some hours going through this, but like, does it really serve the market to need to ask if will Taylor Swift and Travis Kelcey be married before January?
First?
That's important stuff.
It is important stuff. We had a lot of Bloomberg headlines on this as well.
But indeed did we We did?
We did?
But it is important.
So what a lot of those prediction micro believers says, We're going to bring a lot of people through sports. So for example, Kuchi has ninety percent of their volumes very often coming from sports. So it's pretty hard to make the argument that this is a truth machine at
the moment. But what some people hope and believe is that eventually some of those casino elements and of those betting elements, we will bring people who want to bet on things like economic data, things like maybe people want to hedge, Like the hedging scenario is something that has come up a lot talking to people. It seems like it's not coming anytime soon, but people are saying, Oh, maybe I want.
To hedge the weather in Florida. Maybe I have a house and I can't buy insurance.
Well, I don't understand that.
I keep going on topic and I'm trying to take them off topic, Like here's another one. For example, what will Rachel Maddow say during Jimmy Kimmel Live, Right, Okay, Epstein corrupt slash corruption, Ice, Russia, Ukraine, affordable affordability healthcare?
All right, but there's serious stuff like the FED decision in January.
Helpful what we do?
And we talked about this doing elections in different things.
For sure. Elections have proven to be one pretty good time.
Help me understand though, and well you know, Lydia come on back in here. One of the things I'm curious about is like who is checking who is making these trades? Is KLSHI or is polymarket? Are they actually checking, especially when it could be potentially insider trading. Do they know exactly who's making these trades? Are they doing due diligence?
So these exchanges are structured as self regulatory organizations, so they're supposed to kind of self monitor, monitor trades and root out any potential for market manipulation. Again, the sort of where you draw the line between what's okay what's not okay on insider trading, that's a judgment call, I think, except in all but the most clear cut instances. But you know, exchanges can self report information.
To the CFTC.
The CFTC can look into it. Again, it operates differently than the Securities Exchange Commission.
But what's the bandwidth for regulators to want to take this on.
The CFTC is chronically underfunded. They have I think roughly five hundred staff.
The sec has for four or five.
Times maybe ten times that number are not quite but they they they are understaffed for the task at hand, and there are more applicants. I mean, I think we mentioned in the story that there are there's a lot of interest driven heavily by sports trading, but also in the economics, also in other spaces. And so they're kind of underwater in terms of all that there is to do for market demand for this space. So I think a lot of people are wondering what the CFTC will do.
But if we look at the new chairman, Michael Sellig, when he was an attorney in private practice, he wrote a comment letter that was pushing back during the Biden administration on any effort to reign in sports prediction markets, for example, or really most prediction markets. So I think you've got someone who's very you know, he said he's going to defer to the courts on how the courts
might eventually rule on this topic. But at least when he was an attorney representing clients, he was very much in favor of.
Them before we let you guys go, Taniza. If we think about the universe of prediction markets, Robin Hood's getting into it, Calsh and Polymarket are the big ones, and they count I think a Trump as advisors to both of those. Are these all regulated the same way or is one regulated differently than the others.
So also obviously they have the Trump as advisor, and Trump Media is looking into launching a Prediction American and a lot of the sports baking companies are looking to also get into prediction market the way so Cawhi so far is obviously under the CFTC. Polly Market is just entering the US. They have this beta test so they're
only onboarding some users. So currently most of the beds on poly Market are actually in this weird regulatory space where a lot of them are coming from abroad and isn't necessarily regulated under the CFTC.
We've seen very different decisions.
For example, there was a market connected with the United Care CEO killing, and CFTC asked how shei to remove that market, but poly Market, who is not under that jurisdiction, actually kept the market. So you can see there are very different outcomes depending on the regulation.
Well, a human land on Mars before California starts a high speed rail nineteen percent chance costs twenty cents for yest eighty five cents for now.
Well, what counts as the high speed rail.
Is like I'm just reading.
This is the Bloomberg Business Weekdaily Pod. Listen live each weekday starting at two pm Eastern on Apple car Play 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 played Bloomberg eleven thirty.
Yes, ski season is underway this winter. Snow story, though, has been all over the map, and as you keep reminding me, Tim not so great.
Yeah, the Rockies they've been off to a slow, dry start, snowpacks near historic lows before recent storms helped open a little more terrain. The Northeast has seen more mixed conditions. Parts of Canada and Vermona reporting solid powder days. But for those folks who went out west over the holidays, they were so disappointed.
That's a bummer. That's a big bummer. But I feel like we've been repeatedly or often more often the last few years hearing that story. All Right, That's where Snow Partners comes in. With an indoor ski resort. The company is keeping the slopes open year round, no matter what the weather does outside. Joe Heshan is founder and CEO of Snow Partners. He joined us from the company's indoor ski slope, the Big Snow American Dream in New Jersey.
Yeah, we're having an amazing start to the season. The whole Northeast really is really having one of the best seasons in a few years. We have Ale Nina type of weather pattern, which typically you know means cold early. So the Holy East Coast is good, Mountain Creek is doing fantastic. We're gonna have full connection of all of four of our peaks by holiday week, which that's how we measure a great season. So it's early, but it's looking really good and we're really excited about it.
How many people are showing up. I'm just curious about the kind of demand. You know, we are watching the consumers so closely, and I'm just curious, what are you seeing.
Yeah, that's a great question.
You know, we're seeing great visits because of a great snow and the great conditions. And I'll be honest, we talked a lot about what's the economic impact of skiing. You know, many people, you know sometimes it's a higher expensive sport. And I'll tell you in my experience and industry in twenty five thirty years, weather is the biggest indicator.
If you have good weather, you have great visits. If you have bad weather, I've lived through with a pandem, I've lived through the Great Recession, and when you have great weather, you have great visits. And we're seeing that on the East coast overall.
Right, now, that's good. I mean that's here.
So your bottom line saying it's weather related it has nothing to do with the economy.
Yeah, I spend more time in the fall thinking about, you know, how the squirrel's acting and the farmers all the act and things like that. I'm more worried about that than the economic situation in the country.
Okay. So, Joe, You've got an interesting business because you operate these two resorts, one of them outdoor, one of them indoor. I mean the one that you're in right now. I've been to this one and it's a great place with little kids to like introduce them to skiing and to teach them. Talk a little bit about what's going on in the American Dream Mall and and just the stability there, because there are a lot of questions about
the mall and the financial health of the mall. But are you guys okay, even if the mall as a whole is having a challenge.
Yeah, that's also a great question. We've been here since December fifth, twenty nineteen. We were one of the first tenants to work with Triple five. I've the people who operate the mall, and we've been successful every year since twenty nineteen. We've had constant growth from our revenue side. Our first year of opening, obviously within six months was COVID and the pandemic, so we're a little slow on getting groups up, but now we have great group visitation.
I'm very happy with the performance at Big Snow, and this is going into our busiest time of year.
Where we're going to see really great visits the mall. Overall.
It's funny back in twenty nineteen, I got asked that question all the time, and you might have been the first person to ask me that question in the last two years, because as you go through the mall, especially this time Yere's, it's really there's a lot going on here, a lot of entertainment, a lot of new tenants have opened up. We're really happy here and we're really happy about the business we have here as well.
Okay, cool, So where are the people and that's three sixty five? You're there. You guys are open every day every day?
Well we three sixty four. We close on Thanksgiving?
Okay, that's the one day you're not open. How's demand they're looking because it doesn't matter in terms of snow because it's all man made, it's indoor. What does demand look like in terms of is it cyclical, is it stronger now than it was, because that could give us a good barometer of the economy.
Yeah.
The most interesting thing about operating a snow dome that's open year round is everyone thinks that it's going to be busy in the summertime because that's when other resorts are closed. But we're busier in the winter when they could go to other places. So when winter is on
people's mind, when snow's in the market. You know, right now, we've had snow in Central Park already this year, so that drives tons of visitation because when it's cold outside, people just think winter, they think skiing, and that's where most of it becomes. Springtimes, our slow is time year, Summer slightly busier than spring, and then fall starts to ramp up with people from all over the country coming to get their first terms on.
Snowe Hey, Joe, I'm curious, you know what your cost equation is. You know, we're in an environment where people still talk about everything costing a lot. We were talking with folks representative of the restaurant industry how they're dealing with labor and food and lack of immigration and that is certainly impacting them. What are your what's your cost structure look like right now?
Yeah, I think for us, definitely things when utilities get more expensive here Big Snow, that's definitely a consideration for us.
As far as labor, you know, we've we've always.
Since we opened, we've strived to be one of the top workplaces, so we've always paid a very competitive hourly wage to our team here and then for as far as guests and what it costs at Big Snow specifically, we've tried really hard to take the barriers of why people don't try skiing in the first place, and we tried to take those barriers out of equation and those barriers are distant, so we're really close to the population here at Big Snow.
But it's also the price of entry.
So so you can come and have a package for you know, well under one hundred dollars and that gets you a lesson, gets you rentals, all the equipment, outerwear, jacket, and your access on snow.
So but cost is definitely over.
The years, and that's something that We're always tracking to figure out how to become more efficient.
For sure, there's been.
So much consolidation in the ski industry. You have Alterra Mountain Company with the Icon Pass. You have Veil Resorts with the Epic Pass, which kind of invented that in the early two thousands. Rob Katz and Veil doing that. You guys are independent, though, is it How tough is it to be an independent operator in twenty twenty five twenty twenty six?
I think it depends on the geography and where you're located. We're very lucky that both of our businesses are are directly related to population. We do a lot of new visits. We have a lot of core local customers in Mountain Creek. Up here in New Jersey. We have is our sixtieth year of operation, so we have really good communities. People that learn to ski there and the sixties are now taking their grandkids to learn to ski.
So for us, it hasn't impacted us.
But you know, people aren't deciding which way to go, and that actually brings up a really interesting point of you know, Veil a huge fan with Veil has done a huge fan of what all Terra has done. We've also seen a lot of independenceries words come together with
things like the Indie Pass. We actually released a new product this year with a bunch of partners called the Snow Triple Play because what we found out that we are really introducing a lot of people to this sport and we can kind of give those people a warm handoff to other.
Resorts all across the Northeast. So we've seen a lot of success in that.
It's really fascinating kind of going through all your business you've got, I guess it looks like an app manager resort from an iPhone. I mean, talk to us about like what the business strategy is and where's the real growth is it, you know, creating more of what's behind you in other places around the country or even around the world. I mean, where's the growth or how do you create either organic growth or acquisition growth for your business.
Yeah, that's so when you look at Big Snow, we certainly want to expand and build more Big Snows, And I think the reason that is such a great opportunity is because you can design them to expect you can roll them out, and you can operate them really efficiently, kind of like the Jack Welsh, variation is evil situation. Without the variation, we can really figure out how to operate an efficiency. So big snow is really important in
our future plan. But we are most excited about Snowcloud, which you mentioned in the Technology and you also mentioned earlier things like.
The epic Pass and icon Pass.
Over the last decade, we've seen massive innovations with those past products. But I think the next ten years the disruption in the ski space is going to be driven by technology.
I always going to be able with.
I think it's going to be the way resorts operate their business, the platforms they use to relate with customers. And I think the biggest change is about to happen which we've been excited about is the AI piece, which I know a lot of people talk about AI and they don't see what that's going to look like and how that's going to feel, And the way we see it and what we've been building our platform to do is you should be worth dealing with your own families, agent,
booking anything. I think that's the way this is going is everyone will have their own agent yea, And if you want to go skiing, you're going to say to your agent, I want to go skiing, where should I go? That agent will then broker with agents at different resorts, and I think it's going to completely change change the
way people plan trips, the way they buy passes. So I think in many ways, what we've seen with the Epic Pass and Icon Pass and other passes, we're going to see a complete change in the relationship of how people buy products, plan experiences, and it's all going to be hyper personalized. Like, yeah, I have this thing I would say is like, have my people call your people. That's like the joke that they've always said on cartoons, and that's the way I think people are going to plan their trips.
You're talking about agentic AI.
Right, absolutely, Yeah, yeah, agentic ai where everyone has their agent, each business has their own agent. Different Like I see a world in the next few years where it's not just Epic and Icon as the leaders. I think there's probably twenty thirty forty flavors. The technology we're building allows any resorts to team up together have different segmentations.
It's really exciting.
Totally get it. Heyess. One thing I want to ask you climate change, is that creating opportunities for you, especially when it comes to inside kind of ski experiences.
You know.
I think it's it's definitely easier to operate a business when you don't have to worry about the weather. You know, we have our outdoor resort and our indoor resort, and it's really easy to You know, what's interesting about operating Big Snow is it's kind of like retail where I can literally predict what we're going to do almost every
day because of it's so consistent. When you have you know the changes in the climate and you have different variables, you need to be ready for what if we have a slow start like we're seeing out in the West right now. And I always remind people that you have to have a good pre soul strategy. So Vale has done great with the Epic Pass. They've sold them, same thing with al Terra with Icon Pass. Resorts know how
to make sure they protect themselves early. And I always tell the skiers who have I have a bunch of trips planned out West this year, don't judge the early start for the whole season. This could still be an amazing season out West. I was a Jackson Hole on Monday. They're getting a massive storm this weekend, so you know, I wouldn't give up on the season on the West. I think we have good, good ski days ahead of us.
Hey, Joe. To Carol's point about other parts of the business, if we think about snow partners and the Umbrella organization, how much revenue comes from actual operations of a big snow and Mountain Creek versus SoundCloud snow operating business and snow Go the bikes that you manufacture and sell.
Yeah, so revenue wise, we're probably so high level.
Think of like one hundred million in revenue. We're doing sixteen operations at this point.
The rest of it is primarily focused in Snowcloud or software technology.
As far as where the growth opportunity.
We think we have, we think Snowcloud is going to be the Shopify experiences. We work with Stripe on our platform where we're really lucky to be one of their category leaders in the space that we're in, and I think we can see growth with Snowcloud that's not just in the ski business, but water parks and amusement parks. I feel a way that Shopify has opened up the doors for people who want to be in retail at all sizes and levels. I think that's what we're truly trying to build with Snowcloud.
So that right now.
Is not our largest business, but I always tell people is by far our largest opportunity.
Just gonna say, I love the Mountain Creek water Park. Did that with my daughter.
It's pretty wild.
It's pretty wild. I actually had the wind kicked out of me out of one of the riots, but it was a lot of fun.
No water pike like like that in the world, one of us kind of crazy.
Joe, appreciate you joining us. Joe heshan founder and CEO of snow Partners. I'm going to see him on the slopes.
Yeah, you should join the latter park. It's wide.
Cool. All right, We'll see you later. Joe Heshian, founder and CEO at snow Partners.
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
A new year, and get ready to step up to the counter for some of the year's most anticipated cooking. We're diving into the US dining scene and things are geting deliciously creative, from some of the.
Most exciting new restaurants opening this year to turning waste into tasting menu experiences with Morris Bloomberg Pursuits Food editor Kate, creator Kate. When I was reading the story about the counters, I brought myself back to this fall late summer. Sebastian, who's in the control room right now, Carol, who's right across from me, next to you. We were in southern California. We were in Orange County, and my sister found out we were there. She said, you have to go to
this one restaurant. So I was so excited because whenever we travel together, we tried to do like one really nice meal together. It's like a highlight. We go to the restaurant, we walk in, it's counter service, and we all look at each other and we say, this is not the experience we want tonight. Did we make a horrible mistake?
So that was twenty twenty five, and maybe your reaction will be a little bit different if that scene is recreated in twenty twenty six, because it is going to be a big trend. There's so many fun restaurants coming opening around the country this year. One of the big trends that we're seeing is counter service, where you do have to do some of the work yourself. You walk up, you order, you should be sitting at a table. If they had you standing up, then that's not ideal.
But oh, we just walked in and walked out, walked out.
We just felt like it was not going to be as nice.
Well it's it's not. There's definitely some there's definitely something missing from it. But the reality is I mean, you guys go out to eat, you know what a good restaurant is eating ass gotten so expensive it's crazy. I mean it's been coming and coming for a while, but especially here in New York. You know what, you can't, like walk into a restaurant and order a burger and a drink and not get a check that's like one hundred dollars, you know, and it's crazy.
It's crazy.
I mean it's based on reality because, as you know, food prices are going up, labor prices are going up. Real estate isn't free in New York City, so there's a lot of factors.
Going into it.
But nonetheless, I think people, I think the sticker shock of it is starting to set in and certainly, you know, at the margins for restaurants urs are slimmer than ever, so they are like, huh, how do we make this? How can we cut costs? And so what they are doing now is they're increasingly looking at counter options because it also fits like the comfort food mentality, so it allows you to cut back on labor a little bit.
It can streamline a restaurant design because you don't need like a lot of places to set up to have like servers putting things down. So yes, I predict that in twenty twenty six you'll walk up to a counter because they're also going.
To be really cool.
In Chicago. This guy who's like a barbecue champion is opening Fat Back. In New Orleans alone Shia, who's a really celebrated Israeli chef, is opening Safta's Table and he's going to serve food all day long. And then it's also happening in DC a place called Brie Bunny. It used to be a restaurant called Tail Up Goat that
was fantastic, it opened a decade ago. And these are some very talented restauranteurs and now they're saying, you know what, let's go to a different model that's sort of like modern American cooking seasonal menus, and and it's going to allow us to keep our prices a little bit stable instead of ramping up.
I love feeding the decor of this one, rag rugs, patchwork tile floors and string lights, like it's just like it just sounds charming to me.
Carol, You're going to walk in there and not walk out, I predict I that's my prediction for twenty twenty six.
The one thing I also thought was kind of interesting is it Maize and Denver. It's eighteen course menu and you moved through a series of spaces. I thought that was also kind of interesting.
Isn't that cool?
Yeah? I mean that isn't don't think like tasting menus are dead and gone and that nobody's you're only going to be able to eat an account. There will be there will be opportunities for you to sit down and have some really elite kind of food. And that's happening
in Denver. This couple, Johnny Kirel, I think, and his wife have really spotlighted Mexican food and authentic ingredients, and so they're obsessed with maize and corn and so they have started of an experiential dining experience, and I think that's really fun. That makes me want to go to Denver to eat.
I want to talk about everything on I feel like you're listening Matdaily podcast afternoons from.
I think it does a lot.
There's still like there's still a sort of faucet of high end Japanese sushi masters and wagu chefs who see a lot of opportunity in New York and Miami too, and who are opening restaurants here, so you will continue to see omakasi. I will say, I'm I'm really eyes on. I think people are just have are cutting back on going out and and or will cut back on going out.
And so whereas like a year or two ago, we would see some of these amakasis priced at like four ninety five or five ninety five, and that means you're spending like eight hundred dollars, right, Tim, if you take me and Carol out, you like get ready to know.
I to tell you, guys, I was in San Francisco last year for a week and one of the things I wanted to do was just go to some good restaurants. So I texted a friend in San Francisco. I said, I just want really good sushi. Where do I go tonight? And he texted me a list of like five places. I looked up every single one of them. They were all Oma case only, and let's just say, my managers would not have been happy had I expense to me out at those places.
No, I think so, I think now. I mean, it's still obviously you're going to spend three figures on these menus, but I'm seeing more a little bit more like two ninety five and low three hundreds, which is still so much money, but it's like, at least it's like two thirds of white.
I think you're going to be taking us there.
Let's go well, you know, gosh, I feel like, Kate, we've talked to you. I just want to just go big, broad if I can for a moment, because I feel like we've talked with you through so many different cycles, and we've had good cycles, and then we had the pandemic and everybody had a shift, like what was last year like? And where is the restaurant industry some of these major cities.
It's such a good question, Carol.
I think if I look especially at New York City because that's my home, and it's the most exciting food seat in the world. I will say that I think everything was on the front burner. There was so much. There was so much happening with like go here, do this, go to the corner store, go to trees. You know, it was like it was seemed like a constant highlight reel.
And there's still like so much of that Yolo mentality where you really feel like I'm going to do this, like I've got to have like a corn experience tasting menu. And I think this year is the year that we step back a little bit and things dial down a little bit. In New York City feels a little bit more lived in, and you go, like you keep supporting.
Something that happened right after the pandemic is that people really supported their neighborhood restaurants and then there was all this pent up energy though, and so it went from maybe it's burning your local restaurants, but really going big to the places that you saw over social media. And I think that calms down now. I think that places the biggest restaurant opening and it's not on our list because it opened at the end of last year, but it's called stars. It's a little wine bar. It's on
East twelfth Street. It's like a horseshoe counter. It was apparently inspired by Grand Central oyster bar, except that it only seats like twenty, like you only like twenty people can fit in it. But it's a wine bar with a fantastic array of snacks. They have these deviled eggs that have been getting a lot of attention with these
little pastry stars on them. They have a shrimp sandwich that's bananas with like a really good crusty, you know, crusty buttered, griddled bread on it, surrounding these like plump shrimp. And you can walk out of there for like maybe one hundred dollars, Like maybe you'll spend one hundred dollars if you're drinking some really good glasses of wine. But you can also go out of there for like sixty bucks and then go have dinner somewhere else, or go
home and cook your dinner. And I think we've written about that but before. But wine bars are like here to meet your economic moment, and New York City hasn't done wine bar so well, and now it starts.
Now can we talk some trash?
Yes, I love this story. They love talking track love this story.
So this is this. I was reading this, this story by Emma Court Kay creator edited it, and I was reading and I was thinking, this is so up Carol's alley. Because Carol's not somebody to waste anything.
We try not, but we.
Talk a lot about just personally, how much food goes to waste, Like you know, spoiled salad in the fridge ends up we end up throwing it away. This is a huge issue for larger establishments like hotels and large restaurants too.
Food waste is I'm so with you, Carol. It makes me nuts, and it gets wasted on every level. It gets wasted in your home, but it especially gets wasted in kitchens and you know, commercial operations, and it happens on every It happens in every stage. It happens when you're preparing food and you throw out trimmings. There's plate waste that also has a lot to do with it.
I'm interested to see how that evolves with as more and more people are on like GLP one drugs, and because portions I think are becoming like a little bit more reasonable because here, at least here in the US, and so hopefully that play waste is going to decrease a bit. But there's the restaurant in the East Village called Hags that you can pay up to one hundred
and sixty dollars for your food. But the chef specializes in maximizing her trimmings, Like she grows mushrooms, Like she uses the compost in her kitchen to grow mushrooms that feature in like a beautiful like risotto. And she's using like squash trimmings to make like the soup and every single thing that you can think about that you and I might throw in the garbage. She's like, nope, Like I see other opportunities.
I think it's really it's brilliant because if you think about right sometimes to create something, especially at a really nice restaurant, like how much food either they're cutting away or so on. But it's also like this whole area of companies that have come up if you will, to help these restaurants like monitor their foods on and so forth. So there's this whole other industry, cottage industry or whatever you want to call it that has popped up.
Well it's so smart. Yeah, there's a company called Winnow that analyzes you. This is some proprietary technology to analyze the trash and see what you might be able to use. And I think they've been working with some big hotel groups like the Four Seasons and now the Four Seasons Houston. I think was making like a case of da or something that ended up being seventy percent waste. That isn't that fantastic, Like it saves them money, it's better for the environment, all of it.
It's not just customer plates though, that where the waste comes from. That's about a third of the waste according to this story. This is the Waste and Resources Action Program data, but forty five percent of it comes from food prep. Twenty one percent comes from spoilage and the
food prep side of things. It kind of makes sense and fine dining because it's like they want to present like the most ideal part of whatever they're cutting, whether that's a piece of meat, whether it's a filet, or whether it's a fruit or vegetable.
Right, no, exactly, but I think that the onus of that that certainly was the case like a decade ago, and now especially it find dining, because the margins are so thin, they really have to figure out something else to do with like that, with a less attractive piece of duck, it's not going on the customer's play.
Well, are we going to start accepting that as customers?
Like?
What do you do with that piece of duck? If the person who walks into that fine dining establishment doesn't want that.
I mean it depends. There's different categories of diners. And you know there's some people who are like, oh no, like how could you? But I think now there's so much. You know, people love something imperfect because it generally tells a story. And I say, man chefs and restaurants, yeah, me and you, Carol. But I think people, most diners, especially if they're like gen Z, are not necessarily looking for the exact perfect siceve Wago.
Love love, love this story. Actually, there's a bunch of people in the story. I want to get on our talk about kind.
They bring some food. I don't need the mushrooms.
The deal, you know, Tim eats, I don't. I don't during our show.
The mushroom powder. I don't need the mushroom powder. But anything you.
Can let them know that it can be part of your rider.
Countertable.
Tim's always eating.
Yeah, yummy, Kate, Thank you so much. Great to have you in town too.
That's Kate, Creator, Bloomberg Pursuits Food Editor.
And that wraps up our weekend edition of Bloomberg Business Week on Bloomberg Radio. Thank you so much for joining us.
I'm Tim Stenefeck and he's hungry.
And I'm Carol Master. I might be hungry to have a great and safe weekend everyone.
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from two to five pm Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal