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. Bloomberg Business Weekdaily with Carol Masser and Tim Steneveek on Bloomberg Radio.
Hi, everyone, welcome to the weekend edition of Bloomberg Business Week. This week, the spotlight was on the World Economic Forums Annual meeting in Davos, Switzerland, and a keynote given by US President Donald Trump.
It's great to be back in beautiful Davos, Switzerland and to address so many respected business leaders, so many friends, few enemies.
As you've learned, when the United States goes up, you follow. I want Europe to do great, I want UK to do great. We want strong allies, not seriously weakened ones.
All right, That, of course was President Trump at Davos, Switzerland, the World Economic Forums Annual Meeting. Got to say the President tim grabbing a lot of global attention leading up to and at and after the meeting there in Davos because of renewed terwer threats on Europe and really reviving that idea of a US takeover of Greenland the outcome, and I got to say, there are a lot of twists and turns in this. No new tariffs on europe markets like that, and then a framework of a future
deal that includes mineral rights we think in Greenland. It does still feel like a lot of details yet unknown and to be worked out. So stay tuned, check out the Bloomberg and Bloomberg dot com for the latest on this.
So, just to reiterate a lot coming from the president flooding the zone as others have described, That's what Steve Bannon said during the first term is sort of the strategy when it comes to communications. Raising the question two once again about the logic behind the administration's decisions that are often pulled back. It's something that we seen quite a bit during President Trump's first full year back in the oval office, such that there's a term that has
become popular. We've heard it a lot in the financial press and the financial media. I've heard a lot on Bloomberg the idea of the taco trade Trump always chickens out.
Yeah, that definitely came back into the narrative this week. Hey, it also begs the question is there a method to what some might say is the madness in terms of logic and strategy of the Trump White House. One Nobel Prize winning economist looked into it and offers up a theory of Trump.
Also, this hour arc invests Kathy Wood. She's giving us where last year's disruption may be creating this year's opportunities, and from the c suite, Charles Schwab's chief executive officer, Rick Worcester, stops by on everything from a record quarter and the White House's moves to opportunities that he sees in prediction.
Markets or doesn't. Maybe he's got.
A really interesting view, especially compared to the competitors out there.
I thought it was really smart and detailed, So stick around for that. Hey, all of this to come over the next couple of hours. We begin with what some are calling the theory of Trump. We've entered year two of President Trumps second term, and for years his critics and supporters alike have described his politics as chaotic, impulsive tweets in the middle of the night, norm breaking decisions, and a governing style that often seems driven by instinct rather than ideology.
But what if it isn't chaos at all. In a recent Bloomberg BusinessWeek story, drone Asamoglu, Institute Professor in the Department of Economics at the Massachusetts Institute of Technology, also a Nobel Laureate in economics, argues there is a unified theory behind Trump's actions, one rooted in leverage, disruption, and a willingness to weaken institutions in order to strengthen negotiating power. Darn joined us with more.
You took a step back.
You looked at this, and we're just trying to understand this NonStop White House news cycle. Is it about the president and his team controlling that news cycle?
And this is what we all chase, you know?
Is it something more significant beyond just kind of a flood the zone concept that we often associate with President Trump and his team.
What did you come up with?
Look, I mean, obviously there is a flood the zone element in there, and it looks chaotic, But in my mind, worryingly, there is a bit of a theory, which is that all of these actions are aimed at centralizing power in the hands of an executive presidency with fewer and weaker checks which come either from institutions or norms. So even
the foreign actions are all about increasing domestic power. Even the sort of unconventional appointments are about weakening norms that control what the president can do and bringing in more loyalists that have now more for maneuver because all the norms that had guided US political dynamics have been broken.
So you write that it would have been viewed as completely unacceptable for Bill Clinton, George W. Bush, or Barack Obama to ask his attorney general or the DOJ to go after enemies. It would also have been considered beyond the pale for a president to invoke what you describe as a poorly documented crime emergency as a pretext for sending the National Guard into US cities, or for a president to continue to be involved in his family business
well in office. Why is it being viewed, at least by members of Congress Republicans in Congress as acceptable for President Trump to do these things.
Well, you know, part of the reason why those actions would not have been taken in the past is because they go against norms. There weren't explicit laws that said these things, so it was part of an institutional equilibrium with norms of acceptance and backed up by other politicians deviating and sort of distancing themselves if a president did that, or bigger sort of pushback from civil society or the media. But President Trump and his team have been breaking these
norms systematically for the first year. But even if you go to the first term of the president, there was already the same attempt and all of these have now culminated in Trump controlling the party and the rest of the party, even part of the judicial system, are no longer able to stand up to him, and all of the norms that would have helped them sort of mobilize around some sort of objection saying this is not acceptable.
You know, we don't see them now. Recently, for the FED case, a few senators have started making grumbling, So perhaps there might be some limit to what the legislature is going to put up with. But the part of the agenda that is I think now very clearly visible is sort of break down one piece after another of this edifice that was constraining other presidents that are now gone for President Trump.
So Jerron so basically right, we thought this checks and balances would work right three branches of the government. It made such sense, and it for so long has pretty much worked pretty well, but there was this strategy when it comes to the legal part, certainly of the government as well as the legislative. But let's just talk the legal part, because we did have you know, a judge saying Dominion Energy can resume a win project that President Trump had halted. So we have seen him lose some
of the judicial actions out there. Having said that, if he didn't have that in terms of the Supreme Court justices, would we not be maybe having this conversation today, Is that what's so much about it? Or is it all of it? That and the legislative side of it, and everybody, you know, even them GOP members of Congress saying, yeah, do what you want to do. You know, it's kind of interesting because that's their job kind of being taken away.
Yeah, I mean exactly, the sort of separation of powers with you know, not just the Congress and the judiciary, but also the independent agencies acting like the Fourth Brunch. Those were the things that constrained presidents and if today those constraints were working well, we wouldn't be in this
turmoil in terms of the domestic situation. And part of the concern is that right now it's really the parts of the judicial branch that is that are standing up against Trump indeed, but that's that's got its limits because there are a lot of Trump appointees, and the Supreme Court, with lots of Republican and Trump appointees, hasn't really taken
a very strong stance either. So all of these are piling up and taking us more and more to a situation where I think many of the former sort of presidents or constitutional scholars would find very scary because the structural US government wasn't meant to function this way.
So then I'm trying to understand. And one thing that we do each and every day is we look at the markets, and we look at market reaction. Markets were and have been kind of seen as a backstop here to at least some of the things that the President has said he will do or wants to do. Do you think they're reacting to his decisions or do you think they're saying, hey, it's all fine and good at least up until now.
Yeah, it is hard to understand why the markets haven't reacted more because some of the effects that are already seen from the tariffs. I think that just really underlies that you know, the stock market is not the fifth
branch of government. It's not really a hard constraint in the same way that the other ones were supposed to be on the sort of centralization of power in the hands of one person or one group, And the tariff debacle demonstrates that the administration is much bolder and is willing to take actions that could lead to market reactions, at least in the short run. Now some people are saying, Oh, it's the bond market really that we need to watch
out for. I don't know why. You know, right now, the bond market would be much more important than the stock market, and sometimes both of them are things that both the administration and the business community are watching. But I wouldn't you know, bet on, you know, the market mechanism being a strong enough guardrail against this kind of executive imperial presidency emerging. And if it does, I think it has really sweeping implications for how business is done again.
You can see that from the fact that the President Trump can invite people to his office and say give us twenty percent of your shares.
Yeah something.
Yeah, there's just a moment after a moment where many would say this is it's kind of remarkable. So I am curious is this lasting, Like I am wondering who this emboldens in terms of whoever might be in the White House next.
Is this the playbook? The new US playbook? And to be sorry, that's.
What I'm worried about exactly. I mean, look, I mean Trump is an agent of change, He's really reshaping norms and institutions, but he is himself a symptom of what was wrong in some sense with the US system. There was a lot of inequality, there was a lot of discontent, and there was also some gridlock. You see more executive orders by Bush than by Obama than by Biden. So Trump is, you know, accelerating that trend, but he's continuing
that trend. And I do not trust that the next Democrat or Republican is going to be much better behaved. Once the floodgates are open, I think we're going to go to a place where, you know, presidents could have much more arbitrary power, both in terms of their ideological agenda, but also in terms of corruption and cryptocracy.
That was Drone Asimoglu, a Nobel Laureate in economics and Institute professor in the Department of economics at MIT. Check out his full piece on a Bloomberg dot com and on the Bloomberg terminal.
Coming up, what last year's market turbulence could mean for this year's winners.
And who may have the power to disrupt like Elon Musk?
Is there another Elon like individual out there? We're going to ask arcinvest Kathy Wood, she joins us. Next This is Bloomberg.
This is Bloomberg Business Week Daily with Carol Masser and Tim Stenovek on Bloomberg Radio.
After the S and P.
Five hundred index rebounded from the brink of a bear market in April last April and then spent the remainder of twenty twenty five going from one record to the next, President Donald Trump built it as a sign that he had transformed the United States, as he likes to put it, into the world's hottest country.
Measured against stock markets from Tokyo to Frankfurt to financial capitals across the developing world. The verdict on Trump's return to the White House is decidedly less triumphant. In fact, equity's worldwide once the US is excluded, have risen around thirty percent since he took office a year ago. Roughly double the S and P five hundred schain. That's according to msci's index.
Here to talk about twenty twenty six the economy investment ideas. Great to have back with us the founder, CEO and CIO of ARC invest Kathy, which he joins us from Saint Petersburg, Florida. Kathy, great to have you here, Happy New Year.
Happy new Year, Carol and Tim very happy to be here again.
Well, it's great to have you here. And I want to start with what stocks did here in the US really well last year, but if you look at global stocks, you could say that there was certainly some underperformance by the US. You've invested in a lot of US names, but also a lot outside the US. And I think about Chinese companies buid By. Do you, Ali Baba, are you looking for more opportunities outside the US at this point or And I wonder if you think it's time for maybe US docs and takele.
I think we're very focused on the deregulation, lower taxes and what we believe will be lower inflation, much lower inflation, and lower interest rates in the US, and we think the combination of those is actually going to drive the returns on invested capital in the US up relative to
those in the rest of the world. And I think many people are underestimating, especially on the corporate tax side, that thanks to the new depreciation schedules, our effective corporate tax rate, not the statutory, but the effective will drop to one of the lowest in the world at roughly ten percent, certainly near a record low for the US.
So do you think, Kathy, that's not priced in yet to US equities, Like, have investors not realized that and therefore it's not pricing you know.
It's very interesting. Maybe a lot of your guests have been talking about the depreciation schedules how massively they are going to encourage capital investment here in the United States. So we've never had full depreciation in year one of manufacturing facilities, full depreciation in the first year of service. That means corporations will get huge tax refunds that they will be able to reinvest into innovation because we also equipment domestic R and D, and software those three full
depreciation first year of service that has been legislated. Normally we get oh a few years of this you know this cut and not cut, but that has been legislated Now it's all the time, So we don't think people understand how profound some of these tax changes are.
So what does that mean for something like the AI trade, specifically Kathy, where I think people are worried about pockets of it with a you know, being in a bit of a bubble. Does it benefit everyone who is somehow associated, whether it's the chip companies, whether it's the energy companies. Do you see the benefits playing out there and giving it more room to move to the upside?
Absolutely? Absolutely. I mean we're having huge buildouts of data centers and power facilities, all of that, all of those depreciation schedules will apply to this boom in investment and contribute to it. So yes, any in fact, Carol, Yeah, yeah, I was just going to say, many people think we're in a bubble, and yes, the data center spending last year was about five hundred billion dollars And you can see all of this in our Big Ideas Report we
just released it. Thank you Bloomberg for featuring it. But five hundred billion dollars is a two and a half times increase from where it had been trending for years. So big increase, no doubt about it. But we think that number needs to go to one point four trillion in the next five years to accommodate the AI boom that is now under way and is going to drive productivity gains incredibly.
I want to get into that in just a moment.
I'm really also pequked or interested in the healthcare aspect of it, because I feel like there's a lot going on before we do.
So.
We also have your twenty twenty six outlook, and what's interesting is you note that this is an important economic historical moment.
How so.
Well, we are in a technology revolution, and many people thought that the Internet was a technology revolution, and to some extent it was. But today instead of just one major platform evolving, we have five, so robotics, energy storage, AI, blockchain technology, and multiomic sequencing in the life science space, which which we believe is the most profound application of
AI healthcare. And so this boom. If you look back at the railroad boom, the amount of investment that we saw back then was about six percent of GDP at its peak, five to six percent. The internet boom was more like the auto boom in the early nineteen hundreds was more in the three to four percent of GDP range.
We believe this this five platform innovation strategy or BOOM, is going to move to twelve percent of GDP, and we do believe also that productivity growth will accelerate to the four to six percent range and be sustained there. Normally we see a cyclical peak around there and then it falls back. We think it will be sustained and we think that by the end of this decade, real GDP growth could be averaging more than seven percent per year.
And I know that sounds shocking, given that we've been at three percent for one hundred and twenty five years, but it is the history associated with technology revolutions, a step change up in GDP.
Growth, the productivity increase, the GDP growth that you are forecasting as a result of these disruptive technologies, to what extent is that the result of fewer people doing more? My question is about job losses as a result of this technology, because if everything that investors are betting on when it comes to this AI revolution comes true, it means that companies aren't going to need as many people to do a lot more. What does that look like.
Well, GDP growth at seven percent plus per year tells you there's going to be a lot of economic activity, more economic activity from a sustained growth point of view than we've seen in quite some time. The history of technology is it's a net job creator. In the early nineties, when developers were evolving the Internet, we could not have imagined uber or Airbnb back then, and I think the same is true now. We cannot imagine the kinds of
jobs that are going to exist in the future. And the other thing that we're excited about from a job creation point of view is we're seeing new worlds being created. And by that I mean most of us think about Earth, but now we're moving into space, even data centers. We think elon leading that charge will start moving into space and we won't have the not in my backyard and the bureaucracy associated with data centers. There's going to be huge job creation around the space exploration and all of
the opportunities out there. And then the other one, and you'll find this in our Digital Assets section of Big Ideas is the digital world immutable private property rights. We know from economic history the best way to lift people and countries out of poverty is with private property rights that are immutable. Well, that is now moving into the
digital world for the first thanks to blockchain technology. So we're not worried about job creation, but for those who are, because there is something happening that I know is concerning to many people. The unemployment rate for sixteen to twenty four year old has moved to twelve percent. Twelve percent, big increase. And what is that saying. That's saying that entry level jobs are not being created the way they
used to be. To those people, I say, you know, you must have in your mind an idea for a new business, something that frustrates you, an unmet need. Well, now you can go to chat GBT, you can go to groc and you can have an assistant help you build out that business. Just interview for jobs, but also think about new business ideas. I think we're going to see entrepreneurs explosion here.
Well, and you know, speaking of entrepreneurial explosion, I think about, you know, how long you have certainly been with Tesla and a backer of Elon.
Musk a long time.
And I think about, you know, when we first talked and you likened him to mister Einstein, Albert Einstein. But I just wonder Elin at Davos earlier today and he talked about the carmaker's fortunes will be increasingly dependent on humanoid machines. Kathy, how are you modeling this, I mean into the thesis of Tesla, and is that where the growth is more so than EV's for Tesla going.
Forward without a doubt. We've always said Tesla is not an auto company. It is actually the convergence of three of the platforms I mentioned, so robotics, energy storage, and AI. Each one of those technologies it has its own s curve and now they're feeding each other and we're seeing that in robotaxis. Robotaxis we believe will account for ninety percent of Tesla's valuation by the end of the decade.
We're in print at twenty six hundred. That includes nothing for Optimist robots, and we're beginning to understand how quickly Tesla is moving on that front. Why Because it's the convergence of the same three technologies, robotics, energy storage, and AI. So I think that price target obviously if Optimis is successful, and we believe it will be, we think that humanoid robots is evolving into a twenty six trillion dollar opportunity. Half in the home half in manufacturing plants.
That was ourk Invest's Kathy Wood. That full conversation available on the Business Week podcast feed and of course on the Bloomberg terminal.
Still ahead on Bloomberg Business Week. Market swings, geopolitical uncertainty, navigating risks, that's coming out investors this past week alone, actually already in twenty twenty six.
On that of you from the c suite and into the minds of investors and if prediction markets are what they want, the CEO of Charles Schwab, that's next. This is Bloomberg.
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Charles Schwab reported earnings this past week that beat Wall Street expectations after the company reported a surge and average daily trading volume in the fourth quarter. All of this happening as retail investors sought to take advantage of the end of a strong year for the stock market.
Retail investors are still looking for guidance as they saw markets whip saw in response to President Trump's global tariffs and geopolitical uncertainty, plus a rising popularity in prediction markets.
That's why we wanted to hear directly from the top and from someone who understands this space and markets in a big way. Rick Worster is President and CEO of Charles Schwab. You kicked things off with us talking about the company's latest earnings update, well.
As a record quarter for us as a firm. Our our earning screw fifty percent year over year, our revenue was up twenty two percent year over year, and we saw net new client assets to the firm of five hundred and nineteen billion dollars on the year, including an all time record quarter in the fourth quarter of one hundred and sixty three billion dollars. And importantly, what we are seeing is a ball market for convenience, not just
in financial services, but I think across most industries. The way that reflects itself for us is a desire for clients to have more of their financial life conducted with one institution, and we've been the institution for many that they're turning to. We can help them with their investing needs, we can help them with their trading needs, with their wealth needs, with their banking and lending needs, and so bringing together a client's financial life, we're able to help
them more. When we do that, they're satisfactionally actually increases in our business growth. So it's a win for them because we're bringing convenience, and then's a win for us because we're doing more business with them and doing more to help them in their financial life.
You mentioned financial lives, and you just went through a whole list of things that people do with these apps and services. What about prediction markets? Can you talk a little bit about whether you're planning on exploring options for customers when it comes to prediction markets. It's all a rage right now, as you very well.
Know, and you thought we were going to warm you up we weren't.
We're just going right in at the moment. It's not high on our client's list of things they want us to innovate for them, and so we've been focused our innovations in other areas that are more interest to clients.
But I distinguish that between that and sports gambling. And if you look at ninety five percent of the volume of what people call prediction markets is actually just sports gambling, and that's not something that is we're keenly interested in getting into for a very simple reason, which is our mission as a firm is to make clients better off in their financial life. And less than five percent of people who go on to one of these gambling apps take out more money than they put in in the
first place. That's the complete antithesis of what we do at schwab. Our client's wealth is at an all time high, the level advice we're giving them is that an all time high, and the amount we're doing to try to help them is that an all time high. So we'll leave the sports gambling, which constitutes ninety five percent of the prediction markets volume, We'll leave that to the gambling houses, to the van duals, the DraftKings and the Robin Hoods.
So it's funny. It's interesting that you say robinhood. We'll get back to that because I think Robinhood w would probably like to position itself as a competitor to Charles Schwab in a lot of areas. If we stick with the ninety five percent of what you believe prediction markets a sports gambling, what is the five percent that is of interest to you that we could potentially see at one point on Schwab's platform. Give us some examples there.
Well.
I think if you want to take a position on what the employment report's going to be, you know, at the end of the month, or how inflation's going to print, those things could have an impact on your portfolio. If you have a big bond position, you may have interest in what's going to happen in the inflation report. And it's a simple way of taking a position based on a yes or no position, And so that could be
of interest to clients. But the reason I think we see haven't seen much volume in those and the reason why ninety five percent of the volume is in sports gambling is because if you want to take a position on the employment report or the inflation report. There are countless ways to do that in financial market spense already doing that, whether it's in the bond market, in the futures market through options, there's plenty of ways to do
that today. And I think that's part of the reason why the true idea of prediction markets really haven't taken off, and why the firms that offer this have pivoted to sports scambling, because there's a lot more interest in that than there is in taking a position on the employment or inflation report.
All right, So then safe to say, Rick, if you were a betting man, I would guess that there's nothing in terms of a prediction market on the Schwab platform in the next year or so, or maybe never.
Well, we've been innovating at a very fast rate. Twenty twenty five was all about how do we meet the wealth lending active trading needs of our clients, and we had significant innovations in every one of those areas. We went to twenty four by five trading for our active traders. We continue to make our mobile app even stronger for those that want to actively trade and do so via
the mobile app. For our wealth clients, we launched new tax trusts and estate capabilities, including an investment made in wealth dot Com to bring trust capabilities directly to our clients. We launched a series of new capabilities for our advisor clients, and in particularly really leaned into innovations around making it easier for them to work with us. All of those are things that we think are far more impactful to our clients' ability to grow their wealth than prediction markets.
And when we go out and survey our clients about what they want from us, prediction markets is low on the list, So it's something we are actively looking at. I think at some point in the future we will have true prediction markets at some point, but it's just not high on our innovation list because we're firmly focused on those innovations they're going to have the most impact on our clients'.
Wealth, right.
Unlike something we talked about when we were at SWAB Impact with you in November that you had just done a deal which would give investors access to private companies, as was buying Forge Global, So I get that's more of a priority for clients.
Yeah, I think you go back to the eighties when I believe it was KKR that did the first leveraged buyout instants have been benefiting from the diversification and the return enhancement from alternatives investments, and you know, in the past decades or multiple decades, they're really wealthy have also been able to participate in those return and diversification benefits, but the everyday retail investor has not been able to.
And our Forge acquisition was really about democratizing investments and alternatives. We're now going to be able to bring it to all of our investors in multiple different forms and allow them to participate in private markets the way institutions and the very wealthy have been able to. And we're thrilled to bridge that gap and excited for what that could mean for our client's wealth.
I want to bring this into the conversation because I feel like when Tim and I and you were together at Tuama Impact in Denver, it was pretty upbeat. I think about the market environment and the outlook, and there's been a lot that's happened here in twenty twenty six. It feels like volatility is back. I'm just curious, you know, have any of the assumptions about the White House and policy and changes changed.
In your view. I don't think any of that surprises us. We're still within percent or two of all time highs and markets. I think there's going to be geopolitical noise from time to time. If you've read the book The Art of the Deal, I think it begins with starting big in your requests and then negotiating to something that is workable for both parties. And my guess is that
that may be the playbook that's followed here. But for our clients, we're not seeing an undue amount of concern and this is a kind of environment in which we thrive because we're not just an investment app. We're so much more than that. We took thirty million calls from clients last year and answered them in less than thirty seconds.
We're in all many local communities across this country with actual people that are there to help coach our clients and how to navigate periods like this and how to see through the noise and be diversified and stick with it for the long term so that they can build their wealth. So whatever markets and geopolitics bring, we're going to be ready for it, and it's going to help us distinguish what we stand for here at Schwab, which is helping our clients grow their wealth.
You know, we had some reporting in recent days about the New York Stock Exchange exploring ways for twenty four to seven trading of certain assets, and I'm curious crypto kind of paved the way for that because a lot of people can trade crypto twenty four to seven. What do you think of the ability for people to trade stocks twenty four to seven.
Well, I think we're very open to that and would certainly participate. We're already twenty four by five. Today, we see very little market activity or very little client activity outside of market hours. It's usually only a couple of a percent. The vast majority of trading happens within the market hours, and I think the market hours are a feature,
not a bug. And what I mean by that is by limiting the marketing hours market hours, you draw people in at the same time and create a lot of liquidity so that spreads are tight and trading efficiency is very high. I think the convenience of twenty four to seven is certainly very appealing, but we need to make sure that those trades are done in a way that makes sense for clients. And you know, as we see
clients trade on our twenty four by five platform. We make very certain that they trade in a way that they're recognizing the higher spreads, and we make that very clear to them and they live with that for the convenience. But we just need to be careful as we go to twenty four by seven that we don't lose the efficiency of the market and the benefits of getting everyone into the market at around the same time, which is great for trading efficiency.
Hey, Rick, superquick ten seconds. It feels optimistic this year.
I think.
So there's a lot you know, the economies on strong footing. Market's been up three years in a row. Unless something changes, things look pretty good.
Thanks to Rick Worcester, President and CEO of Charles Schwab.
We should point out after the company reported earnings, there were a few analysts on this street, including UBS and td COW and that actually raised their price target on Charles Schwab, which really outperformed last year and is already trading higher here in twenty twenty six.
So I really that conversation with Rick for a couple of reasons. One, I thought he was really candid with us when it came to prediction markets, and he mentioned some competition, and what was notable to me, Carol is he put robin Hood, which I would say is among the biggest competitors to Charles Schwab at least with the the you know, retail investing audience. He sort of alluded to that company in the same breath as he referred to you know, callsh and poly market as prediction platforms.
And he was very quick to say, we're not interested in sports prediction markets. We think that's gambling. And if you go to robin Hood's website and you just look at prediction markets, it's like all sports that are featured, it's we're recording this, you know, when we're talking about
the Australian Open. So there's Australian Open, there's Denver Washington, there's some other NBA stuff, there's some pro hockey, there's some pro football, there's some soccer, Like those are those are the events that Robinhood highlights on its website.
Well, and this is going to interesting, and I feel like there's going to be, you know, a moment where regulators are going to say, well, wait a minute, are these sports gambling sites? And so what's the oversight that's required, Like is it just like the other gambling sites right where there are rules and regulations that are keeping an eye on them. I did think what Rick said, as you said not interested in offering sports gambling at Schwab.
He said he could see where clients, as you heard, you know, doing wagers on like an employment report, something like that.
And that wraps up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio Ahead. In our next hour, the CEO of Barnes and Noble on the company's post COVID revival.
I love this conversation. Plus look out Uber. The future is self driving cars. Think something like way moo. This is Bloomberg Business Week. I'm Carol Masser and.
I'm Tim Stenavec. Stay with us. Today's top stories in global business. Headlines are coming up right now.
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. Bloomberg Business Week Daily with Carol Masser and Tim Steneveek on Bloomberg.
Radio Plenty Ahead in our second hour of the weekend edition of Bloomberg Business Week, including the CEO of Full Speed Automotive on the health of the consumer.
Plus from cars people are buying and holding on to to testing the next level of AI. Behind the wheel, our own Hannah Elliott takes us for a spin in the Mercedes that almost drives itself.
First up this hour, just about one year ago, Bloomberg Business Week had a great story about Barnes and Nobles unlikely comeback thanks to a pandemic era swarm to what's called BookTalk, us readers are more quickly discovering titles and recommending them to friends and followers. That's good for the book industry.
It's offered Barnes and Noble, which reported seven straight years of falling sales before it became the target of a billionaire hedge fund owner back in twenty nineteen, a chance to resurrect itself.
Which seems to be now in full swing. The company, which is owned by Paul Singer's Elliott Advisors, has six hundred bookstores in the United States right now. It opened more than fifty last year and planned to open another sixty more this year.
James Honest, CEO of Barnes and Noble. He's managing director of Waterstones' bookstores in the UK. He's founder and owner of the independent bookstore chain Don Books Too. He joins us here in the Bloomberg Interactive Brokers Studio. Welcome, Thank you for having me. So it's a private company now, so we don't get all the numbers that we get.
But right before it was taken private, Barnes and Noble had a loss of one hundred and twenty five point five million dollars on revenues of three point seven billion dollars. That was for the fiscal year that ended April of twenty eighteen. Same store sales were down more than five percent. What are and metrics you can give us right now that speak to the health of the company.
Well, I think generally the book market has rebounded, so it's not just us, though it is definitely US along with books and COVID was a difficult time for us. Obviously a lot of US stores were closed, but people rediscovered reading. But also I think always bookstores are great places in which all all ages, all types, but particularly young people like together and like to read. And I
think we run our bookstores better. Our lecture say, but I think also the independents are opening up great stores around and people are discovering the pleasures of a physical bookstore, and we're benefiting.
I love that you go that, why do you think it's come back?
Because it used to be just lovely little bookstores in towns and cities, and then of course the big guys came in, and I mean.
There was always the tug of war between the big and the small.
There was an old Tom Hanks Meg Ryan movie.
It was a cute You've Got.
Me Out, and then it just felt like it was really bad for the selling of books. Amazon came on on the market place, and now I too have seen a resurgence of little bookstores.
Why do you think that is?
Well, Amazon is why people lost confidence, and then the rise of Kindle and that those are general notion and a media sense that physical books will gone. Reading was disappearing, and I think collectively, including the big chains and the small guys, a lot of people lost their way. And then we got ourselves sorted out, and the good independence have sorted themselves out, and we're all now running much nicer stores, and people are back and have embraced us.
Now the independents who did not lose their confidence, they wouldn't have even noticed the trials and tribulations that the rest of us went through.
So what is it about the experience inside a bookstore? And we're not just talking Birds and Noble here, because you have experience at books, you're also managing director of Waterstones Bookstores in the UK. What is the experience that you try to create inside a bookstore that makes it so people don't order them online or download them on an e reader.
But I think the great independent bookstores have magic of curation, which is selecting the titles they have, matching those to the community in which they sit, and having a really nice physical space and a welcoming and vibrant one. What we, as a chain bookstore and now need to do and have done, is abandon all of the consistency and operational disciplines of a chain bookstore and hand power to our individual store teams and allow them to replicate that independence.
So essentially, you're trying to create a community bookstore within every Marn's and Noble location.
And that has worked dramatically well in many better generally in most and not so well in some whereas it startware where the teams don't quite understand or don't have the skill set, or where we haven't built up the experience because bookselling is a trade, is a vocational trade, and the skills that are attached to that you have
to be learned and developed. So we haven't completely that journey, I would say, but in most of our stores are a lot better than they ever were, and some of them are really fantastic.
So when it comes to the Barnes and Noble, does that mean there are certain things when you walk in that are going to be consistent whatever Barnes and Noble you come in, and then there's going to be certain nuances to the community and the environment or or what how do you kind of hand over?
Well, the consistent thing is they're full of books and the book store but we and because there are books obviously that our best sellers and books that people want, and you know, everybody has to have capturing the rye because every bookstore does independent or thing. But we leave it entirely up to them. We give them no constraints,
no budget constraints, no visual constraints. We just say, use common sense and make it the best possible book store you can, and generally they get on with that dramatically better than when they were given very strict rules to do it in precisely the same way everywhere.
I want to know about how your your role works. It's not every day we speak to the CEO of a large company that has two other jobs as well. So, as I mentioned your CEO of Barnes and Noble, you're managing director of Waterstones Bookstores, you're the founder and owner of the bookstore chain books. How does that relationship work just in your professional life? Like, how do you how are you the CEO of Barnes and Noble but also the managing director of these other stores.
I think the only advantage of professional advantage I have is I really do understand how to run a really good bookstore because I ran by myself for twenty plus years longer and continue in a sense to do so. So I understand what my teams need, what my stores need, and then my job is to just make sure from a central perspective that we don't get in their way and that we provide what they required or run a really good bookstore, and what they generally require is frankly money.
They need clean carpets, and they need their h fact fixed, and they need books to turn up on time when they order them. But I don't tell them what to order, and I don't get in their way, and that allows me to do the job reasonably well. And frankly, the less I do now, the better it goes.
Are people as interested in reading classics and old time you know books that were just very popular years ago.
I'm just curious about, like, what is it that people are buying?
Say you mentioned BookTalk earlier, Book doc coming out of COVID was exploded with the love of classics. Everyone was reading Middle March and Jane Austin and that was hugely exciting and continues still. But at the same time, you know the roving eye because you know kids want to read the same thing, because they want to talk about books and engage. At the moment, it's it's romanticy, and it's it's relatively spicy romanticy. But at the same time you know they're reading the great books as well.
Books are only part of what Barnes and Noble sells. What else do you use to get people in the door and get them walking out? Parting with money?
Well, we have sort of become really the last place in which quite a lot of the of these sort of dying categories actually have rejuvenated. So we have a fantastic music business, vinyl, even DVD cds' there's been an increase in sales of those. But we have a fantastic news stand offer, and now we do toys and games, board games and the rest really properly. Again a mean for those to be educational, to support effectively the intellectual
engagement that you have around books. And therefore they sit, we believe, naturally alongside books, and you know that's our job. We call it related product. We have to keep them tightly tied into a love of learning and development which is encapsulated by books.
We're talking about James Don't. He's the CEO of Barnes and Noble. He's also managing director of Waterstones Bookstores in the UK, founder and owner of the independent bookstore chain Dot Books. He's here in our Bloomberg Interactive Broker studio. James, what about like live events for doing stuff like I've done some things at local bookstores, you know, at Q
and a chat with someone on a new book. But I'm just curious, how do you kind of think about that, whether it's in your own bookstores, but also for Barnes and Noble, making it a place where people go to meet up.
I think we are social spaces and that can at it's sort of modest level, that can be the story time a bookseller has to learn how to read a book upside down to three and four year olds, all the way to obviously being the interaction between authors and read and so holding talks, events, question and answer interviews, all of the myriad of ways in which you can make a bookstore an exciting place in which to come.
It's easier to do in the metropolitan cities because you can get the great authors, but you can do it wherever you are on a more modest scale.
I mentioned same store sales back in April of twenty eighteen. We're down more than five percent. Can you tell us same store sales are? Are they positive?
Now? Yeah?
The book market has been going up, so, I mean there are plenty of publishers whose public numbers will show you that, and there's been a huge boom since COVID and generally the publishers have been doing very well. And you know, we're in that market and we're doing very well. And when you have an increasing store count, and we are now over seven hundred stores, in fact, we're below six hundred a short while ago, then you're going to sell an awful lot more.
The Wall Street Journal reported a possible IPO as early as the second half of this year. Is that still the plan?
Well, luckily that is above my pay grade, so.
It will affect me.
But I own the place. As sad as that may be.
Do you think you would stay on as CEO?
I enjoy what I do, and I have a feel that what we do and the people who work for me are hugely vocationally mophiltated. We were not as important as public libraries by any close measure, but what we do we do do with an immense respect for the power of books, and I think all of us, including myself, hope to continue to do that better.
I think it's interesting you brought up libraries because I do feel like there's less and less funding for libraries in different towns.
I know growing up that that was a big deal.
You get your library car, you'd go to the library.
That was a big deal.
But is some of that also maybe fueling where people just have to go buy their own books, especially for kids.
I don't think that's to our benefit. I think it's only to the detriment generally of reading and generates for the engagement with books. And I speak actually as an Englishman, and what's happened in the United Kingdom where public libraries have not been funded for really a decade and more, and it's hugely to the detriment of.
Society, AI and books. This is wild. I mean, if this has been happening for a few years, but if you like a big news event happens, you can go find like a self published AI written book on Amazon to download right away. Are you going to carry AI books?
We generally don't, and we go to very great efforts to exclude them from our online operation. Other than it's a challenge, it is a big challenge. But actually AI is absolutely fantastic at hunting out AI, so that's helpful. But in and of itself, as long as AI it is clearly communicated that a book is created by AI and if readers want to read it, then we should
provide that. That's our role in life. And so I'm not you know, an evangelist saying, you know, never AI but I am saying it should be very clearly indicated whether it is a real author, to whom, by the way, as booksellers, we feel huge duty of care or.
If it's a how big is AI category when it comes to books now in your store?
Is nothing?
I mean not nothing nothing, but as far as we can possibly determine, it's nothing.
Our thanks to James Dont, CEO of Barnes and Noble.
You're listening to Bloomberg Business Week coming up from bookshelves to oil changes. What consumers are spending money on when it comes to their cars.
I think they're frugal and they're very, very cautious about spending anything unnecessarily out of their pocketbook. They're also in the customer wants efficiency. They don't want to be there long, they want to be quick, get it in, get it out. And it's also not lost on us that about seventy percent of people distrust the folks that work in my industry, and we are trying our best to reverse that trend.
The CEO of Full Speed Automotive joins us. Next, this is Bloomberg.
This is the Bloomberg Business of Entertainment Report. Paramounts Guidance is looking to return to the days or many of us were.
Saying, I want my OWNTV sloombergs.
Lucas Shaw tells us Paramount is looking to revive MTV and has spoken with several major companies and leading music industry figures about acquiring a.
Stake, and they would like to find someone in the music business who wants to partner with them, invest in it, bring in some assets. Most of the feedback that I've heard from the music business has sort of been what is in it for us?
MTV began in nineteen eighty one airing music videos before it evolved into a home for reality TV programming with shows like Jersey Shore and the Real World.
This is the true story story.
Shaw says. Paramount believes it can reinvigorate MTV by recasting it is more than just a cable network and bringing the focus back to music, but he says is a tall order.
I say the odds are pretty low. People have tried to reboot MTV many times before and it hasn't worked.
Paramount shut down MTV's twenty four hour music channels and select countries at the end of last year. Karen Moscow Bloomberg Radio.
This is Bloomberg Business Week Daily with Carol Masser and Tim Stenevek on Bloomberg Radio.
So morning signs in the global car market. You might recall earlier this month, Porsche reported its sharpest sales decline since two thousand and nine, way down by weaker demand in China, tariffs and rising evy costs. Meantime, a shortage of memory chips caused by the data center Boom is leading the auto sector to brace for yet another potential supply chain disturbance.
Let's talk about the US story and the auto industry and sort of a different take on it. We've got Brian Masiak with us. He's CEO of Full Speed Automotive. It's the parent company of the automotive repair and service facilities including Grease, Monkey, Speed, Oil Change, n Auto Service and Quickcar and more so think oil changes, tire sales and rotations, break services and the like. Brian joins us here in the Bloomberg Interactive Broker's studio. Welcome, how are you.
Hey, I'm doing great. I appreciate the opportunity.
Yeah, So, you've got a really interesting view on the country and the economy because Full Speed Automotive, through its different brands, franchise, and company owned nine hundred of these stores throughout the US. You serve millions of customers each year. How is it out there? Like, what are you seeing from your customers?
Yeah, so it's very very clear if you listen to the customer exactly what they want. They want value, they want efficiency. They don't want to be there. I mean, let's you know, in all honesty, nobody wakes up in the morning and is excited to go get an oil change, right. No one wants to spend the dollars. It's it's a
grudge purchase, right, It's a chore. And we understand that that doesn't mean that we can't deliver a delightful service for them, right, And so when they show up, we want to treat them like they're a guest in our house. We want to open the door for them, we want to escort them into the waiting area, we want to offer them water, coffee, and we want to provide them honesty of what that service needs.
Are Are they on time in general with the recommended rotations with replacing tires with oil changes or are they letting that slip? And are they driving cars longer without getting them service, like, I'm looking for any economic signals that you can send us from what you see.
Sure, sure, no, Our space is fairly resilient to whatever fluctuations in the economy exist.
Right now.
The average cost to buy a new vehicle is about fifty thousand dollars. People are spending an average of about seven hundred dollars a month on their vehicle. And so what's that you know, you think back.
That does include you're talking about you're talking about a car payment.
I'm car payment alone, yeah right, wow, And so that is forcing people to keep their cars longer. Average age of the vehicle on the road right now, and there's about three hundred million of them about thirteen and a half years. They're still continuing to drive about thirteen thousand miles a year. So they're driving longer or yeah, they're driving you know, normal miles. They're keeping their cars longer, and that means they have to they have to go
to preventative maintenance. They have to get that car done, but they're trying to watch their pocketbook, and so they are stretching as long as possible before they need to get it into our base and perform the oil jot.
How long have you started seeing that that people are stretching out?
Yeah, so you know, there was a time when we used to see every three months on the dot and now it's around five six months. We might see that customer only two times a year.
When did that start? Last six months?
Last Yearly about the last twelve months, Yeah, last twelve to eighteen months we started to see it slip. But that's where it is right now, is about five to six months we'll see that customer.
But how would you, Brian, describe the consumer?
Because I think it's safe to say that when we talk about this economy, folks say, we'll wait. You know, in your records on Wall Street, we've got economic growth. There's a lot of metrics out there. Even though we're starting to be a little bit concerned about the job market, unemployment rate's still pretty low.
So I'm just.
Trying to understand, how would you describe today's consumer.
Yeah, I think they're frugal. I think they're frugal and they're very very cautious about spending anything unnecessarily out of their pocketbook. They're also in the customer wants efficiency. They don't want to be there long, they want to be quick, get it in, get it out. And it's also not lost on us that about seventy percent of people distrust the folks that work in my industry, and we are
trying our best to reverse that trend. And how we're looking to do it is infusing some technology into the customer experience. We don't want you to take our word for it anymore when we come to you and say.
Yeah, no, no, keep going.
When we say you know you need a you need a transmission flush or a break flush, we want to show you visually. We want to send you a digital vehicle inspection on your phone so you can see it and we start to build that stickiness and that trust together.
Well, isn't that.
Kind of what cars are about? I mean, I remember a few years ago.
It's kind of a little embarrassing, but we had a car and you know, there was I guess a rainstorm and there was some water runoff and we could kind of go through it. It didn't look so high and ended up frying all the electronics and we had to just we lost the complete car. But I'm just isn't it today that you just basically plug in and the car tells you what it needs to have done in a lot of ways.
In some yes, you can do those diagnostic, it doesn't hit every single code, and sometimes the customer just doesn't want to pay that extra fifty seventy dollars for that diagnostic they're requiring on our sixteen point inspection visually, And we don't want to just we don't want them to just simply take our word for it. We want to show them in a video so that there is no ambiguity whatsoever.
So what do you show them?
So funny?
Yeah, I know, I mean a few a couple of years ago, my uncle, my uncle had this prius for years that, like you know, he drove for years. Then my it went to my cousin, his son, and he showed me this video a couple of years ago, and it was like the car had just been beat up. I mean it parked on the streets of New York for years. It was a complete beater. And he showed
me this video is like check this out. And it was a video from a mechanic that was showing all the places where the rats had shoot up inside of the car. This is very what happens in New York City, especially in the winter. Like, it's really gross, but it's a very New York City thing. And what I was I was struck by the video was it was because it was basically like the mechanic was offering this as proof of this happening. It wasn't like, hey, check this out, this is crazy.
So you went inside the car and key He's like, this.
Is why we are replacing this, this is why we're doing this. It's this like environment where there's a real lack of trust because I think there's a power dynamic imbalance when it comes to the customer and when it comes to the person who's working in your car, customer doesn't know anything. When Google and Chat GPT, the person working on the car seems to have all the power. And I think that's a hard thing for me as a customer to come to terms with, especially when that check comes.
You got it right. So we want to go through our sixteen seventeen point inspection. We want to tell you, hey, your tires look good. We want to show you. We want to show you the measurement that you're fine. You don't if anyone tells you need new tires, you don't. And then we want to show you some things that this needs to be place, but maybe not right now,
so maybe it's thirty sixty days from now. And that gives our marketing team then an opportunity to reach out back out to that customer in a month or two and say it's about that time, bring it back in. Here's a coupon to do.
So it sounds like it's also labor intensive, like you do need a lot of folks in order to the cars come in.
Do the evaluation, walk us through that you do?
Yeah, ok, so cars are becoming much more more technologically advanced and difficult, and that's good and bad. I remember the days when my dad would change his oil in the in the in the parking lot.
Now these my dad taught all of us had a lot how to do it.
Yeah, now you can't get not changer, but we had to learn how to check it. Now, can't get rid of the track of our milet like we had to do a lot of You can't get.
Rid of the oil now, so you actually need to go somewhere.
That's right, Yeah, that's right.
So we have shifted from a do it yourself to a do it for me, right, but we need skilled labor in order to do that, and we have really good relationships with trade schools, and trade school enrollment is increasing. We also have found partnering with the military folks that are getting out of the military and needing jobs. I mean, these are people that are well trained, they show up on time, they're loyal, very very good, good workers, and they stay with you.
For a while.
Can you find them? Because there was this Wall Street Journal story just the last few days, the one hundred and sixty thousand dollars mechanic job that Ford cannot fill. It's sort of turned into this lore as an illustration of the trade skills gap in this country. Can you find everybody you need?
Not everybody? There's definitely there's always a race for the you know, those master mechanics, no question about it.
But do you need master mechanics?
We don't, okay, and so Ford would be different. Right, They're doing heavy engine work, transmission work, and we don't do that. We focus on quick loube and then some ancillary services that you really don't have to drop off the car. You can still stay in the waiting room twenty thirty minutes and you're on your way.
Can someone who has no experience but has drive and motivation come in learn what they need to do there? Do they need some sort of training ahead of time?
Yeah, so certainly you can take a newbie. For sure. Not every employer is going to do that. We have a really robust training program. We won't let you work on a car until you pass the certifications, but for the right candidate, we'll absolutely put them through it.
Franchise versus company owned, like close to one thousand total. What's the breakdown of franchise versus coming?
So we have three hundred company owned and then the remainder are franchisees and licensees.
And you're owned by mid Ocean Partners, private equity firm acquired just about five six years ago.
That's right, five years ago.
What's the plan? What's the next iteration of this?
So right now we're doing well from a cash flow standpoint. At some point, you know, they may want to do a transaction. I'm sure they will right but right now we're just focused on on the growth, growing top line and then growing our rooftops, largely on the franchise side.
Why have so many different brands, why not put it all under one brand name?
Yeah, that's a fantastic question. And my initial thought was, yeah, let's just all convert it to one national brand. But what we have found is in some pockets, in some regions, Michigan being one of them, they really want to go to their small regional brand that they've gone to all the time. There's name Cache are there, and for us to change it would be a silly business decision. So, you know, it costs a little more on the marketing side, right for sure, but that's what the customer wants and
that's what we want to deliver. Where we think we can convert the name, we will.
Evs don't need new they need new tires, they need new breaks, but they don't need the lubrication services that you guys do.
Right, Yeah, is it a concern, it's not.
You know, I think a few more years ago we all or I don't want to buy to say about all, but some of us thought, oh my goodness, if this is going to take over the quick loop space is going to dry up pretty quickly. And it really hasn't transferred transferred to that, right. Hybrids are important. Hybrids are selling,
but hybrids need oil changes. Where we're trying to even see those evs are we offer a diversified, you know, menu of services, so they still need the breaks, They still need you know, a lot of the other ancillary services, so we still see them.
That was Brian Masiak a full speed automotive.
Still to come on Bloomberg BusinessWeek. She rode in a Mercedes with Next level AI and said it made everything else feel well, kind of dumb.
This has been developed with NVIDIAs, So this is truly AI in your car, driving your car on a fully other level than some of these lesser self driving systems. MB driver syst Pro is so smart that it does know when it can turn right on red and when it can't.
Our car guru Hannah Elliott on the driver's Seat of the Future. That's next. This is Bloomberg.
This is Bloomberg Business Week Daily with Carol Masser and Tim Stenovek on Bloomberg Radio.
So imagine the car you're driving could think faster than you anticipate every stop, turn and lane change, basically hands the city streets on its own.
Sounds ideal.
Even read a sign that says, you know, no right turn on red.
I think that's amazing.
Okay, So we've been talking about the potential for self driving cars for many years now, but that could soon become reality with us is Bloomberg News autoclumnist Hannah Elliott. She testrove a Mercedes with the latest AI system with some surprising results. I gotta tell you, Hannah, I loved Okay, Carol and I like, it's no secret how much we love Way Moos when we go and you know, go to San Francisco or l or Phoenix or whatever like
Way Moos. Yeah, Sam, what shocked me the most about One of the things that shocked me the most about reading your story was the price of the car you drove was under fifty thousand dollars.
Me too, I was surprised. Okay, what is it tell us about this car?
Okay, so yes, this isn't the whole thing is kind of about this car, which is the Mercedes CLA and the starting price on the car is forty seven, two hundred and fifty dollars, which is amazing. This is now
the new entry level car for Mercedes. It's an electric vehicle, fully electric, but they are coming out with a hybrid version later in the year for those of us who still want our combustion engine along with our electric power, and it is a direct attack on Tesla and on some of these more affordable cars that people are selling in the rest of the world, especially in China. Mercedes has decided we're going to take them on, and we think we can give consumers a really good product at
a very very competitive price. And I think they nailed it. I really really liked this car.
All right, and I love you say my takeaway after driving around an hour in a car driven by AI makes everything else feel well dumb walk us through because there's actually two levels here, and full disclosure, I've had a few more Mercedes and like the atest one which is now probably over ten years old, has a lot of safety features in it that basically I take my hands off the wall the wheel, it drives itself. This sounds like the next level.
Yes, this is the one that we should really talk about, is the MB Drive Assist Pro. Now, there is an MB Drive Assist system that is already in the car that is level two advanced semi autonomous driving, which means you can drive without your hands on the wheel for lengths of time and the car will drive itself. Okay, great. The Drive Assist Pro, which is coming out later this year,
in which I really spent the most time testing. Is a system that allows you to navigate to any point, any place and not touch the wheel at all.
The car does everything.
This is a subscription system that costs under one thousand dollars for three years, so in light of everything, I think that's a very good priceload. It downloads to the car, and this has been developed with Nvidios, So this is truly AI in your car, driving your car on a fully other level than some of these lesser self driving systems,
and tim you kind of hit on it. The real difference here is that this NB Drive Assist pro is so smart that it does know when it can turn right on red and when it can't turn right on red. It knows when it can roll through a yellow light and when it needs to stop because the light's about to turn red. It was really really interesting, and I think the key takeaway is it felt more humanistic than any other sort of self driving system that I've been
in before. It felt like it was reading and understanding and comprehending street situations in a way that felt closer to human than we've had before.
We should note that you still couldn't take this on a highway, right, That's right.
This system is only for city streets.
The NB Drive Assist, which is the lesser system, does go on highways and city streets. This system right now is only for city streets. So yeah, that's kind of the caveat. We're not to this like bright future of robot cars driving us everywhere except for waymos, which we could talk about too, But they're getting there and the technology is there. The highway thing is really more related
to regulations and legislation and that sort of thing. But yeah, this was a really interesting fund way to navigate around a city that I don't know very well, San Francisco. The car handled it, and dare I say it was relax It was kind of great.
How does it work?
I mean, I know there's ten cameras, five radar sensors, yes, twelve ultrasonic sensors. But this end to end stack, from the role of Nvidia and its expertise, sounds like it's crucial in all of this.
Yes, yes, so Nvidia has This is their fully full stack, which means that they developed the entire system internally for Mercedes. But Nvidia has collaborated with a lot of different car makers, Toyota, Volvo, Rivian, Lucid helping develop these AI autonomous driving systems. This particular system in Mercedes, like you say, uses ten cameras, five radars, and a dozen ultrasonic sensors. It's kind of like what
we see in a Weimo. For anybody who has written in weaimos, waimos use lightar, radar cameras, and high definition maps to read and anticipate the environment. This is very similar. It's not exactly the same, but from a user standpoint, when you're in the car, it feels very similar. So if you have been in a Waimo, it's like, imagine that the Weimo is driving your own personal car and you're in the driver seat, which is a good thing. I have a lot of friends who are a little
bit still uncertain about Weimo. They're not sure it's safe, and I understand that apprehension. But for me and you guys can speak to this too. It took like two or three minutes for me to be in the car before I trusted it, and then it was like, oh, yeah, this is fine.
Yeah.
I was going to say, I think anybody who doesn't think a WEAIMO is safe, and I hope I don't ever eat my words here, Hannah. But I think anyone who doesn't they just haven't been in it truly, right, because once you get in it, once you sit in and have that experience, you're like, wait a second, this thing is safer than the random guy who is driving me. Yeah, called up on my iPhone. Hey, yes'm oh go ahead, go ahead, Hannah, because you actually do I'm just stats in here.
Well yeah, well, I was just gonna say too, no no knock on the wonderful taxi and Uber drivers of New York City, and I'm grateful for them. But yes, I was going to say, WAMO was a better driver than half of those guys.
And those guys know it too, So it really is true.
And a lot of my friends speaking out about Waymo for a second, actually enjoy not having another stranger in the car. So, like you say, it's like once you try it, once, you're kind of sold.
Typically I have to say.
Like like Gateway drug to Autonomy.
Yeah, the first time I did, I have to say, I felt like I was in a spa.
It was like immaculate them.
The music was the music was moody, and I was amazed how at how quickly like you write about like I close my eyes because I had like a forty minute ride to the airport. I think it was Arizona, and it was like I couldn't believe, and it was night. I couldn't believe how relaxed I.
Was, totally and I and I have to say too, And we've talked about this all the time.
I love driving.
I own old car. I'm a big fan of driving. I'm honestly, I have old combustion cars. You know. I'm all about the right tool for the job. I don't think we have to live in a world where there's only one option. I actually love the idea of a lot of variety and you pick the right tool for the job.
And my point is, if.
You have a self driving car like the CLA, this Mercedes CLA that truly is budging up on being fully self driving, that's level three. This is level two plus plus. But we're very very close. It doesn't mean you can't also have fun driving. It just means that when you're sitting in traffic and your eyes are glazing over and you want to pull your hair out, the car can handle it. You can feel like you're in a ba For instance.
Hannah, I'm without the essential oils. That's the only thing that was missing exactly, although.
I maybe I need to start traveling with those just exactly.
You do live in California, so I think that's kind of part for the core these days.
Hey, more broadly, give another story and it's entitled look at Uber. The future is self driving cars like Waimo? Is that where we're headed? And it seems like there's a lot that we still need to tackle before we can get there.
Yes, I think we are increasingly headed toward semi and full self driving cars in urban centers, yes, and lacross ride sharing platforms. Yes.
I don't know if you guys have.
Seen zekes going around zukes Is Francisco and there's a there are a few testing programs around the country as well. Yes, we are moving this direction, and even in private cars with AI defined vehicles like the CLA that Mercedes it. Yes, everything is moving in that direction.
Now.
Do I think we're going to have a world that is dominated by self driving cars that are level three and above? Level five is like full full self driving like robot taxi. You can take a sleep, take a nap in the back. We're not there yet. We're at level two plus.
Plus.
Experts that I talk to say we have another ten years before we'll see anything close to a predominance of self driving cars on the road, So we don't want to get ahead of ourselves. Yes, we're moving in that direction. Yes, we're going to see it more and more and more, especially as automakers. Let's be honest, try to stay competitive with China, because China is leading the way. They're making great products that cost less. So yeah, we're leading, we're
leaning that way. Is it going to be another ten years before we're like quote unquote living in the future. Yes. And also I should mentioned, and I said this before, we've got to figure out the legal implications of all of this. Whose responsibility is it when inevitably there's an incident. We've got to sort through all of that, which is also why way Moo's not running in New York City right now. You know they're figuring that out. So yeah, we're moving in that direction there yet.
No, And I highly recommend everybody check out Manna's stories because I think there was the one thing that you mentioned too that kind of frustrated me is that it didn't always drop me where I wanted to drop. But we're gonna make people go to the Bloomberg or Bloomberg dot com.
To read second walk a little further. No, it ticked me off. I was like, wait, where's my car? Where's my car? Hannah? Great stuff.
We love, love love catching up with you and looking forward to the Tesla story as well.
That was Hannah Elliott. She's Bloomberg News auto columnist.
And that wraps up our weekend edition at Bloomberg Business Week from Bloomberg Radio. Thank you so much for joining us. I should point out that even where I live, just across from Lower Manhattan, starting to see some testing of.
Way most Ooh, so there's a driver in the driver's seat.
Still, yes, we did see drivers, Okay.
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Have a good and safe weekend, everybody. I'm Carol Masser and I'm Tim Stenevac.
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