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Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. This past week it was largely about the newsflow from Washington to Wall Street, and that included shifts on US trade policy with global allies, and renewed pressure on the FED to the White House fast tracking its AI infrastructure build out, and oh right, a busy and big earnings week.
On that this first hour, what you need to know about results from two members of the mag seven, We talk Alphabet and Tesla. One traded on earnings, the other initially sold off only to Rally.
And speaking of Tesla, we get into the relationship between Elon and the President, recently feuding and yet this past week President Trump perhaps offering an olive branch, as he put out on social that he wanted Elon to thrive Elon's Universe is the cover story of the upcoming new issue of Bloomberg Business Week.
Plus one real estate investor finding opportunities in Solar. We'll explain all that to come. We begin with two of the big earnings this week. First up, Alphabet, which said demand for AI products boosted quarterly sales and now requires an extreme increase in capital spending, heightening pressure on the company to justify the cost of keeping up in the AI race.
To help break down Alphabet's quarter reelaned on Laura Martin, senior analyst at Needeman Company, who has a buy rating on Alphabet, the.
Single most important number to offset the bears is the search number. So search revenue up twelve percent, was well above the whisper A number of ten percent growth and above the Wall Street census number of nine percent growth.
And they also had four percent click volume, which basically is the same as last year, and that's up from two percent you know, click through rate in the first quarter, which is positive because people of the bare case here is that generative of AI answers lower than the economics of Google Search, which is the big money engine here. So the single most important number was that search grew AD revenue twelve percent, which was three hundred basis points above consensus view.
The second most important number is cloud.
Right, there's still out of capacity with Cloud, but their cloud business grew thirty two percent and a twenty percent margin, So that's fantastic, So they're really pricing up now that they have capacity constraints. And the third most important numbers YouTube YouTube grew thirteen percent of revenue, and we think it's worth seventy three dollars a share here if it was separately tradable and not confined within the alphabet conglomerate. So but I would say those are the three most
important segments that people are talking about. But the barecase really is highly focused on the search revenue.
Ground, and that's exactly where I want to go right now. Going into this print, there was so much concern about the cannibalization of traditional Google search. Why aren't we seeing that?
So what they're saying is that what happens when you have those answers, when you put in a Google search and then you get an answer, is that people are spending ten times more time, ten percent more time asking the next question, asking the next question, and that the shortfalling clicks per query is made up by the fact that people spend ten percent longer, which then lets Google serve more queries or more ads. So that's what they're saying,
is that the demometization is about equal. That's their words, about equal. But I think part of it is the extra time people spend using the answer format is offsetting the actual you know, the downdraft in the economics per query.
Hey, the extra spend the up again CAPEX. Initially everyone was saying, well, that's why the stock traded down in the aftermarket. It made some folks, or at least some investors it felt like initially nervous. What is your take on that. I think our own man Deep Singh was saying, well, listen, it sounds like they're getting the demand and they're spending to meet that demand.
Yeah, I mean I would say that.
I would say the other thing that's going on is that I think one of the reasons the stock was a little volatile is the operating income grew fourteen percent, The top line grew fourteen percent, thirteen fourteen percent, and it sort of looked like there was minimal operating leverage. But what they told us on the call that was buried in the financial statements is those costs included one four point four billion dollar fine legislative fine, regulatory fine.
So if you subtract that just to look at costs, the most important point we would make that I think largely is being missed. It doesn't have to do with revenue, has to do with the fact that by integrating generative AI into every aspect of their business, they've got really accelerating revenue, which everyone's focused on. But their costs are going down.
Okay, that's not fair.
Their costs are just not going up as fast. There's a lot more operating leverage here if you exclude the fine. So I think that's why I think once they said there was this big fine and the costs, people realize that jenerator of AA is really lowering or increasing the productivity here, and so the operating leverage is at margin expansion is faster than people think at a time when revenue is also accelerating. Over consensus view.
One thing I loved in your research, and you put this right up top, Laura, as you said, we like Google's strong strategic position as number one in search, number one in streaming YouTube number two in mobile, Android, number three in claud, number one in autonomous driving. Weimo, which Tim and I are both in love with. And you say lms make data more valuable and Google's data is best in class. Again, your view is alphabet in many
ways the one to beat. And why hasn't the stock been I don't know, doing more this year?
You know, I think I think Google, So I would say their execution has been very haphazard.
It's not.
And Wall Street really prefers leaders that lead from the front, like Meta, like Mark Zuckerberg. We like, you know, visible, clear, visionary leaders, and that's not what's going on here at Google. But you know, Google just sort of despite itself, really does have the human capital and culture and financial resources to fund what will be a retooling of American business, which is the generative AI backbone infrastructure that they're building.
And they're leading by executing within their own They're showing what's possible by executing implementing generative AI and everything they do, every product they have, and every cost center they have. So this is what's about to happen to America over the next decade is companies that follow Google's lead will have increasing margins and accelerating revenue. And if you don't, which requires a cloud. By the way, you can't do this without cloud. If you don't, you will go out
of business. Because, in my opinion, because the guys, the companies that use generative AI to increase productivity and margins and increase revenue will get higher multiples from Wall Street.
I know you said search, search, streaming, search, cloud, and YouTube are the three most important numbers, but we'd be remiss if we didn't ask you about weimo and the expansion that the company said is coming in the quote near future. Here's what they said. Alphabet hopes to expand weimo to all cities in the near future. How do you look at this as an analyst on this company stock, as an analyst for the company and material contribution.
So you guys love the service you just said, so, so I don't like it in this sense that right now, I think the most strategy is what you say no to. And what Google should be saying no to is anything that isn't generative AI related. Because this is a race and a war, and they are spending a fortune on jenerative AI. Good for them, But Weimo is another huge sunk cost or financial commitment, and I would like them figure out a way to do Wei moh. They are ahead,
they are number one in autonomous driving. I would like them to keep the data because I think data in the real world plus the virtual world, is worth more than either world standalone. So I like the data aspect of WEIMO, but I do not like the capital commitments, which compete right now with the generative AI capital.
What are the capital commitments? They haven't been totally clear about that. What do you to view them?
Ass?
Well, they sit in other bets, and I think other bets I'm forgetting, but it like it loses typically three to five billion dollars a quarter, so it's like twenty billion a year, and a lot of that is WAYMO and it's their healthcare initiatives, and so I just think that that money. You know, they just upped CAPEX by ten billion. I would like to see him take it out of other bets.
But the primary other bet is WEYMO.
So I think they're unwilling to relinquish their pole position because now.
Tesla's coming after them.
So I think I think, Look, they are number one in all of these strategic segments. Because they get there early, and so they're early to Weimo. I just wish it wasn't as capital intensive, the losses weren't as big at a time when Google should be spending all of its focus and resources on Jenerator ai Ura.
We really, really, really like Weymo. I'm just gonna tell you. Really, I even close my eyes in a Weymo. That's uncomfortable.
I know.
Hey, listen, we've got about three minutes left. There's so many different places we would love to go with you, but you pick because you've got Apple reporting next week, Meta reporting next week, Amazon reporting next week, uh, Disney in early August, Netflix already out, and then there's the Late Night Wars. What's interesting to you right now that you think the Bloomberg audience and investors really need to be paying attention and it could be something else beyond that.
Let's do Apple because it used to be the biggest company in the world now. I guess the videos, But what I would say about Apple, we have a hold here on Apple, whereas we have a buy on on Alphabet Google. You know, I think I think Apple isn't really a box because when you listen, for sure, when we hear Meta who's spending hundreds of millions of dollars per person to create a super intelligence generative AI group.
And yesterday there was no sentence on the Google earnings called it didn't have AI in it.
So you know, these companies are really talking.
Amazon will also because that's being run Amazon now is being run by the AWS you know founder. Essentially, he's talks a lot generative AI a lot. So the you know, the one that's not the same is Apple, and people really want to see what's happening with their generative AI strategy and how is it. How is Apple either sixteen iOS, sixteen iOS, seventeen iOS going to keep up with Android, which is Google, who last night told us they're integrating
jenerave I tools into everything including androids. So I do think there's a bigger threat to Apple's only business, which is this iPhone business. We think it's a single product company with upsells to other devices. We think the anchor
ten that there is the iPhone. So we really want to hear how they think they can compete when they are saying nothing about jenerative AI and they're spending twelve billion dollars on Capex, which is the same number at Apple for the last three years, when we just every single quarter we show up on the Amazon call, the meta call that Google called they're raising capex by ten billion dollars.
At a time or with order thirty seconds on Apples, Tim Cook the right leader to guide them through the AI era.
Ough, so harsh. I'm gonna go with no, but so harsh. No, I don't think so. I think we need a wartime CEO. And I think Tim Cook is great at a lot of things, but I don't think he's been He's not proven great at this this technological disruption called generator.
They I got someone else in mind that you think she'd lead it ten seconds?
It's an impossible job. So no, I have no idea in mine for who could replace him.
You you rock come back soon, and I think you are coming back soon, which we're looking forward to already.
Laura be well.
Laura Martin, senior alys at Niedem and Company, knows this space like no other. So glad we could get some time.
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 the Android Auto with the Bloomberg Business app or watch us live on YouTube.
All right, let's stay with earnings and from another mag seven we're talking about Tesla, which it shares fell after Elon Musk warned of difficult times ahead for the company following one of its work stretches since it first started producing electric sedans over a dozen years ago. Tesla will be in a transition period for the next year or more, losing electric vehicle incentives in the United States and needing
time to roll out autonomous vehicles. That according to the chief executive Elon Musk.
Ross Gerber is a longtime investor in Tesla and owner of Tesla cars, including the cyber truck. He's the CEO of gerber Kawasaki Wealth and Well. He's been a longtime Tesla advocate. More recently, he's been a vocal critic of Elon Musk. He joined us to reflect on his cautious optimism.
I think probably my biggest issue is that what I believe is best for Tesla isn't actually the strategy being employed by Elon, And what I think is best for Tesla is to be focused on selling great evs that can drive themselves versus completely pivoting into this robot and
robotaxi business because they're struggling to sell cars. Because what we're seeing now, which I suspected to be true earlier, is that the deterioration of the EV business is really really bad for Tesla, and it essentially is an EV business, and so hoping that robotaxi robotics is going to be a revenue stream or let alone profitable anytime soon is
really just not going to happen. And so, as Elon said, Tesla's in for some pretty tough quarters ahead, and with the ending of the tax credits and all this kind of stuff, I mean, this is all bad news.
When you say it's not gonna happen anytime soon. What do you mean by that? Give us your own timeline here.
Well, you know, we follow WEIMO very closely, and we think that Tesla is two years behind Weimo as far as the development of their robotaxi and now Weaimo is scaling and being quite successful at charging you know, the right amount for rides and generating enough revenue that it's meaningful.
So I think it's at least two years right.
So where Tesla's at for them to generate any revenue at all, all of meaningful ability will take a couple of years. And then from a profitability standpoint, we don't even know if that business is going to be profitable with all of the competition that's coming into the robo taxi business.
So you said you've been selling shares of Tesla. I think there are reports to in June that you sold about sixty million dollars worth of Tesla's shares and you cited the waiting confidence as you're laying out here in the company's future. Are you selling more? What's your exposure at this point?
Yeah, you know, we still have you know, on my last thirteen haf we had over two hundred thousand shares. You know, right now we're we're holding a little less than two hundred thousand shares. So we continue to sell the stock. We have a lot of diehard Tesla clients that you have huge gains because we bought the stock at you know, like two dollars and so, you know,
people aren't that excited to pay taxes. And there's still this possibility that Elon could change course and really do the things necessary to fix Tesla because fundamentally, Tesla is a great company. Most if not all, of Tesla's problems are self created because of the CEO Elon Musk. It's not that Tesla's core business has some big problem. It's actually the opposite, that CEO is the problem, which is super unique. So so that's what why I'm loath to
just be like completely out of Tesla. But on the other side of the coin, with the valuation where it's at, and basically we think they're not going to be profitable next year. You know, the stock needs to move meaningful the lower in my mind before I would buy it.
Hello, what's meaningful?
Well, you know, I don't know if any of the analyst estimates for next year are right. I think they're all vastly overstated. But even if you did three dollars of earnings next year at fifty times earnings, which is in Nvidia's multiple, you'd be at one hundred and fifty dollars. And then you put some premium on the Elon Musk robot premium, maybe you put on fifty one hundred dollars, so you're at you know, two hundred to two hundred and fifty dollars.
A shares where I think Tesla should be.
Hey, Ross, in the past when we've spoken to you, really critical of Tesla's board, even critical of it on social media as well. The board does include folks such as Kimball Musk, It includes James Murdoch. Most recently, it added Chipotle's Jack Hartung to the board. Are you any less critical of the board now? Do you think the board is doing its job?
No? I mean I think there is no board.
I think the board is Elon Musk, and so the board is just, you know, it's like a weekend at Bernie's. You know, it's like a bunch of bodies that they put at a desk and Elon tells them what to do, and they do it. This Jack guy they just put on probably had no idea what it's getting himself into.
And he's in deep now, you know.
So I don't actually think the board of directors cares about anybody but Elon Musk, and I think investors in Tesla know that at this point, and that's why we're ultimately sellers is nobody actually represents retail investors, which own you know, still own eighty seven percent of Tesla. So it's really a unique situation, and I expect Tesla to buy Xai at some point for probably two hundred billion dollars some outrageous price, and I think that's the next
thing that will happen. So there's no question that the merging of these businesses seems to be on the horizon.
Hey, before you go, definitely want you to get Have you weigh in ross on what President Trump put out on social that he denied he was seeking to ruin Elon Musk's business empire as retribution for the dispute over the President's signature tax law. What's your reading, Arnest? Might this be helpful to Elon and tell us that we just got about a minute ten?
No, you know, Trump, Trump's just being the bigger man here and trying to, you know, act like he doesn't have a tiff with Elon, you know, because he's so mature or something. But the truth of the matter is he's already done what needs to be done to destroy Tesla by taking away all the subsidies and making evs much more expensive, and so you know, he doesn't have to say anything anymore. It's Elon's dug his own grave and he's going to have to figure out a way out of it.
So so you know, Trump, Trump doesn't have any reason.
To look bad or grind an axe, you know, and he's playing Trump's playing Elon like he has the whole time.
Thirty seconds. We have talked with you about your cyber truck. We talked about others you know that you have owned. Would you buy another Tesla? Do you still like the cars? Just quickly, I do?
You know, this is the whole issue, you know, I've looked at so many other cars to buy, and I want an electric car, and I want a great electric car.
And I still think Tesla makes the best cars, and Rivian.
I have a Rivian too, so I think they're a close second, and they make a great vehicle as well. But I just haven't been compelled by any of the other vehicles EV vehicles out there, and and so you know, I still kind of like my cyber truck, and I know.
You know, I can't sell it anyways.
But Tesla makes great vehicles and it's a great time to buy an EV before the discounts go away.
Bus Gerbert, You're incredible of Gerbert Kawasaki. Well, we're so appreciate it.
This is the Bloomberg business Week Daily Podcast. Listen live each weekday starting at two pm Eastern up on Applecarplay and the Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa played Bloomberg eleven thirty.
Safe to Say So Many called it that the romance would last between the world's richest person and the US President. The breakup happening after disruptions to the US government under what some say was the guise of efficiency and data foraging.
We are talking, of course, about Elon Musk and how his companies, specifically Tesla, SpaceX, and Xai, are struggling in the wake of his feud with President Trump. This past week, Bloomberg reported that a risk factor statement was sent to SpaceX investors, including Elon's desire to get back into politics.
Certainly a whirlwin for those invested in Elon's empire. Writing all about it as the cover story for the upcoming issue of Bloomberg Business Week is Bloomberg's Max Chafkin and Ed Ludlow.
Max is Bloomberg BusinessWeek Senior reporter, also the co host of The Everybody's business and Elon Inc. Podcasts. He joined us to break down how Elon's empire may be creaking under the strain of his antics.
He's the wealthiest guy in the world, and investors to date have essentially allowed him to do whatever he wants and to do things that most CEOs, most entrepreneurs would would never be able to essentially get away.
With that said, there are i'd.
Say bigger challenges facing these companies today than he's experienced in a very long time. You know, of course, Elon Musk has a history of sort of flirting with disaster, and you look at the history of Tesla. There were some very dicey moments in the two thousand, same thing with SpaceX, but you haven't had this situation that we have today where you have essentially three companies SpaceX, Tesla, and Xai. I'm going to leave off this sort of
small smaller ones, but those are there too. And then in the foreground you have this potential fight with Donald Trump, and so you know, everyone's focused on the fight. But those three companies, each in their own way, have very significant challenges.
So let's get to it.
Because you do, right, there are many more weapons President Trump could deploy against Elon Musk's business interests where he's so motivated so so much as like does he or doesn't ty, let's start. I love the way you guys do this. You do basically like these case studies of each of these three businesses. So let's talk about Tesla. He makes promises sometimes it takes longer we have all gone along from the ride that we eventually get this stuff.
And to be fair, when it comes to EV, certainly in the United States, he moved the needle.
Yeah, absolutely, And that's what's made I'd say the events of the last couple of years so surprising because Elon Musk is attempting this very dramatic pivot away from it and towards robotaxis, which kind of strange because the EV market is still growing very quickly. Tesla, on the other hand, is not growing. I mean, their deliveries have been falling for the last two quarters, had a down year in twenty twenty four.
We'll see what this latest quarter looks like.
When they report earnings. But they are selling fewer cars each quarter than they than they did a year ago, and that is kind of surprising for a company that is trading at just this insane multiple, trading at a value that is way, way, way richer than you know, a normal car company. Now, of course, the reason investors are going for this, the reason they're you know, continuing to buy the stock at a relatively high price, is because of robotaxis, this belief that Elon Musk is gonna
revolutionize transportation. The issue is that's been this kind of thing that Musk was able to point ahead in the future and say, look, this is going to be great. Don't focus on the now, focus on the future. And we're now we have the now. Now, now we have some robotaxis on roads, and it's really a very small number. It's something like ten to twenty robotaxis in a very
small part of Austin. Meanwhile, you got Weimo, and we've talked about this before, but there is this obvious competitor, Weimo, which has way way more robotaxis and more markets and is not getting valued the way that Elon Musk, the way that Tesla is getting valued. So you do wonder, you know, how long is it before investors start to look at that, and you know, how many quarters of sort of declining deliveries, declining car sales are they really going to tolerate.
These companies have sort of always Elon Musk's companies have always kind of used one another and shared engineers at certain points. Now we're getting to appoint max where Elon wants more investment from one company to another company, specifically Tesla, to invest in Xai, which is a challenging thing to do because Tesla's a public company, Xai is not. Shareholders might not love this idea. Explain the sort of borders or lack thereof when it comes to this counting.
I mean, the thing is from the point of view of Tesla investors, and I think this is true of most of the investors in most of Elon musk companies, They're not investing in a particular product. They're just investing
in Elon Musk. And that's one of the reasons why, you know, even when Musk does something that seems on its face a little bit foolish or crazy, for instance, the the on again, off again purchase of x at a ridiculous you know, overvalued at the time, investors go along with because they just think, Okay, Elon Musk wants this, he's a he's a brilliant guy, and so you have this thing where the companies, although they are nominally independent,
are sharing resources, sharing management of course, not just Elon Musk, but other folks, you know, sort of bouncing between them or doing work on the side. And now even you have Xai, which is desperately trying to raise money, raising money from Elon Musk's other companies, SpaceX, according to Elon Musk, putting two billion dollars into Xai. And then Musk has said he's going to ask Tesla for money for a year ago he suggests the number will be five billion,
So you're talking about significant amount of money. Tesla of course has a lot of cash at the moment, so it's not like it can't afford it. But you got to ask yourself what is the rationale, Like, what's the business rationale if you're a Tesla investor to you know, move money from from Tesla to x especially when X and Tesla are sort of in competition, you know, they're
both AI companies, and so so that's an issue. I mean, what I think it shows is that as much as these companies you know, add up to this big empire, they're interlocking and if one struggles, the others are going
to struggle. If Tesla's value were to decline dramatically, that would hurt Elon Musk's empire in a big way because Tesla shares are a big source of his wealth, the way he finances things, and beyond that, there's this aura of success that he has used to sort of promote himself and promote these companies, and as that has i'd say, come into some question, you know, I think that hurts some of these other companies.
So he did post on x that he's back to working seven days a week and sleeping in his office if my little kids are away.
Yay. But I'm just.
Wondering which part of his empire is the most interested. You guys talk about Xai that that's what he seems to be super interested.
In, right, Yeah, And you get different answers depending on who you talk to within the empire, because, of course Tesla also feels like Tesla h employees board members also feel like they are in the middle of this really unique opportunity with Robotaxis. But yeah, I mean, Musk has spent it seems, at least over the last couple of weeks, a lot of time on with Xai and Grock. Now, of course AI chatbots, that's that's an area that a lot of investors are excited about. On the other hand,
this is a very expensive company to finance. We've Bloomberg has reported that they're losing a billion dollars a month. So like that, you know, five billion dollars from Tesla, that's gonna they're gonna burn through that, you know, pretty quickly. And and you know, I think I think from the sort of bull cases, Hey, these large language models are really expensive to finance, so we need to you know, put as much into them now catch up to open AI.
But of course the other side of the coin is like why, you know, why does this very successful car company that's worth a trillion dollars by market cap, you know, what does it have to do with AI chatbots? I don't think that the answer is a whole lot.
Yeah.
Elon Musk claimed without evidence that President Trump wasn't accomplice in the crimes of Jeffrey Epstein and alleged that the president had covered them up. This was sort of the nadir in their relationship. I think if we look back over the last six weeks, is there any recovering from that? Like, do they get back together, do they become allies again?
I think it is very hard to see.
I mean, obviously those are very serious charges, I mean sort of like the most serious charges in Republican politics. And it's led to a news cycle right that that happened at you know, as their feud was kicking off at the beginning of June. Now we're in you know, mid late July, and Republicans are still talking about Epstein quite a lot. So so yeah, I mean it's it's been a bad that's a thing that's going to really
throw a wrench in any kind of you know, potential makeup. Now, I will say Trump and Musk are both this is going to sound weird, but they're both kind of forgiving. They both although they like to cultivate this, both of them, you know, Alpha image or whatever they have. You know, Trump has done this where people have been on the outside and then they find their way in. Steve Bannon, of course, famously was very much on the outs. Now he's no longer on the outs.
Musk is the same. Musk.
You know, we we'll get very mad at people and and you know, find a way to get them back in.
So I wouldn't.
Discount it entirely just because, and I've said this on your show before, there are reasons each of them has an interest in being on good terms with the other. That said, I mean it is it has seemed very difficult. And you're seeing now, and we get into this in the story, there are lots of sign if you're looking closely for ways in which this relationship is hurting Elon
Musk today. Now I'm not just talking about Jared Isaacman, the you know, the person that Trump originally nominated to head NASA, the Space Agency, who is close to Elon Musk, who's out now. But there are lots of little regulatory moves, policy moves, and just to give you one example, the guy who's going to run NITSA, you know, at his confirmation hearing suggested that we need to have more oversight of autonomous vehicles.
So if you're Elon Musk, you don't want to hear that when robotax trying to get on the roads.
Yeah, you absolutely don't. And and so or you know Sean Duffy running NASA now, who's he.
Was, according at least some reporting from inside the.
White House, was one of the people who was really upset about Doge. So you're seeing these little things that are potentially troubling if you're Elon Musk and certainly cut against the sort of bull thesis around the time of the election, which was like, these guys are perfectly aligned. This is going to be amazing. I mean, that's what sent stock up to its you know, crazy heights in
mid December, and it's fallen. I think last I looked around thirty three percent since then, as that that argument has sort of fallen apart.
It's, you know, as you guys say, you know, you can't count out Elon ever, but it is curious to see how this ultimately plays out and whether or not he becomes a target of the administration potentially. Hey Max, thank you so much, really appreciate it. Bloomberg Business Week Senior reporter Max Chafkin, Max and Ed Ludlow writing this story. It's an upcoming issue of Bloomberg Business weeket is the cover story already on the Bloomberg and at Bloomberg dot com.
You're listening to the Bloomberg Business Weekdaily podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Applecarplay and the Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Who would also unleash you just by lowering the interest rates.
If the Fed would lower the rates, we wouldn't even have to do that. But we are thinking about no tax on capital games on.
That was President Trump this past week with a statement that caught our attention. The President taking questions in the Oval Office during a prece event that he is considering a proposal to end capital gains taxes on home sales, and I got to say, caught my attention and sign me up.
Are you planning to sell your home anytime soon?
Not anytime soon, but you know, when you've been in a home for a long time and it was a market that was pretty dead, there's been a fair amount of appreciation.
So yeah, but then, but can't you also have you been keeping track of all the improvements that you've made over the years.
Yeah, I don't know how good the files are, but yes.
I'm sure they're on your desk somewhere.
Carrol I.
Actually, you know it's so funny that you say, because I'm always liketed my husband or give me like the receipt, give me the like. So yeah, yeah, just some bank statements.
Just keep track of that and then it becomes your accountants problem.
Yeah, exactly.
Hey, it's still a developing story, so nothing official yet. But under current laws, single filers are exempt from paying taxes on capital gains of two hundred and fifty thousand dollars or less for the sale of their primary residence. Well married couples filing jointly are exempt on up to five hundred thousand dollars. This new proposal would eliminate that cap.
To white cut our attention, legislation that, if passed, could impact millions of homeowners. For the latest on this and the latest on housing, head to Bloomberg dot com or check out the Bloomberg terminal.
You know, I've been thinking about this, and it's one of those things first you'd have to find where you'd offset that revenue loss when it comes to capital gains. But it's also one of those things, Carol, that I think would again disproportionately affect the wealthier people in this country because it's homeowners who own their homes for a very long time, so they would see the benefit, not necessarily the folks who the President has talked about wanting
to be able to afford homes. Those first time home buyers that he's talked about not being able to get into those homes the way they were like their parents were able to. I mean, we even talked to a real estate agent this week who talked about first time home buyers being in their forties now as a result of high prices and high rates.
Also, she talked about multi generational home buying, so older folks, you know, either passing on their homes or helping out their kids and then living with them. With the understanding, I agree, it doesn't necessarily get to the housing affordability problem that has persisted, to be fair, not just this year, not just last year, but has been around for many,
many years. We have a great voice though on housing that we like to talk to plays into the multi family very much in the South of the United States. We're talking about Thomas Carroll. He's founder and chief executive officer ballast Rock Asset Management. The firm has about six hundred million dollars in assets under management, and as we said, focuses on multi family real estate and private equity.
The industry as a whole has been white knuckling. I would say with an expectation of rates coming down, they've been white knuckling the sale of assets. We're primarily in the secondary market rather than developing specifically in multi family.
But you still have to do a lot of work to those multi family.
Absolutely, we're doing massive renovations and so inflationary costs around that material, et cetera. But yes, the rates environment has had a tremendous effect on the multifamily market, and until rates come significantly lower or sellers reprice in a material way, then it's tough for the market to get started again.
That's what I want to ask you. If we just know, all right, the Fed's on hold because this is what's the policy that makes sense for the next six to twelve months, then folks are going to do deals.
Right.
It's like having some clarity because historically we're still at a lower rate environment. We've had much higher rates. And I guess my point is, are people just looking for clarity on what the policy is and there's just between the back and forth between the White House and pressure on Fetcher J. Powell and maybe folks thinking that that could ultimately lead to high lower rates. I mean that uncertainty essentially, and at the same time tariffs, which are
putting another layer of uncertainty. So we just the FED doesn't know exactly what the environment's going to be, so they're on hold. So if at some point we have more clarity in the FED says nope, economy growing, we're doing good, Thomas that, then people say, well, this is the environment, so we'll reprice and we can do stuff one move ahead. I sorry, there's a long way of saying clarity.
Yes, indeed, clarity would be extremely helpful, and perhaps you would have some owners be willing to transact again. However, a lot of owners still you know, asset holders still have twenty twenty one and peak pricing in mind, and so it's hard to let go. It's hard to reprice
an asset lower, especially an income generating asset. So because they're income generating, you can hold on to them far, far, far longer than you would be able to otherwise, even if pricing theoretically should be lower if you were to sell, but you don't sell, you just hold onto it for years longer. But yes, hopefully greater clarity would be useful, But I would not say we're in a particularly clear environment.
Right now.
Is not there, and so volumes in terms of secondary market volume four commercial real estate in general is substantially lower than it was at the peak.
So what are you doing? Are you not buying anything right now?
So we are not buying a lot right now. No, the only deals that we're doing are situations where the seller is genuinely in distress. So if there's not outright distress, it's very very hard to make the numbers pencil. And what we're focusing on instead is actually where the big beautiful bill has created a short term window of opportunity, which is solar development.
Interestingly enough, this is what I'm glad we were talking about this. It was in the notes and our producer already said this on the phone, and I was thinking ABOUTLF solar because the concern, and we saw this play out in the public markets, was that solar companies would get hit hard as a result of this bill, and they've been under a lot of pressure. Where are you seeing opportunity?
They have been hit hard, and there is really very limited window for opportunity. So it's not great if you're
full time in that business. But for us, we're a private credit lender to solar developers that might have a twenty or thirty development pipeline of projects, and it enables us as a lender to step in on a senior secured basis and identify and cherry pick really the best, most actionable, immediately actionable projects where we can get shovel in the ground right now and and bring these projects to fruition because very shortly any investment tax credits are
going to disappear. So it is about a short term window and for us the opportunity is as a lender. Absolutely this bill has been extremely problematic for the development industry and for generation of solar power in the United States.
How short term and what are the terms looking like?
So we need shovels in the ground this year or by the middle of next year if there is no foreign content, and we need completion of the project by the end of twenty twenty seven. Some of the rules are still to be finalized. Actually, the Big Beautiful Bill obviously passed on the fourth of July, but a week later, the Trump administration issued in executive order that the IRS
has forty five days to clarify the rules. So, interestingly enough, we're playing by a rule book that we don't fully have the details for.
You talked about lack of clarity, correctly, it hits a lot of different areas, that's right.
But there is opportunity there in the short to medium term for us to help those small to medium size developers bring those rapidly deployable projects where we can get energy to the grid before the end of twenty twenty seven online immediately. But they need capital and they're very profitable when you do it, and that's where we see the short term opportunity in development.
Then do these product projects go poof?
Well, no, the project will last for twenty that's it. If you have a thirty project pipeline, you might have five that you can bring to fruition. You might have twenty five go.
Poof all because of tax credits.
Correct Now, there will be major changes that are going to occur. The cost of construction for solar projects. The EPC construction costs are highly likely over time to come down because if there's less development going on, those construction companies will reduce their costs. So there'll be opportunities there. There will also be opportunities for states that want to continue to incentivize solar to step in and provide credits
where the federal government steps out. And then finally the utilities themselves, which at the moment use the interconnection fee and other aspects of solar development to make money, they will probably compress their margins as well. So there are a number of different moving levers, and then ultimately the cost of electricity is going to go up. Well that's and that's going to be a huge driver of value.
This is what I wanted to ask you. What are the projects that you are investigat.
So the projects that we're lending money to are lending to forgive me exactly for clarity, we're a private credit and the lens money rather than investing equity. But those projects are below utility grade. They're what are called community solar, so they're usually in the five to fifty megawatt project size, whereas community solar really kicks excuse me, utility grade kicks in above about one hundred megawatts. Those projects, because they
are much more challenging and time consuming to execute. A lot of those who have gone to use your words, who because they can't be delivered in that timeframe. So there is a massive change in the demand. As we know for solar as a result of AI for electricity in general, but now there's a material change in supply for the negative.
Before we let you go back to your focus on multifamily in the past, you've been on with us and you've spoken excitedly about the Sun Belt. Where geographically are you thinking for opportunity now?
We continue to see a lot of opportunity in small to medium sized cities across the southeast, the Carolinas, Georgia, where these right to work states where we're seeing a lot of new battery factories and and other new factories being built. It's those small to medium sized markets where we continue to see a growth in demand, an increase in wages, an increase in job opportunities, and we're there to do our best to support that with housing.
How would you describe the economy just real quickly, kind.
Of strong jobs market, but a lot of lack of clarity around issues such as tariffs and rates that have that make it challenging for long term deployment of capital.
All right, interesting, So it sounds like potentially a lot of stuff sitting on the sidelines just waiting we see clarity. Certainly, all right, good to check in with you. Thank you for coming in. Thank you, Yeah, appreciate it. Thomas Carrol, He's founder and chief executive officer of ballast Rock Asset Management, joining us right here in our Bloomberg Interactive Broke Studio.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern on Applecarplay and the Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa. Played Bloomberg eleven.
Thirty plenty ahead in our second hour of the weekend edition at Bloomberg Business Week, including the luxury brand facing questions about how far is too far when it comes to exclusivity.
Plus really excited for this one because we get to speak to our Bloomberg Food editor, Kate Crator. She's stopping by. She's talking about the boom in YouTube chefs. New York influence also pervades the food and drink scene in London. Apparently you can get a pretty good burger there these days if you want it. Pizza too, pizza yeah. Kate's also going to share how CEOs optimize their sleep routine. I was surprised to see some of these CEOs are not doing a very good job. And I was too.
I was amazed how many I expected, like all these great like lie about it.
If you're not doing a good job, CEOs, come on you a good example.
This part of your brand, all right. And while on the subject of food in chefs in nineteen sixties, diner is one of the scenes in a new high tech immersive show on Elvis Presley that unfortunately failed to impress. Elvis has left the building, and it sounds like maybe our reviewer wanted to do so as well. We'll explain it's all in Bloomberg Pursuits.
First up this hour, the Starbucks Pumpkins spice latte is set to return to stores in just about a month. Nuts, that's nuts. Come on, Togs twenty.
Six, get over.
I think it's a little cheating to think about you.
I'll have listen a pumpkin spice latte.
I stay away from it. Okay, I do too, no matter what time of year it is. Speaking of the Pumpkins spice lattes, one of the most read stories over the last week is about the CEO who turned around Taco Bell and then turned around Chipotle, can he now do the same for Starbucks? For Bloomberg Business Week, Danielle Story interviewed investors, baristas, and Brian Nicol Well, the Newish CEO who has lured to Starbucks with the pay package
valued at about one hundred million dollars. He's been on the job for a few months since September, so it's almost been a year. Actually. The ceramic cups, a handful of madeover stores, and condiment bars are some of the changes he's betting on. Oh, and protein too. Doniella sr. Torri is Bloomberg News restaurant reporter. She joins us from our Chicago bureau. She spent a lot of time with Brian Nichol. She did a lot of traveling for this story.
Doniella tell us a little bit about how Brian Nichol is doing and turning this company around.
So there's definitely been some progress, you know. The Starbucks has already made some changes, like bringing back the Continent bar so people don't have to, you know, complain to baristas about their drink being.
Too sweet or too dark or too light.
They've also started renovating some stores, you know, they started redesigning the menu, So definitely things that are going to make a difference. And you know, they do say that people are hanging out in stores more because they want to bring back that feeling of you know, it being like a coffee house and that they're ording a more coffee centric drain. But some of the big things, you know, in terms of operations, which is such a boring word but it matters so much when it comes to getting
your drink quickly, are still being developed. Like, for example, the company is in the process of putting more workers in stores, which they are hoping will you know, speed up service. And then also you know, give Braces a little time to you know, have a chat with you. But some of these big changes are still are still in the works and so you know, it's definitely working progress.
And Brian himself has said.
That, well, let's we'll get to Brian. More on Brian in a second. But one thing that I really liked about your piece was it did a good job of laying out the challenges that Starbucks has faced in recent years. Can you talk a little bit about how it lost its way?
Absolutely, so you know, we can look back at a sort of the pandemic, one of the things that happened was the company moved a lot to sort of that convenienced, convenience focused model, right, a lot of us wearing go into the store stores weren't even open, and so Starbucks actually started removing seats from stores. At the same time, you know, there was this unionization movement ignited by several things, you know, like very says, feeling that there was understaffing.
All of that led to slower service at the company. Lines just have gone very long. At the same time, people are like, well, this doesn't feel like a cafe anymore. And then you know, we also have some issues outside of the US, right, So, for example, China has been very slow to recover because of the companies sorry, because of the country's economic situation, and also just competitors that
have undercut Starbucks. And so there are challenges on multiple fronts that the company has to confront right now.
You know, it's interesting I try to think about what it is that Starbucks has to deal with. They really kicked off, right kind of the coffee craze, right, and you know, not just getting a cup of coffee from a deli, but made it so much more. But the market that they really created is now a really crowded market,
So is it just that? But it can't be just about coffee anymore, and that Starbucks has to mean something beyond that, like food, a cafe you hang around and you bring the family, Like what is it that it may be? What do industry folks say it needs to be? Is it or is it just painting the cafes and making them cozier?
What is it?
No, that's absolutely right. I mean in Starbucks created this idea of sort of the third place right beyond you know, your work and your home, where you could hang out, and also making coffee a little bit premium here in the US, but there's been a lot of competition that has undercut the company in terms of price, in terms of speed, and also in terms of new products. You know, if you look at places like Dutch Bros.
They just have these.
Drinks like protein coffee, drinks that really appeal to demographics like gen Z and at the same time, you know, they've kind of pioneered a model of convenience. So it is almost like all of the above, right, Like one of the things that when you talk to Brian Nicol, he wants to make sure Starbucks stands out is by having the space, you know, having the coffee shop where you can hang out. That is something that you know, those drive through concepts like Dutch Bros. Don't really have
because by definition they are drive through. But at the same time, they also need to make sure that they have stuff that actually gets people in the door. And so that's why they've been also redesigning the menu. They are trying to focus on coffee because that's their heritage, and so they think that they can sort of distinguish themselves that way. But at the same time they are adding those twists like that vanilla latte with the protein cult foam.
I actually got to try it in Vegas. It's quite it's quite interesting.
But you know, it's like they can't they can't go super focused on like purest coffee. They also recognize they need to have stuff that actually like catches people's eye, if that makes.
Sense, Daniella. I'm curious too about Brian Nicol. He has been so quiet. I mean, Tim and I have talked to him a lot. When he was at Chipotle, he was very accessible. I've done some deep dives too with him for BusinessWeek magazine and for Bloomberg. I'm just curious, why is he kind of laying low.
It's interesting the perception that he's laying low. I mean, I guess from my perspective. You know, since Brian joined, he's been pretty clear about his vision and his plan. So I remember he joined September nine, September ten, he actually came out with like the broad outlines of his plan, and by October, you know, they were putting him on the phone, you know, to talk to reporters about what
was happening at the company. I do think that part of what's happening is that while his vision is clear in terms of what he wants to accomplish, I mean, he knows he wants to bring back the coffee house, he wants to focus on coffee, he wants to speed up service, sometimes the underlying tactics are changing a little bit, and so you know, the.
Sort of direction of travel is clear.
But just to give you an example, earlier this year, Starbucks said that they were going to bring more staffing to about a third of US company operated stores. So that excludes stuff like airports, it excludes targets. Then later they were like, no, actually it's coming to all stores. Probably part of it was a little bit of pressure from investors being like, all right, man, when are we going
to start seeing your results? But the tactics and sort of like the speed are changing a little bit, even though everyone knows like the direction of travel.
If that makes sense, yeah, it does. You mentioned the changing menu and to get people into the door. What I learned from your story is that's a big part of Tressie Lieberman's job. Tell us about her.
So Tresie worked with Brian at Chipotle and a Tacko Bill. Actually, she told us that she's been working with Brianston. She was in like her twenties, so she knows Brian quite a bit, and so she came over right before Starbucks. She was actually a chief marketing officer at Yahoo, so she has brought experience and so her rema is marketing. So how the company presents itself to customers, including the sort of rebranding as Starbucks Coffee Company, but also the
menu because I think they recognize that. Yes, the company has had some hits like for example, cold foam, things like shake and espresso. One of the thing ways to know if something's been ahead is if competitors have copied it and if you go to any coffee shop, any
coffee shop has those things. But at the same time, there were things they launched, like for example, energy drinks last year that they've discontinued because they just didn't think we're apt to par and so that's kind of what Tressie's doing, and she's described wanting to make the menus sort of modern and premium, and so one of some of the things they're looking at is like the protein latte and also bringing fresh baking to Starbucks because I
don't know if this is common knowledge, but pastries of Starbucks coming up plastic bag that then gets reheated in an oven. So that doesn't really fit a definition of premium, which is, you know, they're trying to justify the prices that they are that they are charging, and they're trying to justify the experience.
So that's sort of the direction that they're moving.
We'll say, their littlegg bites I think are something my daughter really like.
People love these popular I know, right, yeah, they're kind of nice.
And if you see that, it's another example of Starbucks setting a trends that has caught on, like even Costco seales X bite egg bites.
So can I ask you something?
Wait, because I would say that we're a couple of different, three different generations. Do you go to Starbucks?
I do, but I also cover it, so sometimes I just go to see how things are okay?
So okay, Tim, Tim doesn't go.
I will not go unless I don't falling asleep at the wheel. And it's the only place, right.
So I think, why you do go?
You do?
No, I don't go.
I don't like the coffee.
And would you go if you didn't? I mean, this might be uncomfortable, but would you go just between the three of us if you didn't cover it?
Just between the three of us in front of everyone. I think I'm gonna refrain from answering that question.
You're the smartest one getting yourself in trouble.
There's lots of choices.
But I will say I I it's why I only have one cup of coffee a day. I know, and I have to have it at home because I can't do anything.
It's a little bit of a prima.
Well, the thing is, I don't know. I mean I used to drink. I used to drink the coffee, but then you move to New York, and you're like the options for coffee here it's nuts or unbelievable.
So many Yeah, I like to press at home.
But don't you know people go Charlie Pelleck goes every day. I know Katie Greifeld goes every day.
I think you now like that.
I think that's that's a question.
Right.
There is a loyal base of customers and some of the moves that Starbucks has made, you know in recent months, you know they changed their rewards program, they've did they just changed a lot about the experience. Does that keep the loyal customers or not? And then at the same time, does it bring new people?
Like you know, maybe Brian will do something that will actually get Tim to come in the door. He's just not going to happen.
If it's like a Chipotle or if it's like a Chipotle Bowl or Dorito's Locos talker, then maybe.
Maybe, I don't know, what, what if he improves the food, that is also part of life.
I know I was trying to do in Zac right, like you go in and right you increase that like individual purchase. Hey, twenty five seconds China.
They are looking at us selling a stake there. That is the latest information that we have because recovery has been tough and they want a local partner there to help them figure out what to do.
Because that's an important part of growth, right for.
Them, second largest market after North America, and they say they believe in it.
So see final question Pumpkin spice latte too early. August twenty six, too early, right.
I don't know if it's earlier than other years, but it's not fall. It's definitely not fall. But I think it's earlier and earlier because it does give them a big sales pump.
So maybe that's why definitely not fall.
Danielle Sitory joining us Bloomberg News Restaurant Reporter. A great story on the Starbucks CEO. It's a BusinessWeek story. Check it 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.
Tiffany's salespeople call them the watch monsters. Oh my god. Salespeople always have words for the customers, the obsessives of the ultra wealthy shoppers who were sure they would be among the chosen few to get their hands on the rare, limited edition Protect Philippe timepiece.
But what began is a celebration of the iconic jeweler and watchmaker has evolved into a cautionary tale, a lesson in how exclusivity, if mishandled, can dim the glow of luxury.
Jeanette Newman is Bloomberg News consumer reporter. She wrote all about how Tiffany turned their best customers into their loudest critics. She joined Tim and Bloomberg News equities reporter Noura Melnda.
This watch was particularly coveted and particularly special, So if let's say you wanted to just go in and buy the watch, you couldn't just walk in off the street and say, you know, I love Protect philip I want this very special watch. There were only one hundred and seventy of them made. You would express interest in the watch, and then you would be told, okay, we'll, we'll Tiffany. Tiffany salespeople would tell you we'll, we'll get back to you.
And that's because this watch was very highly, very highly desired, and so there were many people who were who were trying to get it and it was ultimately, as we report, at the discretion of Tiffany executives who ended up getting the one hundred and seventy watches.
And that discretion is really where things got complicated for some of the folks who were argue, at least in lawsuits, that they were longtime customers of Tiffany and spent quite a bit of money at Tiffany. What did you find in your reporting?
So in the reporting, what I found is that and I think it would it would also be helpful of you if you find it helpful to just to kind of situate, you know, this moment. So we have to go back in time a little bit just to understand why this watch was the watch at the time and why now even a couple of years later, we're talking about it. I'm I'm reporting on it because it's the sale of the watch is still having repercussions today. So this this watch that was made by Ptec Philip was started,
was went on sale in December twenty twenty one. And if you'll remember that at that time, we many people were feeling, you know flush, we had you know, extra pandemic savings. Some people still had some money left over from the stimulus checks, a lot of people were buying luxury goods. Demand for luxury goods was going through the roof. That included luxury watches. Some said at the time there
was actually a bit of a watch bubble. People who you know, maybe hadn't been interested in watches before, all of a sudden got very interested in spending their pandemic savings on these luxury watches, like Pateech philip So at this time, Pateech Philippe says, okay, actually we're going to discontinue one of the most beloved watches in the world, their fifty seven eleven model, which is the Nautilus fifty seven eleven model. They said, we're going to discontinue it.
At that time, the watch world freaked out. It was it was a huge deal that amid this kind of watch bubble, one of the biggest, one of the most important watchmakers in the world says we're no longer going to sell the watch that everybody, that everybody loves. And then they said, okay, So that caught everybody off guard. And then they caught people off guard again by saying, actually, there's going to be one final swan Swan song for
the fifty seven eleven line. We're going to make one hundred and seventy of these very special edition watches to honor the one hundred and seventy years that patech Philly and Tiffany had been working together, So an incredibly long standing relationship in the luxury world. So Patek made one hundred and seventy of these watches. And what was different was, as you said, the dial was in that kind of in that signature Tiffany Tiffany Blue, which is actually a
patented color. If you go to the stores, everyone knows that the Tiffany boxes are in are in that color. Now, PTech doesn't have that many retail stores, so it relies on Tiffany and other jewelers to sell its watches. So in the case of this blue dial watch, it was Tiffany that was tasked with with selling with selling the watches, and as you said, that's where that's where things got
a little bit complicated. So there was basically Tiffany. Tiffany executives realized that there was so much demand for these watches that they could encourage clients to spend between two to three million dollars on jewelry in order to even get a shot at buying watch.
And this is called as you as I learned reading your piece, this is called bundling, and it's something that is typically done, but there are no it's they're not real rules around it. It's kind of like understood, but not always in writing. It's typically done in high end stores with with luxury items. Explain that.
Exactly, it's not, it's all. It's all very informal. I think, you know, talk talking to some people for this story, people would often mention, oh, right, that's kind of what you have to do if you want to get simply, you can't walk off the street and just buy a burken bag. Often what customers will say is you have to You're encouraged to buy other other goods in order to then get access to that, to that, to that
burken bag. And that's again what some people in the industry called bundling, other people other people call it call it tying. I would say one one potential difference with that is, you know, if you walk into an air med store and they're telling you to you know, potentially telling you to consider buying some other goods in order to be considered be considered for a burke, And that's kind of all within the confines of one store, right
one and one brand. I think the difference here is that you had Tiffany, which was selling Protect Protect watches, encouraging its clients to buy Tiffany jewelry in order to get access to the to the Protect watch.
So explain the alienation of some customers, these wealthy customers who expected to be able to buy this watch after spending money at Tiffany, but according to your reporting, ultimately weren't able to do that.
Right.
And there was definitely some frustration based on our reporting, based on sources that we talked to with the sale, with the sale of this watch, and I think I mean one kind of specific element that might be interesting to listeners is so there was a charity auction of the watch in December twenty twenty one, and the watch went for a staggering six point five million dollars, which
is about one hundred times its retail value. The watch itself will need obviously a lot for so many of us, but the watch itself only cost around fifty three thousand dollars and it sold for six point five million dollars. That initial sale fell through. The watch ultimately exchange hands for six point two million dollars, still a lot of money. People who were interested in the watch saw that sale
and said, well, this is a no brainer investment. If I can get access to something that costs fifty three thousand dollars and then potentially sell it for the market is showing that there's demand of up to six million dollars, well, that seems like a no brainer investment. So what some of our sources said is that some people again saw that as a no brainer investment and said, okay, well, if I'm being encouraged to spend two to three million dollars on jewelry, that might be worth it, because I
think that I can resell I can resell watch. Now, the thing about that auction is, in general charity auctions, longtime collectors will look at charity auctions with a bit of a skeptical eye because sometimes, for example, the watchmakers themselves are involved in the bidding. So seeing that six point five million dollar price as kind of a market price versus a price that's you know, maybe more marketing oriented,
I think was part of the issue. According to our According to our sources and according to our reporting, and then what happened to answer to answer your question, is people thinking the watch was worth this much, some of them did get the watch, and then over time, over the over twenty twenty twenty twenty two and into twenty twenty three, the value of the watch really fell. And now the watch sells in the secondary market for around one point two million dollars. So obviously a very a
very big drop. Still a very expensive, a very expensive, very valuable watch, but not what people who were encouraged to you know, spend spend money on jewelry, were expecting for this, for this investment, and also to be to be fair. And I'm sure if you have, you know, friends who buy watches, there's there's all kinds, right, I mean, some people buy watches, you know, it's it's buy and hold or and there's some people who want to buy
and sell. Other people bought the watch and never even intend didn't see it as a no brainer investment or or otherwise because they didn't see it as an investment, right, They saw it as I want to buy and hold this because I love this watch and I want to have it. Others, the ones who were disappointed by the decline in the price. We're seeing it as more of an investment that they could potentially flip at least have the option to flip Janette. Based on your experience covering
the luxury space, is this normal? Are mishaps, mishandlings like this common? I think you know in in this story. At the end of this story, we mentioned I spoke to an anesthesiologist who what he what he told us. He told a story of how he was trying to buy some Ferraris. He had one Ferrari that he really wanted, and he bought several Ferraris in order to try to get that Ferrari and he never he never got that Ferrari.
To kind of decline to comment on his kind of specific, specific experience and said, you know it, it doesn't encourage that kind of behavior. This anesthesiologist said that he's come across that game in the luxury world, and honestly, he's the way he said it is, he's kind of he's kind of sick of it. So I think that is a potential risk in the in the luxury world that some people, some people like to engage in this game,
and I think others find it tiring. I would say, speaking to some people who sell watches on the on the secondary market, one of the things that they say is they find that some of their clients come to them because they just want to be able to like, what's tell me the price and then I'll buy it, or I won't. I don't want to get involved in trying to spend money on X, Y and Z that I might not even want in order to get what
I actually what I actually do want. So I do think it definitely happens in the luxury world, and you know, people can choose to continue to engage with it or or say, you know, that's that's not for me.
Janett a great story. I learned a ton including maybe I should have considered a career in anesthesiology. Sounds like it considering that this anesthesiologist has bought what five ferraris or something hie er really really good stuff. Check out this story. It is the most read story on the Bloomberg terminal. The headline you really can't beat it Tiffany Anger's rich clients who wanted to buy a rare the tech watch.
This is the Bloomberg Business Week Daily podcast. Listen live each weekday starting at two pm Eastern on Applecarplay and the Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa played Bloomberg eleven thirty.
Julia Child, Gordon Ramsay, and Rolla Gassi, Rachel Ray. These are just some of the many celebrity chefs that make a living cooking on television. Well now, the next generation of chefs are turning to YouTube even TikTok to learn new skills and establish their culinary reputations.
Plus New York vibes and London restaurants. That and a lot more from the Bloomberg Pursuits team with us right now. The editor of Bloomberg Pursuits, Chris Rouds, are also Bloomberg Pursuits Food editor Kate Crater. She is not in London. She's here in New York City in the studio with us.
Carol, I can't even tell you how much we've been talking about this all week.
We're like, we've all done, We've all donegy we group hugs already, like we spent a bunch of time catching up and supposed to.
Work.
We do all right, We're going to talk a lot of food in a moment because there's so many stories that we want to get to. But first of Chris, we just want to talk a little bit about green watches.
The most important news. There's a new color on watches.
You guys, how does this happen? How does like the watch industry levels then go green?
That's you know, it's funny watches. There are not that many trends that can take over watches. There's like different styles of watches, different metals, sometimes different colors. And then every once in a while there's like a big blue year or big green year, and there's lots of stories and and sort of collects these certain things. And this year there is a wave of pistachio colored watches. And this is interesting only because or it's interesting because there's
it's not that bold of a color. It's kind of a subtle color. It doesn't pop off your wrists, and it's not traditionally a color that people like in watches. But we've seen everything from Rolex to Hugh Blow to Parmesiani to Oris all have watches this year in this color. And it's like they talk to each other, but they didn't.
That's what That's what I find crazy.
Kate.
Would you hear a green watch?
I absolutely would, especially if Chris told me which one to wear. And I want to know which of those Pistasia watches you have.
Christ Well, I have.
Good news for you, Kate. They is a price range and it ranges from about six thousand dollars per watch all the way up to two point three million dollars per watch.
Just help me make night, You help me make night decision?
Could you have a twenty four thousand dollars watch with a rubber strap? I'm just asking, Yeah, that's a good question.
Some people we hold on rub What about a two point three million dollar watch with a rubber strap?
Exactly?
There is one of those.
Yeah, So that's a Reshard Meal watch, and that's kind of a that's sort of what these things caught that. These resharp Meal watches are the billionaire's handshake, they call them. And this one is a flying Turbion Sapphire. It's a big chunky thing. It's a kind of watch that Kendall Roy watches on succession wears on succession. The most popular one will be the Rolex Oyster Perpetual, which everyone's killing
themselves to get this pistachio green color. My favorite is a Parmegiani watch, which is a skeleton and a beautiful slate green color. It is not affordable. I will not derying it.
It's affordable to some people.
It's seventy thousand dollars, but it's extremely beautiful and you should look at the story online to check it out. But there's there's more inexpensive ones like Orris has a cool one for four thousand dollars, and nor Caine, which is a very cool, sporty new company that we've covered, has one for six thousand.
All right, all right, when I think of green and when you said pistacio, I thought of ice cream and other things. So let's go to food now YouTube. Yay, I have to say there are I can't tell you how many times we are when we're looking to cook something, we go to YouTuber or social to figure out. Sounds like there's a whole new generation of chefs.
I was going to say, you could be a professional chef right now, Carol, the way you're talking, I could not. Well, let's see you know what you never know? Just watch a couple more videos. No, it's kind of. It's like this seismic shift. A couple decades ago. You know, people would would professional chefs or want to be professional chefs, would want to train in a kitchen like a Thomas Keller kitchen or a Bobby Flay kitchen, And now they
don't even need to do that. They just turn on their computer and watch some videos and sooner or later they can actually open up their own place. It's been to me it's a seismic shift.
It's amazing.
You have this great anecdote about James Low and wanting to I don't even know what the right term is, but like filet a tuna, is.
That what it is?
Butcher, I think you would say Butcher sit home, Tim. Yeah, Butcher, I think I think he would be.
Butcher Easier said than done.
Truth, total truth.
Yeah, No, he's a He's a very British chef and there hadn't been tuna in his neck of the woods since he'd started cooking, had like a thirty year career, and then all of a sudden or whatever, because of because of the way that the government was able to manage the waters, tune it became available in Cornwall, and all of a sudden, it became a sort of local ingredient for him, and so he bought one and then realized,
now what, because he'd never ever butchered one before. And so he and his team sat there and watched YouTube and then carried a four hundred pound piece of fish or a whole fish into their kitchen. Like it took over their dining room. They'd watched hours and hours, and he said it was a process that took He said, it was a process that took hours. But there is a picture if you look at this story, there's this crazy like that literally took over five tables of their
dining room. Like that's how big the fish is. They didn't have the knives to do it. You know, it's an amazing story.
Maybe because it's the fiftieth anniversary of Jaws. But I saw this and it looked like a shark. Like all I could think about was the shark and Jaws. It's massive.
So thirty years ago, he would have had to fly to Japan or buy cookbooks or make a lot of mistakes.
Yeah no, exactly, expensive mistakes. Precisely. Yeah no, I think you or he would have just brought somebody in who knew how to do it. But yeah, no, just think about like, even if you're looking at the most detailed manual of a cookbook, it only takes you so far when you're presented with his fish.
I don't know.
I do this all the time, not for cooking, for anything that I have to build that comes with an instruction booklet. I'm not good with the diagrams the instruction booklets. I gotta watch YouTube video. Unfortunately those exist for everything.
Tim you can open up a restaurant with Carol.
I was more thinking about assembling children's toys, which is why I was looking at Chris because I know he does the same thing.
You know what's crazy. I don't cook. I'm not a great cook. It's a joke in my complete family. But I'll be on Instagram and like people making things and I just find it really relaxing.
And transfix thing.
Yeah, it's pretty amazing.
Yeah, I was just.
Gonna say it's actually cool because in London, where I'm based right now, these pizza chefs, there was this whole thing during the pandemic. A couple people who weren't so happy with their jobs started watching pizza videos because there were all those US style pizza all of a sudden available, or like it became there were all these videos from like Dave Portnoy barstool and stuff like that. And now there's a couple newly minted pizza makers in London thanks to.
YouTube, and they're very hot, very popular people.
Very popular.
Pizza perfect against pizza.
Perfect segway to talk about pizza in London, Usually we talk about pizza in New York City, But Kate, You've got a story out that's talking about a kind of vibe of New York City taking over London restaurants. When I think of food in London, I think of really good Indian food, and then of course the classics fish and chips and the like. But apparently you can get a good pizza there now.
Yeah, no, you are, You're absolutely right, And it's it's it feels a bit ironic because you know, the US brand isn't so so hot over over in the UK and Europe, and tourism is way down here. I think it's down, and it's going to be down by two point five million people they estimate in New York City by the end of the year. And yet New York vibes are super hot in London, and it's got to
do with state. Like you, if you go somewhere now you'll see a cheeseberg on an ambitious menu which you never would have seen before, and steaks and oysters.
But it's also an energy.
Which is the part that I think is really fascinating. The Brits aren't used to being spontaneous. If you know any Brits like you will probably co.
Sign on that we love all of you who watch it.
We love yes, yay you, yeah, you guys. But now so they traditionally haven't had walkins at restaurants, and now now a lot of these cool, super cool London restaurants have places for walkins.
But it's also an energy.
It's the way they arrange their tables, so instead of there being like rows and rows of tables and chairs, they turn the chairs in different directions and that literally changes the energy in the room.
Okay, many people, multiple two people forwarded me this story and asked me, does that mean that the martinis are bigger or are they still? Are they still thimble sized?
You know, they're they're pretty modest. I think if your friends who are like doing a measurement, they will they will say that, but there's a big I think the most The thing that this story inspired the most debate on is where the martinis from because technically and historically or not technically, but the history is a bit fuzzy. But it's supposedly from the Nickerbocker Hotel in New York City and that makes Brits very very mad.
You can get a Cosmo in London now, yes you can. Wow, I'm just saying true story. Hu to thunk? Who to thunk?
Just?
Uh, where do we want to go?
Where do we want to go?
This story?
Both Tim and I talked about this were like, okay, there were some good strategies, but there are a lot of CEOs who don't seem like they've got this under control.
So we do this feature every month in Business Week where we call it the Ceo Diet. We talked to a bunch of CEOs. Hate is in charge of it, thankless task, and she talks a bunch of CEOs about their habits and what they do, what they eat, what they drink, what they do in the morning. And so this month we did how to optimize your Sleep, which CEOs are everyone wants to know and they have a lot of thoughts.
About Yeah, they do know, it's it is. It's kind of amazing. The CEO of Dogfish says he takes a bath underneath a picture of Andre.
Three thousand playing a flute, playing a flute.
Sorry, yeah, thanks for that.
Wi Fi scree breaks is white out and that's why they have separate bathrooms. The CEO of Uber, which is a very famously data oriented company, says he used to be obsessed with data and like compete against himself every night, and now he just puts away all of his screens and goes to sleep. And that to me is super ironic.
That is so telling. My husband is obsessed with data too, and he'd be like, I got a sixty seven, had a seventy five. I'm like, well, how do you feel? It's like, I don't know, I got a seventy five. But what was amazing? There were so many folks that I thought, who was it?
Peter McGinnis, No, Shabonni Well formerly of Tabonni Carol and I have spoken to him quite a bit. Now he's that impossible foods. Yeah, he's basically says, maybe I should get more sleep. He's not good at it.
Yeah, that doesn't surprise you though, right like CEOs you think of like never sleeping and not maybe just.
Like but that was like ten or fifteen years ago. Now now sleeping is cool, like like now sleeping is cool. Being healthy is like in right now, that's what it feels like.
That's exactly right. I think you used to brag about the minimal amount of sleep you needed, and now you're like, look at me sixty seven, seventy five or now. If you don't get a good night's sleep, if you're changing time zones too many times, it's something you know that you sort of agonize over and say, like, I need to get better at it.
Yeah, I love the guy was at the head of Vito Coco. I think he talked about napping a lot.
Yeah, yeah, forty minutes nap, a forty minute nap every single day.
Hey, Tim, before we start our show, we'll just tell everybody, Hey, we're going to take a.
Nap that I don't know, Chris, when was the last time you got to take a bath for thirty minutes?
No, I haven't taken a bath in years. I mean, I think about it makes me want to cry thinking about it. The Rainy Williams from Beverly Hills estates of the CEO. I thought had good advice. It was like, usable a lot of it. Yeah, I take magnesium, zinc and ATP along with a cortisol bouncer to help regulate stress levels, which I would really like.
I don't know.
I have to find out what that is. And that's just the start, she says, And.
Then she takes a relaxing shower, full skin care and self care regimen.
She's doing it right, and a red light mask.
Right to be.
Kind's like her answer was twice as long as this. This is an edited version of what she does, Like, she's doing it right.
Can I just tell you I went down a rabbit hole on those red lights.
Here's my return before I go to bed, clean up everything that my kids have taken out that day. Yeah, clean up all, do all the dishes, start making lunches for them for the next day.
Uh.
And then look at my phone.
Yeah that's about what mine is.
Yeah, all right? Or maybe no sound bath, you know, Or maybe what you should do is go see this new Elvis show in London and only got about a minute or so. Here Sarah Rapperport, she did a review, didn't seem like she liked it.
Chris, there's a show called Elvis Evolution in London right now which everybody is loving to hate. Only fools rush in. Audiences are not all show up. Sorry, So Sarah went, and we have been excited about this show because it was supposed to be AI. It was supposed to be like the abb of Voyage, so like there you were going to see Elvis, you know, like a new incarnation of Elvis interacting with the audience. And that's not what it is. It's like you walk in. It's an immersive experience.
It's a tour. So you start in a diner and then there's actors and then you go to a like a bar, and then at the end you see a video of Elves on stage and people are Sarah says, it's quite disappointing. People are asking for their money back. It's three hundred pounds for VIP tickets. One old older guy got really mad during the show and started complaining loudly, and then security tackled him and took him out and he canceled the rest of the shows from the evening. It is, yeah, it's.
Not how can you make Elvis bad?
Well?
I guess there's probably the reason they started.
Carol, and I know you can, Kate, you got it.
You're gonna have to go see it.
Really just for work.
We'll take that.
We'll take that as a Now, this has been such a treat. You guys made our week. Thank you so much, so appreciate it.
Thank you, guys, thank you.
Oh thanks to Chris Rouser, the editor of Bloomberg Pursuits, and to Bloomberg Pursuits Food editor Kate Creator.
And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thank you so much for joining us. I'm Tim Stunbeck and I'm Carol Mass. Have a good and safe weekend. Be sure to check out Pursuits. Just to see the big VI was it is tuna? It was it tuner, It was a tuna. Just to see that picture a little pretty wild.
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