Bloomberg Businessweek Weekend - June 16th, 2023

This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus bloom oall business finance and tech news. The Bloomberg Business Week podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

Says, f.

Yes, indeed, we are living.

Instagra.

Good record.

I remember listening to this record on my very first trip to Amsterdam.

Oh yeah, was anything involved?

No, well so I was nothing illegal there.

That's so true, nicely said. We are living in strange time, strange days. This story we want to get to. It's in the Bloomberg BusinessWeek newsletter and you can read it. It's on the Bloomberg and of course at Bloomberg dot com slash newsletters. It is written by Joshua Green. Josh Green, National Coursepond at Bloomberg BusinessWeek, who's joining us right now on the phone from Washington, d C. And Josh, we want to get to it. Talk to us about.

What is going on.

Why are these people supporting the former president who hopes to be president again.

Well, yeah, I was up in New Hampshire last week and one of the running themes, you know, at the various town halls and campaign stops for some of these candidates was that they were all either extolling Donald Trump or more likely attacking Joe Biden in the Justice Department for you know, for going after Trump for indicting him.

But my twenty year old daughters here, who's a Swiftie. She's going to be really embarrassed that I'm calling her out here. But yeah, totally get it when you.

Make that aware.

They're everywhere I just don't understandami. He's he's a little bit older. You know, he went to Harvard and then Yale Law School, So it's not like he completely lacks critical thinking skills or is totally ignorant. Why is he down here about in Miami, just like on his knee kissing up to former President Trump? Does he want to be on the ticket? Is there a romantic link we don't know about, Like, what's the deal? Joe Webber, by the ways, a great question.

With the Veke who I saw in New Hampshire last week, he makes a point of mentioning that he is the only millennial Republican running for president. That might have something to do with the swift.

Bragging about being a millennial.

I think more likely is that these candidates are all looking at polls of who votes in Republican primaries, and we've seen a bunch of them since the indictment came out. And what Republican voters think is that Donald Trump got screwed, that the indictment is political. They don't like it. It's made Trump more popular, not less popular, and they're very, very angry at anybody who criticizes Trump over the indictment.

But what if he can't run right? What if? What if he's actually not available, not on the playing field, and I'm allowed? And then and then I think the vex move becomes a little bit more clear, which is I'm the closest, most sympathetic guy that you have to that you have and I you know, basically in spirit, I am maga incarnate yet as a millennial.

At your back.

So I did a lot of calling around about that, talk to lawyers, talk to Republican strategists, talk to voters at these town halls in New Hampshire, and basically, you know, if it doesn't seem like the legal system is going to move quickly enough to hypothetically convict Trump before people start voting. But you know, he could get hit by lightning. He could, you know, I don't know, decide he'd rather

Can we talk about the Nikki Haley approached a little bit, because I thought that one was an interesting one. What did she do?

Yes, you know, Nicky Haley is sort of the Republican hamlet to cycle. When the indictment was first announced, she came out in the press and said it was terribly reckless to have done stuff like kept you know, classified nuclear documents in the mar Lago bathroom. But she got attacked so much that she she then pivoted yesterday and came out and said no, actually she was inclined to savor pardoning Trump if she were elected president. So she's managed to be on both sides of this issue. You know,

That was back when it was the party of law and order. They've decided they don't care about law and order anymore. By the way, can we well, can we stop.

Only as far as it applies to Democrats. There was a lot you know, you ask about the Trump indictment, and you know, nine times out of ten the answer comes up being, well, why haven't they indicted Joe Biden or Hunter Biden? Which may, by the way, but but there's they're only the candidate of law. They're only the part of law and order in so far as it pertains Democrats, And I think for most Democrats that goes the other way to everybody's very interested in seeing Trump indicted.

Well, that's not terribly unlikely, let's be honest, But I think we should. I think we should.

We focused too much on he kept classified occupants in the bathroom, which doesn't matter because Biden kept classified documents in the garage next to his gorgeous nineteen sixty seven corvette. But the problem is the obstruction Yeah, the problem is the obstruction charge, right, And is anybody in the Republican Party obtuse enough to see beyond the irony of Donald Trump chanting or leading a chance of lock her up against Hillary Clinton? I mean, how do you These people

Are they just they can't be just dumb.

No, I don't think any of them are dumb. I think they're looking at the polls and reacting accordingly. And there is one candidate in the race, so I spent time with in New Hampshire when he made his announcement last weekend. Who isn't going along with us who's been very critical of Donald Trump, and that's Chris Christi, the former New Jersey governor. The problem, though, is, we see in one of these new polls, is that Republican voters

And then there is the former vice president Mike Pence, who apparently said he cannot defend what is alleged in the most recent indictment against former President Donald Trump. I'm reading ABC News as a story. I guess. He did some interviews with other networks, but he talked about reading the full indictment. But he also is saying I'm going to wait until basically after he's had his day in court.

He also was clearly afraid to really speak out right, Josh. I mean, this is a guy the former president sent an angry mob to essentially kill him, and he's never really said anything that bad about Donald Trump.

But he's still saying I can't believe that politics.

His campaign released a pretty tough kind of video ad, but Pence himself has more or less been kind of whimpering in the corner, you know, hoping this all goes away.

But Matt, do you really think Pence could not not run like he kind of has to run even if I mean, I mean, you've got to put your foot out.

I feel like Pence would have had a great shot at this had he immediately come out against his former boss and said, you know what, it doesn't work that way in America. You know, we don't attempt to overthrow Congress. We don't attempt to overturn an election. This is a democracy, and we're strong. If he had flexed at that point, it would have been awesome.

I want to go back to you, Josh, because you wrote the book Devil's Bargain Steve Bannon, Donald Trump and the storming of the presidency. Really just you were there at the get go, at the beginning, watching Trump and his you know, his winning of the White House that first go round and the rise of the alt right. Having said that, what you were seeing at this time in place, do you see that indeed it's going to be trumped, depending on the legal cases play out a

There's no real reason I can see, based on what's happening in Republican politics right now, to think that Trump is not going to be the nominee. Like obvious caveats, you know, he could drop de of a heart attack, he could somehow change his mind, the Earth could get hit by a meteor. But barring something like that, if you look at Republican voter sentiment, it's hugely favorable toward Donald Trump. In a new CBS News poll, Trump is leading his closest opponent, Rond De Santis by more than

All right, we got to run great stuff as always. Josh Green, National correspond at Bloomberg Business Week, Joe Weber at the editor of Bloomberg BusinessWeek. Find this at Bloomberg dot com slash newsletters. This is Bloomberg.

You're listening to the Bloomberg Business Week Podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business App, and you too. You can also listen live to our flagship New York station. Just say Alexa, play Bloomberg. You love them thirty.

Bloomberg New Senior financial reporter Shrinanarajen here with Matt and myself in our Bloomberg Interactive Bookers studio. Were you a little fraid to walk in because Matt was a little heated?

Of course.

I've never seen anyone more excited about inflation than him.

This is why we love Maddie's enthusiasm over all things, including FED meetings. FED meetings are fun. Also fun is watching firms navigate politics and kind of the global financial world and where business will be and where they need to focus their efforts. Talk us a little bit about gold Band and what they're doing in India. And you know this country right well born there, family there.

Grew up there.

Yes, I did know the country a little bit. It is fascinating the story and it is a mustreat. It is a window into Goldman in the fact that their biggest office outside of New York, their headquarters, happens to be in India and Bangalore. But equally it is a story about how India has become a attractive center for a large number of firms. Goldman might have eight thousand of it's roughly forty five thousand people there. JP Morgan has about fifty thousand people there, fifty thousand of about

Call in like write a lot of the back office.

That used to be the case. When you go back to the nineties, when you go back to the early two thousands, you will think about India. You will think about back office jobs. You will think about your you know, customer care centers, that's where most of your calls were getting answered. Then that was the stereotype associated with India about the kind of jobs. But what the story does a good job of explaining to us is how that

No brainer, right if I look at the landscape in India, the universities, the educational system is so strong that you know, we see obviously some of our smartest analysts here Bloomberg Intelligence are from India.

Right.

You look across the banking landscape, You've got some of the big CEOs.

Are from India, you know.

To me, when I read this story, a light switch was flipped, like, oh, obviously you can hire pms, You can hire business heads there and you don't have to pay them, you know, ten million dollars a year. I would move a lot of my business to India.

And move away from the banking landscape, and think about the tech landscape, Google, Microsoft, IBM, all of these places, a lot of their CEOs right now are products of the Indian educational system. And that's why it's important to sort of break down why it's so attractive. Right there is this vast pool of young talent. India just became

What I would give to be twenty eight, You could take my left arm if I can be twenty eight.

We can easily rewind five years age if that's all you want.

But not just that.

There's an educational system that has this focus on science and technology. Right that again becomes a big thing in an attractive, attractive quality for a lot of these companies trying to set up these centers, and the most important thing, the unforeseen catalyst what happened with the pandemic. You learned that you could have your workers and your staff in distributed locations, in remote locations, and still do it seamlessly.

Shri and I think about like China and what it developed into in terms of supporting the world, right versus what India is. I mean, it's really a very different story, right. This is these are highly educated workers that are becoming increasingly a really significant part of the global economy.

China became a manufacturing powerhouse. It became the factory of the world. Looking at how this Indian ecosystem is developing, you're seeing more of a services exports system here, right, And that is what it is turning to. It is using the demographic dividend to its advantage. It is using its existent education system and the focus on science and technology or even the STEM fields if you may, to attract a lot of these companies and they're seeing the

What I wanted to ask, what is I know many Indians students actually end up at Harvard as well, but what is the Harvard of India?

I believe how we call it the Harvard University for instance, is the I of the United States?

Oh?

I see, I love the way he did that he turned around.

Ah, that is very interesting.

It's god.

You know what I wanted to quickly. We only got thirty thirty five seconds. So when you see the headlines about Tim Cook and Apple and India, are they behind what the financial firms have been doing, because it sounds like they've been entrenched on a much more sophisticated level in India for a while.

No, remember the Apple headlines and the Tim Cook in India headlines recently were more about Apple opening a retail store. And as a completely different side of the question there, you realize that when you have one point to build in people and a very fast growing middle class and that still translates to a pretty significant number. You have a consumer market that is approachable in ways you did not think possible many years ago. It is a growing market.

Group so glad to jump in and see mattx craziness and then do this story. Shrinata Rojan, thank you.

You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live to our flagship New York station, Just Say Alexa Play Bloomberg eleven thirty.

All fly, Amram Baby, Ram baby.

All right.

I do want to fly, but not in a narrow body seven thirty seven Max.

I'm still a little bit worried about flying on a seven thirty seven? Is it just me?

No?

I get that I don't know enough about planes to sort of suss out what aircraft.

I know very little about planes, but I know this one tends to crash a lot. Those numbers seem yeah, and Apparently the Chinese. For a while, they were cool with it until the plane started to crash. They were buying a ton of Boeings. Uh Trump's trade war and then COVID, and all of a sudden, Boeing went from like the most beloved plane maker in China.

To the biggest loser to air Bus.

This duopoly is something we're going to talk about with Bloomberg BusinessWeek Editor in chief Joel Weber. He joins us here in the Interactive Broker studio, as well as Julie Johnson, the aerospace reporter, and Joel, I was telling Katie earlier, my love for this business has grown exponentially since I read Airframe by Michael Crichton.

Okay, have you read it? No, man, I.

Feel like this is one of the most novels he wrote Jurassic Park, and it's a great book.

It touches on China.

But everyone needs to read it. So how did how did Julie win? You overd this pitch?

Then?

Well, you know, we have this interest in airplanes and air lines and the people who are running those companies and also the people who manufacture them. There's this thing that happened in China where you know, they closed the borders for a really long time during COVID travel and demand went away internally, domestically in China internationally, and that

Pretty fascinating, I mean for the last three or four years. The story had been pretty much the same until very recently, and it was one of frustration for Boeing. They were locked out of their largest international market, frozen out, whatever you want to call it, and and the they very much seemed to be caught in the middle of this, you know, trade war, and they were all kinds of other issues mixed in, including the fact that China was the first nation to ground the MAX after those two

The numbers are striking.

I mean, I took from the story that Boeing was like a big was beloved in China and was selling more planes than anybody else there. And then the geopolitical tensions I think are key, right, the Trump trade war plus COVID plus the MAX crashes. Since twenty twenty, Airbus has sold three hundred or delivered three hundred and eighty four planes to China.

Boeing has delivered four why haven't bothered, and Ryanair has.

Now put in an order for three hundred. United Like two hundred, and the Indians have ordered another one hundred, So you know, everybody wants these things, and I guess Boeing is now optimistic?

Is Dave Calhoun, the guy who runs Boeing?

Now he's optimistic that what the Chinese are going to start ordering him again because he had a backlog of like ten billion dollars of the planes that he was supposed to sell to them but had started already giving to other clients.

You did it, that's firedough it.

Yeah, so there's a lot of to unpack here. Boeing has one hundred and forty planes that they built for China, most of them in twenty twenty nineteen, that have been in storage because China was closed to the MAX and China has not resumed imports of the Max yet, but apparently that could happen. It's basically all they need is a stamp from the government for that to happen. The airlines want their planes. So so yeah, that's the ten

So how did Airbus manage to to really just continue to you know, sell planes. There's so much more dramatically than Boeing.

Well, their plane wasn't grounded. I mean, this is so the Max. The global grounding was I think the longest in aviation history, certainly the longest for a really important aircraft, and Airbus Boeing had to shut down production during COVID. Airbus managed to keep their factories going and running semi semi hot. And then Airbus has also done a lot of direct investment in China and they've got they've you know, they're building their A three twenty NEOs in China that's

Oh well please, They've brought it upon themselves.

I mean, you know, if you want to win a congressional campaign, dissing China.

Is a great way to do that to get votes.

And the Europeans have been courting the Chinese with the Belton Road initiative and letting him straight up in through Italy, right up into the heart of Europe. That's got to help a lot as well, doesn't it.

Yeah?

Yeah, absolutely so.

I wonder why does China not have its own I was talking about airframe. I was talking about Airframe, the book by Michael Crichton, Julie, have you read it?

Sorry?

Okay, I thought it was popular anyway.

Part of the book talks about how the airplane ip like, for example, how you make a wing is so heavily guarded in this country, and I'm sure air Bus guards theirs as well. But they have to outsource some of this manufacturing to China. As you know, the global economy became too intertwined. China knows how to make planes, now, why don't they make an uncomfortable narrow body jet.

They have China just to make things even more complicated. So China has its rival, homegrown rival to the Max and to the A three twenty neo, and it just entered service last month and more than ten years behind schedule, by the way, and about I've seen estimates that around eighty percent of the technology in that plane, basically everything that you need to keep it aloft is Western made, and so manufacturing commercial jets is really, really, really difficult,

Okay, Well, if Matt is reluctant to get on the Max, Katie, I'm curious the CET nine to nineteen, that's going to be China's answer to the Max. Matt, when you're gonna step on one of those.

No, I mean no, it's like getting a Chinese COVID vaccine.

No, thank you, ma'am.

No, it could work.

It could, yeah, it could.

Okay, Julie, I have a question about the competitive landscape here, because again it seems like this dynamic maybe is shifting again in favor of Boeing. But I mean you also made the point that if you look at airbuses, waitless. I mean we're talking until the start of the next decade. So from a competitive standpoint, it still seems like when it comes to China, Boeing is far behind that of air Bus.

Is that safe to say, Yeah, that's that's spot on.

Yeah, that's exactly right on. The Airbus is clearly in the driver's seat. And frankly because they both Boeing and Airbus have struggled post COVID to get their factories back up and running smoothly. And when you're coordinating hundreds of thousands of planes or parts that go into a plane and they've got to arrive on schedule, you know, sometimes down time to the half hour, you can just see how quickly, you know, how difficult that is, and how

Okay, Julie, I'm curious. Air show coming up soon Parish? Do you get to go? And if not, what are you going to be looking for from Afar?

No, I'm I'm I'm gonna be there.

I'm gonna be sleep deprived and you know, eating bread and cheese and sitting in traffic.

Maybe truly, poor Julie, she's gonna be eating French cheese and drinking wine.

What what are you most looking forward to there, Julie?

You know it's on it.

The excitement is palpable. So it's it's very cool to have the whole industry. I mean, tens of thousands of people jammed into an airfield for a few days and you run into I mean, like, oh my gosh, there's a you know, four star general walking by. I mean, it's just it's really really cool just and and as a as a I love airplanes, and so just just to see them up close, to see the flying displays, to run into people I know, it's it's like.

It's very cool.

Matt wants you to ask why Airframe wasn't a bigger hit.

I feel like it was huge, But now you guys read it, I'm excited to I'm excited to see what they have. And Julie, we're going to have you back on out at the Paris Air Show because they always have the coolest new things, new products there and it'll be interesting to see.

It's always an open question. Overrated, underrated? The book air Frame by Michael Creton, just putting it out there.

The book apparently is under red, all right, Julie Johnson. There covers airlines for US or aerospace is more than just airlines, the makers of planes and defense.

Stuff as well.

Joel Ever, editor and chief at Bloomberg business Week.

You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business app and YouTube. You can also listen live to our flagship New York station, Just say Alexa, play Bloomberg You Love them thirty.

First of all, just a little bit of a setup. Remember we caught up with more Keeshaw CEO at All Finance.

Yess, I will never forget because he gave me that phrase that I use all the time, which is you.

Need to put your greed above your bias.

Yeah right, yeah, it makes so much sense. Well, and he is really specifically working on diversifying the all finance space, and he talked about All Finance having their first graduating class of HBCU students who are now headed to the investment world. So all about diversifying the financial space. And that's where we get to our next guest. It's our regular equality segment because June is Equality month. Harold Butler is City Group Global Markets head of Diverse Financial Institutions Group,

Wouldn't it be wonderful?

Why aren't we done already? I've been doing this a long time, yes, and Matt's been doing a long time.

And it is funny.

I was reading there was a story today about the Supreme Court backing black congressional district, and I think Alabama was in Alabama, Alabama, and I was thinking, how insane is it that we still have to deal with this kind of crap. If somebody a hundred years ago had read that headline, they would have been like, seriously, they haven't dealt with the racial problems in America yet.

Seriously.

Yeah, I mean exactly, it's just unbelievable, the right to.

Vote other things. Absolutely, I agree.

With you what's wrong with society?

You know, if I had a crystal ball, I could probably give you that answer. Right.

I think people need to relax.

Quite frankly, what does that mean?

What do you mean?

I think people? I actually think folks are very uptight right in the US and general. And it's not necessarily just a financial markets. You know. I'll give you an example. You know, when you go my very first time to Europe, I had the pleasure of serving in the US Army and I got stationed at NATO Suppek and when I landed and this is back several years ago, with seventy years a long time, and when I landed in Belgium, I went to the installation and I said well, where is everybody this?

Oh, it's CIEs the time.

Where people are taking a lunch and taking a break so they can reset themselves for today, right, and communicy families or whatever. And then they come back to work and to work a couple of hours, and they're much more effective. And I said, in what's wrong with this picture? Come in?

I'm in.

I want to join that too.

We sa a bit about Germany right, that there was more balance.

I mean, you know what because of the social system, because of the safety nets. I think also, you know, people aren't as worried about how am I going to pay for if I have an accident, how I pay for health care? If I get fired, how am I going to afford to pay my rest right? Because there are so many more safety nets, and as a result, I think they need to use them less.

To be honest, no, I get it, they get worried about it. So if we relax, yes, I like to relax. Why do you think how can that improve the situation in terms of diversification. I'm tired of hearing I love you Mackenzie, but tired of hearing about the studies. I get it. It's better to be diversified and there's a bottom line financial component to it. So tell me if we relax, how does that make things better?

Well, I mean, let's use the financial component.

Right.

So, like you, I am.

Oftentimes mind boggled at the same conversation around you know, why are we doing what we're doing?

Right?

Just recently, in fact, I was asked, so, why are we having the same conversation about equity?

Yeah?

Why are we still having this conversation? And you know, without having to go into a history lesson, which sometimes I don't mind doing, right and really helping that individual ask me the question, talk about helping them to understand why things are the way they are. I said, let's let's refocus your question and you ask yourself, right, if if the shoe were on the other foot, how would it be different for you?

Right?

And when I say the shoe of being on the other foot, you know he's talking about in this case, I'm kind of tired of hearing about diverse and equity and all this kind of stuff.

Tired. Just no, no, no, I'm just saying repetition is why isn't it done right?

That's just the whole point is that I think I think we and I hope this is where we're going now. Right, much of the work that's been done, certainly past the horrific events that took place several years ago. There's a lot of corporations that have come into the space that are putting capital in the spaceport George Murder, George Floyd.

The conversation shifted dramatically.

Dramatically, right yet, and yet I think I think progress is happening, but yet we're not there yet, right, And I think it's because it continues to be a difficult conversation for people to have. I think people some people don't really understand steal the what or what needs to happen. And I think some folks just get for Clint about the level of commitment that they need to make.

Right.

We over a.

Lot of times financial institutions in general, because it's the nature of how we do business, you know, we think about it a lot, right, We put do you think about risk? And we think about this, and we think about that, and all this out of time.

A trader's got to pull the button and make the trade.

You got to do it right. If we weren't on radio live radio, I have a nice little term for them but it's.

Probably it sounds like we got to get off the pot.

I mean, really what we need to do.

I think also it's just it's so hard for people to overcome their biases. Yes, when Marcus Shaw came on and he gave us this, uh, this term, you need to put your greed over your biases.

Use.

His point was, if you have that kind of diversity, you're going to be able to generate more revenue, better margins, You're going to be able to make money.

And that's what we all want to do. So we all want ostensibly, right, So.

Bias is that strong that people will give up making money?

Yeah, let's talk about black banks versus surely because you said sometimes you don't mind giving people a history lesson, and I think people need that.

Here.

There are historically black banks. Are they still in operational the same sort of scale that they once were?

Well, you know, since reconstruction. The black banks that are in existence today about seventeen of them, so that's not a big number. Across the country probably have more capital than they ever ever had. Right during the number of years prior to these events that we've talked about, such as the murder George Bloyd and how the whole industry sort of change. It was a tough world, right, and that's steal tough, but it is changing because the banks

Right?

And then I like to say to the history lesson things, I well, if you were denied capital markets, if you couldn't play in the capital markets, you'd be the same way, right, because it's a vicious cycle, right. And if you don't have access to capital, you don't grow, right. And if you don't grow, you cannot offer the communities you serve services and things like that. So you know, it's it has been a.

It gets exponential, it does, right if they're able to lend out and you keep going.

It's just the growth, that's right, that's right.

So what can be done about it? You are at city? Can you do you work with them? Or are you competitors?

Definitely not competitors, right, So we've taken we're gigantic, We're not relative pect. We're not that I'm gigantic the waistline maybe a little bit.

But you're what we considered one of the big banks.

Well, we are a big bank, right, and I'm thankful we're a big bank because we're able to do things in a unique way and we're the first. Really maybe you didn't know this, I'm so I'm happy to tell you this. We're the only bank Steal on the street, the first to actually create a dedicated business unit, the Verse Financial Institutions group. This focused at the minority deposit institution. Are going to include broker dealers and asset managers because

Yeah, all those things that keep people from moving ahead financially as well as just kind of personally stay in touch. Let's know, how things are.

I'm happy to stay in touch. I've got so much to talk about you. If you have me back, will we get back. We can have all kinds of fun talking about this week.

We will definitely have you back. Thank you for coming in, Thank you for your service.

Thank you very much.

By the way, thank your waistline is just fun.

I'm just okay, I appreciate that.

Harld Butler, who's Global Markets head of Diverse Financial Institutions Group at City Group.

You're listening to the Bloomberg Business Week podcast. That's just live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business App and YouTube. You can also listen live to our flagship New York station Just Say Alexa play Bloomberg. You love them thirty.

Well, got to say. Ruling the AI world right now without a doubt is Microsoft and the stock closing at an all time high today. It is up forty five percent year to date. Microsoft A lot of the reasons why investors excitement over the company's outfront moves when it

It's that human touch that you're providing.

Max Chafkin and Bloomberg News Seattle bureau chief Dina Bess Joela Max in studio Dina on zoom and Seattle. This story also Bloomberg's Big Take, and it's in the new issue of Bloomberg Business Week, on newsstands, online, and on the Bloomberg terminal. So, Jill, Microsoft's kind of cool again.

Yeah. The way that we've been talking about this is that Microsoft strikes back and Microsoft has been really, uh not a cool company h for a really long time. We've We've covered before how it became an absolute juggernaut in the cloud space and that was really a Sachi a Della move, and what we've seen recently this year ultimately has been this emergence, this unexpected move where they showed just how strong of a hand they had in the AI space, largely because of their investment in open ai.

For more than two decades? And I think you know, some of the key moments that we talk about in this story took place around twenty nineteen, when you know, Satynadella and he had sort of deputized his CTO, Kevin Scott and trying to figure out why all this AI stuff they were doing wasn't really amounting new hill of beans. And so you know, they simultaneously, almost or very shortly one after the other, start you know two things. Kevin Scott looks at what they're doing and realizes that it's

And what that amounts to.

Is that Microsoft, for pretty much the first time in history, is basically outsourced, you know, the underlying technology for one of the biggest platform shifts you know, in its history to another company, which is just huge for Microsoft.

So score well, I have to say when I read this story for the first time, and Carol, you and I have been watching Microsoft stock for twenty five years together, for the first time.

Is that true? Twenty five years together?

Yeah?

Wow?

Yeah?

For the first time I understood how the cloud business and Windows and I never understood Get Hub or the Open Eye investment. Now I get how they all fit together really well to form, uh, to make a buttload of money. As I think you guys wrote, right, tell us Max, the potential of these the sort of co pilots that they're now releasing, right.

So a lot of the kind of when you've been sort of following the popular press on AI, right, a lot of it is focused on like will computers replace humans? Are they going to take over the world? Are they gonna are are they going to like usher in some

And so on.

And you know, Microsoft is so good at extracting revenue from software, from very expensive software.

It's something like four hundred.

Million people pay for Office, which is now called Microsoft three sixty five. But the idea here is that they're going to charge users between say ten and twenty dollars a month. These these are not official numbers. These are numbers that you know that that are basically our best gas based on a reporting, and that's going to potentially create just an enormous revenue opportunity where where you're able to get something like forty percent more revenue out of

It's like an AI flywheel there thanks, right, we should.

Unless you think we're you know, we're calculating these numbers. Run like on Monday, Microsoft CFO so that this AI business is going to be their first you know, first business.

To ten billion dollars.

I don't completely know what that means because it's not one business, as Max was just saying, some of its office, some of it's azure, some of it's being but you know, at minimum we know that what they're thinking about is also in the many billions of dollars.

So the person, one of the people who was behind the scenes at Microsoft here, you know, was Kevin Scott, and I'm curious tell us more about his role in this AI initiative.

Wait, so Kevin Scott is a really interesting person. First of all, he is a very different background.

He's the chief technology by the way, Yeah, he's their.

Chief technology officer. He comes from Appalachia, very you know, he's not a you know, he did not go to Stanford, so a different different background. He basically, you know, comes to Microsoft via the open A excuse me, the LinkedIn acquisition. They did not acquire open a. I a little bit of a Freudian slip there. So he comes to the Microsoft via LinkedIn, and almost immediately Satianadella names him chief

Uh.

He knows Sam Altman for many, many years, and so he has a he has an interesting perspective. And it's not a redmand Washington, Microsoft headquarters perspective. It's a Silicon value perspective. And so he gets put in charge of coming up with a way to rationalize Microsoft AI business, make it more impactful, make it add up to you know, a much more significant thing. And Nadela also puts him in charge of the relationship with Open Ai. So he ends up being the goal between and you know, and

I'm so glad Bill Gates was like in it from the get go. So Max talked to us about Gates because he wasn't on board initially.

Yeah, And I mean it's pretty interesting because you know, Gates has sort of been out of Microsoft in most official capacities since twenty twenty when he left the board, but he has continued, as we write in the stories, continue to advise company and on AI. You know, they listened to him because because this is an area of interest for Gates, and Gates you know, was against the open Ai deal, the original deal, the one that Dina

Okay, so you hit on the ethical thing there. We I think all of us have spent a lot of time already talking about some of this. But the Prometheus bit, let's talk about that one.

Yeah, come on.

Indeed, So Prometheus was the code name for the underlying model and the big bot, so the big chatbot, and you know, when they announced it in February. I was kind of a little bit ranty at the event because I thought it was a really interesting code name choice, because you know, on the one hand, you know, Prometheus is the one who brings fire to humankind and and you know, dramatically changes.

The future of human history.

So you can see Microsoft, you know, and opening it to some extent perhaps seeing this this work is bringing this new superpower to humans. But you know, Prometheus punished for it, right you know, he's you know, has his

Man.

This is, by the way, when Reto Grigory hired me in nineteen ninety nine, one of the first things he taught me was don't buy into the pr jargon, right, They're trying to spin the story by using phrases, and I wonder if we're doing that essentially when we call

You know, it could it is already doing. That's I

And it's but it's great marketing, and I think that's part of one of well, it's one of the reasons they love talking about the apocalyptic stuff because if it's going to cause an apocalypse, that means it's working, right, and it assumes that it's working.

Sure, I'll give you my favorite part of the story to as we wrap here, which is Microsoft executive saying this is a little bit like our Windows ninety five moment is just to bring it back of like how nerdy Microsoft can be.

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You love and Turty.

I'm kicking what they gave in because I'm working for them.

All right, we are, We've arrived at that point in my day. I have say it's my favorite point of the show. And we talk about one story from the Business business Week magazine. This is going to be the forthcoming issue of BusinessWeek magazine, and we typically talk to Joel Weber, the editor in chief, as well as the author of the story. We're fortunate enough to have Ellen

Right because I.

Had thought as well as probably many of the kids graduating college today that if you learn to code and you're like halfway good at it, then your set for a sweet job in Silicon Valley for like the rest of your life. And it now seems that's no longer the case.

Yeah, I mean, this is kind of the big mood shift in Silicon Valley, which is the learning to code is not a guarantee of amazing forever employment anymore. To be clear, there's still a lot of people who want to hire software engineers, especially firms that are outside of tech, like in healthcare and finance. They're definitely looking for coders.

One thing I saw is that there have been two hundred thousand layoffs in tech this year. You found a website that essentially aggregates all of the layoffs, but eighty thousand of those happened in January. So what I'm wondering is, are the layoffs kind of slowing down? Does it look like maybe it's not as bad as it was at the start of the year.

Now, Yes, that's definitely what the numbers are showing, so our in our story. We have a wonderful chart. This data comes from layoffs at fyi, which is a hilarious site, very well run by just a startup founder who started during COVID collecting layoff numbers and putting them in this wonderful data website. So you see a bit of a peak right after the start of a pandemic, and then a drop, and then it really started to pick up mid last year and peaked in January, and now it's

What I was, what I've been thinking about ever since it felt like there was this real major mood shift, was just what that what that feels like in the valley? Ellen, And I'm curious, like being there feeling like you could do anything you wanted forever. How are from the sources you spoke with, how is that manifesting itself? This decision?

Yeah, mood all sorts of ways. I mean, everyone knows, you know, a lot of people are just getting laid off, you know, in the way that people you know, generally you might have expected that recruiters or people who work in sales might be the first to go. This time, it's like senior engineers have worked at firms like Google

That it might.

That new grad phenomenon is the one that I find most interesting, because these were the people like you were just they were just getting swept up and money thrown at them. And especially like in Dylan's case, he had multiple internships at all the blue chip places. There's this helpless quality that it must feel like to be in that twenty something age. Ellen, And I'm curious when you

I mean, they're freaked out in different ways. The twenty somethings are like, wow, I really thought that I was picking the most obvious, most stable, most high paying career, and now it's none of those things. Or I might

Well, the thing is, ellen, if you need to charge a jet for a fishing trip in Alaska, you know that's not cheap anymore.

Yeah, it was never yeah, but now it's really not.

I really did appreciate. You know, there's a wonderful part in the story where yeah, we kind of reminisce about what the boom times looked like in Silicon Valley in the mid twenty tens. It was out of control, right, We're talking about perks and salaries and stock grants and these kinds of things that were you know, these companies Facebook, Google,

It sounds like sorry, Ellen, it just sounds like another one of those things that goes away, and when we don't have a zero interest rate environment, you get less of that kind of just getting brought on.

Everything.

I mean, that's a great.

Actually, yeah, I'm just being smart, you know what I mean. But one thing that I'm curious about too is whether these companies are sort of blaming AI to be able to fire or lay off their employees and to kind of get away with it. Yeah, did you did you find that in your reporting?

There's definitely a sense that AI is like the idea of the day, and so people are pointing to it for different reasons, one of which is, yes, there are some CEOs who over hired at the beginning of the pandemic when it looked like tech was going to have

All right, Ellen, well, thank you so much for joining us. We're going to have to leave it there so we can get back to this Trump news today, but really appreciate you joining us and the story, of course, which will be featured in the forthcoming issue of BusinessWeek magazine.

You can read it.

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We're going to talk DC because you've got the Washington Capitals, the Wizards, the Washington Mystics. She've got Team Liquid, You've got the Capital One Arena, You've got NBC Sports Washington, and so much more. Add it all up, you get Montaman, Monumental Sports and Entertainment, a four billion dollars sports empire headed by Ted Leonsis. He's a New Yorker, he's a

So we talk about our consumers, our customers. We talk about what's happening in the economy obviously, and whatever happens there in fact impacts our customers. We're in the media business, We're in the disposable income business. People have different ways to spend their money, so we are We think about that a lot. Jobs, inflation, interest rates, not so much impacting us directly, but impacting our customers.

So that's something we talk a lot about.

What does disposable income look like right now? You know, I often bring up the stats of excess savings left in consumers accounts right now. We to that about one point two trillion dollars essentially left over from stimulus. Now, a lot people strike back on Twitter. Let's say you're wrong. You know, we don't have any money, and I get that some people don't, but what does what does your client base have?

Yeah, you know, we're in an interesting business.

We're in the media business if you really think about it, and so again, disposable income. But we are also so much a part of the fabric of our community. People have grown up in sports, whether it's on the youth level of the high school collegiate professional level, so it's really part of their life in a way that a lot of businesses or products aren't. So coming out of for example COVID, where we were essentially shut down for

Other facilities that aren't just our teams.

Tonight we have a major wrestling event, So that that side of the business, that side of the live entertainment business that occupies our buildings came back very strong as well.

The concert business.

We all so what's happened recently with certain very high profile acts, so our businesses, I won't say with a recession proof that what impacts us more is our team performance. So if we have a downcycle on the teams, that's much more impactful than a downcycle into the economy.

Peter, who want to get more deeper into sports, but when you look at the economic outlook, does it say to you recession? Does it say now we're going to skip it out?

You know, I think that's what you all and your other guests down at Bloomber get paid.

To a pine on that's not really my area.

If you wanted to ask who we should pick in the next draft, which is coming up, I might have a view on that.

I don't believe it. I don't believe Listen. We do spend a lot of time talking about J. Powell, but I guarantee that it's J. Powell ran into you. He would want to pick your brain to figure out what's going on in the economy because you're the kind of people he wants to talk to.

Now, I think, as I said, we've done well.

We are concerned, like many people are, with cities commercial real estate that impacts us here, particularly in a market like Washington, so we pay close attention to that. We have a lot of our corporate partners. Obviously we have people buy tickets, but we have sponsors and their businesses are impacted by what's going.

On in the economy.

Again, the commercial real estate world concerns us a little bit. We're downtown, we need fans comfortable coming here, their fan experience, fan safety, all those things are very important to us. I don't know whether mister Powell would focus on that, but that's what we focus on our fan experience. We think of it as driveway to driveway, when they leave their driveway to come here, and then when they return,

Well, we're just thinking he might. I don't know is the Grateful Dead playing at the Capitol Arena because he might come to see it because he does like the Dead.

Well, the Dead no longer exists, but what do they call themselves?

Dead and Company? I think they play Toctal City Music Theater.

I don't know whether they're on tour or not. We're sort of the only game in town, so if they play in Washington, they would be playing here.

They are on tour, they're playing city Field on next Wednesday and Thursday.

So people play indoor buildings, particularly older acts tend to play indoor buildings like hours, they're an older act. But in the summertime, obviously, the football and baseball stadiums can hold a lot more people than we can with twenty thousand dollars. Here, become a rainy night or a cold November day, they'd be very happy to be inside with us, Peter.

One thing that is certainly a great economic and market indicator is when companies are willing to expand grow their business, you know, take on debt, you build out their business, or possibly you know, expand their franchises. And I'm just wondering along those lines. The Washington Nationals are said to be coming up for sale, reports that you guys might be interested. Are you enthusiastic maybe about doing something like that? Is that a possibility?

You know, there's there's been a lot of reports out there. The team was on the market. It's no longer technically on the market. We view ourselves here as having a platform. You've mentioned we have a couple of teams, we have, have a dozen venues. We now own our network. So for us, we have this platform and if we can add like businesses to it, it's tremendous.

We have tremendous operating leverage in the business.

Makes a lot of sense from a media point of view, we really are focused on the region now. For us, the region runs all the way up to Philadelphia and down into maybe even North Carolina and west from here. So adding to the platform, we're six hundred and fifty million dollars in revenue news revenues now Ted Chamer wants to get to a billion. We'll do some of that organically, just growing what we have. Some of it will also be adding businesses to the platform. I'm not going to name names.

That there's no matter how hard you try here make a lot of sense.

I tried to kind of weave it together and was hoping.

A little bit of a slip. You wanted a little bit of a slip there from.

Pete No, no, I respect. I respect Peter. Having said that, we did mention the teams. You know, you guys have esports gaming. As you said, you're a media Company's where's the growth. Where's the biggest amount of growth?

You know, I think it really is on the media side. We can't really add seats here in the building. We can raise prices, but it's about getting eyeballs. We really need eyeballs, and as you all are very familiar with with the changing media's landscape and the regional sports network.

Cord cutting, we need to be.

Getting to our fans however they want to consume us, whether it's again on a traditional TV with a copper wire coming in, or it's on their hand held or whatever. So our growth is more eyeballs, but getting to them in ways that we haven't gotten to them in the past.

One of the reasons where.

In esports, particularly sports related to basketball and hockey, is that's a way of connecting with the younger fan, and we need to connect with the younger fans.

So esports is that.

One of the reasons where active and it's all over the country, all over the world and sports gaming is that's the way to connect with our fans. We have fans who have an interest in doing that. We need to have a product, whether it's a channel or distribution to reach those fans, younger fans, fans who have a very specific interest, whether it's gaming.

That's where our growth is going to be. It's going to be more. That's where our organic growth will be is in more eyeballs.

You know, Peter, I got to be honest, like you know this. You've been there for I think what two decades, I mean, coming off the financial crisis, we realized how important chief financial officers are in keeping businesses growing. I think we used to be for such a long time. It's the earnings call. They pop on the earnings call, they do the numbers, and then they go away. Being a CFO is so key in terms of the strategy

Well.

Well, obviously our teams through the leagues have a national presence, right, the NBA.

NHL, Right, But you know what I mean, you know what I supposed nationally.

I think we've got a lot of work to do here at home, a lot of opportunity in our market, and there's a lot of value from our point of view. I used this word already on the platform. You can it expand perhaps, but we need to do what we need to do to get to a billion dollars and we think we can do it. And oh, by the way, Washington's a great place to do it in there. There are obviously other important cities in this country, but Washington is one of those, and so we're excited to be here.

You can knock other cities. Washington is an awesome sports town.

I gotta say.

You know, people who live down there really root for their teams. They really get into it in a way that people in other cities sidetracked by other stuff really don't.

But if you only had a baseball.

Team, well, you know, we've had some success. We won the Stanley Cup a few years ago. Our women's team won the WNDA Championship. The Nationals, who you keep mentioning, won the World Series in twenty nineteen. So it's been a few years, but we've had a lot of recent success with our professional sports team.

So is the NWNBA starting to pick up? You know, there's so much talk about pay parody, and to that, snarky men always say, well, if you want them to get paid the same, go see the game. You know, are people starting to fill up those seats.

Yes, and I don't think it's I think it's in women's sports overall at the collegiate level, at the professional level, not just in this country, in Europe for example as well, when we see in the growth of women's professional soccer teams often sistering with an EPL team or a lot of legal team. So I think there's a rising tide raising all those boats. I think the WNBA was at the forefront of that twenty years ago when it first started.

Hey, listen, I want to ask you about something very serious if I may, because it certainly has been a high topic here at Bloomberg, certainly in the financial community. When this story crossed, I think it was the most read on the Bloomberg and stayed that way for the day. And this has to do with the PGA tour and live golf and the increasingly growing role of Saudi Arabia and their money when it comes to global sports. And I'm just curious what you what your opinion of that is.

Yeah, I think is it good?

Okay?

There there have been sort of startup leagues that have grown in the past, whether it.

Was the the old AFL or the the you know, competing NBA, wh and hockey, So that's been a common thing, perhaps not as much of resent people have tried with the XFL and others.

So alternative leagues I think are always going to come up. Often they result in merging, as the AFL and NFL did, and the a BA the NBA, and so I'm sort of not surprised that followed that path, maybe a little quicker and people might have expected. As to the specific sources of funding, I'm really reluctant to comment on that. I think one thing I will say is sports teams.

I want to ask about speaking of international William Hill, I think has spot in your arena there. What's the arrangement and how has that growth been? Because you know, I lived in London for a long time. British kids learn spread betting when they're like five years old and then they do it for the rest of their lives. Here in the US, it's starting to pick up. It's starting to really catch on as a form of entertainment. Well, what's your experience been?

Yeah, so I got to just give a shout out. It's actually Caesar's Now.

Caesar's acquired the US operations of William Hill and they are important partners.

I got to get their name out there.

No, I think it's always been out there, but it's been in the dark, it's been offshore, it's been unregulated, often not good people taking advantage of good people. So having light on it, sunshine on it, I think that we think is critical. I think it's critical. So we have a partnership with Caesars. We have no interest direct or indirect and the betting that happens there. They're a tenant in the building, they rent the space where the sports book is. They buy a lot of advertising, which

All right.

One thing we didn't ask you, are you going to buy the Washington Nationals?

Well, I think you did ask me that a couple of times.

All right, have any easier question, Might you guys go public.

Pools of capital? We need pools of capital at the right time. I think we need to be bigger, definitely, it's something we'd think about. Market's got to be ready. But there are advantages to having the liquidity, to having a currency for acquisition. All the reasons other companies are public would make sense for US. Liquidity, currency, that kind of thing, and someday perhaps.

Well, Peter, you are and no pun intended. Truly a good sport. We really enjoyed this and we're looking forward to it. Be well. Have a good season seasons. Peter, Chief Financial Officer, Monumental Sports and Entertainment on Zoom from Washington, d C. He will be featured in tonight's episode of Chief Future Officer, airing at nine to thirty pm Wall Street Time on Bloomberg TV. I love talking sports.

Yeah, and a very cool show, Chief Future Officer. Tune in for that.

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At your mot alone on the way, all right, I don't even think I can introduce this one.

I think this is all yours, buddy.

All right, So Matt Chambers is a guy who became famous, or at least well known to me when he made Confederate motorcycles.

They were, you know.

Big display spent twins cruisers, and at one point he kind of made this really cool pivot to electric bikes and also changed the name to Curtis. And I was following along this whole saga on social media. I just thought it was so cool and the motorcycles are beautiful. And then one day I was sitting on my couch in Berlin and I saw that they were actually offering shares for sale to the public, not through like a Wall Street IPO, but kind of like a power to

Yes a shareholder, Matthew, come on in and tell us little bit about the business and to one of your shareholders and to our audience if you will.

Well, that's that's great to hear. Thanks for having me on. Yeah, we spent twenty five years in this what I would call kind of the AMG aification of Harley wanting to if Harley was some Mercedes and motorcycles, we would soup them up a little bit. We did a really good job with that. We learned a lot. It was it was like an apprenticeship, and we kind of hit the end of the road in terms of being able to

Well.

One thing, I one day, I would like to ride one of these bikes, because in so many ways you challenge the norms of you know, the peril twin, parallel forks, and the way a swing arm works and the drive shaft as you say, and how does it handle when you get out and ride this bike, or what is the feedback that you get from people who are testing these out?

If you had the experience of being in the business for a long time like me, one of the things, one of the things that would be troublesome is all of the shunt from the first time I all one of our bikes, and our bikes were packaged better than the others. I mean, we we invented our own packaging with the ice and the V twin. It was better. We turned it into a monocoque. It was a far better way to make a motorcycle. But man, when you would when you would run that thing on a Dino,

So I'm just going to ask you some business questions. I mean, how much have you how many are you selling, what's the growth rate that you're seeing, and what do they cost?

Well, the bike, the bike is a hyperluxury item and that plays into our deck. We have about thirteen hundred customers and those are pretty much all ultra high network, so we and we've we have enough to break even the first year. I believe it's about twenty five firm deals and we have another one hundred and five to sell.

I think you're right.

Yeah, it takes I think it takes a long time, but then when it happens, it's like a switch is flipped, and then all of a sudden you kind of realize the benefits.

Not to say that.

You you know, throw away all of your love for the bikes you've ridden in the past. The internal combustion engines. But it's just a whole new experience. And I'm so excited. I'm so happy that you guys are doing this, and I'm so glad we could have had you on.

Matt.

Thank you so much. We really appreciate it, so appreciate.

Wait, so, just because folks in our control are wondering, so how much does it? Say how much does one cost? And you said, hyper luxury.

It's one hundred and twenty thousand that's where it starts and it can certainly go up from there. But if you see the bike, Carol, it's worth It's worth it.

I say it.

No one would see it. It's lovely.

I said to Matt before we get started. I was on your website. They are gorgeous and they are unlike anything else you see when it comes to if you're looking at bikes.

And the engineering is revolutionary and machining, it's so precise.

It's just that it will last you for all of a turn.

I was asking for our community. Matt, thank you so much. Come back soon. Matt Chambers. He's chief executive Officer, Chairman of the board of Curtis Motorcycle. Ticker is CMOT and he's joining us from Leeds, Alabama via zoom. Carol Masser, Matthew Miller, Matt's got a smile.

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