Bloomberg Businessweek Weekend - March 6th, 2020

We're going to talk about the coronavirus continuing to spread and investors trying to size up government efforts and corporate efforts honestly to contain the outbreak. And it's economic and business impact. Right, So we tap some of our top editors of the magazine to look at the markets, look at the economy to see their assessment at this point. Also on the corporate front, Barnes and noble Man. The next chapter, the new Hero of the Chains Rags to

riches tail It is a hedge fund. Didn't see that coming. Plus this week's cover story, what a timely one. It's a sit down with an EC director at Larry Cutlo. Maybe you know him from television. He's become the optimist in chief in this administration, and there's a big question about whether an optimist will make the right call when

it comes to economic policies. Al Right, first, we begin with the roller coaster that was those global markets this past week and former Vice President Joe Biden's campaign continuing to rise as Super Tuesday reignited his race for the White House. That's a story in the magazine this week by Josh Green, Business Week national correspondent joining us right now from d C and Josh, what a week. Super Tuesday a bit of a surprise, and then we had

several candidates dropping out. Obviously, the big news this week was that the front runner of the Democratic race went from Bernie Sanders, who looked like he might be prepared to run away with it, to Joe Biden, who looks like he might have been decisively edging out Bernie Sanders. So, uh, quite a week everything turned upside down. I think the real story is that, uh, non Sanders, moderate voters finally at the very last minute coalesced around a candidate that

was Joe Biden. I think that makes him the front runner. But as I right in Business Week this week, he now faces a new and familiar problem. A lot of Democratic strategists are worried about, and that is that he's back in the role Hillary Clinton was four years ago, where you have an establishment favorite, you have Bernie Sanders as an insurgent, and it's hard to see how Democrats managed to unify the party. All right, And we also

saw Elizabeth Warren and Mike Bloomberg dropping out. Mike Bloomberg, of course the founder and majority owner of Bloomberg LP. He endorsed Joe Biden. Let's look ahead to these next contests here, Josh, because there's still a lot of delegates out there and some pretty important states just over the next couple of weeks. Yeah, that's right, And I think I think the importance of Bloomberg and Warren dropping out is that we now have effectively a two man race.

And as you look ahead, uh, it looks to me like the states we have coming up tend to favor Joe Biden. The one I'm going to be looking at is Michigan. Uh. Michigan was the scene of a surprise upset four years ago when Bernie Sanders came in beat Hillary Clinton. Caused a lot of excitement and belief among Sandor folks that maybe they actually could knock her off. That didn't end up happening. Since Super Tuesday, the polls

that I've seen from Michigan show Biden the head. So we're really rerunning a test case that we saw four years ago. It turns out that Biden wins in Michigan, especially if he wins big, I think that might be the last blow for Bernie Sanders. Josh Green, thank you so much. Well. Super Tuesday's results and the coronavirus dominated

conversations this week about financial markets and the economy. US Congress agreeing to an emergency spending bill after the FED jumped in with an emergency half a percentage point rate cut that was meant to calm investors and ease financial market conditions. Well, let's see how that went. It was a volatile week, to say the least. Let's bring in Markets editor Mike Reagan and economics enter Peter Coy to make sense of it all. So let's start with that

rate cut. You know, Peter, it reminded me, you know, all the way back to the financial crisis. We haven't had an emergency rate cut by the FED since then. Right, the Fed attempted to calm the market. I mean, the problem is that the FED can do only so much. When you have something like this, it's not primarily a financial market issue. It's the issue with real bodies and real viruses, and it affects the real economy, so production, It affects the supply side of the economy, not just

the demand side of the economy. When it's the demand side, you can sort of goose up people's spending by making money cheaper. But when it supplies, ie, when goods aren't being produced because people can't get to work, that's something that monetary policy is not as good at solving. And so is that why the market just sort of wasn't

buying it like well? I think the one thing you have to realize when you look at a week like this in markets is that once you introduce that sort of volatility end of the market, when you have that steep of a drop over such a short time, it tends to create both up and downward volatility. In other words, a big move down one day and then a big move back up the next day, and then back down and uh. The example I I've been using a lot is the two thousand and eleven episode when the US

lost its triple A credit rating. You saw these massive three four moves up one day, back down, the next day, back up, you know, and it's it goes to you know, uh, talk about how computerized the equity market has become and how traders in those sort of algorithmic programs are really reacting to signals in the market, and they're very good at pattern recognition. They know when you see a big drop like this that there's bound to be a bounce.

It's not gonna last. So it all sort of creates this situation where a lot of moneys on one side of the boat one day, the other side of the boat the next day, and back and forth. And I think that given all the other news flow sort of causing uh, you know, it's to go one way or the other, that issue that really explains that the suddenness and the massiveness of the back and forth movements. Well, I think it's fair to say that folks were saying

the market was overvalue the equity market. They were looking for excuse to sell. Having said that, I feel, like Peter Coyd, there were two different stories being told. The bond market was telling one story prior to like, even the concerns about the virus equity markets as they kept going higher and higher, we're telling another one. And then this week we had what the ten year go blow one percent. I mean, that's a significant move, the ten year yield going below one. We're starting to feel like

Europe here. Now Europe has had negative rates nominal rates, and now the US is coming down towards the zero lower round even out to ten years. And what this means is that there's not much room left for the Fed to act. It's already spent a lot of ammunition because the Fed, unlike the ECB and the Bank of Japan, has kind of been pretty clear that it doesn't intend ever to let phenomenal rates at either the short end

of the long and go below zero. That means we're close close to doing about as much as they can do on the rate itself. So that's Economics editor Peter Coy along with our Markets editor Mike Reagan, all, So, this is one of those conversations I love talking to all our guests, but this is one where you and look at the rundown. We're like, well, I can't wait

for this. Chris lou Back with US senior fellow at the University of Virginia Miller Center, also former Deputy Secretary of Labor under President Obama, joins us on the phone from Ceville, Charlottesville, Virginia. Let's start with you've been through a few of these. What did you see it was new and different on Super Tuesday? Well, I will tell

you that was a surprise to me as well. Um, you would have said, look, and the conventional wisdom was Bernie Sanders was, you know, clearly the front runner and the only question was is how much of a delegate lead he was able to rack up on Super Tuesday. So I think this is a pretty for those was that spent our time in politics. Um, this, this Biden comeback is just stunning, right, but it ain't over yet,

right because we still have absolutely not. Yeah, so walk us through that, Like, you know, what's great about you is we were kidding you know earlier that you're someone who's been in the room when a lot of things happen, Like what are the conversations that's going on you know at these parties behind the scenes, and also what kind of pressure is coming from the Democratic Party overall because

their endgame is beating President Trump. And I don't think at this point with any anyone who's still left from the race up that anyone's any party leader can tell them that they should stay in or go out. I mean, when people like to criticize the party establishment, there really is no party establishment anymore, particularly in a day and age where people can raise their own money online and raise large chunks of money. So, um, you know, this

is going to go on for a while. You know. Um, obviously a lot of delegates were selected, but I always remind people, Um, April, May June, more delegates are awarded those three months, and even just in the next couple of weeks, We've got you know, Michigan, Missouri, Washington State. Next Tuesday on the seventeenth, We've got Arizona, Florida, Illinois, Ohio. So this is going to go on. We literally have a Super Tuesday, like almost every Tuesday for the next month.

So I think, you know, and again with the two front runners, Biden and Sanders, I think they're just going to continue to slog it out, you know, the way that my former boss Barack Obama did with Hillary Clinton right through a good chunk of two thousand and eight. So let's talk about some some compare and contrast here, Chris, because you know, you look at that race, and obviously

there were some some differences between Obama and Clinton. There were clearly some differences between Clinton and Sanders, and there are echoes of that right now in terms of establishment versus insurgent. How as someone who knows the Democratic Party as well as you do, how do you assess that you know, sort of together with the rest of the party. You know, on one hand, you know, when everyone tells me, you know, boy, this has been such an ugly race. Hey,

go back and look at two thousand and eight. I mean, you know, the Obama people called Clinton a racist, She called us a sexist, she said, you know, you'll remember she said her big theme was Obama was not qualified and ran this kind of three am ad You know, who would you want to answering the phone and three am So it got really nasty. The difference, though, was that ideologically the two of them were not that far apart. You know, While you know, one was probably slightly more establishment,

they were both fairly establishment people. I think here you have a greater ideological difference between Sanders and Biden. Um. But the truth of the matter is you know, even on something like healthcare, I think even Bernie Sanders would probably conceive that Medicare for all isn't happening, you know, in the next four to eight years. Uh, and that you know, we as a country have to sort of move incrementally in that direction, the public option being you know,

kind of a first important first step on that. So I think you can even find ways to bridge some of these differences, but they are certainly more significant than in previous years. Chris lew Is with US, his former Deputy Secretary of Labor under the Obama administration, Senior Fellow today at the University of Virginia Miller Center, on the phone from Charlottesville, Virginia. So, Chris, um, you're probably hearing

about it. I mean, lots of headlines continuing to pour out from the corporate community about how the virus is impacting them. You wrote about it, you said, the coronavirus is bad. Trump could make it worse. Crisis management does not seem to have been at its best in terms of the US and how they're handling this. Yeah, I think that's that's a fair statement. You know, for the president to get his arms around this, he's going to have to manage in a much different way than he

has over this three years. He's gonna have to rely on government experts. He's gonna have to make decisions based on science and facts, and he's gonna have to be willing to hear hard news and then delivered to the American people. And unfortunately, you know, you kind of see he likes, he likes to kind of use happy talk to talk about where we are. And they're certainly aren't good things or it's not as I don't want to say, is that because I'm not sure we really know what

it is. But even on a simple statement of when we're gonna have a vaccine um, he's contradicting his own um government experts on that topic. And that's just not helpful at this time. Yeah, and so well, let's dig into that a little bit because that does seem to to be part of the problem here is everybody not being on the same page. You've been in a lot

of these rooms. Who does that fall to? I mean, is is that ultimately falling to the president, or is there some part of the administration sort of bureaucracy, be at the chief of staff or someone else who essentially says, look, folks, here's the script. Essentially, here are talking points. I mean, this is this is not that complicated. No, And you know, the first term of the Obama administration, I managed his cabinet and we had to deal with a bunch of

these crises. We had H one and one in two thousand nine, we had obviously the Gulf Coast oil spill, in two thousand ten, Hurricane Sandy. So we had an experienced team of people with its stability, and we had practiced on this means. Unfortunately, we went through many of these incidents. And yes, obviously you want to coordinate the message.

So I get that, But some of the news accounts that are coming out are troubling that military officials as well as health officials are afraid of telling the president the truth because he doesn't want to hear it um and and it's that's unfortunate, and so, you know, the

president needs to hear bad news. And I think frankly, he's a little too concerned about what this might do for not even the economy, but really what it does for the stock market, which he then takes as a proxy for the economy, and then he views that as a proxy for his reelection, and if he just simply buckle down and focused on public health, ultimately that does

the most to help his re election prospect. There are certain things you can plan for and then there are things you cannot, So give us kind of a smart understanding of that. The thing that's going to hit you is the unexpected thing. I don't think in April we could have anticipated there'd be an oil spill in the middle of the Gulf of Mexico. But what you have to understand is that the White House can't actually do anything.

It's only agencies that can do things. Agencies have money, they have programs, they have authorities, and you first of all have to have a competent, stable group of leadership running your agencies who understand all the levers that you can push and pull. And unfortunately, this has been a cabinet that's had a huge amount of turnover, So then you need those people who know how to run the agencies. That's Chris Leu, former Deputy Secretary of Labor under the

Obama administration. He's now a senior fellow at the University of Virginia Miller Center. And Jason, you and I love talking with him because, as you said earlier, he has been in the room and so much has happened, and understands the workings of insign and administration well. And as we heard from him, he was involved in crisis response in the administration. He's worked across all three branches of government and let's not forget also a super delegate, so

he knows his politics as well. Activists out in full force this year, especially the hedge fund Elliott Management, which is involved in two well known companies. What are the companies making news this week? Another A Jason, of course, is a feature story in the magazine this week. Well, and the news this week scooped by Bloomberg, a scoop by the guy who's sitting with us here in New

York City. Part of the team, got the stock moving, got a lot of people talking, uh, including probably I think it's safe to say Jack Dorsey Scott to vote here with us in New York. What's going on in Twitter? Well, Elliot has taken a steak obviously, and um, we broke the story on Friday night essentially that they've taken a stake, nominated for directors and now want to push Jack Dorsey out of the CEO role. Okay, so wow, Yeah, I mean that's a that's a big headline and certainly stopped

a lot of people in their tracks. What's the case, Well, the case is pretty simple, and I think it's something that's been made a few times, is that Jack has he's one of the only people in the world to run two publicly traded, gigantic publicly traded companies. UH. He runs Square, he also runs Twitter UM and you know, late last year said that he also wanted to spend up to six months a year working in Africa UM and.

So I think the argument is clear in that, you know, he has a lot of things going on and obviously has some divided loyalties between the two companies UM, and that Twitter is something that needs a full time CEO, particularly now we're going to major events like the U S Election, Summer Olympics, We've got the coronavirus going on. And while those are really great for you know, tweet activity, what they do also is create Twitter users and advertisers.

So what does Elliott want. I mean, they've amassed what about a billion dollar position in shares of Twitter. It's a little bit more than more, yeah, than a billion years. So what do they want specifically, do they want tor see out no doubt about it? Yeah, I mean that's the that's the supplicity of this argument is that And and that's why I think it resonated with you know, so many people around it is that it's a singular argument.

You need a CEO that will run this company and you know, well they think that, you know, the shares of underperformed you know, relative to Facebook and what have you. Um, they do pag a lot of that on the act

that Dorsey is is, you know, divide a loyalty. But also you know, there is a Ruling Stone magazine article, you know, last year sometime where he said that he was getting eight and a half hour sleep at night, so running running to you know, one thirty five billion dollar company, one billion dollar company, uh, and getting more sleep than I do in a night right now. So

I think that's the argument. But I think that's a really interesting point too, because so often an activist comes in and says, you know, the company needs to explore strategic options because costs, they need to do this, They need to explore all these different things they need to undertake this review. This is like boom, we need to

bounce this guy. Yeah, and I think part of the argument is also that you know, UM, Twitter hasn't UM innovated in a way that a lot of its competitors have, so it's always stuck to its kind of core UM model and core platform UM, whereas you know, Snap or Instagram UM even to talks, seem to be more innovative and creating more consumer friendly UM products. All right, So, meanwhile, down in Union Square, not far from where we are, kind of ground zero to some extent of what's going

on with Barnes and Noble also involving Elliot Man goodness gracious. Yeah. So, uh, you'll recall last year Elliott UM, through its private equity arm, acquired Barnes and Noble UM, and you know, they've they didn't do a whole bunch of change in the lead up to the holidays because they didn't want to mess with sales at all. But now that we're in the new year, are starting to implement all these changes into the Bardens and Noble chains. So that's what we're hooking

this story on that's in Business Week this week. Well, you know, and let's just take a step back because before we get into kind of where Barnes and Noble maybe going in the future and who may be instrumental and determining where it goes. Tell it remind us. I mean, Barnes and Noble was the behemoth when it came to

selling books before Amazon. Yeah, you've got mail, right, like that was that was the you know, that went as soon as you become famous and they make like a fictionalized version of your business like books, that's right, And so that was you know, at the peak of what Barnes and Noble was. It was you know, we say it in the story, it was like the socialization of a Starbucks with the sales tactics of a you know,

a dealership of bargain basement dealership. And so when Barnes and Noble was like coming up in the nineties early two thousands, they you know, they were the big kid on the street, right, and they had you know, they were pushing all these independent stores and all of these

smaller chains out of the way. And then of course we know what happened then, Uh, Amazon started selling books, right and uh and the e reader started to come and all these all these challenges um ended up beating up Barnes and Noble in the same way Barnes and

Noble was beating up on everybody else. And that's Scott devote all over the activism beat here at Bloomberg, and that's really taken him into some of the biggest and best known companies, be a Twitter or in this case, in the and that's taken him inside some of the world's best known companies. Twitter obviously in the news this week, but Barnes and Noble, that's a story I didn't fully

understand until I read this piece. When I think Scott makes a really good point when we sat down and talked with him, and he says, you know, Elliott has about forty billion dollars to deploy, so when they're going to do it, it's not going to be small, unknown companies. It's going to be those household names, those company names that we know. And that's exactly what they're doing. And another company very much in the news that Elliott has

its eye on is soft Thing. It has been a week where once again, the coronavirus dominated conversations about financial markets and the economy. It's also been a week, Jason where the FED jumped in with an emergency half a percentage point rate cut to comm investors and financial market conditions through it all, President Trump's chief economic voice, Well, he was pretty optimistic. I thought you were just going

to stop with It's been a week. We can say that to about every week, but this one was a doozy. Sean Donnan joins us from Washington. He was in the room where a key moment, the room where it happened, as they say, with the aforementioned economic advisor, that of course is Larry Cudlow. Take us there Tuesday morning. It's all happening, Sean. Yeah. So Tuesday morning, at at ten o'clock, the Federal Reserve announces that it's going to cut rates.

It's the first emergency rate cut since the global financial crisis in two thousand and eight. And I happened to have an appointment at the White House for ten thirties. So I'm waiting in line to get into the White House and and see Larry Cudlow, who we've been talking about sitting down for for a couple of weeks, and things have moved around a bit, and and there it was.

So by ten thirty, uh, a little shortly afterwards, I'm I'm sitting down with Larry in in his office and and uh, and that's just as J. Powell is getting ready to step up and and and do his press conference. And what you really get from that moment is a sense of how this White House is trying to write out this storm. And you know, Larry Cutlow is this relentlessly optimistic figure. He is. We all know him from CNBC,

from his TV shows. We all know him from uh the way he trots out at the White House, uh pretty much daily to try and talk up the economy, talk up markets, uh and so on. And he has this this office uh in the West Wing, which feels like you're stepping into an old school gentleman's club. He sits at the end of a dining table. Uh. There there's no computer or or or TV in his office. It's an old fashioned pile of papers, printed out emails

on the desk in front of him. Uh. And he's there looking out at the at the world's largest economy and what's happening in in markets? And uh they may be crashing and they did on on that Tuesday, But Larry was there, the relentless optimists seeing me through all of this and that tells you a lot about this White House and and whether they're in denial or whether they simply are refused to be swayed in their optimism, whether that's President Trump's message that he's taking into the

into the election or whatever. But boy, there they're sticking to it. Well. So I love your story because you also get into the background of Cudlo, and we can go there in a moment. But what I do wonder is, you know, you have a head. You know, this is the president's chief economic guy, right, and so you have an individual who runs something but often has support staff and he's taking cues from different things. But it was interesting to hear no computer, just emails, Like I do

wonder where Cudlo takes his cues from. Is it? I don't know where is it? Is it the president? Where does he get kind of the information to kind of help make his decisions or guide the president to make economic decisions. So Cudlo has a staff. He's at the head of the National Economic Council, which is a staff of policy wants, and they certainly give him advice. He's also talking to people in the markets and and and in business a lot and he's spending a lot of

time with the president. One thinks Larry cudlo has been very good at doing is figuring out where the president is on the economy and where he might be going off the rails potentially on the economy, and trying to talk him away from that. But he spends a lot of time with the president, and so when you're hearing that optimism in that view that he's trying to project, it's it's a lot what President Trump wants to project as well. And that gets into you know, this is

an existential moment for this administration right now. Uh. They are running on the back of what has been a pretty robust economy that is facing the first real crisis on the economic side of his presidency. Well, and Shawn, you know history both immediately and longer term. We'll talk a lot about this president's advisors and specifically the advisors

in that role. Uh, let's get into some of the policies where Larry Cudlow has disagreed with the president, has tried to sway the president, maybe to a more successful extent than his predecessor, or certainly it feels like he has navigated the president maybe a little bit very better than Gary Khone did. I think that's right. I think it's it's worth remembering that Larry Cudlow, and he said this to me the other day, remains a free trader.

He does not like tariffs. But then he got this job on the back of Gary Khne resigning over tariffs, over the steel tariffs that the President introduced in March eighteen, when Garry Cone lost an enormous policy battle inside the White House, got out maneuvered by Wilbur Rosson and Peter Navarro, and Larry Cublo came in knowing that the President had this this trade policy that was at odds with his

own worldview. And he's tried very hard over the two years since, and it's been almost exactly two years that he's been in the job h to to try and press the president in a different way, UH and in a quieter way. I think the view inside the White House was that Gary Cohn was a real uh in fighter. No one sees Larry Cudlow as as a guy who's very political in terms of or aggressively political in debates.

He makes his view UH known, but he's much more nuanced in how he gets it across and I think that is a view that has that has worked with with Trump much better. There's two key moments really that Larry Cudlow has wanted a debate on, and the first of them is with China in the trade wars. Larry was pretty instrumental in convincing Trump to embrace the idea of a smaller deal, of a phase one deal, to try and get to a truce in the trade wars

and and and reduce attentions. And that started really back last summer when things were really melting down uh in the markets again, and when President Trump was minded to escalate, Larry kind of talked him off the ledge there. The second thing, and it also came last summer, was when the President around the same time, was getting increasingly concerned about the strong dollar, and it was a serious conversation going on inside the White House about possibly intervening and

currency markets to try and weaken the dollar. Now, Larry Cudlow for decades now has advocated his view of king dollar that a strong dollar is actually a sign of strength for the US economy and and and should be embraced h and that is at odds completely with President Trump's view Uh. And he's expressed that again this week, that that a week dollar is what he needs to help experts and Larry managed to talk Trump out of

out of intervening in the market. There. Those are two big moments, and we're seeing it a little bit this year. And how Trump is dealing with Europe. Larry has been instrumental as well and in talking the President out of slapping auto tariffs on European imports. So it's a big deal. So what I do wonder And you make a great point of saying, you know, he's a friendly kind of guy. For those of us who've had converse stations with him, he's pretty friendly, you know when you're talking to him

and he calls people friend and pal. He's an optimist. But I do wonder in this time where we're trying to figure out what the coronavirus means for the US economy, there's criticism of the administration and in handling it. Maybe we don't know the extent of the virus yet in the United States. Uh, you have the FED to the emergency rate cut. It felt like we're in a pretty

tough situation in terms of the US economy. You know, what's his track record, you know, on catching economic cycles, and will his optimism potentially make a misguided step when it comes to guiding US policy economic policy? Look, and and that is absolutely the fundamental question here is is whether Larry Cudlow's optimism it is actually gonna cloud his judgment in some way. We are at a key moment. You got to get the calls right here, and Larry

in the past hasn't gotten all the calls right. And back in December two thousand and seven he was poo pooing any talk of a recession. We know now that that is exactly when the recession that turned into the Great Recession as a result of the global financial crisis was getting under way. Uh, he acknowledges that. But he has this this this this relentless optimism. Part of it is is political messaging. There's no doubt that the President wants to be in a place where he's talking up

the economy, not talking down the economy. But you can't escape the fact that this week the Federal Reserve, for the first time since two thousand and eight, went with

an emergency rate cut. This was not a scheduled meeting that they were moving at this was a response to a crisis that they saw in the economy, and the White House was refusing to embrace the idea of a fiscal plan at the same time, and Larry saying all through this, even as this is happening, literally in that hour, that this is happening with the Federal Reserve, that he

thinks everything's fine in the U s economy. That Shohn Donnan, who covers all things trade and globalization for US here at Bloomberg News, Jason, I love about this story, and

it's kind of what I love about journalism. You're working out a story, which is what Sean was doing trying to get an interview with Larry Cudlow, and it finally came to fruition this week and on a day when we had that emergency rate cut by the Federal Reserve, a press conference by j Powell, and so this was the guy you want to talk to about where we're going in the US Economy's we got to get back

to the financial markets. We sat down with Suzanne Woolley from our Bloomberg Wealth team as markets faced a wild week. She discussed why now is not the time to buy the dip in the midst of such volatility is not a great time to rethink your asset allocation. It's really hard at point at a time like now to sort of sit on your hands and stick with a well thought asset allocation that you have or if you're four owe k is well spread out between stocks and bonds.

Um being impulsive now it can be dangerous. And buying on the dip sounds good because we've had eleven years of a bull market and we've been a lot of people have cash on the sidelines. They've kind of been waiting to jump in. So it's now all the time. But so funny when you say that, because there was a fun story last week was a Mike Regan about all the metaphors, you know, climbing a wall of worry. But it is like, we're, yeah, exactly, like we're at

that point where there's so much volatility. It's like, okay, so what does this mean? And we're all using these metaphors right right, and we have no clarity, you know, I mean, there's just no visibility into into much. So buying the dip now seems a little more like market timing, and as we all know, you know, bad idea, Yeah,

bad idea of fools. Errand that's what they always call it, because partially, when you get out, that's one decision, Okay, The harder decision often is to get back in, right, And a lot of people who sort of got out in the last downturn didn't get back in soon enough. Well, and you make such a great point. I mean, this

was a number that really stopped me cold. When you go back to March nine nine through February one, the SMB had a price game of three hundred and nine percent three nine three, And so when you think about a ten percent or even more sort of dip in

that context, suddenly the math is a lot different. It's almost like you have to put up sticky notes, you know, that will keep it in context, have some perspective with you know, because ten percent in this context, you know, I don't want to talk like a market timer, but it's not very much well, you know, it's funny though, Susan.

I've been thinking a lot about this though, because I often with a lot of our guests on air, talk about you know, also capital preservation, right, and there is a point where I do wonder have we made you know, whether it was last year and you know, when we have a strong market, do you kind of pull back a little bit and just say I'm good with this, you know, And then do you wait for when money off the table, right, and or be a little bit

more conservative and wait for valuations to come back down. Because I think about I hear what you say from the financial crisis, but people saw their investments, you know, cut in half because of the financial crisis, So like you have to kind of balance that out right, Yes, definitely, I mean it all depends on your time horizon, right, and if you have you know how much cash you

have saved. But because if you're planning to retire in a couple of years and you really haven't put enough away, you don't want to be having to sell stocks into a downturn. So in that situation you may want to pull back a bit. And maybe in your foe owing k there's stable value funds that you know are reasonable, right,

not anything like equity long term returns, but safer right. Well, And that leads to I think one of the most important points of your story, which is it is a good time, in a very real time to understand your appetite for risk totally tell us about that. Well, you know, we don't really know our appetite for risk until we're in it. And after eleven years of a bowl market, there are a lot of people, especially younger investors, who

don't know what it feels like. See such a swift decline, you know, and sort of most of us actually think we have more of risk tolerance than we do. We overestimate it. So now is a good time to sit back and think, like, how did that make me feel? Did it make me feel panicky? Couldn't I could I not sleep? Was I worried? Okay, so maybe you want to adjust your portfolio a little bit right now, you know, tweak it UM so that you can sleep better. So that is a and that's sort of this amorphous thing,

but it's very valuable. But yeah, absolutely, and it's real. Let's let's not forget it. What about UM going to some of those safe safe havens. And I think about the bond market, which had a good run last year, right but you know, the bottom market raises its own risks UM, you know, and it's a little bit of a it's hard to find a haven right now. You know a lot of people have run into gold um that is a tactical move, um, that a lot of

people have made that maybe they've had their move already. Yeah, yeah, maybe, And it's hard. I sort of think you just have to think of your basic asset allocation and pretty much stick to it and maybe tweak a bit. But there's not a lot of places to hide now, right. It's funny too. I mean on our daily radio show, we have a lot of money managers on and they talk about their clients. You talked to a lot on an

ongoing basis, but specifically for this story. What are they saying about what they're hearing and how it may be different or what's the general times. Yeah, from clients, they're, um, they're getting some worried calls, um. But they are also getting some calls about like should I buy now? Um? So they're definitely you know, at about like ten percent down on SMP, they started getting calls about is it

time to buy now? And you know, some advisors are like, well, okay, you know, if you have if you're still working and you have like one to two years of cash saved, or if you're retired and you have three to four years of cash saves, so that you can ride through any market downturn and not have to sell into weakness. Maybe, but um, because is it a time to put some

new money? Like this is that valuation question right? It's a lot better than it was a couple of weeks ago in terms of valuations, and so many market watchers were calling for some kind of correction even without the virus concerns. And so if you do have some new money and you have a safety net put aside, is it an opportunity to kind of get to put some

new money to work? I mean something to think. One thing to think about is that if you have a four one ken, you're already sort of averaging into the market every month or so and it goes into the four O one K. So if you you know, you could be doubling down on the market if you decide to take money outside that accountant. And that's Suzanne Willey a smart story, a timely when obviously, given everything that's

been going on in the market. So I know, those of us who have dared to look at our four oh one case, it's a chilling moment, but got to be smart in this sort of environment. And she reminds us if you're already in a furrow one k you're already buying into the markets ups and down. So that's something to remember as we face those volatile financial markets. Jack Welch so much talked about former chairman and CEO of General Electric. He passed away one week ago at

the age of eighty four. Someone who knew him beyond the headlines that most of us read is John Byrne. He wrote the book with Jack Welch. It's his autobiography. It was entitled Jack Straight from the Guy. He's spent a lot of time with him, more than a thousand hours a full year, a level of intimacy that really no journalist gets with a source, and a friendship that certainly continued. John joins us from San Francisco. So I

have to say John, first, condolences. I know that he was a close friend and mentor, uh and someone who gave you a lot of advice over the years, unvarnished. What was your first thought when you heard that he had passed, Well, there was a sense of sadness. Um, he was really a larger than life figure. And I know that's almost a cliche, but in his case it really fits. He squeezed every precious moment out of every minute in his life, Uh to get the most out of it. He was fun to be with. Uh. He

could be a very um scary character when he got mad. Uh, he was remarkably intense. He Uh, he was wickedly smart. UM. And when you were in his orbit, you somehow spelt felt special. Um, you didn't feel ordinary anymore. And that was the kind of magic that he had with a lot of people. And he was very much a people person, I mean he um. And he would go right to it. Well, so what what whatever, Wherever there was some something that he could provoke, he would provoke it. Before you wrote

the book with him, UM. And I think two thousand one, you actually first got to know him back in and you wrote a story for Bloomberg or what was Business Week at that time. It became the longest UM cover story in the magazine's history. Take us back, that was what was your first impression of him? What was the first time you met him and sat with him? Um? Do you remember that? Sure? Well, contrary to what people think,

he never sought the limelight. The limelight sought him. And it was difficult for him to actually sit down with a journalist. UM, it took me a year to gain access to do that cover story. So but once he opened the door, he completely opened the door. I spent four months. I interviewed well over fifty executives in the company. I traveled all over the country to different divisions, and

I interviewed him multiple times. And the story really told, UH the sort of narrative of how did this one guy have so much influence over this massive global corporation with three hundred and fifty thousand employees and a range of business that was truly mind boggling, from appliances and light bulbs to aircraft engines and um, the aircraft engines and power generation equipment. UM, how does everyone know him

as Jack? And how does he wield this influence? And it really got inside the motivational techniques that he used to get performance out of the company. He would do these handwritten notes that became prized within uh G E two people who really made a difference and UH and those things hung in their offices and they were just

like the amazing most the best honor you could ever get. UH. So I got to know whom there and then as he approached his retirement two and a half years later, he came to me and asked if I would help him write his memoir. Of course, there was no hesitation. I agreed to me that experience was like having a PhD in management or leadership. I did, in fact, spend well over a thousand hours face to face one on one with Jack. Uh. It was the most grueling experience

of my life. Uh. We fought a lot over what should be included, what shouldn't be included. Uh. He was very demanding. We went through many, many, many drafts. I can tell you some of the chapters went through something like eighteen twenty drafts. We'd sit side by side after I would write, Uh, and to make the manuscript his own, he would go over every paragraph, every sentence, every word. We'd fight over commas and dashes. Uh. Sometimes the changes

in the manuscript would be so extensive. So one time, after scribbling all these notes all over the pages, UM, he turned to me, grabbed my arm, looked me in the eye, and said, you're gonna mess this up, aren't you. He used a more colorful than mess it up? Okay, but that was Jack. Yeah. And so what did you learn about him in that process? About him? As a human because again the intimacy that you gain over that many hours and over telling someone's life story in that

level of detail. What did you learn about him? Well, I learned that one of the remarkable characteristics that he had was his love for people. And while he could be incredibly tough on people, um, literally beat them up, he also just as easily could come over to them, wrap his arms around them and tell them in the most genuine way possible, I love you, um. And that meant a lot to people. And he rewarded people incredibly generously.

You know, we often think, uh in Silicon Valley and I'm here in the Bay Area that, um, these companies are very generous and buy a lot of talent with stock options. Well, you know, Jack us stock options very effectively in a big conglomerate, made tens of thousand people uh millionaires as a result. So if you performed and really did well by the company, you did well by yourself because he made sure that you were generously awarded for your work. That's John Byrne, who wrote with Jack

Welch his autobiography. It was entitled Jack Straight from the Gut. That book selling more than ten million copies worldwide. But it's great to sit down and spend time with someone who spent so much time with Jack Welch and got to talk with him and see him not only as a CEO, but just as an individual, Yeah, as a human being. And he tells some great stories about everything that Jack was a complicated guy, obviously a legacy that will continue to be picked apart, but a very human

look for sure. Let's not forget Jason. That's our Bloomberg Business Week Extra podcast. We talked with John Byrne for a long time, so be sure to check that out. Speed Racer. So the Bloomberg audience love sorrying about aving to do with the auto industry, from evies and stuff driving cars to really cool things like supercars, collectibles, innovation, competition,

racing and more fast cars. All right, so today we're talking about the business of racing of the perfect duo to do that, with IndyCar champion Joseph new Garden joining us in our interactive Broker Students, so welcome to you. Also, of course, with us is our auto calumniess for Bloomberg Pursuits, Hannah Elliot, who actually brought us Joseph. I tried to in you the best. Yeah. Anyway, alright, so first of all, congratulations, welcome,

thank you. Um. So, what's the state of racing right now? Well, we're here to just just distract everybody, you know, with all the chaos that's going on right now, we want you to just think about racing and good things. Um. But the Yeah, the state of racing is good, you know. We um, we're still going forward. I think Indie Car

is an exciting time for us. We're kind of growing. Um. You know, we've gone through some swings over the last twenty thirty years with just the series, the identity of it, the popularity and uh, ever since I joined back in two thousand and twelve, we've just had this nice steady uptick and growth and I feel like we have a lot more momentum on our side now with Roger Pensky acquiring the Indianapolis Motor Speedway in the Indie Car series, so we feel like the direction of where the the

series can go and really the growth potential is is pretty enormous right now. All right. I don't know why he's been so serious. What's it like to race? It's awesome? Alright, that's what I want to know. Yeah, no, I I love it. I grew up I'm for Nashville, Tennessee, and I played stick and ball sports like most you know, suburban American kids. Baseball was kind of my sport as as as a young guy. And uh, I always loved racing.

I love cars that went fast. The first thing you raced, So I raced just go carts, traditional like hundred c C carts and um, you know, they go like sixty miles per hour, superload to the ground, and there was nothing like that around Nashville, Tennessee. So my dad actually had to take me. Uh. We we did this round trip three and miles up, three and miles back to Indianapolis. It was the closest carting track to to Nashville, and

we did that. We went up there and figured out how carting worked, and then tried to get into cars. And then you kind of just learned how the you know, the series form up and then how to maybe one day try and pursue a career in motorsports. And what I'm so curious what separates a champion from someone who's really good. And I mean when you were driving these carts, did you know from an early age, I'm really good.

Did that come later? It came later. You know. When I was a kid and i'd watch indie cards on TV, especially around street circuits, which is a track type that we run on, I'd watch these guys, you know, handle these seven hundred fifty horsepower super fast cars in between you know, twenty foot of walls, like that's that's you know, the track was the walls basically lining the track super tight. And I had no idea how they'd be driving these things at two or miles miles per hour in the

street courses. I was like, man, there's there's just no way. It looks so dangerous, it's crazy. I mean they are like it's like riding a raging bull. And then there's

they're so masterful. When I was a kid watching the drivers do it, and I never thought it was possible, to answer your question, for me to be able to be capable of that, And so I just got into it for the love of cars, the love of racing, the competition, and then quickly you learn like I'm pretty good at this, like maybe maybe I'll be able to drive cars one day. And then you get into cars finally and you're like, yeah, I think I could possibly get good at this. Was there a discussion you had

with your parents about this? Um, Yes and no. I begged to start racing go cards since I was like three years old, and it was always a no until I was thirteen. So it took. It took a lot of convincing to hey, let's actually go try and do this.

And so, to go back to what Hannah said, I mean, you understand you're pretty good at it, but then there is that, you know, a matter of seconds or middleiseconds in some cases inches feet that separate you know, a true champion, a winner, from someone who's like, yeah, this is pretty good. But what's the difference. Yeah, it's honestly, so like once you get to the top level and you're like, hey, you know, I'm I'm I'm pretty good at the sport. I'm lucky that I have some talent.

It's so much more than just being fast or being inherently talented at something. You have to have such a complete package at the top level of it. Um, you really have to be diverse in your skill sets and and that a lot of what the driver does is

he's like the quarterback of a football team. You know he's leading the pack, he's kind of directing on everything that we need to do, not only just on a race weekend and what decisions we make, but also globally, like how are we developing the race car, what's gonna make the race car fast? And all those decisions really derived from the driver. So the driver has to have a really good skill set to lead the team and

lead the engineers and mechanics found the right path. That's that's what makes you good at the top of Is it a case though, like with any I don't know sport, if you will that the more you do it, the better you get, like practice, practice, practice, or that's not necessarily the case in racing. No, No, it's very true, very true. I think with anything, particularly indie car racing. IndyCar racing, amongst all of motor sports, is probably the

most diverse. So with NASCAR, they're so predominantly oval racing. You know, probably the tracks they visit are all ovals. For IndyCar, it's split across four different track types, so we RaSE street circuits like I was talking about earlier. They are all so completely different that if you're not good at all of them, you're never gonna win a championship. So the diversity that it that it requires to be

good in Indy cars is pretty cool. That's INDO Card Champion Joseph Newgarden and Blueberg's Hannah Elliott and I have to say the only challenge of listening to this on the radio or podcast, Carol, you don't see exactly how handsome Joseph Newgarden is. He really is, but so articulate as well. We had a fun com versation. It was not just about what it's like to get into a race car, although he did talk about that, but also talking about the broader industry, what's going on, it's self

driving cars and e vs. It was a great fun conversation. Yeah, definitely keep an eye on him about fayv incredible stories about the lovely Cake Crater from the Year of the Noodle to opening a restaurant too simply winging it and by winging it we mean chicken wings. I think you just gave her a new nickname. It's called Hot Sauce, which I love. We call her Kate Crater Katie Kay. I'm not saying anything, but he did not call her back. I'm just saying, all right, Kate Craters here with us

in New York City. Great to see you, so good to see all right. I said to Chris Rouser, who edits pursuits. I ran into him in the building this week and I said, you're the noodle I percent. And he told me a little bit of the back story. And you talk about this in the story. Every year could be the year of the noodle? Really is? Tell us why really is the year of the noodle? And I do think like every year people find a dish

to fall in love with. You know, for those who got to Reya, there was that crazy octopus and bone marrow few silly several years ago. Mom Fuku Ramen has a lot of followers. But this year chefs are Chefs are taking the noodle. The ones who are already experts are going in new directions. And then some who have like not been crafting noodles have found or have you know, taken gotten religion or like now we're going to start

making some noodles. So what are the new directions? Is it just a different shape or is it a lot of different things. It's a lot of different things. Actually, like one thing another thing that's fantastic about it is that I think traditionally, or at least I do in New York, think about UM. I mostly think of noodles as Italian. But it's awesome. I mean, not that I don't love Ramen, but now it's going in so many

different directions. For instance, there's this really popular restaurant called Coat, which is a Korean steakhouse, and they, after Parasite won an Academy Award, they introduced the dish, a dish that um I don't want to know spoiler alerts, but Chapagari plays Um plays a role in this movie, and so they started doing a late night special and it's made with really good instant noodles, like better than Ramen noodles for sure, and they put their fantastic steak in it

and they sell it every night. I have to say, when I saw a Parasite, I will not give anything away about the movie either, but when I saw that in the movie, I thought you would call ahead to get sout to get that. Let's take a step back, because you know so much about food and restaurants and culture and the intersection of all those things. Why do we love noodles so much? Well, you know what there's something satisfying. It's not something they are satisfaction, you know.

I think like they come in bowls, you slurp them their comfort. You probably have a childhood memory of them. Wherever in the world you come from, a bath of them. They're so simple. They can be doused with butter, or they can get really elaborate, and they really they scratch the itch. Whether you know you have it or not, it will always be like someone you know putting their arm around you. For years, for my baby brother for lunch, I would make like you know, I boil some noodles

and then with butter. That was our garland delicious. When feel like there's something comforting elemental, I mean, I think there's something about the elemental quality of it, and you know, you can certainly find it in a burger or something

like that. But there's something about noodles that come too warm, the texture of them you bite into them, that you and the simplicity of it, ultimately, I mean sort of what you're getting toward and you are as well, Kate, this notion that you know, even when you're just starting out, either as a teenager or certainly when you're in college, like there's that notion of like, all right, well you can at least make you can do this right? No exactly how many how many noodles like noodles have stage

college students? Yeah, we aids centuries what happened though too. I feel like, you know, the pushback against carbs like um, but yet there's like all these noodles. I think that's

something that's actually fantastic about this. You know that they're so I mean, we can talk about chickpee pasta and that's of course having a moment too, but it hasn't like pushed conventional pasta off the stage, like conventional pasta is like we are here and so many different guys is as we were saying, Um, this guy, I don't know if you guys know pudo ramen, but it's like legendary. It's where people wait hours to have a bowl of ramen. And the guy, the chef um has opened his own

place in Brooklyn now on Smith Street. Um it's called something I can't pronounce the first word of it, but it's like boton, Kazaki, boat and um. And he's doing these like he's inspired by New York culture. So he's making some broths with um steakbones with like major steakbones because he loves the steakhouse culture. And he's making another one. He's using the espresso machine to blend the broth because he likes um. He likes our coffee. Has culture here

so smart. So what's the noodle dance? The noodle dance, I'm not going to recreate it here, so you might have to go to fleshing to Heidi Lau. But um, it's a really it's a fantastically popular chain in Asia that opened its first outpost here on the East coast, and they do crazy things like they'll give you a hand massage because the lines are so long it's so popular. They offer snacks, Um, they give you a hand massage.

But the best thing and the best thing that you guys actually have to go and take a video of is um if you order these hand pulled noodles, which is a fantastic thing, just to watch a video of someone comes up to your table with with this rope of dough and starts like stretching it out behind your back in front of you, like it's crazy with like any hits like play on the boom box and so like there's music it's a party. It's wonderful. Well, and it feels like you alluded to this at the top

of the conversation. Even places where you would expect to have pasta are taking it to a new level. Let's talk about a restaurant we've all been there that their pasta is unbelievable. Their new noodles are unbelievable. It's one of the hottest restaurants in Manhattan. Got to eat there with you. What are they up to? It was the best night? Um, But yeah, no restaura. So he does.

So this guy Stefano Sacci, the chef um worked with Musmobotora, who's who has been ranked the best, who's the chef owner of one of the best restaurants in the whole wide world in Italy, so he knows his pasta. But recently he started making a double stuff Torlini called dopio tortoloni and it's got like two compartments, so better than

one too. So for instance, for the spring he's doing like a parmesan Oh, one compartment will have parmesana when it and the other will have pusiudo and then it gets like a spring peece sauce because spring is coming, and and it's really it's wonderful, like it's a great it's a great way. It's like showing off, you know. It's somebody who has like a black belt in pasta stepping up and being like, look at what I can say. Oh cool, you can fill that with something. I can

fill this with two things in separate chambers. So exactly, yeah, exactly grabbed that places I've never felt so associated, But yet I didn't feel full coming out. It just was like in heaven, like my taste buds were just all right. So, speaking of restaurants, you have a great flow chart essentially in the magazine this week that you put together and it just says very simply, so you want to open a restaurant dot dot dot walk astro. How do you even put something like this to gather n you think

this with Steven Star? Um, yeah, so Stephen Star is the hottest restaurateur in the country. Like he's the hit maker, He's the guy behind um so many popular restaurants here on the East Coast from La Diplomat where everybody hangs out in d C. He reopened pasties here, which is like the hottest dining room. He did Lo Cuckoo a couple of years ago, and he also did a Bloomberg favorite, Boudhakan Bloomberg crowd favorite. So, um, he knows how to

open successful restaurants up and down the spectrum. He's fantastic. Um. He has forty one restaurants now. And so we asked him. We thought it was a good moment to ask him, like, what do you look for in a restaurant, Like, how do you always go big? Do you sometimes go small spaces? Do you go concept first to line up a chef first, what neighborhoods you go into. It was, it's fascinating, it's fantastic. Well, and one spoiler here just for those of you listening,

you're watching in New York. One of the boxes on here is are you in New York? And if you say yes, forget it. Yeah, yeah, move on to something else. Now. The legislation in New York. You'll hear it from more people than him. Um, And it's you know, we've seen a lot of restaurant closings in the last year. It's still like it's still in my opinion, like the like

one of the best restaurants cities in the world. But it's definitely it's a challenging time to open restaurants because there's so many laws in The minimum wage has gone up in the last year, so it's it's not easy. And to that point, and you know, you and I know some restaurant owners in common, and one of the things that I've heard from them is that even you know, like tried and true chefs, tried and true operators who have had huge hit restaurants, they try and do something else.

Even if the concept is sound, the economics just don't work. It's really I mean, it's it's a really challenging time to have a restaurant in New York. And so even someone like Steven Starr, who really is a hit maker m is it sees it well. On a letter note, he also says lighting is really important. I love that.

I agree, well, you know, it's fantas aska. Actually, this was actually one of my big takeaways from this is that he does not like to go into office buildings because he was like, all the glass means you can't have ambiance, like you want to be able to control the control the ambiance, and so lighting is key. That's one of his secret sauce things. All right, so sauce. Actually you brought some sauce because this is just a

phenomenal story. This is one of these I'm going to rip out and put on the refrigerator at home, all about chicken wings, which who doesn't love, Like, if you eat me, you love chicken wings. They're one of the best foods out there. I can't talk enough about this. So there's this like viral hits show called Hot Ones. I don't know if you've seen it. I don't know if you guys ever want to employ it, which is why I brought you some hot sauce so you can

so you can try it. But this guy, Sean Evans, who's the host, has figured out how to get celebrities to talk by making the meat increasingly spicy sauces and um and so, and he gets everybody layless celebrity, you know what. So the person who's the person who's actually been the best is Charlie's Throng because she's from South Africa.

So she's actually the star that flinched the least I think when she ate this like crazy hot one hot sauce, but um, like Paul Rod, DJ Khalid, Post Malone and everybody. He gets everybody is fantastic. That's k creator. She is our food and restaurant expert here at Bloomberg News and at Pursuits. And who knew that there was so much going on when it comes to noodles. I didn't that.

I'm very happy to know about it. Well. That wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thank you so much for joining us. I'm Jason Kelly and I'm Carol Masser. Be sure to tune into Bloomberg Business Week Radio Live Monday through Friday, starting at two pm Wall Street Time, and catch us live get our daily podcast wherever you download your podcast. You can also

watch the show live on YouTube. Just search for Bloomberg Global News and you can get this week's edition of the magazine. It's on newsstands now, will be back next week at the same time. This is Bloomberg