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This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. Quite a week that included Super Tuesday's voting in fifteen states at as expected, prompted Republican presidential hopeful Nikki Haley to drop out and deliver definitive wins for both former President Donald Trump and President Joe Biden in an almost
guaranteed rematch come November. As for President Biden, he also addressed the nation in his State of the Union speech this past week, announcing, among other initiatives, plans to raise taxes and corporations.
On top of all that, we continue to digest us economic data on every from the services sector, factory activity, job openings, and on the overall health of the job market.
This is Fedchair J. Powell spent two days up on Capitol Hill answering questions, as he does twice a year in his semi annual Monetary Policy testimony before the House Financial Services and Senate Banking Committees, the FED chair reiterated to lawmakers that the US Central Bank is in no rush to cut interest rates until policymakers are convinced that they have won their battle over inflation.
A lot going on this week, and all the details on all of what Tim just talked about you can find at Bloomberg dot com or on the Bloomberg but that is our backdrop. We're going to spend a lot on the macro market and political backdrop. This hour with Kathy would have of ARC invest and what impact any of it might have on the market outlook. We'll also get Kathy Wood's take on everything from getting out of Nvidia before the stratospheric run up and what AI stock she might be buying instead.
Also what she makes of the overall run up in stocks and whether she sees any signs of bubble, plus how things are going with her new spot Bitcoin etf Oh, Carol, hmmm, what about Elon too, of course, yeah, and what she's been adding to we're selling out of and.
Why always lots to talk about when she joins us. Kathy Wood, by the way, part of an all star lineup of women over the next couple of hours, in light of March being Women's History Month and International Women's Day just this past Friday, and so also this hour, Capitol Group's head of Global Asset class Services, Matti Desner, she'll join us on the capital market assumptions for the next twenty years.
We all should probably listen closely considering what the author of a new book has to say. Teresa Gilarducci is professor of economics at the New School, also the author of the new book Work Retire Repeat The Uncertainty of Retirement in the New Economy. It's a damning portrait of the dire realities of retirement here in the US.
Which is done investing enough for our futures or our retirement. All right, all of that to come. We begin with a voice and perspective that gets a lot of attention on Wall Street and certainly in our Bloomberg world. Kathy Wood is the founder, CEO and CIO of ARC invest. Kathy joined us Friday to talk the macro environment and her micro investment.
It looks like that corporations are losing pricing power, and we are now beginning to see the unemployment rate move up. It went up to three point nine percent in this latest report from a low of three point four percent, So undeniably it's on its way up now. And we do think it's because corporations are losing pricing power, their margins are getting hit. It's going to it's going to cause a couple of things. One, the labor hoarding that we've seen since COVID is going to diminish, and that
will increase the unemployment rate. But then the second thing is it will accelerate the adoption of technologies. Innovation solves problems, and one of the things that it does is increase productivity, increase efficiency, and create new products and services. So we're pretty optimistic about our strategy in this environment because interest rates should come down. I think I think that the Fed, even the FED is going to be surprised at how low inflation goes.
We think it could be negative this year.
Well, so, Kathy, let me ask you, that's interesting. I mean, if the expectations, at least according to traders right now, is that the first rate comes in June, is that too late in your view for the Fed to start cutting rates?
Well, I think the twenty fourfold increase in interest rates in little more than a year have shocked the system. We're beginning to see a reverberation of the regional bank issues. We don't think they are going away. Deposits are still outflowing broadly from the banking system. And there are increasing problems with commercial real estate. Most people know about the office problems, but multifamily units, multifamily apartments, We're beginning to
see some distressed sales there as well. I think that that problem isn't as well understood I think, and it's going to cause the regional banks even more problems.
Kathy, how quickly do you think unemployment can go up this year? What are you forecasting over at ARC?
Well, I wouldn't be surprised to see the unemployed employment rate go above five percent. Now, I'm saying that knowing that this is an election year and that this administration probably will try and spend more than is currently in the budgets through executive order or what have you, But above five percent would not surprise us.
All right, So above five percent, well, that's interesting, all right, So we have a good idea of your economic and kind of macro backdrop. Having said that, so here we are sitting at a day where we're seeing a little bit of a pullback in stocks, but you're to date the S and P still lot more than seven percent. We're looking at a Nasdaq one hundred that's also got
more than seven percent. You look at something like the socks is up around twenty percent year today, picking an individual name like an Nvidia more than eighty percent, and I could go on and on and on. There are many who talk about a bubble, some like in it back to ninety nine, two thousand, anything in today's equity trade that says bubble to you.
We do not believe we're in a bubble anything like we were in the late nineties. I was there, and the technologies weren't ready, The costs were too high, too much capital chase, too few opportunities, too soon.
The seeds for.
What is happening now were planted during the twenty years that ended in the tech and telecom bubble, and they've been germinating for twenty five or thirty years. So we believe we're ready for primetime. The one place where we could see a correction, and it's just a correction. We're not calling at the end of this at all is in the chip space.
Whenever I hear.
The word shortage, and we started hearing about GPU shortages about this time last year as chat GPT was capturing the imagination of both businesses and consumers.
So for about a year we've heard.
That word and now we're seeing lead times we believe come down for GPUs for nvidians in particular from the eight to eleven month range to the three to four month range. So that is suggesting that there was probably a lot of double and triple ordering as the word shortage was making the rounds, and that those inventories will have to be digestivele Is that.
Also because of an increase in supply in terms of output or is it because you think demand is going down? Which one is it?
Oh?
I don't think no, No, demand is not going down, though there is something we expect that I don't hear discussion very much. And it harkens back to the early days of the Internet. There was a moment when the Internet was taking off, when Cisco was all the rage, and then enterprises started thinking seriously about the need to spend aggressively on this new thing called the Internet, and the backbone and they paused as a lot of competitions started to make the rounds, and Cisco went down fifty
percent plus as enterprises were pausing. Now, why are enterprises likely to pause or at least go through an assessment. They have to integrate all of their data first, proprietary data is the secret to AI's success. And they have to map out in excruciating detail their workflows internally and with suppliers and customers and so forth. And this is going to take time. So we think this is this movement is real, is going to be massive, but we think there's been a little bit too much too soon.
Well, it's interesting to hear you say that, Kathy, because you and at ARC were very early to acknowledge the impact of AI. Yet your flagship Ark Innovation ETF has not held shares of Nvidia in about a year. You do own some of it in your other ETFs. Do you have any regrets about not having held onto the stock or actually increasing your exposure in the last couple of years after more than five hundred and thirty percent gains since twenty twenty two since the end of twenty twenty two.
Yes, so you're right, we were very early into Nvidia ten years ago when it was five dollars. Now it's roughly eight hundred dollars, and we wrote it most of the way up. But I'll tell you what we did, and this is as a portfolio manager. It's not one action but what it causes in terms of another action. Last year we sold in the flagship in Vidia and put it into Coinbase. Coinbase, I believe is up as at least as much as in VideA, and it is
much less well understood. The whole crypto movement, the crypto asset movement, Bitcoin as a new asset class and so forth is not well understood or completely accepted out there. So we prefer to go where others are not traveling as much. And you know, as we were moving out of in Video, we were saying, okay, regulators are trying to crush coinbase here, and we were buying it on every dip. In Vidia happen to be one of the
sources for that purchase. So it's not just what we do on the cell side, it is what we do on the buy side that you have to look at. And yes, we do hold it in the more specialized funds, but we've been taking profits there as well for reasons I just described.
Yeah, And to be fair, you're right, Coinbase is up about six hundred and twenty percent since the end of twenty twenty two, so that compares with about five hundred and thirty percent gain in nvideo. Is there anything, though, Kathy in the n video story that would make you we think the name and want to become more aggressive on it.
Yeah, if the price came down a lot, we would you know, the rate of return expectations or split?
Would a split do it? Because I know we've been never No, no.
No, that wouldn't change. That wouldn't change anything.
No, no, split adjusted than the price. So you know, if you look at our portfolio is what we're trying to capitalize on with a Palenteer for example. Are the next stages of this AI revolution? What we're seeing in the GPU side of things is Nvidia All praise to Jensen one. I mean, just unbelievable company execution, vision and so forth.
And it's not over.
It's going to last a long time, but there are going to be many other companies benefiting from AI. The productivity lift alone is going to be massive. The most massive productivity lift in history, we believe, and so this AI revolution is going to be broad based and is going to benefit a lot of companies. On the GPU side, of course, we have AMD as competition, but many people do not understand that there's a lot of other surreptitious
competition evolving out there. Each of the hyperscalers is evolving its.
Own chip strategy.
You have a Tesla that has designed its own chip for AI, chip for the specialized, more specialized autonomous driving opportunity, and I think you're going to see a lot of companies developing more specialized chips. We know that Nvidia, of course will segment the market as well. So we just think that a lot of the assumptions for Nvidia, you know that this is in Nvidia's market, and it's alone that those are changing.
Well, we're speaking with Kathy Wood if you're just joining us. She's the founder and CEO and chief investment officer of ARC invest. She joins us from Saint Petersburg, Florida.
So it's interesting, Kathy two to you know, right, everybody seems to be out there making chips, and it's funny. We had a conversation yesterday with Chris Miller, who wrote the book Chip Wars, and we talked about TSMC that everybody can kind of design what they want, but ultimately, right now they've got to come back to TSMC as the fabricator to make them. So as you say that, I mean you guys, and one of your funds I think late last month was selling shares of TSMC. I
am curious about then you're thinking around TSM. See there's a story today too about TSMC winning more than five billion in grants for their US chip plant, so money, you know, certainly being devoted to them. Why maybe pull back a little bit on TSMC or what is your case for TSMC in the long run.
Well, the case for TSMC is, yes, it is the manufacturer of these merchant chips, so a very big story there. But this is simply a cyclical call and it has to do with that word shortage and TSMC. For example, Broadcamcom reported last night I listened to that call. In the semiconductor solutions part of their business, they were up only four percent, AI up thirty five percent, but everything
else down. So there there are some cyclical phenomenon out there, phenomena out there that we think are not they're not being integrated into the short term expectations for a number of stocks.
Hey in counting including Yeah.
So, Kathy, I want to move on to Tesla because you brought it up a moment ago. You've been a long time bull on Tesla. You have been buying shares recently after selling them for most of twenty twenty three. The stock down about thirty percent so far this year. We covered the news this week that shipments from tesla shang High factory sank to the lowest in over a year in February. The challenges facing the EV industry have
been well documented. We've talked about those a lot. Why do you still like Tesla considering all of the challenges in the EV space and also what many critics would say are disappointing fundamentals.
So, yes, you're right.
We were selling last year as it was in the three hundred to four hundred dollars range. It's back to one seventy five. And this is what portfolio managers do. We have a five year investment time horizon for Tesla and our price expectations from here, I mean we see roughly a seven to tenfold increase. I know we're in the process of revising our model. So I'm not at liberty to give you the new number.
But would that new number be higher or lower than two.
Thousand, Well, we're pushing it out a year, and.
Therefore it will be higher because the autonomous taxi platform opportunity will be in full force. We think and we believe that Tesla will get the lion's share of that market here in the US, if not elsewhere. Autonomous taxi platforms are sas models. Tesla's current gross margin is well, it's in the teens right now because it's been cutting prices, but we think normalized the ev margin is in the thirty percent range. Sas margins are in the eighty percent range.
Most analysts focusing on the stock have nothing in their models, are very little for autonomous. Our confidence that autonomous is going to happen has increased because it has happened. We see way most successful. We see a lot of success and commercial success. That is in China. It can be done. We think Tesla will launch a national service and Tesla
this is where AI comes in. Tesla has orders of magnitude more data than all of the other auto and tech company companies going after this market combined and what's important about that is that it has corner cases that nobody else has, rare, rare occurrences on the roads that it has recorded, and it is prepared for it, but others aren't.
You just don't.
I just want to jump in. It's kind of like a running joke with the Tesla community because Elon Musk says every year we're going to have this autonomous drive technology, and every year since he started saying it, what twenty seventeen, twenty eighteen, it has failed to materialize. Why are you so confident it's going to happen in the near future.
Well, because it has happened, as I just said, and so it's not. It's not if it is when. That's the most important reason. Interestingly, in his last conference call, Tesla's last conference call, Elon said, yeah, I know I've been wrong about it, so I'm not.
Even going to make a projection.
I actually thought that was good and maybe I had has a better shot now and we're looking at some of their hiring and their job postings and seeing rumblings in different cities that they're starting to get ready.
Hey, Kathy, something I know I've brought up this with you before. But I think back to are you and my first interview back in May of twenty fourteen, so almost ten years ago. But you brought up Elon Musk when he wasn't a household name or what his company was doing, and you likened him to Thomas Edison, And I guess what I want to ask you. You know this, you talk with him, you followed him obviously for a
long time. Do you ever feel you know, do you feel that way still about him in terms of likening to someone like Thomas Edison? And how do you find clarity and feel comfort in some of the questionable and controversial things that that Elon comments on or that he says.
Yes, well, we we're focused on the technology and we're as is he.
He is the inventor of our age.
And this age is a very special age because the five major innovation platforms around which we have centered our research are converging, and three of them he is helping to converge. This autonomous taxi platform opportunity is the convergence of robotics. Autonomous vehicles are robots, energy storage they will be electric right, and artificial intelligence. We're the at three separate s curves feeding each other and should lead to
super exponential growth. He has understood this idea that technologies are going to converge with one another, and that is the way he's been thinking his first principles research. Just because something's been done one way for a very long time, think autos, doesn't mean it is going to remain that way.
And that's why he's going to win.
Do you ever feel though that he gets distracted or or candidate to it.
Yeah, he is so laser focused on technology. And in the case of Tessela, the electric vehicle side that is on automatic pilot, they are just scaling and what he is doing is becoming, you know, the manufacturer of factories. He's trying to figure out how to automate and continue to drive down the costs there. His focus is on autonomous now certainly, and of course you can say on x's distracted, but he's really more focused on the innovation.
How can I go back to the future where I started, which was in the payments app Space sold to PayPal. How can I turn this into not only a payments app, but an everything app? And I think he's hard at work doing that in ways that we don't know yet.
We are, of course talking with Kathy Woods. She's the CEO, CIO and of course founder of ARC invest joining us from Florida.
Hey, Kathy, you're talking about the future of transportation. We got to talk about Archer Aviation. One of the most read stories today is about the company that you've been buying up. It's a developer of air taxis, Archer Aviation. Your stake around ten percent across several of your ETFs. You're the third largest investor in the name. We should note shares down roughly thirty percent so far this year. As our own Sam Potter writes today, you are once again on the other side of a short call made
by Grizzly Research. Last time you were in a similar spot regarding differ name Too Simple. You lost a lot and eventually sold most of your position. So talk to us about why you believe in Archer and does it ever worry you to go against the short sellers.
So our investment process is centered around research and original research. I'll start with Too Simple. We sold Too Simple after the CEO, who was the technology visionary, left and so Grizzly got that right. I don't think for the right reasons. Although we were in the teeth of a massive bear market as well. If that CEO had not left, I don't think we would have sold that stock. In the case of Archer, we have a high degree of confidence
in Archer. One thing to understand about ARC is we are the closest ARC is the closest you'll find to a venture capital company in the public ech markets, and we tread where others in the traditional asset management world will not go, at least on the public side.
When we see a real opportunity.
As we're doing our work on autonomous vehicles, we concluded that the cost is going to drop so much that roads are going to become very congested in the future, much more congested if you can imagine New York City, and so we then started doing work about transportation in the skies. Is it possible, Yes, it is possible. The FAA is the gating factor from a regulatory point of view.
There are two companies the FAA is working very closely with, and I think because of successes elsewhere in the world, other companies are having success where regulators have not been as strict, I think there's been a little more pressure on the FAA to pay close attention here, and the.
Two are Archer and Jobi.
Our confidence went up when Boeing, which was suing it for patent infringement, settled the case and actually took an ownership position in Archers, as has Stilantis and United Airlines, So three very deep pocketed partners who are also trying to figure out the future of transportation, and we know that they're on their way. Both Jobi and Archer two FAA certification. Seems like the process is in motion and we haven't.
Had a hiccup.
And it has an MoU with Abu Dhabi to launch an air taxi service in twenty six and pending regulation, it has an MoU with inter Globe to launch an air taxi service in India. Both of those have been much better from a regulatory point of view.
But how big of a concern is it to you that regulators here in the US could drag their feet. We did speak with an airline executive recently who is concerned that the FA is moving slower than other regulatory bodies when it comes to this type of technology.
Yes, and that is why we paid a lot of attention to regulatory arbitrage. We've seen innovation move abroad to other countries, even Amazon. The FAA wouldn't let Amazon fly its drones ninth generation nearly ten years ago on its own property outside, so it went to India and elsewhere.
I think the pressures on the FAA now. And I also think that the bear market of twenty one and twenty two eliminated a lot of other competition that was brewing just the funding markets were closed, and so I think this market is much more is that both Jobie and Archer are going to have much more share than otherwise would have been the case. So we're pretty excited about the possibilities here.
Hey, Kathy, as you said, you know, one of the things about ARC it certainly and it's the DNA, is that you go places and take positions that other people maybe don't do. And one of the things though that increasingly I feel like the financial establishment again is interested very much so is in crypto. And I want to talk about your spot bag Cooin ETF if I may the RC twenty one shares Bitcoin ETF. What can you
tell us about institutional interest in it? Is there or is it mostly the funds that are going into it are mostly from the retail side. Well we are.
We know there's institutional interest because we're talking to a lot of institutions including state treasurers and public pension funds. And why why is this? Because they're trying to figure out if this truly is a new asset class, and if it is, they must have a point of view as a fiduciary if there's a new asset class which is uncorrelated or shows very low correlation in terms of returns relative to other asset classes, than what an asset allocator does is it will take a position to increase
returns per unit of risk. That's what happens with low correlation of returns. So definitely, now are they moving whole hog. Not yet. Nor are the big wirehouses like the Morgan, Stanleys and Ubs as wells Fargo, marri Lynch b of A. They are all waiting to see who are the winners in terms of the ETFs because they do not want to commit to an ETF that will close down and make sense and right, so and they're going to give it from what we're hearing three to six nine months.
So everything the net inflows that we've seen and are away from those two spaces. Really it's part of it is our client base switching from GPTC into and other client bases into the ETFs, which are.
Much lower fee.
All right, but I do want to also then go to the next level, and that is an ether ETF being approved maybe in May. Are you optimistic that it's going to happen by that made deadline or what obstacles might be still out there that it won't make that deadline?
Yeah, So the biggest obstacle is staking, and I don't think the regulators will allow staking in this first round if they allow the first round at all. Now, we and one other firm will see our final deadline in May if they reject. If they reject our filings, then will have to refile. But my guess is my guess is they will move more now to a first come, first serve when this next round goes through.
So if it's May, it'll be without staking.
If it's later, there's a better chance for staking. If it's in I would say twenty twenty five, because I think legislators and legislation is starting to get involved here and taking it away from simply the regulators.
Hey, Kathy, I don't want to leave without asking you. It is International Women's Day, and I think about your path. We Tim and I have been talking a lot to many women who have made their way in male dominated fields, and I'm just curious how you think about your trajectory
from where you started and what you've achieved. You started two firms or have co found one and started your own firm, how you think about that path and what is top top of mind in terms of those other individuals and other women that are out there that are maybe trying to do the same.
Yes, well, I think the most important thing in early years is to make your own bosses look brilliant because younger people, younger people coming into the business know so much more about technology and where the world is going almost innately then shall I say, more seasoned investors. So just make your bosses look brilliant and educate them and you know, generate enthusiasm, enthusiasm, excitement, energy around around ideas
and make sure you have good mentors. If they're not giving you a good shot, after you've made them look brilliant, you know, time to move on. So that's one thing. As far as starting a business, I would say, make sure there's an unmet need. In our case, in the case of ARC, what we saw was the traditional world going more passive or benchmark sensitive, when we saw an explosion of innovation thanks to the five major innovation platforms
around which we have centered our research and investing. And so I said to myself, you know, someone has to do this, and so we went off, and honestly, I think most people thought we would fail for a couple of reasons. One, we put a truly active, fully transparent equity portfolio inside an ETF wrapper, and that had not been done at scale at all, and no one it was a passive world that we had entered. And then
the second was we're benchmark agnostic. You can put us against any benchmark, and you're going to have to give us some time after the massive interest rate shock that we went through and now we're on the other side and you know, performing better as a result over the last year. But over time, these innovations are going to transform the world and create massive wealth with AI as back to that topic as the main catalyst. So we coulst be more optimistic about innovation.
All right, kind to leave it there, Kathy, as we so appreciate all the time that you do give us. Have a great weekend. Kathy would of course, the founder, CEO, and CIO of our co invest joining us from Florida. Kathy, thank you.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple car Play and ed brot Auto with a Bloomberg Business app, or watch us live on YouTube. Well.
One of our most read stories on the Bloomberg today is about a Fidelity international money manager that dumped nearly all of his positions in US treasuries from friends. His expectations are that the world's biggest economy, the US economy, still has room to expand. Check it out. It's a great read on the Bloomberg terminal at Bloomberg dot Com. It's just kind of one of the resets we continue to see.
Tim.
Yeah, on that reset, I want to bring in Maddi Destner, head of Global Asset Class Services at Capital Group. It's global investment and management organization manages more than two point five trillion dollars. Maddie joining us from Los Angeles right now. Maddie, good to have you with us. The reason you're on is because Capital Group is out with its twenty year Capital Markets Assumptions Report, it sets out some pretty clear expectations about where you all at Capital Group think the
market is going. And when we say market, we're talking macroeconomics, equities, fixed income, and FX market performance over the next twenty years. Carol and I were talking about this.
How do you do this?
Yeah, I mean, how clear is your crystal ball to be able to help us understand what US equity markets are going to do over the next twenty years and what emerging market equities are going to do over the next twenty years.
Well, it's a great question, Tim and Carroll, and thanks so much for having me on. When we think about the long term, you have to consider what is directional, what you know is about to occur, and then what you can assume for the long term. So, really, what our expectations are our inputs to ensure that our clients are set up for success for the long term, and our expectation as we look forward is that they are. Actually Our broad expectation for a sixty to forty portfolio
is about six percent annualized over twenty years. And when we look through the asset classes, we've changed things a bit as we've seen action in the markets over the last couple of years. We've actually brought down our equity assumptions just by a bit about six point nine percent for US equities given the evaluation change that we saw over the last year, not extreme, but our expectations or that valuations are a little less attractive. And then for
a fixed income we've actually brought up our expectations. You're seeing some equity like returns out of fixed income sectors, particularly some of those extended sectors. So we really feel good about the puts in takes of the long term expectations and the fact that investors will be set up for success as long as they stay invested.
All right, what's how do you figure it out? Like we said, your crystal ball, But what are these assumptions based on. I'm always interesting in how do you make the sausage here in terms of investing? So what is it that these are based on in terms of kind of reducing your equity assumptions of the next twenty years, but maybe raising your fixed income assumptions.
Yeah, so we actually decompose the returns into building blocks. So as you start to pick apart the pieces, you can think about what will change in those building blocks. So we think about economic growth, what does that look like over the next twenty years, Productivity, what happens to the labor force, inputs into demographics, how that picture will change over the next twenty years.
These are knowable things.
Our expectation of changing technology and the productivity of the workforce. We think that has a big impact on the expectations. And then of course currency, certainly for US based investors of international assets, both developed as well as emerging. Our expectations for the dollar and other currencies, how that impact the supply demand dynamics and the balance of trade. And then of course the expectation of the change in share count.
There's been quite a lot of buybacks and that has changed the expectation for earnings for companies for individual shareholders. And then the last thing is yield, both on the fixed income and the equity side.
Our expectation is that you're.
Going to start to see healthier dividend yields, particularly in the international space, less so in the US. And then, as I said before, starting yield than fixed income are much higher. So as we look at each of these building blocks, we sort of build up the elements from the bottoms up perspective and then look top down and ask ourselves how westic are these numbers.
Hey, Maddie, I want to dig into the equities research that you and the team over a Capitol Group have done, because I was pretty surprised to see that over the next twenty years you expect emerging market equities to outperform US equities pretty significantly, given and that surprised me given the outperformance we've seen from US equities over the last ten to fifteen years. At this point.
Yeah, our expectation is that there are both cyclical and secular changes going on in emerging markets. So if we just frankly look at the inflation picture within emerging markets, inflation accelerated early on. Central banks started to ease or titan pretty quickly, and now they're in the path of easing policy, so they're a bit ahead of us in that cycle.
We expect to see an upturn.
From that perspective, there's certainly a benefit from a continued weakness of the dollar, which.
We expect to see over the long term.
And then one of the most important things about emerging markets is the change in supply chains that we expect to see over the long term. So we know that Chinese growth is slowing due to demographic impacts as well as less than friendly market reforms. But what's happening is companies are starting to remove their supply chain exposure to China and going to places like India, like Mexico, like Southeast Asia. So we really do expect a resumption of manufacturing centers in those areas.
And then the last thing I'll.
Point to is that from an emerging markets perspective, the demographic picture, the age of the workforce looks a lot healthier than in some other areas of the world.
Yeah, that makes a lot of sense. I'm also curious, you know, here we are coming off a week where we were all agog over Nvidia, right, its result, its outlook, its impact on the trade continues to play out today. You guys did look at as one of your key criteria the changing technology on workforce. Talk to us a little bit about what's the changing technology that you focused on and its impact.
Yeah, it's a number of things, Carol, It's not just one. If we think about the impact of how productive is every single worker if everybody was doing the same jobs that they did in nineteen fifty versus today, How much more can they build, how many more patients can they see, How long is the expectations for life expectancy, and how
that's changing. So things like artificial intelligence and how that's helping us do our jobs, cloud computing and how that's helping us be more efficient, and even some of the innovations in healthcare, whether it's gene therapies or immunizations, these will impact our longevity and frankly, our health as a nation and as.
A world society.
So all of these things are incorporated together, from our perspective, significantly increase the productivity of each hour work from individuals. So it's a bit of a give back to the giveaway that we have from demographics, because we know that this is an aging nation, for aging all over the world, and that will impact We.
Talk about that a lot here on the program, Mattie. We only have thirty seconds left, but we got to talk politics and how you factor politics into your analysis here, not just here in the US, but around the world. Just thirty seconds left.
Yeah, Exogynous factors hard to incorporate into the actual analysis.
So we really do try to look through that and think long term.
From our perspective, though, as we look at the last twenty three election cycles, what we notice is that markets trend up on average every single time. There's lots of volatility around the primary environment, but once we have regardless of who sits in the administrative chairs, we tend to see up markets in that election cycle more so than a non election year.
So we're pretty constructive.
All right, really appreciate this and look forward. Hopefully we can get you back real soon. Mattie Destner, she's head of Global Asset Class Services over at Capital Group, a global investment management group managing more than two and a half trillly in Mattie, of course, joining us from Los Angeles.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm. Easter listen on Apple card Play and then brought auto with a Bloomberg Business act or want us live on YouTube.
All Right, everybody, here's how it's supposed to go. You work hard, you save if you pay your Social Security and your Medicare taxes, and yes, you retire hopefully enjoying some great time during those golden years.
Tim Yeah, maybe you travel spend time with family, relaxed, not worry about whether or not you're going to outlive your savings. But Carol, we know that's actually not the reality for many Americans. In fact, as you and I talked about back in January, younger generations are having a hard time even imagining retiring. A recent TIA Institute's survey said that roughly twenty one percent of Americans ages twenty two to thirty four said retirement is out of reach or not even part of their plan.
Which is pretty remarkable. Probably not all that surprising to our next guest, who writes that our society has largely given up on the idea that a dignified retire hirement should be the right of every worker in our affluent nation.
Teresa Gillarducci is a professor of economics at the New School. She's also the author of the new book work Retire Repeat, The Uncertainty of Retirement in the New Economy. She joins us from New York, Professor, good to have you with us, Congratulations on the new book. Lay it out for us in this day and age. Just how bad is it out there for retirees and people who are working their way toward retirement.
Yeah, I'm glad to talk about it as a big societal problem because I think right now almost everybody thinks it's bad for them, but doesn't realize how bad it is for their friends. Because not being prepared for retirement is often the source of shame. And you can't you don't wear it on your sleeve. You know, you don't have your number on your chest. And so people are
really swallowing their fear. And that's because most people should have, you know, about a million dollars in their retirement accounts when they're approaching retirement, and most people don't have anywhere near that. And if I give you averages, it won't even tell the picture. Because Elon Musk is among our midst and if you know, he walked into my house, so it'd be the richest person you know ever on average. But the typical person really can be described by medians.
And so people in the bottom half of the of the earnings distribution in households are about ready to retire. This is like, you know, from fifty four to sixty four, the bottom half have nothing. The next forty percent, you know, our middle class have about two hundred thousand dollars and they should have over a million. And people even in the top ten percent, they should have maybe three four million dollars to supplement social security and keep their lifetime
lifestyle in retirement. I'm not going to cry out, you know, alligator tiers for them, but even their worried, you know, they have about a million. So like everybody across the board, you know, doesn't have enough, but the bottom ninety percent are headed towards really retirement just depending upon socials sect.
Here's the thing, this is something this is something that everybody should care I think people would argue this is something that everybody should care about because who pays for the folks who don't have enough to retire? What's the societal impact.
Of something that the governments you care?
What's the stress on our system when that happens.
Yeah, so let me just talk to the adult children, you know, who are listening. Of the adult children who are forty and fifty, we're minute. Research is showing that a third of those adult children are straining in some way to take care of their elders. Even if their elders, you know, have a pension, there's no long term care insurance. So what happened is that we're we're reproducing this retirement crisis.
I mean it is reproducing itself because those of daughters and a daughter in law, sons and sons in laws are either reducing their own their work effort, reducing their savings, and we're seeing people actually take money out of their retirement to help their their aging boomer parents.
Teresa, how did we get there? I'm thinking about you know, my dad who fought in World War Two, there was VA benefits. There was a company that he worked for for fifty years or close to it that there was a pension. There were investments because of Forrow and K's and so on and so forth. You know, starting there were social security benefits. Where where did the system start to come undone in that we are kind of now talking about this problem that this is where we are today.
Yeah, I mean there was kind of a golden age of pensions for a group of society.
You know, men who.
Kept their jobs for a while, that's for sure, they had to find benefit plans and mainly their wages kept up with with the productivity, you know, with the rest of the economy. And then women who were working, you know, starting around the nineteen forties, fifties, sixties, they earned wages that kept up with their productivity. They got more educated, non white workers really became an enfranchised in the labor market.
And even though not everybody was in a union, not not even by you know, by any stretch of the imagination, the pensions that they negotiated were defined benefit pensions. I mean you saw them in the private sector and the public sector, and even the companies that weren't unionized, I kind of kept up with the leaders in their industries. So we had a layered system social security, defined benefit plans,
and wages you know, that kept savings up. It all fell apart around the eighties, you know, when Ronald Reagan attacked the labor movement, you know by firing all the air traffic controllers that had the structural problem of kind of slowing down wage growth and wages really fell behind. Productivity fell fell behind that, you know, the growth of
the economy, so that really hurt savings. We had a lot of debt creating institutions kind of overwhelmed our wealth creating institutions, you know, with very little down for our houses, and if we had any home equity, we would take we would take you know, home equity loads. But in the retirement space, we had the decline of these traditional pensions and a pretend to replacement of those pensions with four oh one ks.
And the reason why I.
Said, is it, Yeah, it's not even to even.
And the four oh one K was supposed to be easy and really attractive to employers, and it was supposed to spread across the whole economy. But you know, fifty percent of the population had a defined benefit plan. Those got replaced by the inferior four oh one K system, inferior and like three dimensions. And the people who had nothing still have nothing. And so we've had a forty year experiment with these kind of do it yourself retirement plans.
They're voluntary from the employer, voluntary for the worker.
The worker has.
To take all the risk of choosing the right investments, and then when they retire, it's really up to.
The stock market.
It depends whether or not they can make it last.
So we haven't even talked about much about social security. I don't necessarily want to get to that right now. We don't have time, professor, but I want to know about the answer here. What's a solution to the problem that you outlined.
Well, you know, the book spends a lot of time on the fake solution, which is to work longer. It's just obvious that most people don't have jobs where their employers want them to work longer, or they have jobs that will actually keep up their health, you know, and their ability to do the work productively. And also most people are pushed out of their jobs, you know, either their health or they're just pushed out or they're laid off, you know, before they want to retire. So working longer
as a fake solution, the real solution is bold. It's a lot different than tweaking the tax breaks here and there and then senting small employers to have a pension since they can't really afford much of anything that, especially if it's voluntary, they're not going to take on that liability.
We really need to have a layer of retirement accounts on top of Social Security, and everybody who works, whether it's for grub hub or uber or Delta Airlines, you know, just for five years when they leave that good employer or they're working contingent and platform work, they should be saving alongside of the other Social security. So I advocate a universal tension system. There's a villain Congress called the Retirement Security Savings Act for All Americans. And the best
thing about this is that it's bipartisan. A conservative Republican and a modern liberal Democrat supported in the Senate and the same thing in the House.
And I think.
Lawmakers are just hearing from their constituents everywhere they go about this palpable fear of what happen to them or their parents, you know, or their future selves, that this may be the year when nothing else passes, this kind of sensible universal pension system may pass.
Fingers crossed, you know, excited, we'day you know, Tim and I are going to change our names to uh gloom, Yeah, because we've just kind of had a bunch of stories today that are along that front. But listen, really constructive conversation about what is going on and maybe our way forward to a better outcome. Teresa, Thank you so much. Hopefully we can check back with you down the road.
Uh.
Teresa Jilarducci. She's professor of economics at the New School, author of a new book work Retire Repeat the Uncertainty of retirement in the New Economy. Joining us here in New York.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern Apple car Play and ANDROYD Auto with the Bloomberg Business You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa Play Bloomberg eleven thirty.
Plenty ahead in our second hour of the weekend edition of Blueberg Business Week, including what the highest ranked woman in luxury Swiss watches is doing to ease the pain of purchasing Yes, say a one hundred thousand dollars watch.
I don't know how you ease that.
Non my household. Our Bloomberg Pursuits team on what the newest CEO at Odamar p Gay has in store to bring interest back for these so called hype watches.
Also ahead, from selling cruises door to door to becoming the first woman to take the helm of one of Royal Caribbean Group's most popular brands. What it takes to make waves and rise to the top any male dominated industry with the former CEO of celebrity Cruises, Lisa lutof Prolo.
Are you sensing a theme here? Anybody?
I am all right?
Well, first up this hour. As we've been mentioning March's Women's History Month, no shortage of inspiring business women worth talking to, including our next pair. Between them, they've got dec of experience in senior positions at United Airlines, Craft Foods, to Lette, Motorola, McKenzie and more.
Grace Puma is the former chief operations officer at PepsiCo, and Christianna Smith she is the former president of the Consumer Direct division at Nike. They also share their tips for career success in a new book it's called Career Forward Strategies from Women Who Made It, in which they reveal some well surprising work advice.
Yeah, this book kind of got birked on the fact that we had Matt and we were both on a corporate board and one day we went out after the meeting and really connected, and it connected around identifying that although we took very different paths to achieve what we achieved some of the top levels and different corporations, we had some of the same learnings and some of the same truths.
And then you add to that.
We both have it's hard to call them millennial children, but children that are now in their thirties and having their own career paths, and we really wanted to transfer the knowledge and the learning that we felt really could be helpful as they set their own path.
I should note that you guys are still on some pretty pretty interesting boards. Grace is on the board of Target, among others, Christiana on Columbia Sports where ups West Marine, to name a couple others. So yeah, I mean, definitely still in the consumer space right now, no question.
Yeah, exactly, Christiana, So come on in too. Like, as you guys were putting together the book, did what did you want to make sure was kind of in the messaging here from your own experience?
Yeah, I think we had a really strong goal to address this moment in time as well as just share, you know, decades of career experience learning that Grace and I had. And as Grace said, even though her path was very much through some of the top corporate company corporate brands and companies and mine was consulting for over twenty years and then a c Threek job at Nike, we had similar takeaways about how to build a career that you love and how to make it worth it.
And when we first started writing the book, we were still in the pandemic, and there was of course all this talk about women falling out of the workforce because they couldn't, you know, make the childcare life work balance work. And then there was quiet quitting, and there was just
act your wage. There's so many things right now that show in this moment a need to talk about how you can still invest in yourself and still have a great career while meeting this moment and balancing all the other forces that are at work in your life.
Well, we want to give to some of the specifics, but I wondered, Grace, if I said, luck, skill, timing, what was the most important thing in your career path?
That's a great question. I would probably say.
To be all of it too. Skill.
Well, no, I think it's skill, and I think it's about not just you're not boring with the skill, Okay, it's cultivating skill reevaluating what the next skill or capability is needed or will be needed.
So it's an ongoing and commitment to learning.
And we talk a lot about that in our book, and to read the tea leaves on what is necessary and valuable in those skill sets.
Same thing to you, Christine, if I could, yeah, please do you mind if I was going to say, do you mind if I jump in on that going even a step further with grace and I believe is you can do a lot more than you think to create your own luck.
What do you mean when we talk about when we talk about people we see at work and we say, oh, she's so lucky she got that project, he's so lucky that story hit right at the right time, whatever it is. But you roll the tape back, you realize they invested in building their network inside and outside the company. They invested in knowing things that are important at that moment in time. They demonstrated performance. That's when opportunities tend to
come to you. And then we say the key is do you hear the knock on the door when opportunity is knocking and do you answer it right?
That's timing.
So there's clearly serendipity in your career, there's no question. But you can do an awful lot to be in the right place at the right time through the steps that you take to invest in yourself.
Well.
And some would say I'm trying to think whether I want to think our leader or book or other books about this whole idea of being the first one at the office, being the last one to leave. And sometimes you can't do that, but it's certainly early on in your career things will people will move around and be like, who's here, who can do this? You're here because you're here.
Early and you're here late.
And it's as simple sometimes as something like that. It is.
But I'm wondering, and I want to go to you grace first on this one. If in an era of hybrid and remote work that that is more of an issue because you're not going to run into the boss on the zoom. You're only going to run into the boss, you know, at the water cooler, if you're physically around the boss. And there's an entire generation really brought you know, who graduated in last four years that don't have the same idea of going to the office that I think a lot of us grew up with.
Yeah, I mean, no doubt, and certainly, you know, during the time that we had been in a lot of our career, it was an opportunity, you know, your first and first out. But today is very different and you know, I definitely think, you know, addressing the virtual world, there is still a need to ensure connection and connection through work is really the best connection. But making sure that you're where you need to be and that you're contributing
in those moments and that you're establishing relationships. You hear a lot of people in the hybrid work right now going out and even meeting with colleagues outside of work just to make sure they have a connection.
But I think what you said earlier.
You know, we talk about this concept of growth stock that's more important.
I think than the FaceTime and we talk about it.
Yeah, I do, because we talk about it in the book about And let me just take a minute on it. If you think about a growth stock, a growth stock, you can think of any company that comes to mind. Let's take Apple for example. They tend to grow at a much faster pace in their competitors, and they do that by reinventing themselves, by looking around on the corner,
by investing in the right things. So when you apply that to yourself, whether you're working virtually or in the office, you're going to adopt a mentality that says, you know, I want to no matter where I am, no matter how well I'm doing in my current job, I'm going to be thinking future forward, and I'm going to be cultivating and growing and investing in the type of things that I need to to be able to learn and contribute at a higher rate, and those often lead to
opportunities and career progression along your journey.
So Christiana, it's kind of like, you know, don't wait for someone to tell you what you need to do, look around you and figure out what you need to do to either get to the next level or the next position, or the next opportunity.
Yeah, we would definitely agree with that notion of staying curious, of thinking ahead of planning a bit in terms of saying, Hey, this year, what are my goals in terms of skills I'm going to need to build, what are my goals in terms of people I.
Want to get to know?
And in the spirit of meet the moment, we would also say, may the most of the opportunities that you do have. So specifically, in this hybrid and remote work environment, you may not, as Grace noted, have as many chances to just hang around the water cooler, but you're on zoom all the time. There's one way you can approach those meetings, like, oh, I got another zoom, I'm going
to turn off my camera. I'm going to be doing my email while the meeting's going until they hear them call my name, all that kind of thing.
We've all been there. Those are really important opportunities.
There are other people on that call, and there are other chances that you've got to show up. So we would just also say, make the most of the chances that you get. If you're in the room, you're there for a reason, speak up, participate. That room nowadays may be virtual, but it's really important that if you're there, you're noted.
That's a really good point. One thing we wanted to get into is this idea of don't fake it till you make it. And the reason we bring it up. We had a conversation with the head of one of the divis visions at one of the major cruise companies just on Friday, and this idea of when she got a big promotion that people were like, yeah, but you didn't have all the necessary experience, and she's like, yeah, you were kind of right, you know, but I think
about the difference and forgive me. I don't like to make generalizations, but there has been a lot written about where men will be like I got it, I'll figure it out. Women are like, oh my god, I don't have all the qualifications. Again generalizations, but people have written about a lot of this grace. Let me go to you first. Why do you guys say don't fake it till you make it? Do what exactly do you mean? Because sometimes you don't have all the qualifications, but you can figure it out.
Yeah.
When we think about, you know, fake it till you make it, we don't think that's a bad thing.
We think it's a good thing.
The reason is because you do whatever you need to do to gain the confidence as you go into a new business, or a new environment or a new position. No one goes into a position when they know everything, okay, especially if you progress your career. So we think it's okay to stand up, whether you have to talk to yourself in the mirror, pump yourself off.
But you're there for a reason.
Believe you're there for a reason, and have the confidence to know you're going to figure it out, You're going to learn things, and you're going to be able to apply the talents you do have to be successful. That's very different than what you hear about imposter syndrome, where people say, Hey, they got the job and they're not qualified.
We think that's unhealthy.
But fake it till you make it means, you know, have the confidence that you're in that position or you've been given that opportunity for a reason, and have the faith that your past history will tell you that you'll learn and you'll achieve.
Yeah, Christiana, jump on in here. Then sort of share your experience with this in the way that you thought about it when you were writing about this in the book.
Yeah.
The reason we you might think we're saying don't fake it till you make it is because what we're saying.
Is get past that thinking.
Right.
You were put there for a reason, and your bosses aren't crazy. The people who hired you knew what they were doing.
Right.
Learning what you need to learn to fill in your gaps in a new role is not faking it right.
That's being programmatic.
That's being strategic, that's leaning into it, that's being forward thinking. So all we would say is don't fake it till you make it. Put a plan together to get the rest of what you need in terms of the experience, the skills, the confidence to do the new role that you were put in. But recognize that you are there for a reason in the meantime, and saying that I've got to learn and get down this learning curve in this new role is not the same as saying I'm
an impostor and I don't belong here. We really really dislike the phrase imposter syndrome because that leaves you no place to go, that doesn't give you a path forward, and that's not a very confidence building mindset.
You explore this idea in the book about making sure you're growing within a role, and you argue that you don't want to be too comfortable in a job, and I think for a lot of people that can be kind of tough because, okay, well, you know, they've worked so hard to get to a certain place and they're finally in that place, why do they want to be necessarily longing for something more grace?
Yeah, So, you know, it starts with what we're trying to encourage people to do is to have and set a strategic path for your career and a cardinal direction. And a cardinal direction gets determined on what are your aspirations and they can evolve over time. So to your point, you know, we think it's important that if you're in a job and you feel like you know, I'm doing great.
I might be getting great performance reviews, but you're no longer learning, then you have the obligation for yourself to meet your aspirations by continuing to look for opportunities to expand your capabilities and expand your contributions. And that can show up in a number of different ways. It might be raising your hand and saying, hey, I'd like to get involved in this particular project or this particular initiative that's outside my area, because you're going to know that
you're going to grow through that experience. So that's kind of the basis of it. And it also is important if you set a cardinal direction of what you want to aspire, that you're checking in with yourself and saying, am I on track? And does the job that I'm doing today continue to grow me and progress me on that journey?
Is it safe to say that, Christiana? I mean, there is a point that you get to that you might be like, I've out grown either this company or this career trajectory. I've hit the top, and it's just time to move on. And you just have to face that. Even as much as you might like the company the people you work with. If you really want to advance, sometimes you've just got to leave. It's not just about making more money, but advancing.
Yes, we agree with the notion that if you want to keep growing, sometimes you have to go, and we call that a fork in the road. And sometimes those forks in your career path are forced on you by a company change of ownership or a leadership change in your management team, whatever, But sometimes it's because you're proactively realizing, like you said, that you have grown to a point
where you need to do something different. And what we want to encourage you to do is be self aware enough to actually recognize those moments when they come, versus get surprised by them. And the way you can get surprised by them is if you don't go when you've kind of outgrown your current role, if you don't actually push yourself to get to something next or new, you could end up on what we call benevolent stagnation.
Right.
Benevolent stagnation is I'm still in the same job, I'm still performing. Everybody's kind of taken me for granted. I've noticed I'm not seeing the same increases in my comp I've noticed I'm not getting invited to some meetings. I've noticed I'm not being pulled into the cool projects. And we use the metaphor of a rocket in orbit, right, if you're in orbit around a planet, you still got to turn the gas on periodically or gravity is going to pull you down.
Love that. It's the same thing at a job. You got to grow or you got to go.
All right, Grace, Christiana, we only have about a minute left here, so just quickly, Grace, let me start with you thirty seconds. Some final thoughts here.
I think I would just encourage you to really embrace ambition and realize that ambition is a good thing. It means you're going to create a path for yourself to achieve the best you could achieve. And it might be different for every person, but we would encourage people to do it because it's worth it having a career.
Women especially, it's okay to be ambitious. I'm just going to put it out there, Christiana, thirty seconds here your final thoughts.
Love, love, owning the a word.
As Grace said, The other thing we like to say to women in particular, but again applies to everybody, is if you're not in the driver's seat of your career, somebody else is and you can't get to a place you want to go to unless you're the one at the wheel. So we try to give you tools and ideas for how you could stay in the driver's seat of your career.
Path well, and that plays into you. Also a chapter you guys have Steer about Steer into the Skid, which I really love. I had to steer into his skid and it was such a great opportunity that I ended up creating, but it didn't feel like it as I was going through it. So some great advice Grace Puma, former Chief operations officer PepsiCo, Christianna Smith, she former president
of the Consumer Direct Division at Nike. Their new book Career Forward Strategies from Women who Have made it Thanks to you both.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Applecarplay and then brought auto with a Bloomberg Business app, or watch us live on YouTube.
So you've gotten nothing to lose, Walter Learning, you own.
All right, everybody.
And some news out of the cruise industry today Viking Holdings filed confidentially for an initial public offering as the travel industry continues to rebound from its pandemic era slump. Viking's listing could raise five hundred million dollars or more, Bloomberg News reporting that earlier today.
Our next guest knows quite a bit about the industry, and she actually didn't go to an Ivy League school, she writes in her new book. In fact, she describes herself in that book as quote floundering her twenties seemingly without direction. She did, though, go from selling cruises door to door to becoming the CEO of the company. Company we're talking about is Celebrity Cruises, the subsidiary of Royal Caribbean Group. All this Carol in a brand new book.
It's called Making Waves, A Woman's Rise to the Top Using Smart's Heart and Courage.
Lisa Lutuf Prolo is the author. She's also the vice Chair of External Affairs at Royal Caribbean and, as we said, former CEO of Celebrity Cruises. She joins us from Plantation, Florida. Lisa is so nice to have you here with us. We feel like there's a million ways to start with you. I hope you will indulge us a little bit because I have reported on Royal Caribbean, I've reported on some
of yours. I am a sailor as well. But it's been interesting to watch the cruise industry in general pre pandemic, make it through the pandemic, which was remarkable, and then come out and seemingly be stronger than ever. Talk to us about the cruise industry, the trajectory that we've seen over the last few years here of okay, really tough times and then coming out of those tough time and doing just okay, better than okay.
Yeah.
Yeah, Well you know better than me because you're reporting on us all the time and interviewing many of the executives there, and I think it's pretty well determined and known that, Yeah, we're past those dark days and we're full steam ahead where.
The industry is doing great.
I heard what you just said about Viking, and that's just another indication that it's a pretty robust industry right now.
Why do you think the industry is doing so well right now? What is it about cruising that really continues to attract people year after year.
Guess what I would say is that it's the same as all travel. People want to experience the world, they want to get out there. The industry is robust, it's growing, it's exciting, a lot of wonderful new ships out there, and you know, the cruise industry is capitalizing on people's desire to experience things and travel and people spent two years not being able to do that, and now they're coming back in earnest pretty much in all forms of travel, for.
Sure, Lisa, we got to ask because in the beginning of your book, you say you never considered writing a book is the first thing from your mind, never thought you had an interesting enough story to tell. And yet, FYI, any woman who becomes a CEO is a story. And I can't wait for the day where it's not a story because my whole trajectory in journalism and it's several decades like it has been a story. And so kudos
to you forgetting there. But what ultimately said, Okay, I'm going to write this book.
Well, first of all, a couple of things, if I if I could, Carol, I agree with you, it will be wonderful when it's.
Not a story anymore.
And what was interesting is that when I was first appointed to the role back in December of twenty fourteen. It was such a big story, and I was overwhelmed by it. And what I say in the book is I was actually quite annoyed by it because I was getting a just proportionate amount of attention because I was a woman, not because I had worked thirty years and accomplished so much that actually got me into the position.
But what I decided, and one of the reasons that I ended up writing the book, was that so many people told me it was a big deal, and I decided at a certain point in time, I was going to lean into that, and I was going to use this disproportionate voice that I had because I was a woman who made it to the CEO position to tell my story. And it's really a story about a young woman in my twenties who started at the bottom and ended up at the top. And it's really, if I can do what you can.
Do a story.
Well, I love that, right, And we do talk about often you start at the bottom, and in media often a lot of people do. Whether you start as a production assistant bringing somebody coffee, and you just work your tail off and you work your way up. Having said that, Lisa right, it was really easy to work your way up.
Are you being facetious? Care I am?
I am.
Take us back to the early days and getting into the industry and what it was like to be a woman in the industry forty years ago, any industry, I think, I fail, like even forty years ago was kind of tough.
Sure sure, sure, well, you know, my career started in sales and marketing, so for twenty one years I was in a very gender neutral environment.
Didn't think a lot of it.
Never never thought about being a woman, or the fact that it was maybe something that wasn't working to my advantage, or there weren't a lot of us because in sales and marketing there are quite a few women, even in leadership roles. I realized there was a gender disparity in two thousand and five when I went into operations, because that's a very male dominated part of our business. And again, our industry is old. You just said it yourself, Peril.
It was forty years ago. It's still very much predominantly men in operations, and clearly in the CEO roles and running these brands and companies, that's still predominantly men. I never felt like being a woman impacted my ability to grow or achieve what I achieved in my career.
I did find.
It somewhat of an issue in some of the I had three roles in our company where I was the first woman to ever do it, and I guess I would use the word skepticism.
When I was put into those roles.
A lot of the men that were in those areas of the company were skeptical as to why I was there and if I belonged there, and I just had to build my credibility one interaction at a time.
Lisa, do you think your story is still possible in twenty twenty four? And the reason I ask is because it's so rare to find somebody who's been at one company for pretty much their entire career. And yes, you did start working at a very young age in your
family business in the restaurant. But I'm wondering if you still see this of somebody starting at one company and then working their way completely to the top of that company, because so often the only way to actually get a promotion or get more money is to jump to another company when you get another offer.
Well, there's a lot of truth in that tim, I don't know if I know the answer to your question, because for thirty nine years I was in one company, and in our company, I see a lot of what happened with me. I see a lot of people who work their way up for decades. Our company is very committed to hiring from within, developing people, helping them grow.
Moving them around so they learn more.
So I was in a wonderful situation and it continues to be that way.
However, if I think about.
The new generations and I think about how people are right now, I'm not sure that that's going to happen.
And I think part of one of our.
Issues is people so many people being remote and it's difficult to be noticed. One of the things I talk about in the book is conducting your own PR campaign so that you do achieve what you want to achieve.
And make it to the top.
And it's hard to do that you're not there invisible and interacting every day.
Hey, one day, I want to go back to when you talked about building your own credibility and that you said it was kind of okay that maybe people had some questions about your ability to do some of these leadership Roles having said that, because you said people had some hesitation about my leadership and that was fair. Why is it fair because you know, no offense. If you were a guy, they would be like, I got this. Yeah, I don't have all the experience. I haven't done it all,
maybe exactly, but I got this. Don't worry about it, and it would be okay. Is it just men women in your view and your experience and what you've seen of us just kind of wired differently, or the world thinking that we're wired differently.
Good question.
You know.
I didn't think about it that way, Carol.
I you know, when I went into it and people I so here's how I looked at it. I looked at it as okay, there really have not been any women that have been your boss.
There are very few women.
There were three percent women on our bridges when I started, and there were thirty three percent when I stepped down last April. And maybe I cut them too much black in that regard. I was never I was never a chief engineer. I was never a hotel director, never drove a ship, fixed fixed an engine. So I'm like, all right, maybe they think I need subject matter expertise and yes, I'm a woman and there aren't there are none of
us around. I'm looking left and right, and maybe I, you know, cut them more slack than they might have deserved. I didn't think about it that way, But what I decided to do when I met with that.
Skepticism is just to you know, to turn it around.
I come at everything from a very positive angle, and that's.
That's how I looked at that. I said, Okay, I don't have subject matter expertise, but.
I guarantee you there's a lot of other reasons why I'm here, and I'm going to show you that in a very short period of time.
All Right, Lisa, sit tight, We're going to come back continue the conversation. We've got more time with Lisa lutev Perlow. She is the author of a new book, Making Waves of women's rise to the top using Smart's heart and courage.
And just a little tease, We're going to start our next segment with the dark days of March twenty twenty, especially for the cruise industry, because that's where the book opens.
I feel like, you know, you go back there and just that moment of the unexpected of Yet we're going to shut down the global economy, folks, We're doing it all right. Everybody I want to get back to. Our guests with us is Lisa LUTEV Perlow. She's the author of a new book, Making Waves of women's rise to the top using Smart's Heart and Courage. She's also Vice Chair of External Affairs at Royal Caribbean. She's the former CEO of Celebrity Cruises, which is of course a brand
within the Royal Caribbean Group. And she is still with us from Plantation, Florida. So so good to have you here. We want to talk a little bit about COVID.
Yeah, I mean, you found yourself at the helm of the company, Lisa, at a time that was incredibly challenging, to say the least. So take us back to March eighth, twenty twenty, which is where your book opens. What happened then?
Well, March eighth of twenty twenty was actually a really exciting day for me. I boarded Celebrity Edge. We were we were celebrating International Women's Day, which is March eighth actually, and we were celebrating a history making, barrier breaking event where one hundred percent of our bridge on that ship was manned by women, and Captain Kate.
Was at the helm, so it was a glorious event.
We had worked really hard to improve our gender balance on our bridges. We were able to do this. Our guests were excited, our team were excited. I left the ship on Wednesday, blew home, went back into the office on Thursday, left for the weekend on Friday, and then, as you know very well, no we had a global chef down that weekend and ceased operations four fifteen months.
So what I talk about in the first chapter of the book Sailing Through the Storm is I went from the highest of highs in my career to the lowest of lows within seventy two hours.
And I will never forget that.
I mean, yes, I think about for us like kind of going through the financial crisis and reporting on it.
Were there.
I don't know, we just felt like the world probably felt this way, but the dark days of oh my god, is this system going to come undone? How did you think about you were feeling, like you said, from a high to a low. But you're like, I'm responsible for this brand and the people who are connected with it. We got to figure out our way forward, and you obviously have a corporate parent who was involved in it too. But just take us through, like initially, how dark it was and what you were thinking.
Well, I was thinking what all of us were thinking, is is this horrible thing that's impacted the world ever going to end? Are we ever going to see the light at the end of this tunnel? There were so many terrible things happening all at once, including our business shutting down. That was not the least of it, but it was just one of a global nightmare that we were all living through. And yes, our company played a
very active role. I was only one of the executives dealing with it, but I did have to think about as a leader, how am I going to pivot and what are the things that I'm going to do that are going to get the twenty thousand people that work under my area of responsibility through this.
How am I going to give them hope?
You know?
How am I going to give them confidence.
That this is going to end and we're going to get back into business and our crew members spread all over the world are going to be able to get back to work. And some days I didn't even know that. So I learned more as a leader during COVID than probably the other thirty seven or thirty eight years of my career in the company.
What are some of those things you could kind of impart on other people now that you learned in such a short time.
I think the most important thing that all of us as leaders need to understand is when we need to pivot and what we need to be doing and the muscle that we need to be building at any given time. I was a CEO of a brand within a corporate S and P five hundred company. Shareholder value returning shareholder value transforming the financial performance of the brand was at the forefront of everything I did, how I led, what I thought about.
Every single day.
And when you're out of business, you have to think about different things and you have to downplay those because there is no business to generate.
But also you have to be able to switch.
Yourself as a leader from a hard drive, results focused, driven, visionary strategic thinker.
Two.
Okay, let me give people what they need right now, which is empathy, which is support, which is compassion, and again which is hope. And so I really think that some leaders have a really difficult time flexing their style and being different on any given day relative to what
the circumstances present. And I learned that during COVID, and I learned that as soon as I was able to do that, the way the team was feeling and the way our employees all over the world was feeling immediately changed because they that's what they were looking to me for. I was that beacon for them, and I needed to remember that every single day when I woke up.
Well, we so appreciate that perspective. And we're going to take you back to the high point just before the pandemic, and you talked about the ship and the role of women and Captain Kate, our Charlie Pellett is a big cruiser, including celebrity cruises, and he wanted to know and we're going to ask you, do you follow Captain Kate on Instagram? And what has she done for your brand and being
able to put out a ship? She was of what first time that an American woman was named captain of a mega cruise ship, so it was a big deal. What has that done for the brand?
Oh, Carol, Well, you know she was the first and still only, I might add, American woman to ever be at the helm of a mega cruise ship. She was the captain on Celebrity Edge, which by the way, was the first ship to sail out of a US port post pandemic. January twenty sixth, twenty twenty one. Captain Kate was at the helm of Celebrity Edge and we were the first brand to.
Go back into service.
She was the first woman to take a ship out of the shipyard and send Azir France. I would follow Captain Kate everywhere, and I follow her on Instagram. And when you think about the things that you're proudest of in your career, appointing her and giving her that opportunity.
As captain is one of the highlights for me and for her. And she is beloved.
She's beloved by her crew, her guests, everybody that encounters her. She's an unbelievable navigator. She's extraordinary in every single way. And she's been a great advocate for Celebrity and she's been a great advocate for women mariners and recruiting them into our company.
Here here, I love it. I'm a I'm a sailor.
On the net was going to say, Lisa, can you tell can you tell that Carol spends a good portion of the summer on the high seas. You really, she really.
Loves that, Carol. I love that.
You're welcome. You're welcome.
All right.
So we went to kind of a little bit of a rapid fire round with you if we can. We've got about a minute and a half left, just quick answers. Work from home, yes or no? Or how you feel about it?
You can be honest, be honest, mixed and both mixed and both.
How about that mixed in both?
Yeah, both work from home, don't work from home?
Okay?
And I feel mixedls and cons.
Okay, So talk a little bit about your favorite place to cruise quickly.
Alaska, wow?
Really?
Or the Galapoos where where nature plays a huge role.
All right, leader you admire, doesn't have to you can you can excuse your current leaders because we don't want to put that on you.
No, no, no, leader Ruth Vader Ginsburg because real quickly, Oh my gosh, what she did for everybody herself.
Women, Yeah, everybody get to hear you. Next act, next act, next oh wait, your next port. Let's stay with the sailing metaphor. And just got about twenty five seconds.
Okay, next chapter.
You're gonna have to reinterview me at the beginning of May, and I can tell you.
All right, I like it. May please look at that. Oh ad to the calendar.
Oh yeah, I'm not done yet, folks.
All right, Lisa, So I appreciate this. Have a great weekend. Lisa lutav Pro. She is the author of a new memoir, Making Waves, a woman's rise to the top, using Smart's heart encourage. I love it, love it, love it, love it.
She's cool, very cool.
We gonna check in with her.
May put it to the Yeah, there's gonna be more.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting a two pm Eastern town Applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
All right, everybody, it's time for Bloomberg Pursuits, and we get to highlight another super accomplished woman who is facing tim a tougher market environment.
That environment, pricey timepieces, also known as luxury watches, demand for such as the Gerald Genta designed Royal Oaks sports Watch, Rolex's daytona chronograph or anything. Patek Philippe has begun to wane after surging demand during the pandemic, when cash flush consumers splashed out on established luxury models.
And that is the handout to one top executive in the Swiss luxury watch industry. Here with that story is the editor of Bloomberg Pursuits, Chris Rouser, along with the Bloomberg News reporter Andy Hoffman, who wrote it. Andy, joining us from Geneva, Switzerland. Chris, you love watches, watches all right? Tell us about the germination of this story.
The luxury watch business is dominated by four top brands who have a huge percent of the market share, and one of them is Odamar p Gay, which is an independent brand. It's not part of a big luxury conglomerate. And this woman, a Laria Aresta, has just taken over and Andy got one of the first interviews with her and it was really cool.
So Andy, come on in here, because her path to becoming a CEO of the company, it's it's not typical in the luxury watch world. She was formerly selling consumer products for Procter and Gamble. Tell us about it.
Indeed, it's a very unusual, unorthodox appointment to have someone like a Laria Aresta head a brand, a luxury Swiss watch brand like Odamar p Gay number one. She's a woman. There are just am full of women in the Swiss luxury watch industry in top executive roles, and with her appointment as the CEO of Votamarpigue, she's in that top job in this industry.
Can we just ask for a moment since it is, you know, Women's month, we get a month, you know, we got International Women's Day on Friday. But is it just because men buy a lot of these luxury watches or what is? Why is it? Or is it just the history? And that's just I don't know why a lot of women don't don't rise to the top of this industry.
Andy, it's a fair question. Obviously, the market is more men than women. Men are more interested in luxury watches than women, although that is changing and it's changing quickly. But you know, the Swiss industry is quite closed off, it's quite conservative, and it rarely takes big chances. And you know, a bold move like this appointing a woman to the top job who comes from the consumer goods industry.
Although to be fair, she did work for a Swiss company called Ferminish before this in the heading up the perfume and ingredients division. It is still quite a bold and unusual step.
And by the way, when Andy's had a hand, she's one of a handful of women executives. That's like if three of your fingers fell off your hand, Like there are no women leading these companies. This is very unusual and really great.
So big, big, big deal. Yeah yeah, So Andy, talk a little bit more about how she got there.
Indeed, well, you know, she's a Laria Arresta is an Italian national, but she's also Swiss national. Now she's lived in Switzer Loan long enough to get her passports. And you know, she has spent most of her career a good two decades at Procter and Gamble, And of course Procter and Gamble is a consumer goods juggernaut, and they have their own way of doing business and management and philosophy about selling product. When she was at Procter and
Gamble for over twenty years, she was in Cincinnati. At one point she was here in Switzerland where Procter and Gamble here in Geneva, have a big Outpost their European headquarters, and she oversaw a number of different brands. She talked about when we spoke to her about how passionate that consumers of those brands could become about those products. And you know, while it's a different price point, at the end of the day, creating passion it for product by
the end user, that's the goal. And want, you know, to spend fifty thousand dollars on a Swiss watch, which is how you know, basically the average price of an Otamar pgay watch best known for their gerald genta royal
oak design. You need that client to be passionate about it, and a Laria told us that passion for a product and for a brand that you know, she helped foster and saw in some of the better known Propter and Gamble products, most notably the Swiffer broom, which is sort of a category creating product.
Raise your hand if you're passionate about it.
But who would have thought that somebody you know goes from selling a Swiffer broom to selling a fifty thousand dollars watch. Chris, I mean, this is this is such a huge change, and I'm wondering about whether or not people in the watch community look at an appointment like this.
It's exciting because not only do they not hire a lot of people with like different sort of who have come from different price points and stuff like that, they just don't hire people from outside very often at all. You really often see people from promoted from within. Sometimes the companies you don't even know who the CEO is because it's just so internal, and the brand is the spokesman.
And so this is very interesting, and she's coming in at a really interesting time because watches have never done better than they've done in the past couple of years, that near the tail end of the pandemic, off the chart, off the charts, and that's softening, and so she's facing she's coming in off of maybe the Cut brand's best years ever, knowing that she's not going to be able
to maybe pick that up up that pace. And then also Odimar Pigue is really dependent on that one watch that Andy mentioned, the Royal Oak, that's their star, and they don't really have a lot of our alternatives. So Andy, I wonder what if you could tell us a little bit about what she's up against and how she looks at that.
Indeed, well, you know, a Laria told us that she's not focused on the numbers. She's focused on, you know, maintaining, preserving and adding value to the brand Odemar Piguer, which is a family owned company. As we said, it's independent, it's not one of the big part of one of the big you know, watch making conglomerates like Schwatch or Riachmall. And it's about preserving that value for the family shareholders
for the next generation. And so if that means producing less watches or meeting the demand in a more effective way, is things sort of slow down from the boom time that we've had, she's willing to do that, you know. And odo Marpga is increasing its production capacity, but that doesn't necessarily mean that they're going to produce watches at capacity.
So what does that mean in terms of pricing? One quote from your article really struck me. I don't have pricing as a factor of my business strategy. For me, what drives is the ultimate goal of sustainable, long term independence. But what does that mean A pricing? Does that mean she's going to make it competitive pricing or willing to charge what it's worth or what it costs.
What does that mean, well, what we've seen from some of the big brands, almost all the big brands over the past few years, as demand surge, they've raised prices. They've raised prices to while not necessarily increasing production, whether they could or they couldn't, but price has been a
very useful tool in terms of growing revenue. And the year before Alaria Aresta joined the Automarpiguet, they their sales were about two point four billion Swiss francs, which is, you know, which is by far a record for the company, and many other watchmakers experienced record sales in twenty twenty three after record sales in twenty twenty two, and some
of this was done by price. But I think you know what she's what Alaria is saying here is that you know, it's not about taking price just to increase sales. It's about maintaining that that value proposition that you know, the brand has given in the past and will continue
to do so in the future. And I think you know, it's clear she's going to double down on the on the complications, on the on the high end materials, on the finishing that that one gets with Todomar Pgay watches, and I think that's you know, the the tool or the lever she intends to use as opposed to pricing.
So if if you as you follow Andy her next moves, her performance over the next couple of years, what are you watching for? What are the metrics that you're going to pay close attention to to judge whether or not her run there is successful.
Well, it's going to take a long time, uh to be fair, to really get a good sense, because the kind of you know, the watches that the company will produce this year and next year, that's already determined. I mean those watches have been being developed research and development for years beforehand. There's that kind of lean time in terms of coming up with a new watch. I think, you know, we're going to see, we're gonna we're going to see the culture of Odamar Piga and if it
you know, and how it's maintained or how it changes. Obviously, her predecessor very much was able to focus the culture and the message of the brand, and we'll see how
that evolves. There is some skepticism, there's no doubt of putting an outsider into a role like this, but I think at the same time, it shows a maturity from the board and the family shareholders for seeing you know what this brand, this over a century old Swiss brand is in terms of its proposition as a consumer product, a luxury consumer product where the watch has cost about fifty thousand dollars, but it's a consumer product.
Watch Firehouse one of those things we'll put a deposit. Christ You know you love watches. We love talking watches too with you on a regular basis. Kind of some final thoughts here.
A lot of the brands that raise prices and the luxury high end brands are have tended to do well as the market has softened over the past year. But I personally am excited for all the people who entered the watch market at a lower price point and are enthusiasts and care about these really expensive watches and like
to talk about them and look at them online. But who go out and buy a new, interesting mechanical time piece at an entry price price point which could be five thousand dollars, it could be two thousand dollars, it could be eight hundred dollars. And that's what's been really fun for me in the past year to see people sort of get into.
Yeah, it makes accessibility of it all right, great stuff, and I have to say there's really fun stats too, and especially about kind of what some of the watches were going at the peak, Oh my god, and then how much they've come down since that point. Both of you, thank you so much, really appreciate it. Are thanks to both Bloomberg News Luxury Watches reporter Andy Hoffman of course always the editor of Bloomberg Pursuits, Chrisfrauser. Guys, thank you.
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