Bloomberg Businessweek Weekend - May 19th, 2023

This is Bloomberg Business Wait 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.

Well as the debt ceiling and budget negotiations continue in the US this week. In the new issue of Bloomberg Business Week, out on newsstands, online at Bloomberg dot com, slash BusinessWeek, and of course, on the Bloomberg Terminal, the cover story is this week's remarks. It's about king dollar and how the crown is slipping on the US green back and dollar denominated assets thanks to a few things going on, including that debt sealing standoff, regional bank failures,

Yeah, And as we were kind of talking about this story, it was like, wow, you just start to think about all the things that are poised to go wrong in the US. And I told my art department, I was like, just imagine this house where the floorboards are coming in, the walls are caving in, the debt ceiling, the ceiling

It's got to be worry worrisome to our allies.

And when you do this again and again and again.

It makes I think a lot of people around the world, So you know, maybe this America thing isn't what we need as the gold standard here.

Absolutely. I also wonder about something like the Russian invasion of Ukraine and the resultant American sanctions, you know, and the demands that we put on our allies and our

Yeah, there's been a big push since the invasion for some countries, you know, to start using more of their own currencies or the currencies of their trading partners. And I think it is definitely a result of the US

So Inda, you you you're uniquely capable having been in Hong Kong for a while, and now you're on this side of the pond. What does it bring that international perspective to this? How vulnerable is US prestige in the American down.

So even if a dead ceiling agreement has reached over the next week or so, the uptics of this are just horrible for the US economy globally, and for US leadership and for US influence. And you know, one side subplot from this death ceiling drama was that President Biden couldn't go to Port Moresby and Papua New Guinea for

And the month right, it's Asian American Pacific Islanders.

Month right, and they have a summer going on for Moresby, and the US President couldn't go there, and that's the director result of what's going on. The other point is I have never seen a frenzy like we've seen over the past few weeks about talk of deed dollarization, both from the investment community, the community, and the policy world. Now we all know the obvious counterpoint as well, there's no alternative. Everybody knows there's no alternative for the moment.

I have to say, and you know, you know, go back. I don't know how many years, or I feel like even a year ago that the thought of the US really defaulting on their debt like that was just non existent. But it does feel like that there's a lot more momentum based on kind of these self inflicted wounds that we keep seeing that you just wonder what the heck is going on in this country.

Yeah, and by the way, if you just go back a few steps the blame game over inflation, there were rights and wrongs that story, But the point is the US missed the development inflation, and of course that's spread globally because US monitor policy goes globally because the dollar is what's used to buy and paid for stuff all

Yeah.

The quote from Sarah House of Wells Fargo definitely cut my attention because she says, you don't even need to actually default in the debt for there to be real damage to the economy. So walk through that, because, like I mean, obviously, the worst case in here here is

Yeah, I mean, obviously, at the very least, will prompt governments and central banks around the world to look for alternatives in terms of managing their investments. It might start to look away from the US government bonds, and that in itself might start to drive up US boring costs or time, and as we discussed earlier, it might start to accelerate the use of alternatives, pushing other trading partners

So where do they go though, because in your story you talk about treasuries, right, twenty four trillion dollar market, You talk about central banks their official currency reserves still sixty percent. It's down certainly from a peak, but there's still so much that's you know, in demand when it comes to dollar denominated assets.

Specifically, get what had treasurey eleven when we had our credit rating. Yeah, cut everyone poorting that treasure exactly.

And we actually pointed that out in the story because there was a Bloomberg survey that came out this week that said, like, you know, I think they asked people where, you know, after gold I think it was like, treasure is worth the number I mean, and that is this irony right like that it's it's still the safe haven.

A world war, and that can be enough.

So yeah, I think we're saying is you know, there is nothing right now as an alternative, But I don't the US should not be complacent. There are many many people who are actively engaged in wanting to find Altama.

What do you think an alternative could be? You know, China, the Chinese Ue has talked about often. I'm not sure how likely that is because when it comes to censorship of currencies, you know, China would be right there with the US. Is it possible that a decentralized currency wouldever actually be a contender?

Well, I think more than that, we could go back to a system before Bretton Woods, where there was many, many different currencies, right, yes, right, it's like Maynard, you know, John Maynard Keynes had won the debate, like you know, you know, so there, maybe we don't have a dominant currency anymore, but we have a more you know, sort of evenly spread, you know.

And to command in on this right, you do have this great global perspective, and you've been overseas in Asia. I mean, the US economy is still larger than China's, and I do wonder what the thinking is realistically about who could be, you know, could relay replace the US as kind of the world's currency.

Look, it's going to be a long road for the YU one. That's because China has really strict rules on moving money into and out of China. They've got like a closed capital count that's very different to the US. It's obviously there's got a long way to do on that respect. But nonetheless, every like I said, every day we get announcements Bangladesh, countries in Central Europe, Argentina talking about using either sloop lines or other facilities to trade

But the fact that we're even having this conversation is part of what's insane about this, right, Like, the US has put itself in a situation where people are willing to like start having other conversations, and that all goes back to how America has not been able to kind of shore up its act time and time again.

Yeah, and by the way, if I could just say ironically, the US has a very strong economy at the month. I mean again, you can argue about that, is there is there a slow downcoming or not. But we had another piece of Business Week this week with Reid Picker and mcllleague making the point that all these economis keep calling you sessions, but every time the data comes out

These because of our world currency reserve status. Right, It's pretty easy to have a strong economy if you run trillion dollar deficits. I could do it myself. But let's talk about what's at stake here, Christina. What benefit do we get by having the world reserve currency?

Well, right, we have a twenty four trillion dollar market of debt that everybody wants to buy, and that is the biggest thing we can finance, you know. I mean if you look at the you know, deficits forever and the and up to recently, the calculus was like that was okay because actually, even going into the pandemic, our service our debt service costs were falling, right, so we were like we had I mean, sorry, after the pandemic, we have this huge increase in debt, like and the

And talking about austerity, which is something we have.

Yeah, right now, I think the way to average cost is about two and a half percent. But as long as we have nominal growth of seven, that's cool.

Yeah, we can still carry it.

Right, But you know, if this was another country to have the current account deficit that we have to have, like the like the net balance that we have, the investment position that we had, you know, investment investors would be going bonkers, you know and saying Oh my god.

You know, this is a thing that's waiting to.

Blow and what are the implications. So let's play it out here. So let's say the dollar is no longer the world's reserve currency. What are the implications, because I think about our investor audience and what they're thinking.

Yeah, well, so, Christina Leeda, it will make things more expensive for the US in the globe. But also, by the way it perversely, it would be a knock to emerging economies as well, because even though they complain about the US dollar, the US dollar is a channel for them to raise finance. Because if there are a lot of emerging governments around the world, who if they went out to the public bond market to sell a bond

But if you want to know what the real near term implications would be, you look at what happened in the UK when Teresa May proposed a budget that was unfounded, unfunded.

How that rights you?

That is the kind of freak out moment that we risk having if people do not want to buy, you know, if they lose some of their appetite for US.

Treasures jump in interest and you know, as long as you're talking about the UK, one of the things I was telling Christina was like, like, let's not forget like Brexit shows what a real self inflicted wound can look like, and the US keep doing this, like, you know, can show you what what the worst case scenario could look like.

Yeah, all right, guys, that is a wrap, so appreciate it. It is the cover story of the new issue of Bloomberg Business Week, as we said, out on newsstands, on the Bloomberg Tervel at Bloomberg dot com, slash BusinessWeek or thanks to end. A current global economy reporter at Bloomberg News in our DC Bureau, and Christina Limblack, global economics editor at Bloomberg BusinessWeek here in studio along with Jill Weber, the editor of Bloomberg Business Week. Here in our interactive Broker studio.

You're listening to the Bloomberg Business Week podcast cats US live weekdays from two to five pm Easter on Bloomberg Radio, the Bloomberg Business App, and you too. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg eleven thirty.

I feel like you know, every day we get a bunch of headlines out of China, and the most recent or at least every night, China's economic recovery losing some momentum after we saw an initial burst and consumer and business activity early in the year, so it's been prompting

Yeah, I mean, I also think the next chapter. Investors are hungry for more information on China. Right Investors here, I think would like to know as much as possible and would like to get more insight on and understanding on how China.

Works, right, And I think we thought we had the playbook, and there's actually our next guest has written a book that's called The New China Playbook, Beyond Socialism and Capitalism. Kayu Jin is the author. She's also professor of economics at the London School of Economics. She joins Matt and me here in studio. Kay, you really good to have you here with us. We only have six minutes. I wish we had like twenty because I love this subject. But our Adam Minta wrote a story about what the

Well, first of all, that there's only one model that can work, Western style capitalism where China.

Has that we believe that's the only thing.

That that's the word, and that China has a centralized approach domined by an almighty state. It's not at all like that. It's the decentralized economic mechanisms, the mayor economy which I wrote about, that has galvanized creativity, innovation, pushing for reforms and even protecting the environment.

So how I mean, aside from reading your book, which I'm sure is a great step, right, how can investors better understand the Chinese economy how it works when we're constantly looking at headlines that are rife with missin I don't know if misinformation is too strong, but definitely they're biased.

Right, It's really important to separate hype from reality and the macro versus micro And even if the great leaders of any country, US and China say a lot of things, you might want not to read too much into the message and see what's actually going on on the ground. People who visit China will have a better view. People who look at data, which my book does and systematic

But getting on the ground is kind of what I was where I was going. Do you tell your students go to China? I mean, you can read my book, right, and you can study the country all you like, but if you don't go there, you're never going to really understand how this society works.

If people can go there, they'll form a much more positive impression than if they won't. But it's also important to suspend this cultural and historical lens and this bias that we inherently have and look at China in a different perspectives, see it for its own, see through a different lens.

Well, all right, slow down for a second, because what I mean many would say, you know, what is it in terms of China about human rights and restrictions. That's true, right in terms of what's at on social media. But are you saying and that folks in China coomfortable with that and that protectionism that their leaders are giving them.

There's an implicit contract historically, since history between the people and the government that there's some level of deference, although not blind submission, in exchange for security, government accountability, responsibility, and economic delivery. That still holds today. They should talk to people on the ground and Chinese people ask them what they feel about these politicals.

Everybody, though, help me out here with a younger generation, Like there's differently stories about unemployment rate in China surging to a record of twenty percent, tell me that there aren't younger Chinese individuals are like this isn't working for me.

The new generation is super important for China's future. It's going to shape it, and it's meaning a relationship with the world. They're a positive force because look, they like to spend and borrow, not as save as much, and they're quite open minded and their values converge with the West. But today the pressing problem is that education has raised ahead of the economy, and many of the highly educated are not productively deployed.

We do see an opaqueness though, right when jack Ma disappears or when a Bloomberg journalist is arrested and not heard from for a year, that's difficult for us to wrap our heads around. Is that something that Chinese people grow up understanding? Is that something that Chinese people accept?

And what are we getting wrong about that? Because that's happening.

Yeah, that spooks people, That spooks investors and confidence, which is what is missing the Chinese economy today. But look, you know the old playbook, it was about building factories, industrialization. You didn't need that much in.

Go back to ye like missing journalists or missing jack Ma.

Jackimad is called back now he's good.

A year later. But it was really odd, right and here's a very prominent, you know, technology global figure and someone that China was proud of in terms of what he had built. So how do what did we get wrong about that? Or how do you?

In the In the US, capital can arguably rises above politics. In China that can never be the case. This is why China's not a capitalist society. Jack Maw, without going to his exceptional case, is now needed very much entrepreneurs like him because the economy is needed. And so important thing to know is that policy can swift radically, change dramatically. Never read anything as permanent.

But are you saying that it's okay for a government to just disappear people and that makes investors? That not make you uncomfortable even as a citizen, That would worry me as a person.

It's not okay at all. And the government is learning the painful lesson of by by seeing that the economy hasn't rebound as quickly, that investors are not rushing back to look into China, that private entrepreneurs might be holding back. It's all happening today. That's a lesson.

K you, what is the global value chain going forward? In China's role in that? Because it's been the manufacturer to the world and we were all we all benefited by it. Right, goods cost very little, But what is you know, their value chain going forward?

China's aspiration is not really to compete become like us. It wants to be a bigger, smarter Germany. That means bolstered by the triangle of AI, communications and data. They want to think themselves as a technical industrial power, not a knowledge financialized economy like the youth.

But can they get there with the concerns and kind of nervousness that many other worlds feel right now?

Now you see comes to Chinese is why it's so hard to lead China. Right, it's so hard to If you step from outside, you're thinking, oh, this environment can never foster innovation.

I don't.

I don't agree necessarily with that, because on the ground, the domestic innovation system is all encompassing. This is a massive market form. Companies think that this is the fitness ground to train their own their own companies. And there's a close proximity proximity between AI, autonomous vehicles and chip industries that stimulate demands. I want to underestimate China's central advantages in technology.

Ran out of time.

Come back, we need more time.

I'd love to. I wish we had great to be with you. I wish we had more time. So come back and let's continue this wonderful I would love it. Kenyu Jin, Professor Economics. That let's see the London School of Economics. Her book is called The New China Playbook Beyond Socialism and Capitalism. It is out now. This is Bloomberg.

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

All right, let's get to our guests, because I'm so delighted. We are so delighted to have back with us Marketshow President CEO at Aart finance here in our studio. So great to have you here.

How are you, Carol? I'm doing fantastic. Thank you, Good to see you again.

Yeah, it's great to see you. What I was thinking about it, I kind of was going back. It was about a year ago or so, the Equality Summit. You and John O'Brien and we talked about, you know, more diversity, certainly in the financial world. There were some really dismal statistics that are out there, and I think I shared them with you and everybody who was there. Are we getting better? You have some good news we're going to get into but are we getting better?

We are getting better at the margin, But I do believe we can't take solace in just getting better, right, We've got to continue to improve. What we're really working towards is improving several generations of deficit that we've built in terms of investment, acumen, wealth building, and really creating new opportunities for generations that come after us. So we're working doubly as hard to try to make up for lost time.

Yeah, I think it's incredibly important, and you know, we've covered this story for a long time. What you're doing now is you're helping kids that graduate from historically black colleges and universities to get jobs in finance. And as Carol pointed out, they're drastically underrepresented. Underrepresented even when you look at you know, the breakdown of wherever you are locally.

Statistic here's one Yeah, diverse owned financial firms control just one point four percent of the eighty two trillion dollars of US investment fund assets. This was a foundation as of late twenty twenty one.

I mean, it's even a problem if you just look at the breakdown of employees that make banks right, especially on the like on the levels where people earn real money, like investment bankers.

And it's critical because in this economy, in our economic system, investing of capital and the return that you benefit from that is one of the critical ways to build wealth. I mean, there's a statistic that I heard at a conference a couple of weeks ago. It said, if you go back to nineteen seventy and you look at real GP growth since nineteen seventy, you're talking two to three

Well, tell us about this program that you guys are doing at your company, and you've got the you know or your institution, your organization. You've got backing from some really well known firms, certainly in the alt investment space. We're talking about Apollo, We're talking about areas, we're talking about oak, oak tree, oak tree.

Rather oak power markets powers.

But I'm just thinking about you know, they want a more diverse group. They've talked about it. How has their involvement made a difference.

Well, it's critically important that you have some of the biggest names in the industry making a commitment to this issue of diversity in the workplace in the investment world. I believe what's most critical is that these three firms that are competitive in many elements of this business have recognized that this is a systemic problem. Therefore, we need

But one of the things it's tricky, and you talked about this when we did the panel a year ago, is being at an organization where you are rare and one of the lone individuals, a black individual among companies that are still largely white. So how do you think about that? Folks ready to be in that environment? You yourself were in that environment.

I was in that very environment when I came out of business school in two thousand and five. I was an equity research analyst, and I was one of the only black people in the entire division Bank of America, A Bank of America. And you know, times have changed, but that was less than twenty years ago, almost twenty I'm not that old yet, but almost twenty years ago.

Easy, right, Not not easy at all.

It requires a level of self assuredness that I think people don't fully appreciate. Right to be able to go into work in a place where you're the only person that looks like you, there's not a ton of shared experience, and to be able to perform and outperform every day requires a level of grit that's not rewarded all the time.

That's brilliant. And it's got to be a huge jump also from an HBCU into one of these private equity firms. Like you went to Duke for your MBA, right, so that must have also been a pretty you must have also been pretty lonely in that MBA program, right, Well.

I will say that, And this comes full circle around what's happening in alternative investments. There are other industries that have tried to recognize the importance of diversity and inclusion early on, and I think the banks started this really back in the late eighties early nineties, and the investment banks did. Business schools have done well. My experience at Duke was actually pretty diverse. They did a great job.

Has got to be a part of their by the way, and not entirely out of altruistic reasons, I assume, right, because if you have more diversity, you can also make more money. You can generate more revenue, you can fatten your margins. You need have people who think think differently.

The basic tenon of capitalism. Okay, more people doing good work creates more profit, right, And if you believe in GDP growth right totally, more people being productive increases GDP. So it's to the benefit of these companies, is to the benefit of this country that every man, woman and child that's in this country operates at their highest potential and their highest place of potential.

Diversity of thought is one thing, but this is what you and I were talking about, and because I get a little you know, cranky that we've got these really wealthy companies and yet not everybody is benefiting in terms of workers that are there. Well, I know we'll get into this little bit later. You raise everyone up, you think about you grow the economy. There's more people who have money to put to work, right.

And as part as society.

I want to throw it over to you, Matt, because I feel like you had you were thinking about financial literacy.

You were thinking so I think they're two separate things, right. One thing that the market is that you've done is you've got fourteen kids from these HBCU schools that are now going to advance into private equity.

First graduating class, first graduating.

Class, which I think is amazing. So you're you're placing these kids. Another thing that's separate is financial literacy, which may not just be, you know, a racial inequality problem. I never learned anything about right how to run my money and tell us forty and as a result, I have a lot less than I probably should. But we just But so are you doing both because you're helping these kids also in a sense, be financially literate by

Right, So I will say for the kids that are in our program directly, we want to imbue them all with a sense of investment acumen and a healthy sense of where they feel comfortable taking risk. Right, That's what largely I believe twenty first century financial literacy is about. It's no longer about how to set up a checking account in a savings account, but it's about you know, how do you think about managing your tax liabilities?

Right?

How do you think about establishing your retirement accounts? You know, if you're five twenty nine counts, if you want to have kids, how do you think about financial planning and managing your risk? Knowing when to be liquid, knowing when to be illiquid. All of that just comes with comfort and confidence. And so it goes back to the investment point.

You're investing earlier. You can't really build wealth through work. I was just walking down the street and I saw a sign for a certificate of a deposit that earns you five and a half percent and then I got back to my computer and saw that wage growth is only four and a half percent, So you can money makes more money than what.

You got to invest. You know, the point that we're talking about is it's very hard to earn your way to wealth. You can, you know, get different levels of education and you make these step function increases. Right, you get an undergrad degree, you're going to have a better job than you did if with a high school diploma. You get a graduate degree, hopefully you'll have a better

And so if you can.

Create a dialogue right where students feel is comfortable talking about the best new album from Beyonce or Drake, or you know what's happening in the National Football League or you know what piece of art they like, as they have about the financial decisions they're making, then you have true ownership and true confidence. And that's what it takes to build true you know, personal financial literacy.

By the way, the best financial literacy conversation I ever had was an interview with ray Lewis on the floor of the New York Stock Exchange during the draft. He was in town to help these kids not blow you know, the millions of dollars they were getting there, which a surprising number of them actually do, right.

I mean, I look at Tom Brady. Tom Brady's made a small mint playing football. Yeah, he is going to make more money being a broadcaster than he ever made playing football. But that conversation started with what do I do next? How do I properly price myself in that market? Is that something that I can only return on? And ray lewis a great job, I mean, one of my favorite all time football players, but he's also built a brand for himself, you know, as part of a part of color commentating for the NFL.

And what's and he's in a hugely successful investor, right.

No, but it's tragic how many athletes, professional athletes, to end up with no money ultimately. And so that's a whole other other chapter. What I'm curious is going back to the firms Apollo, Aras, Oatree that are involved, why weren't they reaching out beforehand helped me out there? Because they underst stood the importance of diversity of thought or diversity investments, Why weren't they doing it beforehand?

It's a great question.

It's a conversation around.

That, and I think it's rooted in a couple of things. Number One, these firms grew very very fast. And so again they started off small, largely in the nineties, right, started off small, did not have full fledged HR departments, right, They were recruiting from schools that their current employees and

Right.

They could be kids at HBCUs, they could be women, they could be folks overseas. So at a certain point in time, once you scale, you say I need to find the best talent that I can find, even if it takes a little bit more.

Effort after you scale, after you start.

And so the key is right, that's the generation where we are now what I do believe, and I see it in new firms that are starting up. People are starting to think right off the bat, I'm going to spend a little bit more time and effort in building my team more diverse so that I don't have to do it down the line. And that's just part of evolution.

Right.

We went through generations where people said, I'm going to start a team and it's not going to be diverse, and I'm going to grow it as fast as I can and it's not going to be diverse, and I'm gonna end up with ex returns. And I'm happy with that because all I'm benchmarking and against is people doing the same thing.

Right.

Exactly now, we're in an.

Era where it's been proven you bring a diverse workforce in. I mean, Mackenzie's done the STADI, it's a lot of the consultants and academia has done the studies. More diverse teams generate higher risk adjusted returns. It's the bedrock of

And they need to be greedy enough to overcome their biases.

Greedy enough to overcome their bias.

That's exactly right.

We're gonna get t shirts printed out.

I like it.

No, it's like it's brilliant. Like you think about the biaseness that's been in recruiting, right, and you've really change it dramatically. We've run out of time. You're always welcome, erl thank you. Love to hear more as the graduates continue and how they're doing, so come back soon.

Yeah, a lot want to follow their careers. It's so exciting.

It is pretty cool stuff.

Hopefully you'll have some of them on in years to come.

Actually that would be great.

I think they'll there'll be folks that are moving the needle in this industry of finance.

I agree. All right, Marcus, thank you, be wow, thank you so much. Markus Shaw, his chief executive officer at All Finance. Here in our interactive broker's.

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

We've had a lot when it comes to artificial intelligence and certainly the next level AI We heard Pellant here earlier in the week, the CEO saying in terms of their strategy, they said, they're just going to take the whole market. We just talked about it with Ed Ludlow about Alphabet and Google.

IBM has brought Watson back.

IBM has brought Watson back.

I mean to no fair fan fair at all.

Hey, I's been around for a long time. We's just getting a lot smarter and we can actually talk to it if you will, or talk with it. So let's get another take on AI with us is Favorite Shaithe. He is co founder and CEO at the conversational messaging platform for commerce, marketing and support there called gup shop, and he's here in our Bloomberg Interactive Brokers studio Berry. Good to have you here with Matt and myself. Tell us a little bit. You guys are all in on AI.

Yeah, first, lead Carol, Matt, thanks for having me here. That's exactly right, right, helping businesses and brands build these conversational experiences or chatbots through which they can engage with customers. So for a consumer. The consumer experiences that chatting with the business is just as easy as chatting with a friend or family member. You ask them questions, and through those conversations you can get deals, offers, shopping payments, customer support, troubleshooting, and so on.

Like so or not.

About Matt Well, I have used some chatbots recently with a couple of your clients, for example Verizon, and the experience I had was nothing like a conversation. In fact, I thought it might have been the dumbest piece of technology that I've ever interacted with. Now, I was also angry at the time, to be fair about Verizon, nothing

No, I think it's more like six to twelve months now, right. What's changed, Okay, what's fundamentally changed a few months ago is that these large language models got It was a huge step function in capability, meaning it just dramatic improvement, and all of those are now trickling into these experiences. So it takes a little bit of time, but in the next few it's a matter of months because the hard part is done. It just has to be integrated.

It's a big jump. What was it all of a sudden because AI, as we said, right, this has been around. But what happened? What was the big jump in particular?

Yeah, now that's a great question.

See AI.

I mean I did my graduate research twenty thirty years ago in AI, and it's been going around for seventy eighty years, right, AA has been making constant progress out of the limelight. I think what happened literally over the last six months was it reached a point and basically three things came together, right. One is on the software algorithm side, there was ideas around deep learning and the transformer, which was amazing. The other is More's law, right, hardware

Understands landing tipping point where all of the six became actually really productive.

So from a media standpoint, it looks like it went from nothing to something. But you know, AI research has been going on making steady progress.

But I mean when I talk to a chat bot online at any of these big companies, or if I get a computer on the hotline, it's just a horribly frustrating experience. And your business is very impressive a cup shop, you have a ton of clients, you have marquee investors. You know, you have a huge one point four billion dollar valuation. So I have a lot of respect for that.

So I'll answer there are two aspects to it, right. Once is if you just step away from the US for a second, and the rest of the world where you don't have as many customer support agents as many businesses investing in these things. For consumers, if the baseline is zero, A chatbot it works half the time is a miracle, right, because it solves a lot of problems. You don't have to wait on hold, you don't have to wait in long queues, and so on. So there's a lot of people around the world.

If your problem is solved, But if your problem isn't solved, then there's another two or three minutes that you've wasted talking to What you're.

Saying is this is what we're finding. The more information that goes into it, it's going to get better customs. Fair we've all been in that point where we're so you're.

Saying it's going to improve something, but now now we are on the cusp of it. Okay, because of what open ai and there's just one example, but there are many other models, you know, Meta and Google and even the open source community is just driving it. So it's solve the hard part of understanding language, which is the hardest thing. The second bit is packaging it into specific business conversations. That's remaining, but that's now like weeks or

How do you protect the accuracy and the purity of the information. It's not a case of we're doing something that we're googling, you know later on and we're trying to do our own research.

And that's that's exactly what takes time.

Right.

These general language models are simple word prediction, meaning they just make up their generative right, so they kind of make up an answer. It may not be accurate. So but in a business context, you need accurate information, so we do. There's a process called fine tuning, there's something called prompt engineering, and then you also link it to plugins which give you the actual data. Right, so for example,

It's we're going to know as users that it's the right answer.

Well, so the business, the business has the responsibility and the owners to make sure because they also have the liability for what the bought says, right, So I think they are. This is exactly where we work with them to make sure that the conversations are precise, that are accurate, the information works, and so on, and then there's a lot of deba and so on. Right, it was Look, the web wasn't built overnight, and neither will these chat bots.

I'm excited. I'm looking forward to the future. I'm just saying you have a little time, a little bit hurt.

She's going to learn her language. It takes some time. Exactly how busy are you? Just ten seconds? Are people calling you off the phone or just give me an idea?

Yeah, this is accelerating. I mean we are doubling business here over year, and it's accelerating even more.

All right, well, come on back so we can you know, make Matt happy. That is future chat GBT experiences will be better.

Even better. The next time I'm here, you'll talk to my chatbot.

Ye, all right, here he'll do the interviews for you.

All Right, we get a run.

You're listening to the Bloomberg Business week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business App, and you too. You can also listen live to our flag Ship New York station Just Say Alexa play Bloomberg You Love Them. Thirty.

Something we wanted to get to yesterday and got kind of thrown off course course course because of the budget negotiations, is just kind of doing a deep dive into Apple because it's definitely been an outperformer, easily outperforming the Nasdaq one hundred this year. Just a little bit higher in today's session, but it's up more than thirty percent here this year. So a lot of news that has been

Mark.

It is good to have you here with us, and one of the reasons we kind of wanted to dig into it is there are some questions about the valuation, you know, of Apple and what are the catalysts that kind of get this there. When you look at this company, what does the next six to twelve months look like?

Well, the next six to twelve months is going to be almost entirely about the upcoming reality headset.

Right.

Apple will be announcing this new mixed reality product which uses both.

AR and VR.

AR meaning that you can see your real world through the lenses, right VR meaning you're all encompassed, all surrounded by your three D content.

Right, so a mix of both.

They're going to announce that product on June fifth, so in about three weeks from now at their Developers conference. This is going to be their first major new product since the Apple Watch was announced almost eight years ago, right or went on sale, I should say eight years ago. The product is alf was announced in twenty fourteen, and so this is going to be one of Tim Cook's last big swings as CEO, and the company believes that

So the difference between this and the Watch, and a lot of people are making that comparison mark because you know, the watch at first had kind of lackluster take up, but it wasn't nearly as clunky as this thing is. I mean, is it going to have a separate battery pack? Is it going to be a whole helmet or just the goggles? You know, it's gonna be difficult to keep on your head. Can you walk around with it?

On?

What's the story with this product?

So the goal is for this product to be as portable as possible. Right, So this is going to be a standalone headset, all in one, as you mentioned, save for the battery. The battery will be external, right, It'll last about two to three hours per battery pack. You'll be able to swap those out if you want throughout the day or charge over a connection to a power adapter. And the idea is you will be able to walk around with it.

Right.

This is not something that you're necessarily going to have to be. It's not necessary something you'll have to be stationary to use.

Right.

The idea is that you could wear it in one room in your home or in your office. And let's say you're playing a game right in your living room, right, and so you're in your living room, knows the game was being played in your living room, and then you walk to your kitchen and it will open Safari because the last time you were in your kitchen, you were

You know, it's funny.

One demo internally, one presentation about the product talked about wearing this thing to a party. Right, That's not something anyone is ever going to do.

I feel like a person that where's this thing? Won't be invited to any parties there You're hanging out mom's basement is more likely. Dave Lee wrote an opinion column on this, suggesting that Apple aim it more to the peloton crowd than the PlayStation crowd. What do you think about that mark? Because Apple has really embraced the healthcare market.

I think this product is going to take a scattershot approach, and so I don't think that's correct in terms of where they're going to market it towards. I think that they see this as a multipurpose device that could do essentially whatever you want it to do, right, Like so the iPad, right, you can do anything on the iPad for making FaceTime calls, to writing software, to using software, to playing games to watching movies. Everyone knows all the use cases you can have with an iPad, same with

How it makes improvements, right.

And that that's going to be a core part of the product, as well as being able to work with people remotely and do co presence and collaboration remotely. Right, So me and you right in some universe could both have this headset.

That's terrifying right there, But go ahead, Mark.

It's terrifying if Mad has the headset. But like you know, he could be using the headset in New York, I could be using in LA and we can be working on a presentation together remotely while facetiming all on virtual reality. So right, I'm not and I say it could be.

I'm not saying we'll want to.

Right, So Mark, I'm curious, like what kind of product does this become in terms of, you know, revenue size. I'm looking at right. iPhone revenue for the second quarter was what over fifty one billion dollars. If I look at wearables, it was about an eight point seven six billion dollar business. I mean, how big a business are folks thinking that this could become? For Apple?

So they're anticipating selling about nine hundred k units in the first year, right at a price point around three thousand dollars, So in terms of revenue, you're talking about three billion dollars per year.

That's at the get go.

But the company does anticipate or hope that this becomes about the size of the Apple Watch or the iPad right at some point, and that could be a twenty to thirty billion dollar a year annual business. Now will that ever happen? I don't know, right, that's their hope. Those are their internal projections. But I am quite optimistic about this device. I think it's going to follow a similar similar trajectory to the Apple Watch, where the get

And they like, don't judge Matt and me, but we're both are saying, well, I use my watch to check the time.

I mean, we're twice Mark's age, but yeah, I use it. Like when I'm cooking, I have the timer right here and I just bang, you know, three minutes, aside of him frying some chicken steaks. And so that's probably the main thing I use it for other than healthcare stuff, right, tracking my sleep, tracking my heart, I can text.

Though it's a really cool I don't know, I can see how it becomes a bigger part. Can I ask you something I want to go back to how you started that? Is this really Tim Cook's last hurd And do we need to start thinking about a Apple post Tim Cook? Already?

Uh?

No, one, No, I don't think it's his last.

It's one of his last.

I think the last will probably be the car. And so no, I'm not already thinking. Of course, Actually I am thinking about a post Tim Cook Apple, But this is not something that's going to happen in the near term, right, I mean, he's in his early sixties, ball bikers in his early seventies, and he's still at Disney, And you get the sense that they're built kind of similar in terms of, you know, their desire to be part of the company.

Right.

I would guess that.

If Tim Cook, you know, does eventually step down, or when Tim Cook eventually steps down, he'll probably still you know, be on the board maybe they'll make him chairman or something.

Right, and they'll come back after a successor fails.

Oh, I don't know if his successor will fail. I don't know who successor for sure will be. But I think that I would just guess that Tim Cook would do a better job than Bob Ayger in terms of planning out, you know, a succession plan there, right. I mean it felt like the Bob Iger transition in his departure at at the height of COVID right was extraordinarily abrupt. I would imagine that Apple's succession plan will not be as abrupt.

As who do you think, one mark? Who are the people in the running to be his successor?

Yeah, you know there's four people right now that I have my eye on. Number one is Jeff Williams.

He's the COO.

He's in charge of all the health initiatives company wide operations in the design team reports to him now, and he led engineering for the Apple Watch, and he's quite intimately involved with this headset project as well, and he's essentially the chief decision maker on new products at Apple, right, And so he would be if Tim Cook were to step down the next three years, or if something were to happen or they needed to do an emergency succession plan.

And then there's.

John John Turnas. He comes up because he's the youngest member of the Apple executive team. So Tim Cook weren't to retire for eight more years. You want someone a bit younger, and he's head of hardware engineering.

All right, Mark love this. I was so sure Matt was going to go into the Apple car, but I guess that'll be.

Well, I'm waiting. Mark comes up with, all.

Right, Markerman, we love it. Chief Technology Coursepond at Bloomberg News. Thank you, Thank you from our La bureau.

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Bloomer News putting out a story reporting that an international developer backed by Tiger Woods and justin Timberlake, We're joining an effort to build a sprawling residential community with stores and a revamped golf course in Wellington. It's a South Florida equestrian town near Palm Beach. It's also Wellington has been I guess home to Microsoft co founder Bill Gates' heard of Tommy Lee Jones, Bruce Springsteen.

Tommy Lee Jones, the actor, that's the actor.

They've owned homes there apparently. I don't know if they still do, but they have.

That is interesting, kind of I guess.

I guess.

So I'm not really a South Florida guy like the.

Keys, you know, Palm Beach kind of nice.

Yeah, it's okay, I've been there. Okay, you know the state of the breakers. Did the whole golf thing.

Kind of a kind of a New york A kind of.

Yeah, it was pretty good. I mean, if I have vacation time, I'm going to go somewhere different, Okay, if I want to go to the beach, to a secluded beach. If I want to move somewhere like, you know, I would rather have the mountains. I'm more of a Montana person.

I have seen you wear a cowboy hates actually around cowboy boots. Do you have cowboy boots?

I have a few pairs of cowboys every time I go to Dallas, you know, and I tend to buy a pairent. My goddaughter lives in Dallas, so I go there occasionally. I have to go watch the Giants play the Cowboys.

We want to talk South Florida with someone who knows a lot about what's going on when it comes to South Florida real estate. Daniel de la Vega, president of One Southby's International Realty, joins us on Zoom from Miami. Daniel, good to be talking with you and great to have you here with Matt myself. Hey, talk to U a little bit about South Florida. And what's going on. What are we seeing in terms of prices and valuations.

You know, South Florida is in an incredible place right now. First quarter was incredible. I want to talk about the numbers. I want to give you all the information that the viewers want. But first, Matt, what a segue into talking about South Florida.

We got to get you down here. Maybe you have not experienced it with me yet, so.

I think you know part of it.

Daniel's gonna have a place that you love.

I'm a little bit bitter because, to be honest, a lot of my friends from the Upper West Side, previously from the Upper West Side of New York City, are now living down in West Palm Beach, and it's like one after the other after the other, and now it's like I don't know anyone else up here.

Yeah, I mean, listen, we're representing Peer sixty six in Fort Lauderdale, which is Tavistock Development Group, which you previously mentioned in regards to the development in Wellington, and that is just the epitome of South Florida living with a marina, with a hotel with residences. So they do a really, really great job and I'm sure Wellington is going to be spectacular as well. But look, South Florida is doing incredibly well. Guys from an you see.

You keep saying yeah, give us some numbers because you keep saying incredible.

We saw we saw a major increase in closed sales, average sales price, new pending sales, months of inventory, yes, is up.

But in closed sales in all of South Florida Q four.

Twenty two over Q one, we saw fourteen point seven percent increase.

Average sales price. We saw a.

Six point six percent increase. New pending sales were up sixty six percent. I mean, that's an incredible statistic, right, And again, months of inventory in both single family homes and condominiums are up on average twenty percent. So that's good because as we see people moving to South Florida, we want them to feel like it's an affordable place for them to live. So as I see the increase in inventory as a positive for our market.

I mean, one of my best friends is a I won't say his name, but Morgan Stanley guy. He was up here now he's moved down there. His office is, he says, just a couple of blocks away from his place in West Pond Beach, and he says the restaurants and the bars that he and his you know, click Noe love from up here all operate down there as well. So is it really just like a slice of Manhattan, you know in Florida.

Yeah.

I mean, look, we've always said Manhattan South, but I think we're becoming Manhattan more and more. I mean, we had one hundred and thirty new companies moved to Miami alone. We had we had twelve percent of the five point eight million new business application filed nationally happen in the state of Florida. A lot of that happening in South Florida. You just heard the numbers from Miami. So we've got twelve hundred and seventeen people moving here a day. I

That moves here.

I mean traditionally saw we traditionally, we saw flight capital, we saw a lot of Latin America. We're seeing fifty percent more domestic now over the last call it twenty four months. So it's people living here to live here, so they want those things that you're talking about, man, and we're delivering them. I mean, look, just think West Palmer had lunch at the Bar at Alicia, an incredible restaurant.

It's a sister restaurant, the st Ambrose.

So everybody's thinking creatively how they can bring new brands to our market.

Daniel, how much of it is finance and financial types that are moving there?

Eighty percent of our transactions.

Are cash that was happening during the pandemic and we're still seeing that happen now.

No, no, no, no, I mean how much of it is people from the financial sector, because we've done those stories a lot. How much that's okay, that's okay, Yeah.

It's it's you know, I would say it's about fifty percent of the people moving in South Florida from the sector.

Yeah, it really is. Like Wall Street has moved down, not just New York, right, but Chicago is one of the big Citadel offices, Ken Griffin's company moving down there?

Is it?

Is it just pushing property values up in the surrounding communities as well. I imagine, you know, I'm from a small town in Ohio, Grandville, right outside of Columbus. Intel build a fabric a factory near us, and all of a sudden, everybody's property values have like doubled. Do you see that as well down there?

Yeah, it's the same here, and it's the secondary and tertiary markets as well within South Florida, not just the waterfront ultra luxury markets.

We have to deal with affordability. We are dealing with it with affordability.

There's some new legislation that's come down which allows for more density. For certain I'm not an affordable guy, but you know, it's it's very to do it for our markets because I think it's something that's needed so we can really service every sector.

Daniel, I'm curious. I'm looking at your website. There are properties below a million dollars, and then there's properties that are for tens of millions of dollars or twenty five million dollars. So give me an idea in terms of the type of activity you have. What types of properties are selling the most.

The ultra luxury market is probably trading for the highest prices per square foot. We're seeing the most activity in the one to five million dollar price point. That's where you're seeing a lot of the inventory increases as well, whether you look at the Florida numbers or just the South Florida numbers or the.

Entire East Coast of Florida numbers where we operate.

So I would say that that's been the segment where you're seeing the most amount of transactions, definitely.

And that's where you said how much what was the percentage that most of these are done in cash? Though most of this is done in cash.

Yeah, eighty percent of our transactions are done in cash. And we're still seeing that Q one, you know, with interest rates going up the way they are, which has definitely affected the market.

I think Q four saw it, you know.

I mean, we companies across the country were down, you know, over forty percent.

Think Guide you didn't have me on then.

But if people are doing mostly cash, right, they don't care about the interest rates.

They don't care about the interest rates so much.

In a lot of our new development products, whether it's Peer sixty six that I just mentioned, if we're lauderd or the Saint Regis residences here in Miami on brickles, these.

Buyers have a longer sort of horizon as to when they're going to move in, right, So it's a three year, four year cycle, and they're okay because they know that interest rates are temporary.

Little footnote here when the hurricanes come in, this is not where they go, right is Miami is West Palm Beach. Those those people are safer than like Naples.

Right.

Well, I would say that we're all in harm's way when mother Nature wants to have their.

Way, but it's more up towards the Gulf.

Happening traditionally, Yeah, net that traditionally.

What's happened over the last five years is most of them have been going through the golf or missing us here in South Florida and up the eastern, up.

The East coast. So we've been very lucky, and I pray that we continue to do luck.

All right, got to leave it on that note. Hey, Daniel, great to check in with. You appreciate it. Daniel de la Fega, president of Once Southeby's Internet, calling to come down on zoom from Miami.

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

Well, the new issue, as you know, Bloomberg Business Week is out and that means we've got the latest and greatest from our Pursuits team. Chris Rouser is the editor of Pursuits and he joins us now with a look at the section and Chris this week, I gotta say, Elon Musk said working from home is morally wrong, and I got to stay. Based on the Pursuits opener, maybe there are more folks working that we realized because the world is what lining up once again for the neckties.

And this is not something that I expected. And then I was invited to like a cool dinner at the Odeon in New York by Romez for the necktie. They were like, everyone's buying neckties. Our necktie sales are back to where they were before the pandemic, and people are really into it, even though can I just say you.

Don't have a necktie and I know you have an important meeting coming out?

Well, I mean, I don't know if you remember, but before the pandemic I would wear a tie every day.

You de bow tie.

Often and in a lot of people in this office, would you know, in there's no doubt that offices are less formal like across America the world, if in finance were usually there's sustrict rules. Here at Bloomberg used to be all the guys were in suits with ties, and now it's definitely not that way. But nonetheless, people are still shopping for ties and hiat.

Ties, and they also want quality, which you know, there's a line in the story and I feel like my mom is always like there was always quality over quantity, and that is certainly something you know. Amez is certainly a brand where it's not a tie for fifty bucks or thirty bucks or.

Right so an entry necktie like straight ties two hundred and forty dollars at Rmez. That's a barrier to entry for a lot of people. It's a lot of money. But they're special ties and they're handmade and the quality is incredible, and it reflects the fact that people want to buy ties that feels special, that are a special occasion.

It's like a great accessory again.

Yes, yeah, I mean it's something that you choose that speaks about you. A lot of the people we talked to said, you know, if you want to seal the deal, you have to wear a tie, and it has to be something cool.

You know, there used to be rules, right, like you don't wear a striped tie with a striped shirt. But people are just mixing it up and having some fun.

Yeah, And I think that's part of why people are coming back to ties, because if no one wants to go back to something that feels really strict and restrictive and old fashioned. But people are wearing ties in different ways.

I can I ask you, is really the knit tie?

Possibly back to listen, I have always been in favor of the knick tie. I'm a big knit tie wear. And yes, so Todd Snyder, which is a men'swear brand which I love and they often win awards. Is very cool.

We missed one really big element. And there's some great pictures as a part of this story about women also wearing ties. Oh yeah, this which I love.

This is great. I mean, you know, there was the met Gala which honored Carl Lagerfeld this year, and so a lot of that kind of Chanelle look does have like a lot of bow kind of like seet kind of looks. So it wasn't surprising to see that we saw a bunch of tie type things there, but just generally, like you know, Kristin Stewart, Florence Pugh wore a tie recently to a screening in New York, and Lizzie Kaplan wore this really great big suit and fat tie to

I got to finish on one point only because a big part of our audience here at Bloomberg, as you well know and at Pursuits is the finance world. And you guys did talk to a managing director wealth management advisor at Merrill who lives in Delray Beach, Florida, and he's ruined ties.

Yeah.

We talked to this great guy who said, you know, you don't see ties as much at work, but if you want to seal a deal and you're there really to do business, you have to wear a tie. And a lot of people said, you know, we talked to real estate brokers who said the same thing, like, if you're there to get serious, you gotta wear a tie.

I love that you guys always talk to the folks over at million dollar listing is because they like to talk. It's funny how it works that way. All right, So from Ties to Lamborghini, I have no easy transition, but I have to say, Hannah Elliott, our car columnist, your car columnist, she was like, kind of it felt like she really didn't want to like this.

Yeah.

So Hannah drives incredible cars all the time, and the thing about reviewing incredible cars is that they're mostly incredible, so it's a lot of the reviews are positive. But here in this case, she went to test drive the Lamborghini Strato, which is a two hundred and seventy three thousand dollars car. It's kind of part of the last run of the Hurrican line of cars for a Lambeau, and it's an off road car. And she went into this thinking this is not gonna work. You know, Lamborghini

I love.

At the end of it, she's like, I just wanted another ride. So she was definitely convinced. What a great like one eighties From the beginning, where do you want to go? We can talk wines, we can talk shelves.

You know, we could talk just a little about shelves.

This is a very visual story.

How did this come on? Because I'm like, Chris, I got this idea literally, So there's a story we have about wall shelves.

And when we do these market stories about home decor, sometimes we shoot them, sometimes we use the art from the companies. And we were like, what is who is making really cool stuff in what format? And we were looking at all the new stuff from this yere and there's just so many cool shelves, and shelves are such an afterthought, that's true, and architects and designers are doing industrial designers are doing really great jobs with them. So

I love that line that I wrote. It's so cool and.

It's by this New York artist, Margaret DeMarco. And it looks like you made a sort of a drip castle. It's a drip sand castle but out of wood, and you use it as a shelf, and it's just if you walked into someone's room and they had a couple of those, you'd be like, oh my gosh, I love it.

Here can I just say there's one in there, and you guys are going to just have to read it or go online and check it out. But at first, I'm like, is that my ciest bully's shelf? Did they actually put that in there? You know what I'm talking about?

Oh?

Yes, yeah, yeah, yah yeah, But it's not it's not.

It's because it floats on your wall, so you kind of put it up there.

It's definitely not the bully shoe. Yeah, but it looks like that. Just quickly, we're running out of time, but I have to say, I love your wine reviewer, and she just talks about a new area in California where they're coming up with some great reds.

Allen wrote this great piece, which has been very very popular online because I think it really resonates with people. The hottest area of wine in California in terms of buzz and newness isn't Napa or Sonoma. It's Passo Roebules who also, who knew that it was pronounced Passo Robles.

I did not thank you for the pronunciation.

And it's just they're making really great cavernets. There's a lot of really exciting stuff at all price points and Allen really tells the story of how it came to be, and it's a great story. And now I want to go out and get a bunch of these bottles.

I saw the same thing. I looked at the list, and I also love what she said about the era. That part of it is this great you know. You they go from like warm days to cold nights and it makes for like the perfect grape.

It has a very like French like soil. It's like Bordeaux. And they also that, yeah, that exchange between day and night, the big temperature changes really tightens up the flavors and the grapes.

Yeah, there's a bunch of rowned varieties which are among my favorite. There's also a great wine cork which I've never seen or.

Wine wine opener yet.

Wine opener and just real quickly like thirty.

Yeah, so the Durand is not new. Occasionally for our the one feature we do stuff that's just the best. And it has these two prongs that go outside the cork that hold the cork together because a lot of times an old cork will be crumbly. And Ellen has corked and seen thousands of bottles of wine on corked and she's never seen it fail. So one hundred and thirty five dollars the durand.

All right, next time, I expect a necktie on anybuddy, Okay, or at least about time. All Right, We love Chris Rauser. He is the editor of Bloomberg Pursuits. Chris, thank you as always. You are listening to Bloomberg Business Week. Coming up, an international fast food player says it's making real progress and it's push for sustainability. How Wendy's is reducing its carbon footprint within the ultra competitive quick service restaurant space. That's coming up. This is Bloomberg.

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

Carol Master along with Matt Miller. Are you a chocolate or strawberry frosty kind of guy? Uh?

My chocolate? This is an odd question because when I was a kid, there was only one kind of frosty right what there was? I didn't know if it was any specific flavor. It was just a frosty. So now when I go to Wendy's and I ask for a frosty, they asked me what flavor. I'm like, come on, there's only one flavor. But apparently you can get multiple flavors.

You could get the flavor you don't want. All right, We are, of course talking about Wendy's. They do report earnings on Wednesday before the open. Something they've been doing and really other companies generally have been incorporating for years into their strategy and how they make financial decisions is ESG. We're talking about environmental, social and governance issues, which we

Yeah, great to be with both of you. And I will say, Matt, if you haven't tried a strawberry frosty yet, they came back to our restaurants and you're missing out, So definitely definitely give that.

One a try.

And look, I think that even the letters ESG are relatively new in terms of this area. But obviously companies Wendy's and others have been operating responsibly for decades. But I think what has changed is really the demands that those efforts really be formalized and that they be very

It seems to be a difficult business. I mean, like, if you want to do ESG, you don't want to be working at an oil producer or a hamburger seller, because you know that's one of the leading causes of climate change is raising beef, So how can you change that?

Yeah, it's it's got to be a partnership.

And so what you're referring to clearly are around greenhouse gas emissions. You know, we have set a science based target for greenhouse gas emissions productions and that will include

Leanda, what about garbage? And I think about food waste in particular.

I mean it's.

It's oh, food waste or plastic.

Food waste in particular that ends up in dumps and the methane that's produced off of that and other which is more problematic.

Food waste goes into your compost. Do you not compost that?

No, people throw out a lot of stuff and it ends up in the dump. That's apparently compost I do at home.

I I actually am fortunate to live in a community that has curbside food waste pickup. But that is unusual, and that's that's a really key piece is that I will say for Wendy's Restaurants, we actually waste very little. And I think that's not unusual for a company of our type because it's just a small footprint. And so you know, our operators get very good and have gotten very good over the years of only ordering what we're going to prepare and only preparing what we're going to be able to serve.

And really, guys are that.

Tight, so you're not throwing out a lot of stuff, and we we've actually done some audits on that and have found that but there's always opportunities to, you know, to be better. But certainly as you look at the supply chain, that's where a lot of that that waste may be occurring, particularly in agricultural products, and so it absolutely is a it's absolutely a focus for us. It's interesting and you you know, you mentioned plastics and maybe

Do we need to get rid of plastic.

Then well straws. What do you do about straws?

Why'd you know? Haven't you gotten rid of straws already?

Uh?

No, we still we still have We still have straws.

And I will say, you know, one of the commitments that we've made is that by twenty twenty six, one hundred percent of our customer facing packaging will be sustainably sourced. And so we're defining that as either recyclable, compostable, or reusable. And so we just put out our Corporate Responsibility Report a couple of weeks ago and reported that we're now

Have the infrastructure.

And we certainly don't control that, you know, at Wendy's, but certainly that's a great need of ensuring that there is infrastructure to be able to recycle or compost these materials when they're made available. And then the third piece is educating the consumer so that they know what to do, you know, with the packages that they have full disclosure.

I'm from Columbus, right, so I love Wendy's with all my heart. I mean I used to go and eat at store number one on Broad Street with my grandmother growing up, so I have a very special connection. But you definitely don't want to be giving out straws, do you. Isn't that the worst kind of possible c s R, sin ESG sin straws.

I don't.

I don't think i'd agree with that. And and really, I mean, in in the in the grand scheme of total packaging, you know, certainly items like you know, cups and wrappers and containers produce more more product challenge with straws and and and it's it's not unique to straws, but they're small, and so even if the material is technically recyclable, uh, you know, most facilities won't won't accept that.

I don't know, actually I walk around with a metal straw. I got my own little like reusable as wash them.

That's what we do.

Liliana, thank you so much. Liliana Esposito, Chief Corporate Affairs and Sustainability Officer at Wendy's On zoom from Dublin, Ohio.

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