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Hi, everyone, Welcome to the weekend edition of Bloomberg Business Week. Well, the next Trump administration is taking shape as the President elect named names for those he would like to hold top spots in his administration, including a special role for the world's wealthiest individual. More on that in just a moment.
Plus, the asset that's soaring to record highs, more than doubling this year and out performing the stock market could get a boost in a Trump White House. At least a lot of people are buying it and they think so. We're going to talk about that with the CEO of the cryptomnor Core Scientific.
Also a former administration insider, weighs in on the impact of Trump's second term for international trade, national security, and the US's contentious relationship with China. And speaking of trade policies, the Trump agenda may eat into your Thanksgiving dinner plans.
Next year.
All that to come, we begin with the tech billionaire with another project to run. In the days after the election, Donald Trump and Elon Musk seem to be riding the world's most intense contact high. Musk camped out with Trump's inner circle at mar Lago, showed up in family photos, and joined Trump's calls with world leaders. Perhaps that's what you get when you pour in at least one hundred and thirty two million dollars and counting into the president elects campaign.
Perhaps clearly a front row seat at running Donald Trump's government. Musk, along with former Republican presidential candidate and biotech entrepreneur Vivek Ramaswami, will lead what Trump calls the Department of Government Efficiency or DOGE in a claim to Elon's favorite cryptocurrency. So writes Bloomberg Business we correspondent and co host of the Elon Inc. Podcast, Max Chafkin. Max breaks it down.
Trump announced something that he had teased repeatedly on the campaign trail, something that Musk had talked about. This idea that Musk would be an advisor in the streamlining of government. And there's even a catching name for this. This is the Department of government efficiency. It's not a department in the in the sort of normal sense. And it's also unclear like how exactly how efficient they're going to be. When Elon Musk has a co chair of Vek Ramaswami, that's say, do.
You know what Tim's been saying, Hey, I'd been saying that it's like it's supposed to be a fishion.
Why are there two of them?
All?
Right?
This is and this is a joke that that that Democrats have pointed out and and critics are gonna are gonna seize on. And I think that the challenge here is that many of the things that Elon Musk has talked about wanting to do, cutting two trillion dollars from UH from the federal budget, or even if you start talking about some of these very specific things that he personally thinks is kind of dumb or useless, all of
that's gonna be politically difficult. When you're talking about gigantic cuts two trillion dollars, that's gonna mean Congress, it's gonna mean hard choices about important federal programs like Social Security that lots and lots of Republicans, you know, that majority in the House is going to be very, very narrow. But when you even talk about the sort of smaller things like you know, some defense thing, you know, a lot of this stuff is politically charged.
Right.
You have senators, congress people in various states who care about the jobs in those states. And Trump is going to need to govern and he's gonna need Republicans in the House and Senate to do that, even though Republicans control those those branches. But what and you know, selection of John Thune is as Speaker again, that's kind of a bit of a rebuke to Elon and kind of the hard right part of this coalition. They had wanted Rick Scott. So there's gonna be a lot of challenges here.
Of course, there are ways that Elon Musk can get paid even.
So one thing we should notice, Elon actually a company need the President elect to Washington. He was with lawmakers too. They gave him a standing ovation in addition to giving the president elect a standing ovation, So certainly gives an
idea how he's seen in the Republican Party right now. Max, the China part of Elon Musk's story I keep coming back to because he's got this very close relationship that I wonder if it could be, in the words of like Jeff Bezos, a complexifier when it comes to Elon Musk's relationship with Donald Trump, because he wants to do business in China, and he wants to do business easily and ja, it's not.
Just that he wants to do business in China. He really needs to do business in China Tesla unless there is a dramatic change in strategy. Tesla needs it's China business. There's a massive factory, it's the world's largest market for electric vehicles. Tesla is trying really hard to compete there, and Elon Musk have made that a big part of
his strategy. Now, I think two things are possible. One is, if you know, tensions between the US and China were to heat up further, you know, there are are ways that Elon Musk could deemphasize his reliance on China. The biggest one would be, you know, focusing more on robotaxis, which he's starting to do. The other thing is, you know,
Donald Trump ran as a peacemaker, a negotiator. Yes he wants to, Yes, he's gonna you know, put tariffs, he says, but remember the last time lots of companies got carve outs, were able to negotiate their own their own you know, basically ways to to avoid paying those tariffs. So you could imagine Elon Musk trying to find, you know, get some exceptions carved out for important industrial companies such as, you know, Tesla Motors, the company that he uh, you know,
owns a huge stake in UH. And the other thing is like, compared to Joe Biden, I think Trump is arguably not as despite the fact that the rhetoric is very hawkish. Biden was also quite hawkish on China. So I'm not sure that this represents such a huge complexifier. But though it is certainly gonna be, you know, it's challenge, and it's also of course an opportunity for political opponents of Donald Trump, on both the right and the left to seize on because he you can, you can talk
tough on China. But then when one of your partners, you know, has this enormous Chinese factory as a good close relationship with the Chinese Communist Party, like, that's gonna that's gonna lead to criticism.
I keep thinking about conflicts of interest in this administration. You know, here you have Elon advising Donald Trump in terms of the efficiency of government. I have a company that does a lot has business contracts right SpaceX with the government. You talked about how you know Elon can get paid. I mean his stock is already up thirty percent from the election. I mean it just seems kind of complicated in terms of the connections here.
Absolutely. I mean the thing is, if you were paying, if you were watching the campaign, what you understand is the conflicts of interests are the point. I mean, Trump talked about that as an advantage. That was sold as an advantage, and it's going to continue to be sold as an advantage. Elon Musk He's not just some egghead. He really understands business. In fact, he runs a couple
of important businesses. Trump talked about, you know, on the campaign trail, just essentially like ordering up rockets from Elon Musk. So I think that they believe Donald Trump his advisors Elon Musk, that basically voters and the Republican Party are not going to mind that he's that important. But I
think that really remains to be seen. And you know what happened during the last Trump presidency is that the controversy started to bubble up right, and then it became harder and harder for people who were kind of in Elon Musk's position to stay in that inner circles. And that's exactly what happened to Elon Musk, by the way, in twenty seventeen, amid all this controversy. It was after the sort of Muslim bands and Trump left the Paris Climate Accords, Elon Musk backed away. He had been on
another advisory panel. So I think that is one thing what's different this time around, and I think what's going to put pressure on Donald Trump and actually put pressure on moderating forces within the Republican Party is that Elon has all this money that he's going to spend on politics.
He was tweeting that he's going to play in the midterm, including the primaries, and if you look read between the lines with that, what he's saying is, if you don't go along with my agenda, Senate Republicans, congress people, I am ready to dump a huge quantity of money into a primary, like are you ready for a primary challenge? And I think that is going to be his leverage, and we we'll see if it actually works. And I think where it works partly depends on what John Donald
Trump decides to do. Does he does he run as this kind of ultramga guy that he presented, or does he try to move to the center.
But I also wonder if Elon Musk lodes his interest in this in a few months or in a few years.
I mean, you know, that is the I think there's a conventional wisdom that says he's.
Got a lot on his plate.
He's got a tention span that that that drifts easily. You know, he's got all these companies, he spends hours a day playing video games. He's got a lot going on.
So if this started to he's got a lot of kids.
Yeah, he's got a lot of kids, you know, many interests.
But well, I'll say is though, what I'll say is though this is.
A really great opportunity for him, as a government contractor, as somebody who does a lot of things having to do with the government, to have influence.
So I think he's going to ride.
This train as long as it'll go. And I think he does have levers that he can pull that will make it harder for Donald Trump to push him away than say it was to be able to push away these other sort of business leaders who got close to Trump the last time around. He has a lot more ways to influence Trump than say Anthony Scaramucci, you know, who famously lasted ten days as the Press secretary.
Ma's one thing I'm curious about all that spending that Elon Musk did on this campaign. I mean, it wasn't just a case of just throwing money. I mean he was involved in like creating, you know, hiring companies, getting people to do it.
It was a whole new different.
Way of campaigning for a candidate.
Yes, super unusual. So you're talking about really big money. You said one hundred and thirty two million. I think when all said and done, is going to be closer to two hundred million. So kind of up there with the biggest contributions of any donor. And then this approach that is really different from any other mega donor. You know that Sheldon Aedelson was just giving writing big checks and staying behind the scenes. That's kind of the model Elon Musk, as you said, front and center he's made.
He made Donald Trump and sort of trump Ism, you know, the editorial focus of X, his social network. He was on the campaign trail. He's tweeting NonStop. He is, he is some he brings things to this that are unquantifiable and that are probably worth more than the two hundred million he put in.
Hey, one thing I want to talk about is the platform X. And you know we talked. In the two years that he's owned it, there have been valuation right downs by Fidelity for example, how should we be looking at the valuation of X, or how should we be looking at X as sort of a platform arm of the Republican Party or communications arm.
Well, it's both a business and it's a loss leader media arm for the Elon Ink conglomerate, right, Like, those are the two things. Those are the two functions it serves as a business. It hasn't gone super well. As you said, Fidelity has written down the value massively. Elon Musk essentially taking it over, decided he didn't care about advertising. He decided that, you know, he was going to be
okay with not having a vibrant advertising business. He literally told advertisers to f off, you know, from the stage of a major conference. And what he's done is sort of accepted that this is going to be a less successful business, but try to maintain its influence and maybe even intensified. And I'd argue in that way, it's been a huge success. It's been a huge success of political play, and even as a community like it may not be
super vibrant in the way it was before. There are a lot of journalists who are you know, currently leaving to go to Blue Sky or Threads or these competing social networks. They're growing very quickly. But among conservatives, among that kind of like base that elected Donald Trump, they are on x. This is where they are getting their news right now.
That was Bloomberg Business Week correspondent and co host of the Elon Inc. Podcast, Max Chafkin. Check out the Elon Inc. Podcast on the Bloomberg Terminal and at Bloomberg dot com, slash elon Inc. In anywhere you get your podcasts.
Coming up, more on the next Trump administration and how his mandate may impact future thanksgivings.
And this justice Turkey prices are actually dropping. You're listening to Bloomberg BusinessWeek. This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm. Easter Listen on Apple Cardplay and then Broud Auto with a Bloomberg business app or watch us live on YouTube.
Well Thanksgiving, yep, right around the corner. And with that, gathering around the table with family, watching football and of course eating turkey, though another thing on the menu this year. Politics.
That's because with such a monumental change in the White House looming, people and businesses alike are wondering what the implications of new Trump administration will have on their bottom line. Yes, that includes the poultry business.
This time of year, we like to check in on the cost of a typical Thanksgiving dinner. Jajanren is the CEO of Butterball, which sells yeah, a lot of turkeys, Jtails, Tim and Bloomberg's just meant and what a Trump white house means for Butterball.
Well, certainly it remains to be seen exactly how this administration will play out. As we you know, from the last Trump administration, it didn't have any significant direct impact that we saw as a result of any policy at that time, and don't expect there will be any significant changes again with this administration. But that remains we see. We'll see what kind of position he takes to some
of these issues. But well we'll deal with it as it comes, but we don't expect any significant issues at this point.
Does that include deregulation in the poultry industry specifically.
I wouldn't expect so. From a food safety standpoint, that's one of the main things that we pay attention to. There is good regulation and there are some things that are certainly good about that make sure that we have a safe food supply. Regardless of what comes down with that, we're going to still make sure that we produce a
safe product and give the consumers what they need. So while there may be some modifications, some changes here, and there are some subtle changes, don't expect anything big and certainly don't expect any big unwinding of any policies that we have to work with and work within.
Jay, What about the labor side of this, because this time the former president and now presidentill Act ran on this policy of mass deportations, promising to deport millions of people who are here illegally. No question, that's going to have profound applications for their workforce if he sees it through, and he says he will see it through, and it will affect companies that don't employ people who are here
illegally poultry processing facilities known to employ migrant workers. How are you planning for how this could affect your business?
Well, as it is now and has been, we comply with all the regulations that we need to to make sure that we're only hiring documented workers, so it really
shouldn't have any impact on us whatsoever. We've had. Actually, our labor situation has been very good and continuing to prove over the last couple of years as we get out of COVID, which is great news, and I really attribute that to the work that we've done on our people efforts, the training that we've done for our folks, the benefits that we've provide to them, have really put us in a really great spot. We're now have a labor situation that's much better than it has been for
at least the last six years. So with regard to the immigration policy itself, it really won't have any impact because we're not unable to hire those books as it is now anyway.
Yeah, Jay, And don't get me wrong, I'm not implying that Butterball employees people who are undocumented. What I'm saying, though, is there is this chain reaction in the labor for us, when you remove a large portion of people who are here illegally but also might be working, then there are other people who need to fill those roles that they
previously worked in. And I'm wondering if that could have upward pressure on you on your costs because you'll then have to find new people to work in your facilities because the people who were there might have gone somewhere else.
Well, I think the key is to making sure that we keep our people happy. Some the feedback that we get from our folks, We've talked to them regularly. We do a lot of work with surveys and making sure that we talk one on one with our people and really understand that we're meeting the needs of what they're looking for in an employer. And we feel really good of our positions. So you know that certainly isn't something
that we're terribly concerned about. We're just going to make sure that we take care of our folks the ones that we have, and continue to give them positive opportunities to grow with in the organization.
You export products to more than thirty countries. How are you thinking about potential regulatory tariffs?
Well, we don't see anything directly coming within our categories. We haven't in the past, so that's certainly goodness and it just really remains to be seen again. You know, with the previous Trump administration, there's a lot of effort in those areas and from a tariff standpoint, in different different categories, we didn't see any retaliatory tariffs as an example with our products. Hopefully that will not be the case this year, so you know, we've got an open mind.
We'll continuing to look in a valued situation, but at this point, there really is anything that we can do until we start seeing how those negotiations start to play out.
Jay, I'm just just wondering, like, do you have somebody at a policy position at the company who can represent you in Washington? Does it feel like if you do, you have to sort of beef that presence up a little bit.
Our trade organization, National Turkey Federation does a great job with regard to that. We've got folks there in DC very well connected on the Hill. My company and other companies in our industry spend quite a bit of time up there as well talking to our legislators. So we really make sure that we can take the time to give them the topics that are important to us, the positions we're looking to take, and hopefully we can end
up with a positive outcome. But we feel really good about a representation there now through the National Turkey Federation.
I want to get a glean just on the inflation question because we've seen it come down so much from the rate of change over the last few years. But unit labor costs, so for listeners, basically what a business pay to employees to produce one unit of output. How are you viewing when it comes to how you're paying those and are you still feeling a pinch here when you're thinking about when everyone's discussing about the trajectory of rates and the Federal Reserve.
Yeah, we've got to be competitive, obviously, and we've done a lot over the last couple of years to make sure that we've got a good balance for our folks on both their working and their home life relationship and their income as well. That's a very important piece of it for us. We want to make sure that those those folks are happy. Inflation overall has definitely hit us just like the consumer. You know, we have experienced that
within our company as have others. So when we talk to consumers now we look at this holiday, we know that that's a very very important aspect of what they're considering. Inflation is certainly top of mind. It was certainly a big, a big issue for this election and the consumers total sets.
So we've been working very, very closely in preparation for this holiday to make sure that working with our retailers, we can give the best value to the consumers that are out there, and I think they're going to be pleasantly surprised.
You guys are privately held, so we don't have a ton of information on your numbers, but can you give us some ballpark figures about just how much turkey you're responsible for selling in the US?
Sure? Well, we have within the holidays, you know, certain leaders we focus on Thanksgiving. About one in three turkeys that are sold every year are a butter ball is a butterball turkey. So we're really proud of that position. We have a large market share, spend a lot of time working with our consumers and our customers and make sure we deliver what they're looking for and look to
obviously try to grow that every year. But we are we are the largest provider of turkey for the holiday, and we're very proud of that.
How much of your sales is around the Thanksgiving holiday versus outside of it?
It's about a third. When you look at our business overall, we have a considerable business and food service as well as in retail throughout the year and consumer package goods and the holiday itself represent it's about a third of our business.
Is there effort to diversify in terms of timeline here and make it so that you see more sales outside of this concentrated period.
It certainly is. Our biggest push right now is on our value added growth and our Butterball brand specifically. That is where we've been taking the company for the last several years. Fortunately, we've seen very good progress and that we've seen our Butterball value added business grow. We're also looking at growing outside of the US a number of initiatives there as well, so we're looking to get the
brand spread as much as we can. We've actually been very happy to see the acceptance of the brand in other countries where we distribute, even in countries where we haven't had Butterball at all before. As an example, we'll have Butterball branded turkeys in the UK this year for Christmas for the first time ever. And that's in a country where they have very little branded product to begin with.
Most of it is private label and their grocery stores there, the retailers, So that really says a lot for the brand. We're really really happy to see that happen.
So that's what I wanted to talk to you about. I've been outside of the US for Thanksgiving a few times over my life and it was I mean, this was years ago. It was remarkably hard to find a turkey. When we could find a turkey. Why is it so hard to find a turkey outside the US? Why is turkey such an American thing?
Well, for one thing, it's not an indigenous bird to most of the world, and a lot of cultures aren't used to consuming turkey. So we've really got an opportunity to help grow that and that is a big opportunity for it. So try to get outside of the US, try to go to countries where little to no turkey is consumed. Certainly there's a lot of work on our part to educate them and to show the opportunities and how they can use the product. There are also barriers.
There are a number of trade barriers in place right now where we can't import or excuse me, export our products into certain countries because of various regulations that they've got, whether there are somewhat protectionists for their own supply, their own manufacturing, or whatever the case may be. So we have to be creative in ways that we can look to work into those markets to open those markets up.
Spent a lot of effort through our trade organization that I mentioned earlier, a National Turkey Federation, to help try to open up these countries and then in some cases even look for in country producers to produce a product for us. So there are number different ways that we can look at that to grow our brand. We just have to be creative. But it's a tremendous opportunity for us to expand beyond our borders.
Hey, Ja's something I was thinking about especially the last few Thanksgivings, just because of the cost of different items that people are eating.
You know.
Well, Spargo had an interesting report out recently talking about how the price of turkey is down almost twenty percent this year compared with a year ago. And actually the American Farm Bureau Federation had talked about how the average price of a sixteen pound turkey last year was around
twenty seven dollars. What are you seeing here when it comes to those prices, because, as you know, especially over the last few years with infleetion, what should people expect to spend here on different whether it's turkey or other items.
Well, compared to last year, we are seeing retails lower. Now, we don't set the retails. Our customers certainly do that, but we work with them to make sure that we can give them the best value to begin with, I think what's really important to focus on for the consumer
is the value of that protein. At roughly a dollar a pounds, very very difficult to find any protein that's going to be that economical, and especially during the holiday when there's a lot of feature activity, a lot of discounting going on, it really provides a phenomenal value, particularly now as so many things are up and there are a number of items on that Thanksgiving table that might be more expensive than last year. But the good news right now as it looks like turkey is not one
of those. So we're real happy that we can help be a part of the solution in a time when folks are really struggling with the impact of inflation.
What should we expect for maybe the average sort of gathering sizes for Thanksgiving celebrations.
Well, from our report that you referenced earlier, we do know that people are celebrating Thanksgiving in pre COVID numbers again, which is great. It's about eighty six percent of the people that we talked to total say, would be celebrating the holiday, and about eighty seven percent of those would have turkey at the table. And the gathering sizes is an average dying which is which is a great number.
We're really happy to see that people are able to get out again and travel and those that want to be close suitor in the holiday and get back to those larger gall and gathering. So we were really proud to be a part of that.
That was Jay Jandren CEO of Butterball Our thanks also to Bloomberg's Jess Matten for joining us there as well.
Still ahead on Bloomberg Business Week. She's a former Assistant secretary and undersecretary at the Department of Commerce under President Trump his first term. She's in touch with the transition team and shares what.
She heard you're listening to Bloomberg Business Week. This is Bloomberg.
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This week, President elect Donald Trump nominated Marco Rubio as Secretary of State and Mike Waltz for National Security Advisor, two men with track records of harshly criticizing China for key hosts in his administration, a sign that ties between the two superpowers may deteriorate further in the coming years.
Meanwhile, Trump has pledged to impose extra large tariffs on imports from China and medium sized tariffs for the rest of the world.
But will the so.
Called tariff Man go through with his campaign promise of protectionism.
It's a big question. Nazak Nikotar brings over two decades of experience in international trade and national security. She served as the Department of Commerce's Assistant Secretary for Industry and Analysis under then President Donald Trump. That was from twenty eighteen to twenty twenty one. Currently, she's a partner and chair of the National security law practice at the law firm Wileye Rain.
I don't want to speculate in terms of what the political appointments mean generally.
For very specific policies.
But the trend that's really important to see is that the political appointments are aligning with President Trump's campaign promises right much more forward leaning policies to deal with the threats that we're seeing in terms of the economic and.
National security threats.
So I am personally pleased to see, you know, delivering on those promises to take on some of these big issues that you're talking about.
It does seem like the one thread that sort of ties all these names together is loyalty to the foreign president and the president elect. And I'm wondering what you make of that. Much has been made of the whole idea of having a quote team of rivals like we've seen in past administrations. What do you make of what the president elect is doing now tapping people who've defended in vigorously on TV over the last four years.
And it's an excellent question because it really underscores a very key point. A really effective administration is going to have cabinet members who are like minded and are rowing in the same direction. We've seen too many times cabinet members who are constantly in disagreement, and that impedes progress. China is a big elephant, and China is the national security threat of our time.
It is the big rival, and we really time is running out.
We see what China's doing in the end of Pacific. We really need an administration who has like minded cabinet members who are going to work and advanced policies in unison.
But tell us about since you've been on the inside and you understand kind of how things work. Many would argue it's great to have a leader, but it's also good to have, you know, key advisors around him that don't all just say yes, but they also challenge. So are we not going I mean, I'm assuming you had some of that there when you were there. Are we not going to have that this time around?
Absolutely, We're obviously going to see that.
I think the important thing is that we have cabinet members who are all in a great of what the threat is. But every single individual is going to have a different opinion and had a counter to threats, and so it is it's really important to have different opinions and.
That makes for better policies.
But we just don't want to be in a situation where the cabinet members are not like minded in terms of the threat that we really have to counter, which is China.
Okay, let's talk about that a little bit.
Because the company Byte Dance, it's the parent company of TikTok, and in the first Trump administration he signed an executive order to that would have banned TikTok. The Washington Post of the reporting that the President elect may halt a potential ban. It's a campaign promise that he had. He wanted to save the app, He even had a presence on it. In your view, should TikTok be banned?
I think there's enough information out there that TikTok, through its surveillance capabilities, etc. Is posing a significant national securities right in fact, Europe.
Countries in Europe have.
Made findings about how children TikTok is miss by Dance misusing children's information. That said, it's really important to underscore all so that there are so many Chinese companies that are in our infrastructure, telecommunications companies with the surveillance software, hardware, et cetera. That focusing just on one company is moving our eye away from what really we need to focus on, which is the big threats to US infrastructure.
That is a company, though, that has the attention of millions of young people here in the US, and it has the ability to influence the way that they view certain things. So I think that is a unique company to be talking about. We can talk about some of the other ones. So are you saying that it shouldn't be banned because there's too many companies that have a presence in our lives in terms of companies that are from China.
Look, I think the best way to assess this is, you know, Director Ray did a great job in terms of going back and back back to Congress over and over again in terms of providing assessments on the national security threat. And I actually think Congress ended up exactly where they need to be in terms of, you know, the proposed ban on TikTok. Once the President and his cabinet members are certainly in the office, I think that they're going to look at classified information and make the
right decision. But based on the information that exists today. I believe that there are national security threats that TikTok fite Dance pose and I do think that Congress, based on the information from VIEWISS intelligence community, landed on the right outcome.
You know, I think a lot about global supply change. You know, Tim kicked it off talking about the Stanley Blackendecker CEO about the inability not to be able to make his products here in the United States. Won't mat maybe have the labor, it's not going to be cost effective. You know, how can learned are you?
You know about.
These pending tariffs from a Trump administration and the implications that will have on American companies like they're.
The reality is is that we're not going to be able to make everything we need to in the United States. But I think the US government is correct in focusing on the things that are critical to the defense industrial base and the broader industrial base that spill over into the defense industrial base. Those things we really need to have, whether in the United States or in close proximity to the United States in case there's an emergency and we.
Need access to those supply chains.
At the same time, you know, I often hear the fact that you know tariffs are going to make things more expensive, right, Sometimes they do. Sometimes, In fact, Chinese China tends to absorb a lot of the tariffs that are placed on it because it just doesn't want to displace itself from the US market. I think both things are true, just depending on the item of the good and the tariffs that are imposed. But at the end of the day, tariffs aren't intended. The laws that permit
the imposition of tariffs are intended to provide corrections. So it's not just something more expensive than it was yesterday.
Is sometimes it becoming.
More expensive is fixing the price a distortion, and that then translates to companies making more money, higher wages, et cetera, when they're actually able to compete, get back into the marketplace and not be displaced from Chinese goods that are forty percent of the price that they're offering.
Right, And it's not just because China is more competitive.
This is the function of Chinese industrial subselts and range of Chinese policies that underprice.
Now, Zach, So then are you saying the president elect he will be much more selective in terms of what tariffs are being placed I.
Think there's two classes of products.
When the Chinese distortions have affected the global economy, I think that there's going to be a case for tariffs on a broad range of goods from different countries. But I think on the bilateral side, the underpricing is so severe from China that we're going to see much more significant tariffs on imports directly from China.
Our thanks to Nazak Nikotar, our partner and chair of the National Security Law practice at the law firm Wylie Rain, also former Assistant Secretary and Under Secretary at the Department of Commerce under President Trump.
All Right, everybody.
This past week, billionaire and head of Galaxy Digital, Michael Novograts, speaking of Bloomberg Television, suggested it's unlikely the US will create a bitcoin strategic reserve, as proposed by President elect Donald Trump, though if the US does create a bitcoin reserve that the price of bitcoin it could sore up to half a million dollars.
Arcinvest CEO Kathy Woods said it could even hit one million dollars by the end of the decade, sticking by her prediction from earlier this year. One company with a stake in crypto is the AI infrastructure and digital asset mining company Core Scientific CEO Adam Sullivan joined us for his take.
When you think about the US government putting bitcoin on balance sheet, it's putting a stake in the ground that they believe in the future of bitcoin and that bitcoin has a future on a global stage amongst governments, which I think is probably one of the first times this has ever been talked about in history for bitcoin.
I wonder though, if that bites the USA, Carol, because you're essentially saying, okay, are our treasuries are backed with the full faith and credit of the US government.
But if the US then starts to buy bitcoin.
Then what's what's the faith designed as a hedge as.
A hedge against its own currency? Then does that affect the full faith and credit of the US.
Right does that make that not as important?
Which would go for an argument against doing this.
I don't know.
I mean, we're living at interesting times.
Hey.
I am curious Adam about your outreach you and your team at Core Scientific when it comes to either lobbying Donald Trump or whether it's reaching out to Howard Lutnik. I'm just giving an idea of efforts that you guys are doing on your behalf.
Prior to the election, we were speaking to both sides of the aisle. You know, we look towards the new administration. We are constant dialogue across not only the federal level, but also the local state level and community level as well. As we've seen a number of changes across some of the jurisdictions that we operate in. So you know, it requires constant communication because we don't know all the rules
or potential regulations that are coming down the pipeline. We don't know what's going to be relaxed, and so that requires a lot of dialogue and hopefully, you know, them taking some of our input about what will drive more job growth, what will drive more adoption of data centers, bitcoin mining facilities across the United States.
Hey, one other thing that I think about, like, as your universe kind of evolves and with the hosting energy policy, you've got to be watching it right in terms of you know, we know AI and servers are hosting AI. It just eats more and more power. What are your expectations around that. What kind of assistance or policy changes are you hoping on that front?
Yeah, I would say it's more firm generation power being brought to the grid, and so that that is across nuclear, that's across natural gas, that's across all of the firm generation power. That actually creates a more stable grid.
How does that make it more stable grid?
So renewable power. So let's take wind, for example, at the highest rate, it can run about forty five percent capacity, factory forty five percent of the day it operates. Solar is about thirty five percent. And so as we've taken off firm generation power off the grid and replaced it with renewables, that's the reason why you're seeing a lot more brownouts across the United States and areas that have
high proliferation of renewable energy. So bringing more firm generation power onto the grid reduces that volatility of when capacity is actually available because supply is pretty constant. You know, it changes throughout the day. It's high in the morning, it's high in the afternoon, but that's not necessarily when the wind is blowing or the sun is shining, and so that's what creates the instability across.
The US grid. That was Core Scientific CEO Adam Sullivan.
That wraps up our first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio Head No Our next hour, the finance company that's helping military veterans invest and grow their wealth.
Plus Delta CEO At Bastion on flying Private.
Hmmm, that's interesting, all right. And also we're going to get into how Amazon workers are continuously sharing water cooler talk with robots, and speaking of Amazon, hey Alexa, Apple is finally getting ready to take a step into your world.
We get that when we come back.
This is Bloomberg Business Week.
I'm Carol Messer and I'm Tim Staneveeck. You're listening to Bloomberg Business Week. This is Bloomberg.
You're listening to the Bloomberg Business Week Podcast. Listen live each weekday starting at two pm Eastern on 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.
Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including a partnership in the Friendly Skies, Delta CEO Ed Bastian and Wheels Up CEO George Mattson on working together and what a second Trump term means for the airline industry.
Plus, your next Amazon order could be packaged and fulfilled by robot meantime, Apple is revving up to offer a package of services and a device for your I don't know if I need this thing.
What I don't know?
You don't know that you need it.
Oh.
I can't even turn off the lights without talking to somebody at my home. It's driving me crazy.
I just want to switch to your husband. You say, turn out the lights. It's a little crazy, all right.
First up this hour, we honored veterans on Veterans Day this past week, and we spoke to two people who are helping those who have served.
They're over at the financial firm Siebert, Mark Mallick, chief investment officer at Siebert, and Cash Larsen, head of Military Investing in Communications at the company. Cash also a five year active duty Navy seal officer who still serves. Mark kicked it all off for us.
You know, we know that, you know, veterans are very much underserved in the investment community, and with the help of people like CAJH, we were able to come up with things that we think would would resonate more with that community in terms of education and in terms of specific types of investments that would resonate with them, things that they want to see, things that they're comfortable with.
You know, we have the traditional stuff, but you know, focusing on what their needs are, what makes them comfortable, is really important to us, and that's how we've designed all of our investments around that.
So Coch, come on in here.
Because you have a history in the military, active duty Navy seal for years, still involved in the military at this point, how much did you think about investing when you were actually serving.
Well, not nearly as much as I should have tim right, I was more focused on gun slinging at the time.
Look, that's the answer I was expecting to get.
Yeah.
Yeah.
And now what I'm trying to do as a more senior officer is help like young people at the beginning of their service members journey be a little more sophisticated than I was. Right, And one of the ways we're doing it at Siebert is kind of adopting the same model, a fusion model that we did in the military. In mission planning, we say intel drives operations, and we're using that same paradigm at Sebert.
Right.
So I have Mark over here, He's the ten thousand pound brain, right, I'm the paleolithic knuckler dragger who's going to execute all of all of these really interesting and dynamic portfolios that we've created. So and that's how we're doing it. I think the key here is that the veterans community and the military community is not a homogeneous organization.
Right.
There's a lot of variety and there are no one size fits all solutions. So what's helpful about having someone like me with thirteen years of total service, I continue
to serve in a special operations unit. I understand I've walked a mile in the boots of similar to a lot of these military members and veterans, And so then I can help calibrate, I can help educate and then help calibrate appropriately to help build wealth within this community that is often left behind by the private wealth community.
Kus, what are you seeing right now? What are people who are currently serving asking about when it comes to their finances? Is it more budgeting? Is it what should I invest in? Is it money?
Like everybody else they're asking about bitcoin? Right, And the truth is, like the military has actually been leading edge on some of this stuff.
Right.
Bitcoin itself comes out of a sort of cryptological function that was developed in the military, So there actually is some interior and intrinsic knowledge that service members have but maybe don't necessarily realize that they know that can help them in their investing journey. In general. Absolutely, you hit the nail on the head first. We have to tickle interest in investing, right, and you have to save before
you can invest. So a huge part of our firm and our mission is is devoted just to closing this knowledge gap in order to increase the rates of financial literacy. We're not the only people that are doing that. There are organizations within the Pentagon, the Office of Financial Readiness, and then organizations private sector organizations like us outside the Pentagon that are doing it. But it really takes a village to make a smart marine put his money somewhere good.
I guess the challenges cash that oftentimes somebody gets done with being in the military and they don't necessarily have enough money to start to.
Put to work.
They're more focused on providing basic necessities and providing basic needs. I mean, we talk all the time about the inability of this country to serve its veterans.
Yeah, I would push back on that just a little bit. I think in general that principle is right, but contrary to popular belief, and this is part of the reason that.
The military community has been kind of.
Largely ignored by the street is they always thought that the account sizes are too small, they don't have enough money. But relative to their socioeconomic peers, actually, service members often have quite a lot of discretionary spending, and it's because of non calculated things like the cost of healthcare, something that a lot of military folks don't have to worry about, things like bah basic allowance for housing. Right, So because of that, they have more I'm not saying a lot necessarily,
but more income relative they're socioeconomic peers. Like, yeah, we're an old firm at SEBER, but like cutting edge technology, right, things like you know, the advent of fractional share investing. We say, like, you can start investing with as little as a dollar.
Right.
The problem for us from the financial education literacy perspective is, you know, you still get a lot of young enlisted guys in the military going out and buying that new Mustang at a twenty one percent interest rate. There's an entire predatory industry designed to take service members money, and only a few of us focused on building their wealth.
So, Mark, when you're thinking about where do you actually allocate portfolios, do you make veteran specific trades. I'm an ETF reporter, and so there's a number of ETFs out there that are focused on defense spending, or infrastructure or crypto. Is that kind of your approach to investing?
Partially? I mean, at the core week we stick to the standard principles of investing, right, so we try to match up portfolios to risk colerances of the clients. We also like to put things in there that the clients understand and that they would want to invest in themselves. And so the idea is to get them to focus on more long term investing. When young a lot of these young hotshots come out, they want to put it all in bitcoin or something like that.
But we try we would they would, by the way, that would have been a good movie.
Exactly exactly, exactly exactly.
You caught me, right, you don't see me doing it? Yeah, yeah, similarly, but we.
Try to, you know, teach them that sort of you know, long term focus, but still at the end of the day, we want them to be able to open up their accounts and see ETFs in there that resonate with them, right, So, yes, we do put those types of things in there that they would say, yeah, I know what that is. I get that, I'm happy that I'm putting my money there, and so on top of that, you know, we're constantly managing them to stick with their risks. So for instance,
you know you brought it up. You know, if bitcoin was in there was in their portfolio. Obviously bitcoin, the risk of bitcoin changes as it goes up and down, mostly up, and so you know we've got to constantly be managing that to make sure that the portfolio is still in the right balance for the client.
Is that part of the portfolio now is crypto? Is bitcoin part of it?
It is not a core part of the portfolio, but it is. It is something that can be can be added to.
But it's not the type of thing now that you're saying, Okay, if you want to invest in this stuff, you're doing it outside of Seabert.
No, we help them with that as well, right, So you know, our hope is to you know, manage to manage their core money, right, So we're like the let's call it the savings account of yester year for them, and then we do encourage them to you know, to go out and try other things and we help them with that as well. We advise them on that as well.
But we always like to know that that the core portfolio isn't that important you know, set of ETFs that is going to you know, provide them with that risk adjusted return that's right for them.
And to underscore marks point, we try and speak to our service members in language and metaphors that they understand. So we say, just like you wouldn't go to war with a single bullet in your magazine, we expect you to have a diversified portfolio, many bullets in your magazine, and we expect you also, just like admission planning, to have contingencies things like a rainy day savings account and things like that. So the tried and true principles of
investing are really good for the military community. With some of the additional sidecars that.
You guys were just discussing, I'm curious what you're hearing now from active duty service members that's kind of different from when you served earlier in your career.
In short, what I'm seeing is an increased level of sophistication when it comes to financial knowledge and literacy. Whether that's actually translated into investment is still to be determined, but there certainly is more interest, there's more information, there's a more alternative sources for information, and you're starting to see, especially with the advent of these alternative assets, service members
paying more attention than they had in the past. The other small thing is that the military retirement system has changed, and that's made it that's a forcing function to make people be smarter about their Hey.
So Mark, come on in here, because you are chief investment officer over at Siebert Financial. So we'd be remiss if we didn't ask you, like we're asking everyone about the state of the markets these days, especially given what we've seen over the last week after the decisive victory by President Trump.
Yeah, it's it's been an interesting couple of weeks for all of us. We had, we had all those great earnings just prior to the election, and we haven't even had a chance to really sort of look at these you know, these this this rash of Max seven stocks that we heard from that's been driving the markets higher and suddenly get the you know, suddenly we get the elections, and now we're focusing you know, not on the max
seven but the MAGA seven. Right, So you know, we're trying to figure out, you know, what of this stuff is uh is going to stick?
What is not?
A lot of it is a little I would say, probably took you know, some of us by a little bit of surprise in terms of magnitude, but in terms of the things that have been going, you know, the handwriting was kind of on the wall. So you know, we're seeing as we expected. We we expected a continuation of the prior trends, maybe a little bit turbocharged in those areas that we you know that Trump was very
clear that his administration would focus on. But you know, in terms of the magnitude, it puts us sometimes in a rough position saying, yeah, well, we like this sector, but we can't get into this sector now because it really played out a little too quickly.
What specific sectors come to mind when you're thinking about now we know who the president is, so we have a better idea of what policies are going to be in play than we did maybe a few weeks ago.
Yeah, so I think for us, you know, we we expected you know, the financial sector to definitely get a boost, you know, increased deal flow, you know, all sorts of deregulations, things like we all expected that. And the interest rate environment, although that is rapidly changing, that should be an environment that should be pretty good for you know, traditional lenders
and things like that. I think that the markets responding much more aggressively than we expected, although we still believe that there's there's room, but we have to be a little bit more careful with that.
You know.
Obviously, something that we've focused a lot on that may not be attributed to Trump is you know, we can't ignore uh technology, broader technology information technology sector and also in you know, tele in the telecom sector of the communications sector. You know, we we saw a lot of potential there the what I call the AI ecosystem. We believe that that is going to continue to move. But under a new under under Trump, we have to look at things a little bit differently.
Right.
So, you know, I've always used the supply chain analysis on the Bloomberg, right, and it's becoming a more and more, yeah, important part of our life every day as we're looking at any company. We're checking GEO exposure from these companies and it's part of our It's a factor now in our models.
That was Mark Mallick, chief investment officer over at Seabird, and Cash Larsen, head of Military Investing and Communications at the firm. Emily Grafe is sticking around a little later.
In the hour, still ahead. On Bloomberg Business Week, Delta CEO Ed Bastian on sticking the landing with a struggling private aviation company.
This is Bloomberg.
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 then brout Auto with a Bloomberg Business act or watch us live on YouTube.
Last month, Delta Airlines forecast profit in sales that fell short of Wall Street's estimates for the final months of the year, suggesting a slow recovery from a challenging summer travel season. For an update on the business and the latest on Delta's partnership with the private on demand aviation provider wheels Up, we bring in Ed Basti and CEO of Delta Airlines and George Mattson, CEO of wheels Up. Both joining us from Atlanta. We should note that Delta
does own close to forty percent of wheels up. That's according to Bloomberg Data. Guys, thanks so much for joining us. We're going to get to the wheels Up partnership and the exciting news that you guys have when it comes to new aircraft. But I wanted to ask each of you the same question that I've asked every CEO that I've spoken to over the last week, and I want to start with you, what does a second Trump administration mean for Delta Airlines?
Well, I think you've seen from the market's reaction there's a lot of optimism in the corporate community. I know for Delta, specifically in the aviation industry. The president, the former president now the current president elect, knows our industry quite well, was very supportive as we worked with him in his previous administration, particularly as we went through COVID, got the support we were the original industry that got the Cares Act started and the support to keep our
employees employed. And we look forward to continuing to work with him in a second administration.
What about ED when it comes to regulation during the next administration, Because I think many people would say the Biden administration took what some would call it hostile stance on airline m Anda, do you expect that to change under Trump? Will it lead to a new round of airline consolidation.
I don't know about consolidation. I guess as possible, But I can tell you that the Biden ad ministry, particularly the Department of Transportation, who we work most closely with, we're quite frustrated with the amount of regulatory overreach that we saw continuously through the last four years, and we hope there's a new sentiment that's pro employee, pro consumer, pro business, and a good balance between the three.
And George, let's ask that same question to you. You think about a second Trump administration, what would that mean for wheels up?
Yeah, thanks, Kate.
I think, as Ed said, the prior administration, we're in the prior administration. Obviously, there was a strong support for aviation in general, US aviation in particular. What really drives our business as much as anything else, is a good, solid, strong economy. Obviously, the markets have reacted very positively to the results of the election, and the economy appears to be quite strong and resilient.
And I think ultimately that's going to support our business plan went forward.
And let's also talk, of course about the relationship between your two companies, Delta and Wheels Up and Ed, I'll ask you this question. Delta, according to our data, owns more than a third of wheels You've also supported Wheels Up with credit and access to capital. Why own so much of Wheels Up?
What is in it for Delta?
Well, what's in it for Delta is the opportunity to create a new level of premium in commercial aviation that hasn't previously existed in terms of a partnership, and more than just a partnership, it's an ecosystem that's linked between private and commercial. We know many of our private aviation consumers also fly commercial fly in Delta, and we want to make it easier for them to make those choices when they have the opportunity to fly private and vice versa.
When there's private aviation consumers that may occasionally need a commercial flight, whether it's going to Europe or some other place, we want Delta to be their airline of choice.
ED, would you consider buying the company completely? No, that's not in the carts.
We deliberately wanted to make certain we had investors with us when we made this decision, and I think having the external validation of us beyond just Delta was helpful.
Hey, George, I want to talk about the fleet because there was big news last month when Wheel's upset it would buy the Embray or Phenom fleet from Grand View Aviation. It's one hundred and five million dollar deal. It's part of this three year plan to transition to Embraer and Bombardier challenger aircraft. You're also though, moving away from Cessna citations. What's the thinking behind this apart from just a newer fleet.
When I arrived here just over a year ago, having spent eleven years on the on the Delta board, we obviously had a number of first aid priorities, but one of the priorities over this first year was building a long term strategic plan and a fleet plan that supports that plan. We have a significant, loyal, strong member base, a really strong brand. Most of our members have been individual leisure customers. We are increasingly becoming a provider of
choice to corporate customers. I think through our Delta partnership that's only going to become more important going forward. As we looked at our fleet, it was a little older than we wanted it to be, and it was a little bit more complex than we wanted it to be, with four fleet types operating, which we've now distilled down to two.
Fleet types, and in deciding to modernize.
The fleet, what we did is we basically selected the two most popular aircraft types in their respective categories, with the deepest install bases the largest secondary markets in order to be able to buy those aircraft at fleet scale over a period of time.
This is going to really significantly transform the product offering.
We're able to deliver the customers the experience, the reliability, the efficiency that comes both with the aircraft themselves, and also the simplification of the fleet.
We're going to enhance that fleet with best in class connectivity.
I think Delta was a real leader in providing free, high speed satellite Wi Fi on the air aircraft. We've announced a commercial partnership with Go Go to provide a similar low Earth orbit satellite Wi Fi capability all of our aircraft.
We're very excited to have been able.
To jumpstart this fleet transition by acquiring brand View, which has the largest fleet of on demand feed on three hundred and three hundred e's in the market, and that tr transaction is going to close very very soon, and we're going to immediately be able to offer that at fleet scale to both our charter customers but also our
programmatic member customers. And I think when you look forward at the progress we're making financially in the first year, this fleet modernization is an important unlocked for the next phase of that of that profitability.
Journey as well.
And I also want to talk of course about Delta's fleet, and ed we have to talk about Boeing. You're a major Boeing customer, and to put it mildly, the company has had a lot of problems. They've recently raised new capital though they've gotten past the workers strike. But that being said, how quickly do you expect Boeing to actually get back on a normal production schedule here and are you anticipating further delays when it comes to deliveries and certifications.
Well, we're, as you may know, not anticipating any Boeing deliveries because we have none outstanding in the next couple of years. So in the immediate term we're not impacted at all. But I do believe that they have made the right decisions around raising capital to invest in their business, around a concertain their employees are properly taken care of and compensated, and so they can get back focus on
delivering high quality airplanes to our industry. I think it's going to be a number of years before you see a steady stream of airplanes starting to return, and well, hopefully sooner, but I think we are all realistic that this is going to be a very challenging turnaround still to come.
When you say a number of years, would you count that number on one hand or two hands? A couple fingers as okay, so a couple.
I like that.
Hey, we're speaking with that Bashion, CEO of Delta Airlines and George Mattson, CEO of Wheels Up, both joining us from Atlanta. Ed, well, we have you give us an update on capacity in the market. Here we hear it's improving, but is it improving for both premium and economy seats right now?
The market has rationalized. I think this past summer we saw in the US marketplace there were a lot of seats for sale, had a pretty big impact on pricing. A number of the airlines, particularly those on the lower end of the price scale have been struggling. They most of them have lost money this year, lost money in the peak summer even and have had to implement a number of self help measures to ensure that they can
find better balance between supply and demand. On the premium side, that's where growth has been in the industry, and Delta has led the way. And you know, any of the airlines, there's a couple of us out there that are more focused on premium have done quite well over the past couple of years over those that are more in the commodity sense, where price is the principal determinant of the
consumer purchase. They've struggle and they continue to struggle, and that's why you see the supply and being rationalized.
So that's the view on the commercial airline demand. George, give us a peek inside what demand for private air space looks like, because you think about coming out of the pandemic, we know that there was a big uptick when it comes to private jet travel. What are you seeing right now, especially as we head into some of these peak travel demand periods.
Yeah, I think in general, I would just say that the industry remains quite healthy. We certainly saw a very big sort of demand bubble from COVID, and when people did start returning to flying, a lot of folks who hadn't flown private started to fly private, and so we've seen that I would say normalized.
The industry feels relatively stable.
Here, but I think when you look kind of medium and longer term, has really strong macro headwinds.
Right.
I think, you know, the vast majority of aircraft, private jet aircraft are.
Still wholly owned by individuals.
Or corporations, and so the opportunity for on demand and fractional providers to continue to grow, I think remains very strong. As as commercial aviation becomes in some ways more challenging with congestion and other and other challenges, I think it becomes a.
More interesting alternative.
And I think one of the really interesting things about what we're doing with Delta is really trying to break down the barrier that has always historically existed between commercial and private aviation into one seamless aviation solution.
And so I think as we are successful in doing that, we're going to draw more.
Participants into the industry, hopefully through our offering and expand expand the market and in the process. But to answer your specific question, I think generally things feel quite healthy right now.
Yeah, So George, help us understand the profile for somebody who would you know, maybe they're a Delta one customer, but they're also able to fly wheels up. What does that look like from an income perspective, a net worth perspective where they'd actually make the jump and they'd make that choice.
Yeah, Look, there's different there's different cuts at what at sort of what level of income or net worth constitutes the ability to fly private. I've seen numbers in the mid single digit millions of dollars of networth. I've seen numbers that are higher. I've seen a study that suggests ninety percent of people who can afford to fly private under that definition have never flown private.
And so you know you have if you think about our.
Partnership with Delta Airlines, a couple of really big pools of potential customers. One is the forty five thousand or so Delta corporate customers, where Delta is often the leading provider.
Of travel period to that company.
And so we're offering this within that framework as an additional alternative, as a sleeve, if you will, of an existing broad corporate agreement. And then when you look at the individual customer, which was sort of the gist of your question, you know there are many If you believe that ninety percent of people who can afford to fly private have never flown private, well where are they?
They're in the front of the cabin, generally at the commercial airlines, and you know there may not be flying private every time.
But again, this idea of a sol that could be commercial, or it could be private, or it can be a hybrid of the two is where I think we're going to find demand from those customers. And I think there's a lot of them out there who don't quite know how to access our industry quite yet, and we're.
Trying to that.
With Boeing's recent strike your turbofan maintenance. Do you see a shortage of capacity across the industry or at least at your airline.
I would expect for the next year, though we haven't given guidance for next year. Actually, I expect the industry is going to move as the economy moves. Is an industry that's driven by the economy, not just US, but on a global scale. And for those carriers that are premium such as Delta. We have the ability to drive probably a little higher capacity than the broadct economic growth.
That was ed Bastian CEO over at Delta Airlines. Also George Mattson, CEO of Wheels Up Bloomberg's Katie Gradfeld joining me there as well. Check out our podcast feed for the full conversation.
Up next on Bloomberg BusinessWeek, the robots powering your Amazon packet deliveries and Apple getting to the core of the smart home.
Two tails from the tech world. When we come back, This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm. Easter Listen on Apple.
Car Play and then brout Auto with a Bloomberg.
Business act or watch us live on YouTube.
This past week, Reuter's reported that Amazon is working on a version of its Echo frames smart glasses for its delivery drivers. The glasses would reportedly help their employees move to around and within buildings that could potentially shave time off each delivery.
Yeah.
I guess the whole idea here, Carol, is like you have this map come up on your classes so you can easily find the home.
You know, if they've been talking about this kind of stuff for a long time.
Yeah, I mean maybe this is the everybody life heads up displays, right, Yeah, exactly. As the e commerce giant flirts with smart wearables, one aspect of its delivery operations is becoming well a well oiled machine, and that is its robotics tech. Since acquiring Kiva Systems back in twenty twelve, Amazon has developed, produced, and deployed more than seven hundred and fifty thousand robots across its operations network. They've got the goal of delivering packages to customers faster than ever.
Ty Brady is chief technologist for robotics over at Amazon. He joined Tim and Bloomberg's Emily Garfeo to talk about the growth of the robotics business.
The age of physical AI is here and it is really proving useful for our customers. We have our robotic systems inside of our fulfillment centers. We actually just roll our next generation fulfillment center down in Louisiana and we're seeing a lot of returns and gains on that.
Is this the Kiva system that Amazon bought over a decade ago.
Wait, it is based on that. That is part of it. What we do is that we have robotics that can move goods, that's part of the Kiva systems, but also robotics to store goods and sword goods and identify all the various goods. And we have this in this next generation fulfillment center where we have ten times the amount of robotics that we've ever had under one roof, and we're already that we can process those orders twenty five percent faster and also pass along to a lower cost to our customers.
Just proving just so we understand if when when we order something on Amazon using the app or using the browser, does a robot now pick that item at fulfillment center? Is it still a human being?
Yeah, it's It's an amazing, amazing series of events that actually happens. When you go on Amazon dot com. You're getting your holiday order redder ready. We of course want to have the world's largest selection of good for our goods for our customers. We want to process that at a low cost and then have the ultimate customer convenience, and roboducts is helping all along that way, right, people
and machines working together. We have AI systems that source put the right products in the right area so that can be closer to our customers. That helps on our delivery times. We have robots that move safely around people that we inbound those goods into our buildings where we can take on more goods, put more goods in the same footprint as we've had as compared to our manual buildings. We could store of actually forty percent more goods, and then we have robotic systems that help sort and even
package those items for our customers. All this is so that we can just have the ultimate in customer convenience and get the right good to right to the customer's door.
Ty, what is a twenty twenty four robotics system and how is that different than the systems that we saw ten fifteen years ago. I'm just thinking about how I used to watch that show how It's Made, and it would show factories and there were always robots working in the factories and moving things along conveyor a belt. So what is so different about, you know, the twenty twenty four robotics.
That's such a great question. We have really seen just huge advancements over the last few years when it comes to robotics. This is why we call it physical AI. It's really the embodiment of adaptive behavior in our robotic systems. But our robotics systems shouldn't viewed as singular and as a loon, as just machines. Instead, what we do is we build our machines to extend human capability. We build our machines to augment folks to do their jobs better
and create a safer environment for them. We've seen those benefits in the last four years with regards to safety and also in regards to the efficiencies and the productivities. But we also have to I think the big mindset is when you reframe your relationship with machines. Yeah, people first attitude towards of how we build those machines that allows people to do more. And now we are upscaling. We put one point two billion dollars into an upscaling
pledge for our employees. And then, as Tim said, we funded this independent study with MIT in order to understand the perception of technology and how people adopt machines and AI into their work environment.
So let's talk a little bit about that, because I think you hit on a really important point here, and it's the idea that I was kind of joking about this a little while ago. It was like, can these robots be programmed to love? But the fact is is you do have to be comfortable being around automated things that could look like humanoids, they might not look like
humanoid robots. What did you find through this collaboration with MIT about how people want to interact or need to learn how to interact with machines.
It was a fascinating study. It was actually groundbreaking. The MIT enlisted to ipsos to survey more than nine thousand people across nine different countries to understand how they perceive technology, because perception is really important to adoption, even to innovation. Right, as I said, we put people at the center of
the robotics universe. We really want to understand how people and if they will adopt technologies, and broadly we found the study found that a majority of people see robots having a positive impact on their pay and on their career. And there's three key, three key finings that came along
with that. First of all, if people are asked to work at a higher level and can focus on higher order tasking, then they're more keen to adopt technology, and they're more optimistic when it comes to the use of the technology for their own career goals in their own pay. The second is if they felt valued by their employer. Right, So being valued is both are you working in a safe environment and do you have a great benefits in pay? And then Amazon, we're really proud of the benefits and
pay that we offer our employees. And also through automation, we're actually reducing the number of recordable injuries significantly over the past four years. And then the last part is really those that want to learn more and take control of their career. So if they want to learn and grow in their career, they're more optimistic for technologies. And that was really good good news for us as we put in one point two billion dollars into upskilling our employees.
So they're good signals. But we're not done yet because this is across many many workers, across many industries, and we're going to follow on the study actually a survey of our Amazon employees directly because we're always interested in the voice of our customer, the voice of our employees, and we always want to make this safe for more productive environment.
What's a takeaway that you had from the survey? About how you're going to either design or implement robotics across Amazon, Like, what's one actionable thing you took away from this?
The first action that we had is that we actually want to fund more studies. We want to fund the study, particularly for Amazon employees, so we can hear directly for them of their perception and how robotics is really augmenting and extending the capabilities. So we are the voice of the customers. Our first actual takeaway that we have from the study. The second is really validation of our philosophy
that of putting people the center of the robotics universe. Right, It's this validation of augmentation and extension and allowing people to do what they do well, thinking with common sense and reasoning and really understanding the problem at hand. People do this amazingly well. So our job as roboticist is to complement that amazing skill that our employees have, that
people have with machines that can be better designed. So very concretely, for example, we have a robot called Proteus that is free roaming inside of our fulfillment centers that moves goods on demand, and it understands where people want to be and people can look at the robot and understand what the intent of that robot is. So its job is to move these vessels of goods to our dock doors safely, and it's fully around people.
Right.
So the concrete actual thing is here is that we are getting this really strong validation that by extending and augmenting human capability, not only can we more and more productive, but we can also create a safer environment.
That was Ty Brady, chief technologist for robotics over at Amazon. Our thanks also to Bloomberg News is Emily Graffeo for co hosting.
All right, So, Tim, we are very much an Apple home and yet we've got a few Google small our home devices. I mean, I feel like, to be quite honest, my husband's just kind of waiting for Apple to offer up something similar to kind of put it all together. Thankfully for my husband. As Bloomberg News Chief technology correspondent Mark German reports that device it is coming.
So the smart home is Apple's next big thing. It's actually funny. Ten years ago, or a little over ten years ago, Apple introduced home Kit. This was a framework for the iPhone to interact with smart home accessories, sprinklers, dishwashers, laundry machines, but also things like lights and locks and TVs and whatnot, And it was kind of stagnant for
a while. When they released a home Kit app so you can control these things from an application on your iPhone and your iPad, eventually brought it to the Mac, and then they took it to another level, right they started introducing things like the HomePod and making the Apple TV part of it, but the home approach really never took off. But now they're hoping to change that. In March, they're going to announce a new device. It's a home Hub. It's about a six inch display like two iPhone side
by side, so it's square. It has a FaceTime camera on it, and you'll basically be able to do anything from your wall or from your nightstand or your kitchen table, things like video conferencing, intercomming, of reviewing security footage, controlling your lights, controlling your media, playback on your speakers and TVs throughout the home. So a central place just for
home stuff. And it's really similar to an iPad, right, but something that's going to be a bit cheaper and dedicated to home use cases.
Why not just go with an iPad and instead of creating something completely new.
Yeah, well, obviously they're trying to create new sources of revenue, right, So they don't want people who have an iPad to use an iPad to control their homes. They want people to use their iPads for other stuff, additional device their homes, right. And then obviously you can get wall attachments like your friend, they have them all over Amazon. But also the cool thing there is that this will have a wall attachment specific to this device, something Apple designed, Apple made that
you can buy if you're in the Apple ecosystem. So that's really the leg up there. And there's going to be a new operating system and user interface optimize for home use cases. Obviously, the iPad has the home app, but you can't build the device around those home use cases, whereas this is going to have a dedicated homescreen for your home controls. And the other thing here is that this is going to have Apple Intelligence, So this is going to be built from the ground up for Apple Intelligence.
Apple said that about the iPhone complete lie here, it's actually the truth. This is a device that's going to be controlled entirely by your voice and.
Your iPhone darn anyway.
Yes, using a feature called app intents. App Intents means you'll be able to have finite, very specific control over actions on the device, so you'll be able to manipulate the whole thing, telling it scroll there, do this, do that, write something you can't really do on your phone today or your iPad today. So it's going to be very Siri. Apple Intelligence AI focused big presence on home control, but the big features are communication, home control, security, and SERI.
Does Amazon and Google have to be worried?
I don't think so. I mean they've been in this game for five to seven. They have the Nest Hub, the Nest Hub Max. The Nest Hubs only one hundred bucks. The Nesthub Max is two hundred and thirty bucks, and it's going to have much better speakers on a bigger display than the Apple device, and it's going to be cheaper. Amazon last year launched the Echo Hub, which is a very similar dedicated control panel for home use cases. Several years ago they launched the Echo Show, which was the
first Echo with the display. They have an Echo Show fifteen now that can actually be pinned to your wall as well. So both of those parties have been in the game, and all of these companies are really reliant on each other at this point when it comes to the smart home. That's because there's a new framework called Matter, which makes it so all smart hub appliances, regardless if they're developed for Apple, Amazon or Google, they can work
on each other's platforms. So that's going to be a cool component of this too.
What's the price on this puppy?
I think it's going to be a few hundred bucks. I think it's going to be between two hundred and four hundred dollars. I would say it's probably going to be closer to the three hundred dollars range. I don't have a final price point. We're still about four or five six months away from this going on sale, but
it's not going to be cheap. In context of the existing home display market, there's going to be a premium like there always is for Apple products, but compared to something like an iPad, it's going to be a little bit less.
That was Bloomberg News chief technology correspondent Mark German. Is it fortunate like you're just gonna be buying more Apple devices?
Can I tell you it's not that I don't appreciate technology. I'm just getting to a point that it's more devices that we spend money on, more devices that can break, more of my systems that are connected, so that when the things don't work, we're kind of like stuck.
Yeah, what do you do with all this old stuff too?
I know, right, recycling garbage environment, I don't know. Come on, folks, I think we can do better.
All right.
That wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thank you so much for joining us.
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