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, we did see shares of big tech kind of mixed today. Apple was lower, Amazon was higher. More than twenty tech in civil society leaders, including the CEOs of five of the ten biggest US companies, appeared at a closed door Senate meeting today to shape how artificial intelligence is regulated. The meeting was organized by Senate Majority leader Chuck Schumer. It included a mix of personalities with diverging
views on how to write the rules for AI. We're talking about people like the CEOs of Alphabet, Microsoft, Meta, and Open Ai, all invited to appear alongside rivals in industry critics to discuss possible guardrails for AI that balance the risks and rewards of this tech. Kaylee Lyons is the co host of Bloomberg Sound on weekdays at one pm one Street time, right here on Bloomberg Radio. She joins us from our Washington d C Bureau and Anna Edgerton is technology reporter at Bloomberg.
Now.
She joins us on the phone from Washington, d C. So Anna talked to us a little bit about what happened behind closed doors this afternoon.
Yeah, you know, it was a pretty crazy scene. We were able to go in at the beginning of the meeting, but then it was not open to the public, and there's a lot of complaints about that from senators like Elizabeth Warren of Massachusetts saying, you know, we shouldn't be giving these tech CEOs the chance to basically lobby senators
behind closed doors. But from talking to people who are actually in the room, they said, you know, it was mostly kind of surface level statements at the beginning, and then got into a more interesting discussion involving, you know, the security risks of open source research, you know, things about like should there be a new agency to regulate AI. So there was some discussion and it'll be interesting to see how that continues into the afternoon.
I want to bring you just quickly, a red headline crossing the Bloomberg terminal right now. Arm the chip designer whose IPO is so being so closely watched by the market. According to Wall Street, Journal is set to price it's IPO at fifty two dollars a share. That would give it a valuation of fifty five point five billion dollars a share, or fifty five point five billion dollars overall
on a fully diluded basis. That's seemsingly a little bit more than they were looking for initially, but roughly around that the outline that they had given. But we'll bring you more on this story in just a few minutes. Guys, I want to understand from these discussions that happened today, what do you think, Kaylee, what do you think, if anything, will be the sort of policy implications going forward for these discussions.
Well, this really was just a start. That's what the organizer of the summit today, the Senate Majority Leader Chuck Schumer, said he would like to see many more of these summits. He would like to see committees in the Senate working up legislation. He said he would like to see AI regulation in a matter of months, not years. But what we know is that Congress is a pretty slow moving body,
and this technology is moving very quickly. So it's kind of a race here between policymakers who all seem to agree today that they do want to get their arms around this technology, that there is a role for the federal government to play in setting guardrails around it, and then actually doing so is going to be another story. So this was really just the beginning and we'll see how things progress from here.
It was quite a crew in Washington today. Tech tycoons with a combined networth of roughly five hundred and fifty billion dollars gathered in the same room Wednesday to talk about AI and how it's regulated. One of the people there was none other than On Tesla CEO x CEO SpaceX the C I guess he's not x CEO. That's a good point, thank you. Ex owner Elon Musk. Check out what he had to say to reporters.
The reason that I've been souching to have people AI safety in advance of sort of anything terrible happening is that I think the consequences of AI going wrong are severe, so we have to be proactive rather they're reactive.
That was none other than Elon Musk saying that we have to be proactive rather than reactive regarding AI. Kaylee. This is not anything new that he said. I mean, he's been talking about the threat of AI for years. My question for you is do lawmakers understand AI?
Excellent question, Tim Well. Part of today was framed as an educational effort. The reason they were having, as Anna said, what was a kind of controversial decision to have a closed door meeting, was that they wanted these people to be candid. Knowing that you had more than twenty people there who were going to have about three minutes to speak, at least to the beginning, they were trying to get out as much information from them as they possibly could.
Understanding is largely what they were seeking, in addition to, you know, potential guidance or ideas as to how to move forward on a regulatory basis. But this is the US Senate we're talking about, guys. They're not necessarily the most technologically savvy individuals that are out there.
It's an understatement, so true.
Yeah, I think I've heard some discussions of theirs about the Internet, and that's been around for a little while, longer than some of this artificial technology.
But Ana, are there.
Any areas where you know, the participants in this meeting that you understand from your sources, you know, came to some sort of agreement that maybe didn't exist before.
Yeah.
Two themes that kind of emerged from at least the executives in the room, if not kind of the civil society actors, were that the US should play a role in setting kind of the global governance discussion about AI. It's there's going to be the.
Broad agreement that the US needs to have something to contribute to this discussion, if not in the form of legislation, then you know, these voluntary commitments that the White House has been talking about has the shared from several.
Companies, So you know, that was one area of agreement. And then there was also kind of a broad understanding that regulations should focus on the end use of this technology, like how AI tools are used, rather than the actual systems themselves. Now, the civil society participants might have a different view about that because these systems are going to be powerful in ways that we don't understand. So it's not like, you know, just put cars on the road and.
Let people use them as they will know. You regulate seat belts, you regulate airbags, so you know, what's the equivalent for AI. That's still going to be the task for Congress to kind of pash out one person.
Who was there Anna, who doesn't necessarily have the name recognition yet among a wide group of people, I would argue with Sam Altman, the founder of Open Ai, and I'm wondering what you heard from him. He's definitely someone who I think we can at this point credit with shaping a lot of the interests that we've seen in AI since the launch of chat GPT and since the interest around it.
You know, it was so.
Interesting when he spoke to Congress several months ago because it was kind of the first time that this conversation really first onto the scene on Capitol Hill, and you have this kind of boyish looking doe ied CEO and very earnestly saying we need to be regulated, you know, if AI goes wrong, if you go very wrong. And so you see this kind of plea from this CEO of this new innovative company that sounded very different than
what we had heard from Mark Zuckerberg and hearings past. However, in the month since then, when it comes to actual regulation, like we're seeing an EU with their AI Act, we've heard pushback from Sam Altman. So you know, he is kind of emerging as another CEO who wants to be regulated, so to speak, but only on his turn.
Yeah, Kayla, you actually spoke to him on his way in.
I think yeah.
I yelled at him as he was getting out of his suv heading out to the Center building, and I asked, you know, what are you planning to tell senators? What's your message in your opening remarks? And he says sort of that this is an important, urgent and in some ways precedented moment. There was really kind of a theme here. It wasn't just Sam Oltman, but Senator Chuck Schumer, others as well, everyone trying to convey a sense of urgency in trying to get something done in regard to AI.
And part of that conversation I thought was really interesting was about competition with China. How you don't want to have the Chinese Communist Party being the ones that are setting the rules of the road and kind of the groundwork here that the United States should be doing it. And it seems like that kind of competitive drive was in part what is really driving a lot of the desire on the part of lawmakers to do something and
do something quickly here. And this is something that we know the likes of Elon Musk Raised and the Hearing today as well.
Kaylee Lyons, co host of Bloomberg Sound on weekdays at one pm Wall Street Time on Bloomberg Radio from our Washington DC bureau, and Adgerton Technology Report at Bloomberg News on the phone from Washington, DC. A big thank you to both of you for beginners, the latest from Washington and AI.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, or watch us live on YouTube.
Well it's the.
Big news after hours certainly, but perhaps the big news for tomorrow as well. Arm Holdings pricing its IPO at fifty two dollars per share, and that's according to the Wall Street Journal. This is set to be the largest listing this year. It had intended to price forty seven to fifty one dollars per share, but Bloomberg News had reported that the company was even looking to potentially exceed
those valuations, and it does appear they have. This would put this price, according to Wall Street Journal sources, would put the overall valuation of the company at fifty five point five billion dollars and it's of course start set to start trading tomorrow. Here to break down the price the IPO and the IPO market is Jane Tier. She's the senior data editor at crunch Base and joins us from Palo Alto to discuss we just got this news. Janey,
what what are your thoughts here? Is this surprising to you that we kind of saw the pricing come in just ahead of the target.
I think over the last few days there's been indications as the company has been doing its roadshow with institutional investors that there is a lot of interest in the armstock. They as you said, they said forty seven to fifty one, and they're pricing a little higher at fifty two, not too much higher, you know, I've seen reports of this is five to ten times oversubscribed, So definitely a lot
of investor interest. And I think, you know, as we've led into this month of three companies planning to IPO, three very strong companies which we have not seen in the last eighteen months, I think all the questions have been around what are the right valuations in the market. We've seen valuations come down massively in the last eighteen months, and so where are these valuations going to sit? Is
their investor interest? I think there's been a lot of questions around that, and I think it's certainly interesting to see that they're pricing a little higher than their guidance.
Yeah, it is. It is interesting to see that. And one thing that's also interesting to see is just since arms US one came out, we saw Instacart, we saw Birkenstock. Is the IPO drought over at this point?
Janey?
I think it's a little early to say. I think everyone wants to watch these tech stocks. You know, we run a billion dollar exit board. What we try to do is track the venture back companies that have the highest valuations that go out on the public markets. And
we've seen a complete dearth in twenty twenty two. It was largely spas, and I think those deals were done in twenty twenty one, and then in twenty twenty three things have completely dried up, and so I think this is really a testing to see of three very different companies. The companies we're really tracking as Instacart, Clavio, which is an email automation company largely in the e commerce space,
and obviously the ARM listing. Three very very different companies who are seeking to go out in September, and I think they each have very different stories to tell, but it'll be it'll be interesting for us to watch. Is their investor appetite for each of these very different companies, How are they going to price in this market? And what do they look like three months to six months
down the road. It's not only about the IPO and the IPO pop, but it's really about how these companies do in the markets in the months ahead, because we saw so many twenty twenty one and twenty twenty and twenty twenty two listings have gone down massively from their IPO price, So I think it's a test.
Yeah. One of the questions here as well is whether or not ARM is pitching itself as just like we are, an AI company, or whether it's doing something else and trying to talk about its fundamentals in some way. Jenny, where do you see it's having the most success?
And I think what's interesting about this IPO is that there is obviously it's on it's coming out on the backdrop of Nvidia, and you know, and that start going up incre massively I think also as part of this IPO, there are a number of companies who want to invest in the IPO. I think Apple is one of them, there's a few others. So I think there's a lot of investor interest in the chip space right now. In
a AI, there's certainly a huge demand. And what was interesting in looking at their IPO filing is year of a year revenue has been pretty flat, but I think their expectation, and I think Bloomberg reported this that there is an expectation that in the next year. We're already into that because they're just reported in March for fiscal twenty to twenty three, but for the next year they're expecting revenue to be up around eleven percent and then
even higher than that in the year of following. So I think they're anticipating a lot of demand for their chip designs, and so I think because of that, there is a lot of investor Investor interest is based on growth for these companies being profitable as companies but also showing growth, and even though in the last fiscal year they haven't really shown revenue growth, I think there is
expectation that they will going forward. Nonetheless, this price is still, you know, many are still saying it's.
A rich price, are you? How are you thinking about China's exposure excuse me, arms exposure to China. As we reported last month, ARM runs most of its China business through an independent unit called ARM Technology, which is its single largest customer and accounted for about twenty four percent of its sales in the year ended March. Does that raise any flags for you? And this isn't you know? I mean to be fair, I mean, Apple gets about twenty percent of its revenue each year from the Greater
China area. But I'm wondering how you think about that as an analyst.
Yeah, I think there is. I mean, there's so much demand for trips globally. China is a very very big market. They've been they've been investing in the space in order to create more independence. So I'm not quite sure what the outlook is for China, but certainly the demand globally is so big and China is a very big market, but they are seeking to create some independence, although the China market at this point is behind.
What if this IPO tomorrow doesn't go that well? I mean, I remember the Facebook experience back of twenty twelve. Would it say something about AI? Would it say something about the IPO market? Speculate a little bit for.
Us, Yeah, I think it will definitely say something about both of those, about the AI market specifically and about the IPO market. I think the you know, in going through this process and looking at these companies like Instacart, you know, Instacart is coming in way below even if it's internal valuation set. Recently, I think ARM has been
very careful. You know, we know that SoftBank bought its own shares at a sixty four billion valuation just a month ago, and they're coming in, you know, almost ten billion below that amount. So I think there is a lot of sensitivity in the market right now around pricing, partly because of how badly tech stocks have performed in
the last two years. But I also think because from many of these investors in Instacart and in ARM and in Clavio, it's not really just about these three companies about it's the opening up of the markets, and it's the ten fifty one hundred some even say two hundred companies who were looking at listing and were thinking about
listing in twenty twenty one and missed the mark. There might not be quite that many who could go out in this market or into twenty twenty four, But for many of those investors, it's about these companies that are going to be going out after these IPOs, and they don't want to price this too high and have that impact the markets. And you know, interestingly, I spoke to a lawyer who worked on the Facebook IPO in twenty twelve.
There was so much anticipation around the Facebook IPO. It was priced at the highest level that it could and the stock came down after it when public, The stock came down and kind of dampened the whole IPO market because it was such a big listing for about nine
months after that. And so I think, given this is one of the biggest listings certainly since twenty twenty one when Revine went public, I think investors are focused on arm but they're also focused on the next set of companies to come out and don't want this, do not want the stock to collapse.
Yeah, it's pretty interesting. You bring up meta Facebook now known as Meta Platforms and Rivian companies that have performed in completely different ways after hitting the public markets. Facebook's early problems notwithstanding, so I want to take a step back, and just in the last ninety seconds we have with you, Janey, talk about a completely different stage of a company, and that's of course venture capital, way before the founders are even thinking about an IPO. You do a lot of
analysis on the state of venture capital. Where are things right now in terms of fundraising and in terms of availability of funds.
Yeah, I think what we've seen is a huge pullback in the venture capital markets in twenty twenty two, from the second quarter and into twenty twenty three. And if you look back twenty twenty, there was north of three hundred billion globally that went into private venture back companies from seed all the way through to late stage. In twenty twenty one that doubled. It was north of six hundred billion. And what we're seeing possibly for this year in the pullback, it's going to be half of that.
It'll be less than three hundred billion again. And I think the you know, the late stage market has largely evaporated, and that's because of the IPO markets that there aren't companies on a pipeline to go public. All of that money went in at the very late stage in anticipation of companies going public and that did not happen, and so that massively pulled back but ended up affecting actually every single stage pulled back as a result.
Yeah, that's right. I mean, and you know, you point out that a lot of these companies have brought down their valuations here in this final stage. Janey's here, senior data editor at Crunchbase. Thank you so much for your insight on this really momentous and interesting IPO coming out tomorrow.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
Well, a few months ago, my brother sent me a TikTok. It just blew my mind. It was a demonstration of someone using photoshop. I mean, okay, like that sounds you know, why would I watch a TikTok of someone using photoshop? Well, it started with the picture of a locker room with sports equipment was strown everywhere, and then the person doing the demo was able to expand the borders of the image, and it seemed to magically grow to include other pieces
of sporting equipment, more lockers. It just matched the scene perfectly. It actually looked like it was part of the original photo, even though it wasn't. It was a demonstration of the generative AI capabilities that Adobe, the maker of Photoshop Illustrated More, has built into its full suite of products. Well, today Adobe unveiling pricing for its new generative AI imaging tool Firefly.
It's going to cost less than open AI's ca competitive competing service, Dolly, and you're to give us all the details. Is a Neil chakra Coffie President excuse me, a Neil Chakravati, President of Digital Experience Business at Adobe. He joins us on Zoom from San Jose, California, and Neil, good to have you with us this afternoon. So we were talking about AI a lot throughout the program today, and I think a lot of the credit to the interest in AA has to go to open ai and chat GPT
just about a year ago. How long have you guys at Adobe you been working on these generative AI capabilities?
Well, thanks for having me on the show. We've been working on AI what we call sense for well over ten years. And the kind of example that you just shared in your leadia in which we call generative phill, which is you take an image and then you can expand it and it'll fill it in for you. That is based on set of generative AI technologies has really come together in the last two years or so. But we'll put it all together with our knowledge of graphics vision, all the expertise we have around.
M Yeah, Neil, I want to be clear as well. I have seen these TikTok's or these these reels, et cetera. They're amazing. I also neitsarily thought I was going to see a really boring video and it was very cool.
It's like a whole like they like go viral. It's like a whole thing if you type it into TikTok and you.
Shared one this morning, Tim, one with an iguana. You changed the setting. It's a forest, it's a beach.
So cool.
But what do people use this for? What's the commercial application here?
Yeah? The commercial application.
So if you think of any big brand, and if you think of how much content they produce for their marketing requirements, and you think of a TV campaign that they run, or when you think of content that they run in their digital campaigns, all these personalized campaigns where they have small segments of audiences that they.
Want to reach.
They might want to reach them via email, or through a mobile app, or through social media. So there's a lot of content that gets produced by virtually every big brand the world, and how they do it today is often it's a messy process. It's an expensive process, and they are not happy with you know, how long it takes or the kind of content that they produce, because it needs to be on brand, it needs to reflect their values, but also it needs to be appealing and beautiful.
And that's really what we've focused on is how do.
You take this power of this generative AI technology around Firefly make it available to marketers. And that's what we announced a product called gen Studio for brands to be able to take advantage of all of this technology and open the power of content creation to everybody in their marketing departments.
One of the criticisms with AI has been, okay, well, a lot of what the generative AI relies on has been content created by people throughout the course of history, whether those are images, whether that is just text. In the case of chat GPT, it's always citing something that was created by a person. How do you make sure in this product that people are getting credit for images that they produced.
Exactly, So you know, that's one of the big areas of focus for w right from the beginning, all of our products are designed to be commercially safe, which means that all of the training that we have done for Firefly and our generative AI technologies is with licensed content or content that's already in the public domain, and so that really enables us to be able to assure brands and marketers around the world that the content that's generated by this is commercially for safe and they can use.
It in their campaigns.
The other thing that we've done, in fact, our General con Chief Trust Officers spoke about it yesterday in Washington is really focused on what we call fair which is the Federal Anti Impersonation Right our support for making sure that artists get due credit for the intellectual property they'll produced that then gets used to.
Train these AI models.
That kind of transparency and making sure that there is benefit for everybody in the ecosystem is very important to us.
That it will be Do you see AI products like this replacing the illustrators at Hollywood Studios for example? I mean, just considering the strikes that are going on there, do you see them replace you know, replacing the graphic designers that a lot of these companies would hire to make this kind of content.
We see this AI as a copilot. We've often talked about the creative copilot that you get. This is if you think of, for example, how photoshopping the example that you use, how that people would use it. Usually they would start out with an image that they already had, and then they add layers to it, filters to it,
and they make it more beautiful. So it's one way of starting the processes through this kind of genetic BAI where you can say you enter a prompt, it gives you a set of images, but then that's not the finished product. That's what you start with, and then the artist or the creative professional then goes on to use our tools and to make it on brand or make it much more visually appealing. So it's really the starting point. It's an iterative process and that's why it's really a copilot.
It is not a replacement.
And Neil I always like to ask people who are in your position what they visualize five ten years down the road. I mean, what we're seeing right now is pretty cool, and like I describe it, it is mind blowing. But if you could snap your fingers and create a product or create a feature, what does that look like?
You know, five ten years around the road.
When you think of how brands produce content, content will be individualized, personalized, the right content at the right time for every individual. Today, when companies or brands produce content, usually they produce one hero asset for example, as they call it, and then they use it in every campaign.
They won't need to do that.
You know, if you look out a few years from now, what they'll be able to do is produce beautiful content that's really personalized and appealing to every single individual. So if you and I are seeing a campaign from a brand, we might be seeing completely different images, completely different videos, but it'll be personalized to us and that will be made possible through this technology. O.
Neil, thanks so much for taking the time and joining us this afternoon, especially on such a busy day for Adobe. That's a Neil Chakravati, President of Digital Experience Business at Adobe. Joining us on zoom from San Jose, California.
You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.
Well, it's hard to believe it's already that time of year when Bloomberg Business Week on bils The Business Week B School Rankings. This is an assessment of one hundred and ten full time graduate MBA programs around the globe. It's based on data provided by participating schools, as well as responses historic questions about students nine had employers. The survey's gauge the participants level of satisfaction with learning, networking,
career opportunities, skill development, and more. The person who has the herculean task of putting this all together each year is Dimitra Cassanidas, senior editor at Bloomberg Business Week. She joins us here in the Bloomberg Interactive Brokers Studio. You can read Dimetra's story on the Bloomberg Terminal and at Bloomberg dot com slash business Week and look for it next week in Bloomberg magazine, Bloomberg BusinessWeek magazine. Excuse me.
Also with this is Joel Webber, the editor of Bloomberg business Week. Joel in our business they call an introduction like that bearing the lead. So come on.
Five straight years again, Yeah again, they've done it again. What's in the water out there?
Demitra something very special, lots of money, but.
Don't choke them.
The thing that makes you make money create businesses. No, I mean we're joking. There's a lot of you know, there's a lot of really important stuff that happens in a place that's right next to Palo Alto, that's in Silicon Valley, that's next to big tech companies and startups and entrepreneurs and whatever the hits are that those industries have taken this past year. It still really matters to a lot of people out there, and they it's just top class. So they are doing something right.
So we do this every year.
We've done this for many years. BusinessWeek has, yes, thirty six years us counting. And what's amazing is we it's all survey based, right, So how walk us through a little bit of the methodology about what goes into this so that eventually we have a ranking. In this particular instance, Stanford comes out on top of them.
I mean we some of the other schools. It's survey based and it's data that is submitted based. B schools are required to submit a lot of data to other entities out there that deal with like compensation and various other things jobs and such. We require some of that same information from schools about the composition of their classes and how how much they're earning when they get out, how many students they have, and so on and so forth.
And then at the same time, the key people that we think are most important in this whole universe are the recent grads. There's current students that are about to graduate alumnia over the past ten or so years, different classes and employers, and we ask them, you know, different questions to gauge whether they're satisfied with what they're learning in class, whether they think they're really being exposed to the kind of networking that you expect to get when
you go to business school. That's a major one, you know. And then they also weigh in on some of the other factors that we get the data from the schools on and that all combines in a magical way with the work of Tim. You mentioned that I have the herculean task. I am not alone.
I thought you did it all.
We have an amazing team and the data visualization team, and the two analysts that are primarily responsible for this, Alex McIntyre and Matt Banamu, are the ones that really like pull that all together in a way that gives us this fantastic See still, still are you.
Just saying their names? So they got hate too.
I'm getting a hate mail, I'm hoping, Yeah.
From Chicago, Darmouth, and Virginia.
Okay, well let's get to those other schools, right, Yeah, So who else?
Well, we've seen some consistencies, you know. Somebody just asked me a few minutes ago, like, come on, don't the schools, like, isn't it the same every year? And I'm like, no, it's not the same every year. I mean, Stanford's the same for five years, but six years ago it wasn't Stanford. We have the University of Virginia. This year jumped quite
a bit because it's recent. Alumni reported starting you know, salaries and so their media and starting salary was significantly higher, like almost thirty thousand dollars higher than what had been reported by survey takers last year and the year before. Compensation does matter to people who go to business school might not be the primary factor, but it's an important one. You're going to pay all that money, You're going to do all that time for two years. You want to
earn some good money. You want to pay back your student loans. You want to just know you're going to be okay. So UVA did very well this year. Several other schools moved up. Columbia moved up some. You see Berkeley has moved up. You know, you see across the board there are different factors that are boosting those scores.
Whether it has to do again with the satisfaction they feel they got because of the job outcomes that they that worked out for them, or the comp or really sincerely feeling that they were just exposed to fantastic classes, teachers, learning and research. And you know, from year to year, that's what changes, and you do. You might not see it at the very top of the list, or maybe even at the very bottom, but you see movement in the list that's meaningful.
Is there one category that really sets Stanford apart as opposed consistently?
Well, we've seen, you know, we have these five key indexes and they're you know, compensation, learning, networking, entrepreneurship is the one that year in year out they are coming in first on among all the schools that we survey. And again that's not surprising, right given where they are, given the part of the country they're in the industry that they're very closely aligned with. It's it's an important one for them.
Okay.
The other thing to keep in mind here is that this isn't just a US ranking.
It is not.
It is an international ranking. Yes, now, we don't produce a global list, by the way, just to clarify, sometimes people think, oh, well, how come there's not one list with all the schools. Certain factors like our diversity index is really only for US schools. The way that we're able to measure that is not something we can apply to the international schools. The minute you introduce something like that, and then you can't really mix and match all the
scores and say, well, what's the big long list. We look at schools in Europe, very strong, healthy market for business education Europe. We know right the ncads of the world, but there are schools that are up and coming that are doing great, like the number one school in Europe this year, Bouconi, which is a big school in Milan, Italy. You see other lots of schools in Spain. So our Europe rankings are part of this. Are Asia rankings, which
are growing. We're really pushing because there's been a push that we know. It's not reflected in how many schools we have yet, but like India, another very healthy market for business education, and then Canada, so that's what we've got.
Each year we do a broadcast from the number one business school in the US. We've been to Stanford for the past few years, but Joel, we haven't been to Milat.
There's the ask.
I'm just wondering if we're going to do an international broadcast.
You put a ticket in, just don't subscribe me to it.
We'll see.
That's internal parlance for don't bother.
Me about it.
But I think I'll join you on that ticket. Yeah, I have a little bit of Italian I can draw that we'll be good, will be good.
It's funny. I can already see it being like an extended stay, like we have to do a little dispatch and some research I have.
We have to figure out why the business community there is so successful for these graduates.
Of course Milan, Trada, Gucci, you know, fashion, Italian style and design, and it's not all that actually, no, it's not though. Lots of manufacturing, lots of consumer jobs to technology also coming out of schools like that. So you know, there are both of things you might immediately recognize in a place like Mulan, and then if you stop and you pull back, you know there are others that you might be a little surprised by.
But okay, so the whole point of doing an NBA is that maybe it opened some doors that wouldn't otherwise open, and you have a new appreciation about how business works. You get some skills. What do people do when they graduate?
They do lots of different things.
What do you mean by jobs?
Yeah, what industries are there?
I mean, you know changing.
We have been on the story this year on jobs and we all know this. Jobs have been tough this year. We know what's going on in the tech sector and what was going on really in the beginning of the year into the second quarter and beyond the consulting. So the top three industries are finance, consulting and tech. Finance had, you know, challenging industry this year. Cutbacks, contraction, consulting, same thing consulting unheard of in the past, started pulling back
start dates and maybe even contemplating pulling back job. We have lots of students that we were in touch with on various questions where we have a back and forth. They give us their emails to just communicate and clarify answers.
There were lots of responses and there were lots of things that were shared with us about the degree to which the consulting firms really had spooked lots of business school students across the country with jobs and technology, of course, but you know, the upside is we're seeing that at the same time that we're seeing a lot of new and interesting opportunities emerge. And AI is very scary for people, or something like chat GPT, which dominated the conversation, but
it's not the only thing. The healthcare industry has a lot going on. There's a lot going on actually and consumer goods and even in media and entertainment. So there are ways in which the jobs are going to start to evolve. I think I don't think we're ever going to knock those three off the top three perches, you know, finance, consulting,
and technology. But I think that the way that MBAs are taking the education, applying it, incorporating aspects of you know, climate change and how they're going to manage through challenging periods like what we see it every day in the news, I think the kinds of jobs are evolving and becoming just richer and more about, like it's not just that
you lead a company. You lead a company in this world in these challenging times with many people that work for you, who have very different needs and what have you. So you know, it's it's becoming a much it's just many more pieces to it.
Well, I guess one of the questions people ask is do you need to go to business school because I think there's this feed thought that you know, a lot of the results you're going to get from it are the people you're with, potentially, Sure, And it's interesting to see you we break down the learning component of these rankings and you'll notice that, with the exception of Virginia, the other ones in the top five are not there William and mary Georgia and Maryland Georgia Tech are the
actually the top four. Would you say to someone who's saying, I don't know that I'm not necessary I'm necessarily going to learn very much from business school, And why are these folks doing it better? Maybe even than the top dogs.
You know, I don't know that they're necessarily doing it better. I think respondence from those schools are giving them higher marks because it's just an area that isn't really dominating kind of the ethos and the discussion as much at the school in question. I think it's very simplistic to say that you're not going to learn something at business school.
There are a lot of things you can learn at business school today when you really get into a school and just go and spend some time talking to people about the way their curriculum has evolved, how science isn't entering into it, the interdisciplinarity of it and all. There's a great deal that's changing and that you can really learn if you want to take advantage of it. It might not be for you, depending on what your goals are. Are you very happy in the job that you have
right now? Do you see a path forward that doesn't require you to step off the path and maybe you get some more education. Are you achieving compensation wise what you want or are you at a point where you're really ready for a big cha. You always thought you had the makings of a manager or a leader of a business. You want to start your own company, So you have to really examine very carefully what you want. And there are so many ways that business schools today
then are tailoring their programs. We measure full time MBA programs, but what you're seeing is there there's a drop off in applications and there's a concern about enrollment in these programs too, and there are a lot of reasons for it. And one of the reasons is because coming out of
the pandemic. But even earlier, there are many ways that you sitting in your job, I Dimitri could decide, Hey, I'm gonna ask Bloomberg to assign me to a different beat, so there's no conflict because I'd like to go to business school, but I don't want to give up my job. And I love this program at UCLA, but I don't
live in Los Angeles. But you know what, I can do it remotely and in three years, I can have a specialization in something that is really going to move me in a direction in whichever industry it is that I think is going to be most sort of suitable for me. And there's a lot of that happening. Data analytics is the most popular specialization in business school programs
right now. So it's those kinds of things, and you have to look beyond just like full time MBA two year, which is what we measure, okay, but there's a lot going on in ways that can really enhance what somebody is going to do.
I think one question you'd have to ask yourself, simone, is how much do you like partying and trips to Cancre because that was a big part of my business school experience. Is if that's further and further in the rear view.
There are great parties in it, right.
The parties are ridiculous, Demitra. We only have about a minute left, but I want to talk about that diversity index here. It's not new this year necessarily, but there are parts of it that are that are new. Talk a little bit about just the rankings there and lack of overlap between the top tens or what you're seeing.
It continues to be a challenging area. It's tough to sail out right now because I think there's a lot also that we're not gonna that we're not quite clear on how it's evolve. For the schools that are going to be most directly affected by the Supreme Court decision, the affirmative Action decision. You know, some schools, like California schools, for example, will not be affected. So it's really tough. I what I can say is that schools are very concerned.
Schools have been very focused on trying and working at it's a it's a tough nut to crack. I historically, you know, used to work covering big law firms. I don't I think that there's a ways to go. We're going to keep doing our index, We're going to keep trying to build on that, and schools are going to have to find a way to really kind of level the playing field, I guess, and open it up to more.
Dimitro Cassini's at Bloomberg BusinessWeek and Joe Weber, the editor of the magazine, This is bloombergmark.
A journal.
How about you let me drive no, no, honey, please, I want to drive.
It's a good question time.
This is good drive to the clothes on Bloomberg Radio.
It's hard to believe we're already there, just shy at eighteen minutes until the close of US markets here, Yes, I shouldn't say US equity markets. We're very pleased at back with us. Amanda Agatti, chief investment officer at PNC Asset Management Group. She joins us once again on Zoom from Philadelphia. Amanda, whenever you join us, I always think of the twelve Days of Christmas that you guys do each and every year. But it's it's full, it's not winter yet, so we're not quite there yet.
Are we We're not quite there, but we're starting the work to put the analysis together. So it's going to be here before we know it. We're talking about back to school shopping, but we'll be ready for the holiday shopping season just a few short months.
Okay, that sounds good. In the meantime, what do things look like in the markets between now and then when it comes to equities and what comes to fixed income.
We think it's going to be kind of a choppy second half here. I think if you think about all of twenty twenty three. We really feel like it's going to be very different in the second half, almost a tale of two halves. I think, you know, based on what you're seeing today in terms of the CPI report coming in a little hotter than expected, a little bit of an acceleration there, that's kind of setting the tone for what we're likely to see in the balance of the year.
Here.
We think the market's just going to continue to be a little choppy, if not range bound, until we can get a little bit of clarity on some of the trajectory of key data points to tell us whether we're heading for that soft landing or we're just going to power right through that no landing scenario.
Were there any bits and pieces of today's CPI report that really stuck out, struck stood out to you? Excuse me, so now to you. One of the things that Mike, that's Stuart Paul, our us economist here at Bloomberg Economics, was saying, was new car prices were his, what's yours?
Well, we certainly we saw rents move in the right direction, aka a bit lower. We're seeing a little bit of a frothiness come out of auto. So that's great to see but there's still a lot of stickiness on the services side of the equation. It's notorious in terms of being sticky here, and so I think for us, it's
not necessarily one data point that's confirming a trend. I think we need to see a few more of these CPI reports of a similar tone overall, that the stickiness is here and that there's still a little bit of acceleration likely ahead. But I think the CPI reports are just going to continue to be a little choppy here. I don't think that this one data point confirms what
the FED should do next. We don't think that they're going to take action at the September meeting, but I do think there's still potentially at least one more rate hike in play. We're not at the fed's long term target, so they still have plenty of ammo to take another step if they feel like they need to.
Is there.
Are you concerned that they have over tightened or they could over titan.
Well, we're certainly in restrictive territory. From a policy perspective, there's no question that financial conditions are tight here. But I think what's surprising is that the consumers hanging in there, we're starting to see some weakness. We're starting to see a little bit in terms of cracks around consumer behavior, but labor market continues to be strong. Wage growth is on a real tear here, even with a lagged effect, So there's still a decent amount of underlying strength even
as growth overall is slowing here. And so I don't think we can talk too much about policy error misstep just yet because we're still in positive, though decelerating growth territory. I think the question is much more not whether they take one more step to tighten policy or not, but how long they keep rates at these fairly restrictive levels. We continue to say we're in a longer for longer dynamic.
This whole process is just going to take a lot longer than what any of us investors would like to see, and so I think that's probably more important for the market's path forward than whether it's one hike in the balance of the year or not.
You guys mentioned back to school just a few seconds ago.
What are you sake with back to school?
Well, I guess we're going to get a pretty important retail sales report tomorrow, so I guess I could tell you more after I see that report, but I think it's going to be a very important indicator for the health of the consumer and what you know, consumer behavior consumption trends look like. I think we're seeing a pretty significant shift away from a lot of big ticket discretionary spending.
That's not new news. We've been on that trend for a while, but I think more recently we're starting to see the more consumer staples, you know, essentials be the area of focus. And then I think the wild card that's not getting a ton of attention out there is student loan payments coming back online here. It's going to put a lot of pressure on consumers at a time where they're already feeling the pinch.
Well, could that have the effect of doing the Fed's work for it?
Oh? Absolutely, it could, Yes, yes, and we do think that it will. And we also think that all of the FED policy tightening that we've seen so far hasn't fully been born out in the economy here, that there's this long lagged effect and so some of it certainly is having an impact, but there's still a decent amount
of room to go. And that's why I'm saying, at the end of the day, what matters most is how long they keep rates at these levels, as to what happens with the markets path forward, and certainly whether we ultimately tip into contraction or not. But that's an underappreciated risk. Certainly, the student loan payment you know situation as it relates to consumers very much an underappreciated risk going in a bounce of the year.
Yeah, I'm really interested in this, So talk a little bit about where the risks are and who would see the result of those payments increasing apart from the apart from the people who have to pay those student loans back.
Well, I think it's just a general pressure on the US consumer in general. I mean, seventy percent of consumption, you know, seventy percent of GDP growth and GDP related activity in this country is tied to consumption. And so the consumer's been the lifeline over the course of the cycle, but much better shape given how late in the innings
we are this time around relative to past cycles. And so this, you know, student loan debt coming back online, these payments coming do is hitting very very late in the innings, and so I think it does have the potential to zap a lot of consumer health here and may put the brakes on consumer spending and consumer behavior much faster than I think what the market's no landing scenario is pricing for this.
Year, we've only got about minute left, But how do you position for the coming environment, this longer for longer scenario that you've described.
Well, we have been leaning very hard into quality exposures all year, which has certainly served us well. But in general, we've been very focused on running a defensive playbook. To us, that doesn't mean raising a ton of cash and moving to the sidelines. It's staying very well diversified, leaning into quality, as I said, not taking big bets, staying pretty close to longer term strategic targets. And then what we haven't really talked about too much is what's going on the
fixed income side. We're absolutely dialing back a lot of below investment grade credit oriented exposures in this environment, investors aren't being paid to take on that kind of risk at these credit spread levels, and so leaning on that side of the equation into investment grade as well.
Amanda Gotti, we love it when you join us, and we've got to come back at least one time between now and the holidays. To give us an update on how you're looking at the rest of the year until we do get too hard to births September talking about yet spooky Amanda Gotti's chief investment officer at the PNC Asset Management Group, joining us once again on Sale's from Philadelphia. This is Bloomberg BusinessWeek.
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