Understanding The Digital Age, Tech In The Pandemic

at Bloomberg dot com slash podcast. Well, one of the issues, or one of the topics that has really come to the four once again as a result of this pandemic has been the absolute central role of technology in all of our lives, the digital digitalization, if you will, of our everyday lives, if you think about working from home, schooling from home, it's just kind of really accelerated the embrace of digital technology, the upsides as well as the downsides.

And it seemed like a great time check in with our net guest. Next guest Brett Smith. He's a president of Microsoft and just today out with them, I guess the paperback version of his New York Times best selling book entitled Tools and Weapons, The Promise and the Peril of the Digital Age. Brad, thanks so much for joining us here. It's really topical here, as I think you know, a lot of people are kind of rethinking the role

of technology in their lives. What is kind of your takeaway over the last eighteen months of how maybe people use, interact and and think about technology. Well, things have changed so quickly. It's why my co author Caroline Brown and I added three new chapters to the paperback edition of the book, one of them to address the question you just ask, how have we seen the pandemic impact the use of technology and which of these changes are likely

to really stick with us? And last and you know, we're certainly seeing you know, technology being put to use in a variety of new ways. It's creating more flexibility for us, um, the ability to see a doctor through a telehealth service, the ability of a sick child, perhaps to be able to stay connected to a classroom with with distance learning. Uh, they of so many of us, you know, to work in more flexible ways, including on the road or from home. But we've also seen other challenges.

In part, we're seeing new cybersecurity attacks because this technology is so ubiquitous, UM. And in other ways, we're just seeing the digital divide almost exacerbated. It's as if people who lack broadband access are living in the nineteen nineties while the rest of us are living in the twenties. And that is a divide that is going to exacerbate every other divide in society if we don't move faster

to address it. You know, over and over executives we speak to say they're really worried about the skills that this workforce has and whether it's ready for an environment where technology rains. You have been working through Microsoft and linked in to rescale and upscale people. Companies like JP Morgan have been working with cities to get more people into this workforce. Do you have a proscripection? Is there any cure you can see two people entering this workforce

with skills that they need. Well, I do think there's a prescription, and I think it's going to take a societally wide commitment, UH to really put that prescription into action. And we and it's why we devote a lot of attention to this in our book, both as a specific topic around the tech talent gap for all of us, but also in specific areas like cybersecurity skills. We're seeing

clear shortages, say of cybersecurity professionals and digital skills. More broadly, UM what it's going to take, I think, is for all of us to lean in UM, those of us in the tech sector. For a company like Microsoft and the linked In service that we operate, there's a tremendous opportunity. We're pursuing increasingly with nonprofits and others to use online learning to help fill the gap. But that's not going

to be sufficient by itself. I think employers need to reinvest, increase our spending and the skilling of the people who work for us. I think we have a huge opportunity as a country to do more with community colleges UH, and that's one thing the White House is now focused on.

The Congress and the Infrastructure Bill is addressing. UM. This is a moment where we can just create so many opportunities for more people, not by asking them to get a no new four year college degree, but take a course or two at a community college, or just spend more time as part of their work to add to

their skill set. So, you know, Brad, cybersecurity is obviously it's a big issue, and I think when Microsoft itself UH was the subject of a hack in December, the Solar Winds attack, that really got people's attention if the gods, the smart folks and Microsoft are susceptible here, how about the rest of us? Here? Tell us what actually happened? And you know what was the response from Microsoft? Well, it's the first chapter now of the paperback edition of

the book. Can we tell the inside story of really the cyberslew thing that it took not just at Microsoft, but some of the other really sophisticated cybersecurity firms like fire Eye to put the pieces together. You know, we now know that this was an attack launched by the Russian Foreign Intelligence Agency. It targeted major parts of the United States government, many tech companies. It targeted foreign companies and governments. Uh. And it was executed with great persistence, sophistication,

and scale. It was based on a disruption of the software supply chain, planting malware into a legitimate company, Solar Winds and its product. UH. And you know what we then talk about are the lessons that we all need to take away from this. It starts with recognizing the sophistication and magnitude of the problem. It then leads to solutions.

Some of these are I think really on our shoulders for a company like Microsoft, and we're increasing our investment, and we are and will do more to address this UM, but we all need to work together. There was a meeting at the White House two weeks ago. It brought together not just tech companies, but critical infrastructure companies and insurance companies and colleges and universities. UM. We're going to

need to pursue more information sharing. UM. Companies like ours are going to need to report more to the government, and the government, as it has started, is now sharing more information across the government as a whole, so we don't end up with pieces of information trapped in these different information silos. Brad, what worries you most in the coming months. We've seen major hacks since solar winds. We hear of major things that could happen that can disrupt

the entire economy. What are you concerned about in the coming months. Well, I think the biggest thing we should worry about is that will you look at this crisis and do too little to address it? Um? You know, people talk about, you know, will we face someday a digital pearl harbor or a digital nine eleven. Um. We have it, you know, in our ability to avoid that kind of day, but only if we heed these lessons and all work together. And you know this is not

just for big tech companies or people in government. It means for every business deploying the in many cases cybersecurity protections they've already bought but haven't yet installed or used. Uh. It means for consumers that we turn on your two factor authentication and the like. So we all have a role we need to play. Hey, Brat, thank you so much for joining us. To really appreciate getting your thoughts

and comments. Here Brad Smith, president of Microsoft, on his updated content of his book entitled Tools and Weapons, The Promise and the Peril of the Digital Age, now out in paperback with three new chapters. So take a look at that. Well, here we are again, right after Labor Day, and so folks maybe coming back to work for the

first time since the pandemic began. Certainly on Wall Street, there's a lot of talk of that being kind of a you know, a soft line in the sand, if you will, when a lot of the c was one of their folks back in the office at least temporarily. Let's get the latest update on that. Jenny Seraine, financial reporter for Bloomberg News, joins us on the phone from New York City. So, Jenny again, big big talk earlier in the year, How are the Wall Street firms delivering

in terms of getting their folks back to work? Yeah, you know, I think honestly a lot of the biggest firms have brought a good majority of their workers back. And the thing is, it's just not the way they wanted it to be back. You know, people are in masks, there's no um, you know, no congregating and meeting rooms. It's just, um, maybe not the big fireworks and the big return to normal that a lot of these CEOs have been promising for so much of this year. Um,

and that's been a big disappointment. And I think you've seen a lot of smaller firms actually just say, you know what, We're just gonna wait. We're gonna wait till we can go back without masks. We're gonna wait till we can go back without social distancing. UM. So you kind of see this, this growing divide. The divergence is also spectacular. You see Goldman Sachs bankers back in the office since you know, June or July. Really you see City Group having folks come in a couple of days

a week. You see Morgan Stanley about fifty percent I've been hearing is back in the office compared to what across the financial services industry. Jenny even hinting record numbers without coming back. Why do they have to? I think so much of it is just these CEOs wanting their folks back. They seem to think that culture is really made in the office. Um. A lot of times they also point to like the junior bankers and the need for younger talent to have that in person mentoring and training. UM.

So you just it's kind of a definitely a culture question. Um. And you know, we don't see that in other big industries. You don't see that in tech, you don't see that in autos. So it's definitely a very unique industry in ms of Wall Street just being really adamant that they want these folks back at their desks. You know remember Lloyd blank find years ago saying that Goldman Sachs is not a financial institution, it's a tech company. Um. And so I think about the workforces of Global Wall Street,

a lot of them. I'm not sure what the percentage is about. A big, big percentage is our tech workers and the competitors for those workers are Google and Facebook. And if they're Google and Facebook are bringing their people back, I would think that Goldman, Sachs and Morgan Stanley that have a hard time bringing their tech workers back. What are you hearing? Yeah, that's actually absolutely true. What was

interesting was we Um. We interviewed Um, the person in charge of tech workers at City Group and their trading and investment banking divisions, and he actually was saying that because they're CEO, Jane Fraser has been so so adamant that she's going to be open to remote work and Um has really been softer stance on the whole return to office question that he's actually had way more success

in hiring and recruiting more technology workers. So you definitely see the divergence, and you see these banks kind of thinking strategically now, like, can we, you know, get better talent because we can be a little softer than maybe the Goldman's or the JP Morgan's of the world. Jenny, is this forcing or at least compelling banks to be looking outside of New York for talent? Yeah, you know,

that's actually a really interesting element of all this. They've been very adamant that they want to move to places like Texas and Florida. Um, partially because you know, their workers want to live in those places, and partially because

it's lower cost office space. UM. But now they're coming up on the fact that those places have much lower vaccination rates, and you know, trying to force folks back in in places where vaccine rates are so so low has created this very unique tension that these banks are having to work through and deal with. UM that you just, yeah, you don't really see that in other industries as much, where they've been a little bit more flexible about the work from home life. What's been the pushback, if any

of the reaction from the workers themselves. Do they want to be back in the office. If I'm a banker, trader, research analyst, I want to be back in the office. Yeah, it's I think it's diverging. UM. You know a lot of traders, I think they are wanting to be back in the office these days, simply because it's UM. What we hear is that on slow trading days, people in the office, you know, they make more trades. There's that water cooler chat, and there's there's just a little bit

more activity on slower days when everybody's together. Um. That being said, almost every survey that comes out says that workers just want flexibility. You know, they want to work from home a few days a week, they want to be in the office a few days a week, and they want to decide their schedules. Um. So it's it's definitely Um, there's a big gulf in between what folks want and what you know ultimately might happen, given these

CEOs are aggressively wanting folks back. Um, but it's definitely interesting. Yeah, it really is. Will certainly stay on top of it going forward because they are big, big customers of Bloomberg, very important to Bloomberg. Jennifer Seraine, financial reporter for Bloomberg News. Again her story Wall Street limps into post labor day

return and it's derailed. I delta so really fascinating. Storian Shinale, you know what, as well as anybody you covered this beat, do you think it's just gonna be a gradual thing? You know, it's a very it's a very tough time on Wall Street. The question is do you get paid more for coming in? Paul? Yeah, yeah, I know there's definitely an issue. Uh, you know, if you can dine in New York. I think, as Mr Gorman from Morgan Stanley said, if you can eat out in New York,

you can certainly come into the office. Well, Friday's disappointing jobs report for a lot of people suggest that it will provide some air cover, if you will, for the FED to delay tapering. UH talks to the end of this year, maybe even into next year, and I might provide some support for this market. Let's check in with Brian Vendig. He's president of m JP Wealth Advisors. Say about seven fifty million dollars in assets under management located

in Westport, Connecticut. So, Brian, that seems to be the narrative that we're hearing. And in the wake of that job's report, is that something you supported. Do you think the Fed now has some opportunity to maybe withhold on some of that tapering at least for the short I definitely think so. I think, uh the weekend jobs report and also just the fact that you know, it seems like UM it is taking longer for UM job recovery

to happen within the United States. I think just due to the high productivity numbers investments that we've seen in technology that companies have made, and now that UM we're not seeing these these exceeding expectations on the jobs report, I think causes the SECT to want to be more patient, UH to wait till the next job's report to see how the month of September goes, especially with schools reopening and UH enhanced an extended unemployment benefits expiring UM, and

that as a result, it pushes back the tapering timeline probably towards later on in the year or the beginning of next year. I think investors were expecting that in the September meeting UM those tapering announcements would start sooner, and as a result, UM, the fact that it's being pushed out is providing some optimism from an ass evaluation. For Rector, the taper is such a big conversation here, but I don't think what's as flushed out is how much is that taper going to set certain markets off

the current course that they're on. I totally agree that that's a very fair point. I think we're in this very unique environment where we have a high level of fiscal spending paired with monetary policy, and I think, really what investors are more concerned about is the dot plot with interest rates. I think the tapering is something that probably should happen because there is a expanding GDP recovery.

There are sectors that are coming back. Granted things are taking a little bit longer due to the impacts of of delta, as we've seen other institutions lowering GDP forecast for the year. So I think tapering is a is a situational predicament that we're in trying to get a sense of where the feed is going to be going for that longer term monetary policy decision, which is really

critical around interest rates. Alright, So given that background, brand, what are the sectors that you guys uh think present the best opportunities right now? Sure, I mean we have been trying to stay as fairly balanced between value versus growth, not trying to take one side of that argument, especially because of rebalancing and things that are going on in the global economy as we saw with inflation and interest

rate concerns. But then came back off a little bit and now we're talking we're thinking about longer term interest rates going up again over the next twelve months. So we still like the cyclical side of the trade with UM financials and basic materials and industrials and even real estate paired with you know, sticking with some of those

technology companies that are just pervasive to our society. Idea is helping us support data integration you know five G you know, as well as UM software in the cloud to run not only UH your business, but also just to help the support running your life. And what are you looking at in terms of the delta variant and what what could derail some of the current pricing we've seen in the market. How bad does it have to be that will actually start to see it show up

in the stock market? You're you're right. I mean, the market has been unbelievably resistant as different things have come up over the course of trying to move forward from the impact of the pandemic last year. But I think the things that are important to keep in mind it's more than just the variant story. I mean, technically, policy mistakes both from the Fed and Washington could definitely disrupt

the market. We have to keep in mind that this month and only is that a seasonally tough months to the market, but we also have conversations happening in Washington on taxes and additional spending with the said meeting. Um, we also know that there's other variants that are unfortunately around the corner, and we need support obviously from from science to continue to lead us out of this with you know, a debate on boosters and then at a

lessons being able to get vaccinated. So I think it's a combination of several variables that if they were all to coalesce, you know, over the next couple of months, definitely can cause some investor concern as we move into next year. However, I think the fact that decision makers

are trying to take a thoughtful and gradual approach. I think our friends in Washington are going to come up with uh, some agreements that aren't going to be as drastic as what we've heard on the campaign trail for taxes. I think this will continue to help to support the markets.

And also have to keep in mind that earnings has been extremely solid for publicly traded companies and that looks for next year with companies still trying to rebuild supply chains, getting through these labor shortages, these are all things that still set up for I think still some more room for growth. Brian just real quickly thirty seconds. Uh, bitcoin crypto, do your clients ask you about it? And if so, what do you say? Absolutely? It is it is something

that clients do ask us about. UM. We we try to educate on different ways to get exposure to digital assets. You don't always have to you know, own the coin per se. But I would just say right now, UM, I know there's some obviously some news coming out with with countries adopting bitcoin as as a currency. We still believe right now it's a it's a speculative investment. Uh. And and we're looking for more productive uses in society moving forward. All right, Brian, thanks so much for joining us.

To really appreciate you taking the time. Brian Vendig, he's president m JP Wealth Advisors, getting his thoughts on these markets here, so suggesting that still constructive on the markets broadly, uh, defined has some sectors there that are of interest, but on bitcoin, stand a little bit cautious here, at least at this early stage. This is Bloomberg. Well, we look

down to Washington. President Biden and his administration administration have approximate four trillion dollars of spending bills oneing other ways through Congress. We got the fiscal stimulus and then the broader spending bill. Let's get the latest on when those bills could be passed, will they be passed? To check in with Eric Watson, congressional reporter for Bloomberg News, joining us on the phone from Washington. So, Eric, we had

the fifty billion dollar infrastructure plan passed. Now there's this other three and a half billion dollar spending bill. The question for a lot of people is do they have to be linked? Do they have to be passed jointly? And if so, does that create a problem. Yeah, So the instruction bill, it's passed the stup, it's waiting final

approval in the House. Progressive the liberal part of the Cry Party have said that they would not support the passage of that and they would re bail if they do not get, you know, passage first of the three point five trillion dollar social spending measure, which also has tax increases on the wealthy incorporations. So they've made this link. There was a big battle in August where progressives lost basically the moderates. Who's who got to guarantee from how

speaker to answer to policy? They would be a vote by September. Come hell, or high water on the UH Infrastructure bill. So right now, the committees this week are working behind the scenes trying to get together on the policy provisions, the exact languages, exact policies for that bigger bill. But it's it's it's a real uh, it's a real challenge, and I think the apple cart was a bit upset by Joe Manson the Modern Senator last week. You said we do a pause on that bigger bill, and that's

raising a lot of questions about all of this. Yeah, speaking of mansion as well, what are parts of this bill, the part of the three point five trillion dollar plan they may not make it to see the letter day. Well, one thing know we've we've thought about is that they could make a cut it down, you know, two or

three trillion dollars and probably get some moderate support. I mean, one thing you can do is is all the programs in there, where it's home care for the elderly, for child care, for for Medicaid expansion, Medicare expansion, you could limit that in the number of years, creating sort of a physical cliff. So you could give them five years of that and say Congress to come back and extend it. You know, that could be a nerve wrecking thing for

some Democrats. On the other hand, whenever social programs are expanded attentition Obamacare, they tended to become popular over time and hard to to repeal. So that's one thing we're looking at. But again, the other main message from the White House, especially round claims why ship staff over the weekend is look, mansion is worried about adding the deficit, but if we follow these tax increases, it will be fully paid for. So the real battlet is on the

tax side. We've broken had a big scoop on the Bloomberg terminal last week about the menu of options that's increasing, not just from the corporate tax rate side and capital games increases, but also just looking at a whole set of new stock buyback taxes, other corporate CEO excess pay taxes that they might turn to to pay for this measure. All right, Eric, who's really driving the bus here in terms of getting this thing done? Is a Pelosi? Is it Schumer? Is it President Biden? Or is it perhaps

the other side of the aisle. I think at the end of the day, you have to say Pelosi is a key figure in this she set this deadline is the goal of September. They'll be up to her or try to meet that, and uh and if you can't can't meet that, to figure out a way to finesse it. I think that you know, Schumer and Biden certainly have encouraged and tried to get turns to move as quickly as possible, But it's really Uh Pelosi who sent these deadlines.

So you know, if they can't, if they can't meet that, she's gonna have to figure out how that works out. Do you think that the markets are underestimating how messy this fall season might get when it comes to the aid that's coming out of Washington. I think they're underestimating, perhaps on the dead ceiling. You know, you get to see any plan. Additional in addition to these two big bills we talked about is also the need to send

the government which runs out of its physically. You're at the end of this month, and they related issue of the dead ceiling. You know it's going to impact probably in October or maybe even November, when the government will default on its payment. There's no real plan yet to pass that. You know, Republicans that Democrats have do it on their own. Democrats are not going to use the budget reconciliation process for that. They're gonna try to get

Republicans on board. We had a scoop last week about the White House meeting with Democrats coming up with messaging to blame Republicans. This is gonna be very messing, indeed, and I've yet to see, even with only a few session days less in September, how they're gonna bring this up. That kind of goes to my question here, it's September seventh already, Air, What are the dates that we should

really be focusing on here? Well, the Senate will come back, uh next Monday night, and I think on the sport team there's gonna be a caucus wide meeting of Senate Democrats. We're gonna make some decisions. I'm sold on the spending bill and the dead ceiling, etcetera. So we're really looking at that day. The week following that is when the ask hims back for votes. Are they going to really bring be able to bring this big bill to the floor then to meet this twenty seventh deadline they worked

for that weekend. Those are gonna beet the some key dates. But as of right now that both chambers are officially uh, there's no floor action there in research all right, Eric, thank you so much for that. It's an ongoing story and we'll stay on top of that. We'll check back in with you, Eric to get some of the latest.

Eric Watson, Congressional reporter for Bloomberg News, just giving the update on again the bigger spending bill, the three and a half trillion dollar bill and then the course of five billion dollar UH infrastructure bill UH winding their ways through both chambers of Congress and hopefully as a speaker, Pelosi has suggested get something done by the end of September.

And Shannale your question spot on what's the market discounting? Yeah, and other things are expiring, expanded unemployment benefits, student loan moratoriums. That's a big one everyone's watching for the end of September. Evictions. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller V three. On false Sweeney, I'm on

Twitter at pt Sweeney. Before the podcast, you can always Catch us worldwide at Bloomberg Radio.