This is Bloomberg Wall Street Week. We turn our attention to the markets this week.
USCPI Nembers reinforcing concerns about inflation, the.
Financial stories that shape.
Our worth a really different reaction to Mark. Some more indications of just how hot the US economy really is through the eyes of the most influential voices. Katherine Keating, CEO of B and Y Moan, Ryan Winnahan, a Bank of America, Sam Zell, Chairman and founder of Equity Group Investment.
Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
All Eyes on Washington, on the drama over the federal debt, on whether the FED can take a break from raising raids, and on the two men who are running for president again. This is Boobert Wall Street Week. I'm David Weston. This week Blair Ephron is Center View Partners on the appetite for big deals despite all the uncertainty we.
Are in uncharted complicated waters.
Former FED Vice chair Randall Quarrels on what went wrong with Silicon Valley Bank, and former BBC and New York Times head Mark Thompson on what streaming and AI mean for the business of news.
The news is going through a revolution. That's what's going on.
This week.
Global Wall Streets spent a lot of its time trying to look around corners like the corner of the debt ceiling and whether it will keep the government from paying the debts it is already run up. The speaker McCarthy traveling to the White House for what may or may not the negotiations.
I was very clear with the President we have now just two weeks to go.
And the issue followed Treasure sector yell onto the G seven finance ministers meeting in Nigata, Japan at the end of the week.
If Congress fails to do that, it really impairs our credit rating. We have to default on some obligation, whether it's treasuries or payments to Social Security.
The presidential election may still be eighteen months away, but the two meeting candidates each had his own take on the debt ceialing issue, with President Biden saying it wasn't just the United States that is in the crosshairs.
If we default on our debt, the whole world isn't Trump this is a manufactured crisis.
But on the other hand, former President Trump appeared on CNN and said, maybe a default isn't that big a deal.
I say that the Republicans out there, Congressman, senators, if they don't give you massive cuts, you're going to have to do a default.
And in the meantime, consumer price index numbers came in this week as predicted.
The month over month changed for both the headline and the core comes in exactly as forecast at four tenths of a percent. That's up on a headline basis over what we saw last month.
Which is like vince Reinhardt to doubt that they would do anything to change the Fed's path.
Was today's print disqualifying for FED action in June fifteens ers?
No, The markets this week were relatively calm, with the S and P five hundred off just three tenths percent, the Nasdaq up for ten hund percent, and the yield and the ten yere up less than two basis points, ending the week at three point four to six six. To take us through what we saw this week, we welcome now Liz Ann Saunders back to Wall Street week.
She's Chief Investment Strategies at Charles Schwab and Kristen Britterally, she is head of North America Investments at Citygroup Global Markets. So welcome to both of you. Great you have you, Kristen, thank you for coming to Wall Street. We really good to have you here.
It's great to be here.
Thank you.
Let's start with you.
In the equity markets, they seem to be relatively calm, despite that talk about maybe some kerfuffle down in Washington.
Yeah, this is really interesting, and I think it's one of the most frequently asked questions that we're getting from our investors. Why has volatility muted? Why are we not seeing any stresses within the equity markets? And I think there's a couple of explanations for this. So the first one is, when you look at the breadth of the equity market rally that we've seen, it's really only seven stocks are driving eighty percent of the year today gains.
So this is very concentrated. This is very idiosyncratic. Another way to look at it is you have about ten companies that are driving twenty five percent of the free cashlow generation within the US market. So this is a story about the companies that are really well run as opposed to a breadth and depth of this rally.
So LU say, what about that does that narrowness of the rally, if we can call it that in the stock market, does that make you nervous?
Well, it doesn't suggest as healthy a market as if you had the soldiers at the front line and not just the generals at the front line. I think there's a little bit of muscle memory in a knee jerk move that goes back into names like this when people think back to those that group of stocks, many of the same ones represented almost a defensive place to go
during the worst part of the pandemic. But of course what it represented fundamentally at that time was those represented the only ecosystems in which we were living when everything was shut down. I think this time it's a bit different. Chris talked about the large size and liquidity and cash generation of these companies. You can also see the dominance of their outperformance really kick into high gear when we saw the failure of SVB Bank and the ripple effects,
So I think that really was the push there. You can have an environment like that last a while and it doesn't necessarily have to be calamitous. There are times where you can see some catched down by the big dominant names. While you're seeing improving breadth and better participation on the way back up. That's a bit of what was going on last fall when the market had its low.
But I think concentration risk in terms of what is the manifestation actually for investors, I think investors should be mindful of not chasing that and ending up with too much concentration risk.
So the equity markets can't get too far away from earnings. And we're well into earnings now towards the end of this season, and we looked act to our elves. You know that we have twenty four l's of which we have one from City actually, and they're protecting overall I think two hundred six dollars at the end of the year earnings for share, which is down about eight percent from last year.
Where are you on that projection?
We're very much aligned to that that we started this year about looking at about a ten percent earnings contraction. We're now in the ballpark of about eight to ten percent. And I think when we look at Q one earnings, they were certainly better than feared, which is why we could see some reduction of that number. But I think what we have to keep in mind is when we look at the US equity market, we have seven out of eleven sectors that are already in a profits recession.
When we look at what the FED has done already, the five hundred basis points of great hikes, the quantitative tightening, the stresses in the banking sector that are going to lead to tightening of credit conditions, this is something that has us very cautious. It's more difficult for companies to be profitable in this environment. It's more challenging on the consumer, and the idea that this isn't going to flow through to corporate earnings in a more material way is something
that we just don't believe. So playing a little defense here and expecting some downside is what we're advising our investors.
We're either in or rapidly approaching a federal debt crisis, as the so called X DAYE when the government runs out of money is just over two weeks away now. With a default, something most everyone agrees would be a catastrophe. And there are some indications in the T bill and the CDs markets that at least some investors are starting to get worried, but you couldn't really tell that from
the equity markets. This is not the first time we have been here, and we asked our colleague Michael McKee to compare what we're seeing now with what we saw in twenty eleven when we had a similar close brush with disaster.
Industrious David would rather hope that history doesn't repeat or rhyme. For some time, we've been told that nothing's going to happen on the debt ceiling until we get to the last minute or until Wall Street melts down, and it does seem we're getting close on both counts. Here's what JP Morgan Chase CEO Jamie Diamond told us just a few days ago.
Actual default that is potentially catastrophic, and you can go through a million ways, but everyone, anyone's anyone knows that Cass Tropick and I don't think it's going to happen because it gets cash Rowberick, and the close you get to it, you will have panic. Markets get volatile, maybe there's Doc mar go down. The treasury markets will have their own problems.
It's amazing. You already have certain T bills.
Trading three percent and right next to one five percent.
This is not good.
We have seen this movie before the debt ceiling taken hostage for spending cuts a number of times over the past couple of decades. Twenty and eleven is one time when investors don't want history to rhyme. They went down to the wire as President Obama fought the idea of giving in to extortion on the debt ceiling. Then markets collapsed. The S and P five hundred went down about twenty percent and stayed down for quite some time before starting to go back up again.
Losenne Sanders, Charles Schwab, and Chrissian Bitterly of City are still with us, and let me go to you on this. Why aren't we seeing more reaction in the equity markets than we have so far in the dead ceiling.
I hope it's not just complacency and a correct assumption that although they can will probably inevitably kick to the eleventh hour fifty nine minute. That's just the way things are done, particularly on this subject. But so my guess is just complacency and an assumption that something will get done.
I'd hate to think we have to go down the same path of twenty eleven, which is also a kin for different reasons of what happened in two thousand and eight with ultimately the passage of TARP, you needed that riot moment in markets. I think I agree with Jamie Diamond. I think it would be cataclysmic. I don't think anybody should be cavalier about letting it happen, whether it's for you know, political gain or whatever reason. My concern with
regard to twenty eleven macro conditions are very different. We were on an upswing in the economy, having come out of the global financial crisis. We weren't dealing with an inflation problem or having come out of the most aggressive tightening cycle in forty years. And then there's certainly more vitriol right now. So I think we all should be worried about it, but I think ultimately something will get done.
Okay, thank you so very much to Leazenne Sanders or Charles schwa for being back with us, and Kristin Bitterly for coming to us from city. Partisan fights over the dead ceiling are nothing new for Wall Street those Rockeiser talked about it in March of nineteen ninety six when Congress ended up with a short term stop gap spending bill to keep the US from defaulting. Back then, if you remember the top movie in the country was Mike Nichols The Bird Cage. Coming up, Where have all those
deals gone and are they coming back? We're going to ask Blair Effron, a center of your partners, about whether it has to do with credits tightening or whether they're bigger factors such as, for example, what's going on Washington on the debt ceiling. All of that is coming up next on Wall Street Week, and we are on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Credit it's what makes the financial world go round, and that world is concerned there may be less credit available.
One of the big questions will be to what extent does credit titan and you know, if that is material that will have a drag on the economy.
With CEO's mentions of credit tightening spiking this earning season, the series of regional bank shocks made matters only worse as bankers struggling to stay afloat, had little appetite to take on the risk of extending credit.
A banking system which has government guarantees where people put their.
Money in a trust relationship if they suffer significant losses, that's what causes concern.
But as important as credit is, it's just that hard sometimes to get a handle on it in real time. The fed's backward looking numbers on bank commercial and industrial loans fell sharply in January and February, but started to recover in March, only to turn down again in April.
And the forward looking Senior Loan Officer Opinion survey Or SLUICE numbers this week pointed to further tightening, which FED Chair J. Powell got a peak at last week and told us in advance was in line with what they expected.
In mid size banks have some of them had been tightening their lending standards.
Banking data will show that lending has continued to grow, but the pace has.
Been slowing really since the second.
Half of last year. And to take us through the world of credit and what it may or may not be doing to the deal pace, we turned out of somebody who really knows that space awfully well.
He's Blair Efron.
He is a partner and co founder of Centerview Partner. So welcome back to Walter.
Great to have you see.
Okay, let's start with credit.
Because it was one thing that does affect the pace of deals. Is it affecting it from your point view right now?
Absolutely, it's getting better. Still constrained fourth quarter of twenty two, you had nothing. Today, you actually have the markets loosening up for the right deals, ignishing data point. For example, the largest LBO in the past six seven eight months was a deal with Blackstone and Emerson for their climate business,
fourteen billion dollar deal. No bank that was available. The private direct lending market stepped in firms like Apollo, Blackstone, KKR Areas that did five and a half billion of financing to see it through. Half of that has been replaced in the past week by the banks. So it really depends on the credit and it depends on what the deal is, but there is absolutely credit available. Obviously,
the key is it's much more expensive. You should assume for a private equity transaction it's five hundred basis points or so higher than it would have been a year and a half ago, and for a corporate deal two hundred one hundred fifty basis points. And that leads to the next issue, which is how you price an asset
for sale. And obviously with multiple staying high and elevated and at eighteen times PE, it's the same as it was last year, same as it was in twenty one, But yet your returns in any transaction are more difficult. So you have to think about how to get the buyer and the seller to come to agreement. Not easy.
As I recalled center of you might have had something to do with the Emerson deals like we did.
You can give us a plug, I won't.
Okay, we'll do that.
So let's go to that question of buyers and sellers and where they think the price is. Because some of those prices are coming down. Valuations are affected by interest rates and also some slowing of the economy in some places, have the sellers gotten their heads around the fact that their price may be lower.
They finally starting to do that, which is actually why I think there's more discussion. You don't see it yet in terms of announcements, but you see companies thinking more about M and A as part of their thinking in twenty three, and I would venture to say that as we exit the year twenty three and get into twenty four, you'll see activity actually start to pick up quite a bit.
So you think it will come back? Do you think we'll reach the levels we had before? Because we have some record levels.
Oh boy, that was high. You think about a five trillion dollars peak market, that probably unlikely. But the idea that you'll have a stable global M and a market of four trillion dollars or so every year, I think absolutely. And what you find out generally about M and A David now is it's less prone to cyclicality. It's part of a company's core strategy. Most companies are actually very
good at it. And when you're thinking about new avias and growth new areas for your business, you're thinking about the pace of disruption and how you combat that. It becomes important for most companies to want to consider.
When you've been on with us before, you've emphasized Blair that uncertainty is one of the biggest factors in determining whether companies want to do deals or not. Where are we uncertain? Because there seems to be a lot of uncertainty around right now.
We are in uncharted complicated words starting with obviously the dead ceiling, which way to come back to the banking environment more generally, and whether you think we're a slow down or something more severe in the coming months. I happen to be in a slow down camp. I think there's a lot of resiliency that we don't account for. It's a lot of tailwind that will lead stability. But that uncertainty clearly is an issue when you think about
doing a transaction. And remember you want to be able to think of a dead transaction when there's a macrotail wind, because it covers up some of your assumptions that may not pan out. It's just people do better in a growth environment. Any company does, so clearly an issue. And I think until the dead ceiling situation resolves, and that's with the question mark, I hope it'll be weighing pretty heavily.
We've had this dead ceiling situation before.
Two thousand eleven was the time we had a downgrade actually from it, and we have a lot of people, the president of that States as well as Mitch will Connell agreeing we can't have a default. We actually had formed person tru I'm saying this week, well, maybe it wouldn't be that bad a thing. Well, how does it figure in the minds of people doing deals, CEOs and others thinking about deals? Are they taking into account? Do they take it seriously?
So everybody's takend seriously let's get away from the deal market for a second. Let's talk about a company's performance. I think the debt situation, the debt ste situation already is having a big impact. If you think about driving a car, you're a passenger and the driver goes ninety miles an hour and then slows down, you're gonna think twice about getting back in the car, which you have already Simply the spectra of its probably hit GDP growth
thirty basis points. It's probably hit jobs two hundred and fifty thousand, according to CEA, the Council of Economic Advisors, and then you start to think about what the impact is if you go over and have a default that is measured in days and weeks. The fact of the matter is that's a half a million jobs, that's a half a point of GDP growth, and that's before you start to think of the absolutely urgent consequences of something that's protracted.
We also have regulatory uncertainty, particularly in the antitrust area, both for the FTC and from the Justice Department. Bloomberg actually had a piece this week saying that that really is deterring or some of the CEOs from moving forward because you're not sure whether we're going to approve, but even more than that, how long it will take. There's a lot of uncertainty running. Are you dealing with that as you advise.
Absolutely, David, And if you just it shows up in the numbers. Year to date we have I think fourteen deals over ten billion dollars versus last year was twenty four deals. But you account for that in your thinking. If it's going to take eighteen months for a transaction to close, you spend a lot of time thinking about how both the acquired business and the acquiring company manage their own businesses, keep the base business performing well, and
try to minimize uncertainty for all the employees. You can think about different structures. If you stock, for example, in a transaction, the selling company has more of a vested interest, if you will, more of a meeting the minds in terms of what it takes to do well. And I'd also say you think about the whole question of synergy
in a different way. I think that you need to be more conservative, certainly on cost, and you need to be more aggressive and absolutely committed to the idea that the transaction leads to better growth, which leads to job creation, which leads to potentially better outcomes for consumers. All this factors into the thinking. I would also finally say that it's much more the administration using a megaphone than actually
litigating that people are attentive to. But all that said, smart deals are still happening and they will continue to happen.
Blair, it's great to have you back on Walshiver. Thank you so much for having me, David. That's Blair Efron a Center View Partners.
Coming up.
Generative AI just the latest challenge to the news business model. We talk with the man who led the BBC and then the New York Times, Mark Thompson, about whether there is a way to make a serious business out of serious news.
That's next on Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
This is Wall Street. I'm David Weston.
We're all trying to figure out what to make of generative AI and what it will do to all of our lives for those engaged in the business of gathering and reporting news. It's just the latest and a series of innovations that have also posed challenges. Things like streaming video and social media and even the Internet itself. Mark Thompson is someone who has spent his career addressing these changes and figuring out how to make them tools instead of threats. He was Director General of the BBC and
then President and CEO of The New York Times. Is now chairman of Ancestry, that is the largest for profit genealogy company in the world.
And we're welcome now back to Bloomberg. Mark, great to have you here.
Good to see that is so this week we're struck by the fact that at the same time we have BuzzFeed going out of business, we have Eural Chap New York Times starting a.
Really big deal with Google for cash.
What is going on, Well, the news is going through a revolution, That's what's going on. And the revolution's full of surprises. When I got to the New York Times in twenty twelve, so just over ten years ago, everyone told me the BuzzFeed was going to become the New York Times or the Huffington Post was going to become the New York Times. A decade on, the game's really changed.
It's changed both in the legacy players, some of the legacy players, at least the Times The All Street Journal, the Washington Post might be examples of that kind of got their act together and began to think hard about digital and I think in the early twenty twenties look pretty secure. Whereas the insurgents, the new guys who had no legacy hang ups, they had no print or broadcast TV to worry about. They've kind of got into trouble.
It's turned out to be much much harder than they thought to build a brand, to keep your audience, and above all, to figure out ways of turning big audiences billions of clicks into dollars. That's proven very hard for them.
What does that say about incumbency when it comes to I'm talking about real news? Now, there are things that call themselves and news says befo. We're talking about real reporting. What does it say because in fact, there are all of those things that you've mentioned and more that really sprang up. We thought they were going to be a great new thing, and they've gone now. And yet we do have New York Times, although I'll say Financial Times in Wall Street Journal, who soon you're doing quite well?
Thank you?
That's right.
Well, I think it's a few things to say. I mean, what one question is when was the last time in the free world we saw the creation of a global news brand. Are truly global news brand, not a specialist business led news brand. Bloomberg is a really good example of that, but a kind of global general news brand. It's CNN in the early eighties. So it's really really hard to do, and in a great continental country like the United States, even to become a national news brand.
So legacy in terms of brand and trust and name recognition is fantastically valuable. But it's not enough. It's like you know, it's it's necessary, but not sufficient, it seems, because you always have to work out the economics of a very different media environment. And what's interesting is I would say that the big TV brands in this country, tv news brands to include CNN, have yet to figure that out, and that their business, their legacy business, still very profitable, is dying.
It's dying, and it's not.
Yet clear that they've got credible plans yet for the news ship that's going to take over when the old ship sinks.
So talking about video news for a moment, which I know more about. We had obviously the broadcast networks and there were licensed by the government, there was this motor on your business because you needed a license. That gave rise to cable and people were terribly afraid of cable. That gave rise to CNN. Actually, and then we went on beyond that. Now we have streaming video, so there's more out of it available out there. What does streaming
video potentially mean for news? Is that a risk and opportunity both?
Well.
I think if we just talk as kind of as newspeople, some stories are best consumed as video. And actually even newspapers like the New York Times and realized that you'll see a lot of video on the New York Times. Obviously, short form video, which is kind of specially designed for smartphones and is very snackable, has taken over the world.
I think for the big the big players, if you'll see an end for example, if you're Bloomberg, the question of whether you want to offer users snackable little pieces forty five seconds, a minute, a minute and a half, or whether you want to try and somehow port the longer the show ten to fifteen minutes, the anchor, the conversation, whether that has a streaming role is unproven.
And now i'd have all that we have generative AI. Yeah, and what that means.
You saw Buri Dealer's remarks recently saying he thinks they could really pose a substantial threat to news. What do you make of general AI or is it just too early to know?
It's I think, I mean, I think it's too early to know. It is extraordinary though. I was at a board meeting branches to yesterday and what our engineers had used GPT for to hack the beginnings of a version of the answersty product where you can ask it questions. You can say, tell the story of my grandfather and it will create either a thousand words of pros or it will create a slideshow with actually frankly astonishingly convincing
captions like that in seconds two and three seconds. So I think if it's an immense opportunity to solve some problems for us, you know, at Ancestry trying to bring these family trees to life into human stories with pictures and seals, and where a machine is doing it, you know, in a fairly safe environment. You know, it's all fairly formulaic.
That's very exciting. Clearly, there are threats, though, and I would say one real hope for us is that AI, both generitive and other forms of AI, Machine learning and other forms of AI will really help us solve that problem.
If I'm a.
Consumer of how do I find the media I want? It's Friday evening. I want something entertaining, you know I wanted Pg. Thirteen. I don't want too much of violence.
What have you got?
What have you got? And actually even the very best screams in the world don't do a good job of telling me in my view, and I need to bring friends and go through reviews and rested to work out. I think that business of whether it's finding a new story on a smartphone or what you want to watch in the evening, AI can really help us with that.
But a threat. Imagine an algorithm which could every morning at seven ingest all of the news in the world and then turn it into we could use your voice David Western, and you the consumer could ask your smartphone in the kitchen to ask David what's happened today? And David's not quoting the New York Times or the Washington Post or CNN or MSNBC. David is ingesting it all, paraphrasing it all, and is ready to interact with you.
What's happening in Ukraine? What are they? Did the Russians retreat at the backmotor say what happened?
Why?
What does that mean? And David can answer all those questions and like they'll pay you a good they'll pay you a good fee.
Well. But like every powerful tool, it can be used for a good or for ill.
And will be used for both. Yeah, I mean, I think when people talk about slowing it down, we must, you know, we must have a debate about how does that work? I mean there are national security implications here about I mean, this is the technology which is I think almost certainly going to and probably has to be developed and explored. It will happen. It's happening now very quickly. I want to say, as a species, we're very adaptable too.
People who predicted the end of all jobs and the end of everything with previous you know, the Industrial Revolution and everything since have always been proven wrong because human beings adapt and generally economic history suggests you get more jobs, you get more wealth as the results of these things. So although I can certainly think of very dark nightmass from any like everyone else, I want to remain basically optimistic about AI and news AI and medium more generally.
So I'll buy that optimism was always good. Thank you so much to Mark Thompson of Ancestry.
So this was the week when the entire economic world seemed to be coming down with a severe case of mad cow disease. In Washington, there was you might say, utter confusion. Congress and the White House, whose most conspicuous accomplishment this year had been blaming each other for lack of progress, failed once again to reach agreement on a budget for fiscal nineteen ninety six, a year that's.
Already half over.
So they approve, would you believe it, one more so called stop gap spending bill to keep the government going for another twenty six days.
And that's no. This is Wall Street Week. On Bloomberg. This is Wall Street Week.
I'm David weston the failure of Silicon Valley Bank sent shockwaves through the banking system and rattled the markets. The dust is really still settling, but the forensics on what went wrong are well underway, with the FED Vice Chair for Bank Supervision Michael barr issuing report calling for stronger supervision and stronger regulation. For his perspective on what went wrong at SVB, we welcome. Now mister Barr's predecessor as FED Vice Chair, he is Randall Corrals now executive chair
of the Synature Group, So welcome. It's great to have you, mister Corals. So there's been a lot of back and forth about what happened what didn't happen. I must say, mister Barr and thinks that this is a textbook example of bank mismanagement out of Silicon Valley Bank.
I think everyone.
Agrees with that. Well, are there things that actually the regulators or the supervisors could have done to make it better?
It obviously was a text bookcase of mismanagement. But I think that explanations are usually most penetrating when they don't assume that the people involved were either fools or crooks.
And so the question is, how could some of these decisions have been made, both by the bank management, by the FED itself in supervising the bank, And there I think you have to look at the behavior of the uninsured deposits in Silicon Valley Bank and in the other banks that have failed over the course of the last two months, Signature Bank, First Republic, and the uninsured deposits at these institutions moved away from the bank with speed and out of volume that we had never seen before.
I mean, the largest amounts that had ever run from a bank in the previously largest bank failures in the country's history had been and I think eighteen billion dollars over the course of almost a month. And in Silicon Valley Banks case, forty two billion dollars left the bank in a day, and the bank was getting ready to open the next day with the expectation that another one
hundred billion dollars would have left the bank. You'd have one hundred and forty two billion dollars leaving the bank in the course of twenty four hours.
Finally, one more thought sold to the highest bidder, the sound of the gavel coming down, the thrill of victory over all those who couldn't or wouldn't bid up the price one last time. There's just about nothing quite as dramatic as competition measured in money, and that's why auctions are so exciting. No matter what's being sold, be it fine.
Art, ladies and gentlemen, it gives me great pleasure to present Look two hundred and thirty.
One or Premier League football clubs like Manchester United.
And Manchester United sores amid rapports that the Qataris are bidding for the world famous football club.
Or failing banks like First Republic. We've had a good look before, and now the Inflation Reduction Act has introduced a whole new level of auctions, not just billions, but hundreds of billions of dollars in federal money at state for those investing in green energy or in semiconductors.
The whole point of this is to increase innovation, research and development in the industry, not you know, we're not giving you taxpayer money to fluff your pillow and increase your profit and give it away to your shareholders.
And the bidders in these auctions aren't wealthy individuals or a large corporations. Their states and even countries offering concessions to get companies to invest in manufacturing with them rather than with their rivals, as Canada's stepped up to historic incentives to get volksag and to build its battery plant in Ottawa rather than across the border.
Yes, the IRA is something that we've had to step up to to make sure we're competitive, but we're going to be a lot more strategic about how we pick and choose the right investments. We can't just do a blanket like the US can.
Not to be outdone.
This week, over fifty states and territories on this side of the border gathered together in Washington at the Select USA event. That's all to bid against one another for the foreign investors who are trying to get their share of the three hundred and sixty nine billion dollars in green subsidies and the seventy six billion dollars in grants
and tax credits for semiconductor manufacturing. But maybe, just maybe this is not the end of it, but instead only the preliminary round in what could become the biggest bidding war in history, the United States against China for the grand prize of global technological leadership.
And we seek competition, not conflict. But I will make no apologies that we're investing in to make America stronger. Investing in American innovation and industries will define the future that China intends to be dominating.
Whatever happened to all that criticism of China putting its heavy thumb on the economic scales, Well maybe you can't beat them, you just join them. That does it for this edition of Bloomberg Wall Street Week. If you missed any part of today's program, you can listen on demand with our Wall Street Week podcast. Find that on Apple, Spotify, or anywhere else you get your podcasts. I'm David Weston. Stay with us. Today's top stories and global business headlines are coming up right now