August 22, 2025 • 40 mins
What does it say about the prospects for an artificial intelligence “golden age” that some of those who most enthusiastically predicted it are now tamping down expectations? Earlier this week, in what looked like damage control over the release of a new version of ChatGPT, OpenAI Chief Executive Officer Sam Altman said investors have been inflating a speculative bubble in AI. He predicted “someone’s going to get burned.”
Altman and other AI insiders seem more or less fine with that, arguing that asset bubbles often coincide with technology breakthroughs. The thinking goes like this: the dot-com bust was bad, but at the end of it we had a new information infrastructure that led to lasting economic growth. Maybe that happens this time around, but there’s reason to think an AI bust would be economically devastating—and not just for businesses that bet heavily on the software and data centers needed to run it.
On this week’s episode of Everybody’s Business, we explore the potential economic fallout of an AI implosion with Ed Zitron, a skeptic who makes a compelling case for panic in a recent essay and on his podcast, Better Offline.
In other words, rather than continuing to embrace the new technology, maybe it’s time to hate it. The argument boils down to a problem of misalignment: For years, big tech companies have dumped hundreds of billions of dollars into developing ever-more advanced large language models (LLM) (like OpenAI’s GPT, Google’s Gemini and Anthropic’s Claude). Much of that money has gone to chipmakers, especially Nvidia, which sells the graphical processing units needed to train new models. All of this spending has sent asset prices soaring, creating a dynamic in which index funds are heavily weighted to a single industry—which you guessed it—threatens to crash the entire stock market if it falters. A similar dynamic may be playing out in the world of private credit, which tech companies are increasingly tapping to build data centers, creating another economic risk.
At the same time, there are signs those wildly expensive LLMs are failing to generate commensurate financial returns. These include the blowback to the release GPT-5, which OpenAI had promoted as potentially god-like but which many users say is actually worse than the last version. There’s also a recently published study from the Massachusetts Institute of Technology that showed the vast majority of pilot programs involving so-called generative AI failed to lead to revenue growth.
Also on this week’s episode:
- We discuss the struggles of fast food companies with Bloomberg Businessweek’s Deena Shanker. Normally, they thrive in times of economic uncertainty, but McDonald’s has been struggling, partly she says because the company’s food is no longer seen as cheap. One exception to this trend? Taco Bell, which has thrived because it’s managed to keep prices low .css-j9qmi7{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:row;-ms-flex-direction:row;flex-direction:row;font-weight:700;margin-bottom:1rem;margin-top:2.8rem;width:100%;-webkit-box-pack:start;-ms-flex-pack:start;-webkit-justify-content:start;justify-content:start;padding-left:5rem;}@media only screen and (max-width: 599px){.css-j9qmi7{padding-left:0;-webkit-box-pack:center;-ms-flex-pack:center;-webkit-justify-content:center;justify-content:center;}}.css-j9qmi7 svg{fill:#27292D;}.css-j9qmi7 .eagfbvw0{-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;color:#27292D;}Mark as PlayedTranscript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Everybody's Business
from Bloomberg BusinessWeek. I'm Max Chafkin and.
Speaker 2 (00:15):
I'm Stacy Bannocksmith.
Speaker 3 (00:16):
And this week, Max, I think the theme of the
week is like all hat no Cattle.
Speaker 1 (00:22):
That's like a cowboy reference or something, right, Stacy, that's
something you're having to do from your upbringing.
Speaker 3 (00:29):
I am home visiting family in Idaho. But I really
do think it fits because we have seen the markets
take a real hit this week a lot, because there
have been some signals that may be AI, which has
been this big, you know, touted, this big economic game changer,
might not be everything we thought.
Speaker 1 (00:46):
Yeah, We've got a really provocative conversation with Ed Zetron
of the Better Offline podcast. He is an AI hater
and he is here to explain to us why we
should be worried.
Speaker 3 (00:57):
Also, Max, the fast food industry starting to show some
signs of distress and some restaurants coming out and saying
that this is going to be a really tough stretch
for lower income consumers.
Speaker 1 (01:08):
Wait, but there's one fast food restaurant that is doing well, Stacy.
Speaker 2 (01:12):
That's true to Taco Bell.
Speaker 1 (01:14):
Yeah, we've got BusinessWeek Stina Shanker on to talk about
my favorite fast food restaurant, Taco Bell.
Speaker 3 (01:22):
And for underrated story, this one might be a little
bit more all cattle, no hat. The Federal Reserve meeting
in Jackson Hole, big speech coming later today.
Speaker 1 (01:31):
Everybody's business goes West. Yes, Stacy, I can't believe I'm
saying this, But before we start the show, I feel
like we have to talk a little, just for a
second about le Boo boo.
Speaker 3 (01:44):
Oh my gosh, the like little stuffed, demonic looking bunnies.
Speaker 1 (01:49):
So these are like beanie babies, but for kids of today.
They are sold by a Chinese company called PopMart. Popmark
reported its earnings this week. Stock went up to twenty percent.
And it's all because basically, people cannot stop buying these
little dolls and this has come I gotta unfortunately to
(02:10):
my house as well. Yeah.
Speaker 3 (02:11):
I mean, like, the little demon bunnies are out selling Barbie,
They're out selling hot wheels, and I don't understand it
because they just look they don't do anything high tech
or interesting. They also look very frightening. It looks like
they're happy that the world is burning or something.
Speaker 1 (02:26):
I don't know. Yeah, so I wanted to get to
the bottom of this and talk to some customers who
really understand this phenomenon. So, of course, like I asked
my own children who are ages ten, eight and five,
and we had a handful of other children who are
related to the show in one way or another way.
In let's give a listen. What's so special about le
(02:47):
boo Boo?
Speaker 2 (02:48):
I actually don't know.
Speaker 4 (02:50):
All I know is that they're popular because you're cute.
They're supposed to be monsters and sort of what bunnies.
Speaker 5 (02:58):
And when did you first hear about the laboo boo jam?
Speaker 4 (03:02):
And they like, they're really freaky faces, they're fair shape
of the cutters.
Speaker 5 (03:09):
Why do you think la booboos are so popular?
Speaker 4 (03:11):
They're heads and they could be like not just one
like borning, or because they're really new toys.
Speaker 1 (03:19):
The reason why.
Speaker 4 (03:19):
People like them is because they're freaky, maybe because they're collectible,
they're just cute.
Speaker 6 (03:24):
I completely disagree. They're not cute. They are just freaky,
weird toys. Also, I did not know why they are popular.
People just have bad taste these days.
Speaker 1 (03:36):
Why do you think they're selling so well?
Speaker 4 (03:37):
Probably just because like some popular person like bought it,
and now everybody thinks they need to get one maybe.
Speaker 1 (03:46):
Honestly cute monster. I guess that's the answer.
Speaker 3 (03:50):
I think if people have bad tastes these days, nailed in.
I think that was your son, just like these days,
like you know, people don't know what they're how.
Speaker 2 (03:57):
Old is your son?
Speaker 1 (03:58):
He's a he's a uh And.
Speaker 3 (04:03):
When he was like people have terrible to that is
Max Chafkins.
Speaker 2 (04:07):
That is Max Chafkins. Sn Lo's so cute. They don't
seem to know.
Speaker 3 (04:11):
That is so interesting to me that they seem as
puzzled as we are. It's just like they just are popular.
Speaker 1 (04:17):
What seems interesting to me about this phenomenon, in part
is that it's Chinese, and that it's like a Chinese
toy that has exported and gone global. And like there
was a line in one of the stories I read
saying that, you know, like Beijing is talking this up
as like a proud moment, and I think that's that's true.
Like we've been reading stories for like years and years
(04:38):
about like the Chinese film industry and the and the
role that Chinese consumers are playing in global entertainment companies
and so on, but this is like a true export.
You could imagine that there will be other things like
this that as China grows, you know, globalization, YadA YadA.
Maybe this is We're going to look back on this
as like a significant moment.
Speaker 2 (04:58):
The demonic bunnies are just a harbinger for things to come.
Speaker 1 (05:02):
Yeah, that's what I'm saying. All right, Stacy, I gotta
tell you, I'm getting worried about I'm worried about AI
as you.
Speaker 3 (05:18):
You're about Okay, I know you're you're a huge skeptic
of AI.
Speaker 2 (05:23):
We disagree on this.
Speaker 1 (05:24):
I am worried because we're seeing a bunch of economic
signs over the past couple of weeks that suggest to
me that maybe we're in a bubble. And so obviously
there's the risk that you hear from the AI industry,
which is that the AI is going to take over
the world. This is kind of the other side of
that coin. This is the risk that the AI just
(05:44):
like doesn't do anything, and all these businesses that are
spending tens of billions of dollars building data centers and
buying in vidio chips and buying stock, that all of
that is going to wind up being worth a lot
less than we think it is.
Speaker 3 (05:57):
Well, yeah, I mean a lot of companies have staked
a lot lot of money on this technology, and certainly
a lot of the stock market and even the economy
is kind of banking on this.
Speaker 2 (06:07):
So I hear where you're coming from.
Speaker 1 (06:09):
Yeah, And I thought it'd be useful at this moment,
at a time we have sort of stock prices dropping,
we have lots of bears signs, including a bunch of
the boosters, saying that we're in a bubble. Sam Altman
said this. The other day, Eric Schmidt, the former CEO
of Google, wrote an op ed saying the tech industry
had been too bullish on this technology. I thought it'd
(06:30):
be good to talk to a hater, a guy who
could kind of make the bear case, who could explain
why we're in an AI bubble and what the danger is,
And so I called up ed zytron Ed is kind
of an interesting guy. He runs a PR firm, it's
called Easypr, does PR essentially for tech firms, but he
also has a sideline as a substacker, and he's been
(06:52):
for years been writing essays and blog posts about the
ways in which AI is falling short. He wrote a
piece a couple of weeks back that I really enjoyed
and found interesting called a Hater's Guide to the AI Bubble.
He also hosts a podcast called Better Offline and Ed
is here now, Ed, how are you? I'm doing great.
(07:13):
I'm getting a lot of texts.
Speaker 7 (07:14):
I'm getting a lot of texts of people saying, hey,
you know those hundreds of thousands of words you've been
writing about that I've been somewhat doubting you on for years,
Well what if they were based on hours and hours
of research and careful analysis.
Speaker 2 (07:29):
So you're getting like the well, well, well emails?
Speaker 7 (07:32):
It really it really is, well, well, well look look
who darkens my text message. I'm not talking about you, Max, No,
it's because I just did this this more no, no,
but you did it respectfully. I have people who are
straight upset. I was crazy reaching out and being like wow,
no response, zero injuries.
Speaker 3 (07:49):
It has just been like the story of the economy
right now is that AI was going to transform everything,
and it seems quite plausible in a lot of ways,
because even just using it in different ways you can
see how AI can do a lot of a lot
of jobs.
Speaker 2 (08:03):
It didn't seem crazy.
Speaker 7 (08:05):
I got to disagree with you on that.
Speaker 2 (08:07):
Okay, yeah, talk to me about this.
Speaker 1 (08:08):
I've been saying this for a while.
Speaker 7 (08:10):
I wrote the open ai was a bad business at
the end of last year, but I wrote how does
open ai survive the middle of last year? And I've
been making the point that is it plausible because when
you actually look at what these models can do and
that actual outcomes, they don't do that much. They've not
been that useful. They never have been that useful. Can't
do my job, and my job muppy off for heavily
(08:30):
spreadsheet based. You'd think I would be the first guy to.
Speaker 1 (08:34):
Like pick this up.
Speaker 7 (08:35):
I am naturally someone that loves new technology. I mean
it's been like this from the beginning. They've never had
any kind of real use cases that they can point to.
If you go and look at the coverage of GPT four,
people were giving credit to that model for ordering a
goddamn task rab at because it was in the system
cut from the very beginning. Everybody's got this wrong.
Speaker 3 (08:55):
I will tell you briefly what I am always telling Max,
which is that I do use AI quite a bit
in like looking up research, and I always back it up.
Speaker 2 (09:03):
But it feels like it helps me in the same
way like.
Speaker 3 (09:07):
A very fast semi competent in turn would, So I
find it pretty helpful in terms of like, hey, can
you look up like where was a country that put
big tariffs in place that saw impact on its economy?
Speaker 2 (09:21):
So I do have to follow up with research.
Speaker 3 (09:23):
But I have found it enormously helpful as kind of
a personal assistant role.
Speaker 7 (09:28):
But you're even describing a personal assistant where you have
to check all the work and do the work yourself.
Speaker 2 (09:33):
I've never had a personal assistance, so it's still better.
Speaker 7 (09:36):
So I don't disagree that there are people using it
for research. This is describing what Google should have been.
Chan GPT's growth has come as a result of Google's
lack of innovation, of no one's real interest or curiosity
in making search more than what search was and is today,
other than the AI summaries that blow. And I think
that every description that I've heard of how people use
(09:57):
this is just what Google Search should be. Would be
fine with that if these things did not take hundreds
of billions of dollars of data centers, boiling lakes, gassing
people of color in various communities. But also, I'm not
that impressed by that. It's just like, Okay, it's better search. Sure, Oh,
it's for brainstorming as well. Okay, oh it's for coding. Well,
(10:20):
how good is it for coding? Well, not really clear
how good it is for coding.
Speaker 2 (10:24):
Well, like I said, I use AI as a research assistant.
Speaker 3 (10:27):
But there are some really exciting uses of AI happening
right now. We've got AI reading medical images. AI deciphered
the whale language. We were able to talk to whales
for the first time. Also, you know, going over ancient texts,
deciphering those. I mean, there's some really compelling use cases
for AI that seem really exciting to me.
Speaker 7 (10:46):
Well, the medical stuff. The thing is with that is
that are we talking about large language models? Are we
talking about AI and machine learning? Because that was happening already.
And one of the marketing tricks they do is to
kind of conflate the two, like they love to say
AI and then autonomous cars, which are not large language
model driven. Maybe there's one bit that there is, and
I think that still even these combined use cases don't
(11:08):
back up the market fervor around this.
Speaker 1 (11:12):
Yeah, well, you know, the thing is, and just to
put some kind of like some data I alluded this
to the top, but like MIT just put out a
study suggesting that ninety five percent of the generative AI
pilots that companies are pursuing are failing. I think lots
of people have kind of experienced this in their own
lives right where there are a lot of companies that
(11:33):
are like very enthusiastically embracing these technologies but not quite
yet sure what to do with them. That is where
I think the problem, the economic problems start.
Speaker 7 (11:45):
But that study was so much better because of course
I'm a curious creator and I went and read it.
So people have been misreporting that study. It's actually worse
because that study has one line in it that says
it's a gap, a learning gap, and people have said
that's the reason. No, not at all.
Speaker 1 (12:01):
The actual reason.
Speaker 7 (12:01):
Is enterprise adoption of AI is huge, it's everywhere. The
problem is it doesn't learn. It isn't good at complex tasks,
It isn't good at workflows. Like the actual reasons is
it sucks.
Speaker 2 (12:12):
Wait, what does that mean? It's not good at workflows?
Speaker 3 (12:14):
So companies are using it, they're adapting it, they're trying
it out for different things, and like how is AI
no delivering.
Speaker 7 (12:21):
I mean it can't do the actual things that they
want it to. The common thing within that study was
this mention of it feels good for a week then
stops being good these companies. What happens is they adopt
it because everyone's saying AIAIAI. Everyone's saying AI. The problem
is large language models are inherently limited in.
Speaker 1 (12:40):
What they can do.
Speaker 7 (12:40):
They're not good at automation, they are inconsistent. They hallucinate,
which is when they authoritatively state something that isn't true.
But hallucinations within massive workflows are cancerous for enterprises because
a hallucination will mean it does something wrong, it enters
data in the wrong place, or it can't enter data
at all. Making a linguistic model try and do distinct,
(13:02):
replicable tasks, it's actually kind of nonsensical. It's insane. We
let it get this far.
Speaker 1 (13:08):
Okay, let's start talking about the risks posed by all
this AI exuberance. That was kind of the meat of
the say you wrote. We could argue all day is
like chatch apt useful or not? And Stacy and I
I'll have that argument, continue to have it on this podcast.
But there is a possibility. I think we can all
agree that it's less useful than we believe, or that
(13:32):
many companies believe, and that the business isn't as big.
And that's where things, I think start to get scary ed.
Start with the stock market. Why is the kind of
dependence of the stock market and in particularly like the
SMP five hundred on this world such a problem?
Speaker 7 (13:48):
So there's a few things. One this entire thing is vibes.
Microsoft stopped volunteering the AI revenue in January. They said
at that point that a thirteen billion anialized revenue for
about a billion a month. Stop sharing that stat for
some reason, probably because it's flat or dropping open. AI
is compute which is served at cost or a round cost,
so not remote already a loss, but a bigger loss.
(14:11):
Now it's ten billion dollars or more this year, which
is more than ten percent of as your's total revenue.
All of these companies seeing growth from AI are not
seeing growth from AI. They are riding a bump of
already existent growth from expanding their services that already exist,
but it's not coming from AI. Easiest way to tell
that is because when you actually go and look at
(14:33):
the revenues they're making on AI, which are hidden and
analysts have they're like three or four billion dollars on
like eighty to one hundred billion dollars worth of capex.
On top of that, any narrative in markets is scary
because they can make the markets go to these pornographic
heights we've seen from the last few months, and then
they can drop the moment someone makes a sour fart
and everyone smells it. You don't have a story to
(14:56):
fall back on here because the actual technology itself is
not that useful. It's not integrated its scale, it's not
providing the kind of business repents, and it isn't making
anyone any money. Sales Sports themselves have already said earlier
in the year that they expect no growth from AI
this year.
Speaker 1 (15:12):
There's one company right that is doing super well, and
it's it's Nvidia. I mean to me, like that is
where you start to worry because and you make this
point in your piece. Yeah, but like something like today,
like forty percent of the stock markets value the S
and P five hundreds of value. So that and that
is where.
Speaker 7 (15:31):
Most people is the mag seven right now?
Speaker 1 (15:34):
Yeah, yeah, maybe even up a little bit so like
the mag seven, which is where you've seen most Magnificent seven.
That's that's like the big tech stocks. They're all going
up right now because of this AI story, and if
that story started to collapse, their values would collapse. Tesla, well,
(15:55):
Tesla's a meme stocks, so maybe not worth talking about.
But these companies are all trading at huge multiples, huge
historic multiples relative to their earnings, and so in other words,
they're worth a lot more money than they're currently making.
And maybe normally you wouldn't worry too much if a
handful of companies are potentially overvalued, but this is like
(16:15):
a significant part of our retirements. And then you have
this additional problem ad which is the data centers. All
this money that's going in to all this capital investment.
Speaker 7 (16:26):
There's actually another thing that makes things worse. So the
Magnificent seven makes up forty two percent of in Vidia's revenue.
Speaker 1 (16:34):
That is also bad.
Speaker 7 (16:36):
It's so bad, so very bad, because it means that
if their whims change, in Vidia's revenue drops. And also
the data center thing is also bad because data center development,
and it's mostly from four companies, Amazon, Meta, Microsoft and
Google made up more of economic growth than all consumer
spending combined. And the data center growth, by the way,
(16:57):
involves buying those Nvidia chips. So we kind of have
this systemic problem here. And the thing is, however you
feel about AI, this is terrifying because oh my goodness,
there's only so much space on Earth. Even if they
could afford to buy more GPUs every single day, it
would still they're going to run out of places. And
(17:18):
on top of that, this is the thing. At some
point in video is going to have to not increase
growth every quarter. Otherwise with what in video is going
to sell sixty billion, seventy billion, one hundred billion dollars
of GPUs every quarter by twenty twenty seven. Is that
anyone think that that's reasonable? It isn't going to happen.
Speaker 3 (17:38):
So walk us forward into like the risk that you
see potentially going forward as maybe this starts to kind
of come apart.
Speaker 7 (17:46):
So vibeespace market means that once the vibe sour money
go down, market go down. At that point the markets
would turn to fundamentals. They would say, okay, what about
the money from AI? You making money from AI? At
this point they will say, so I have to take
a phone call in another room. I will get back
to you in three years. So they don't really have
a story to tell them. So at this point they go, oh, crap, Well,
(18:08):
at least in Vidia is doing well, right except the
next earnings for these companies, the stock market might get
a little bit angry if they see all these capital
expenditures and where are those capital expenditures going GPUs and
data centers, So that slows, which brings down in video's value.
And by the way, the magnificent seven to thirty five
percent of the stock market's value, ninety percent of that
(18:29):
is in Vidia, So things start tipping there and at
that point, data center development slows down and we lose
a massive part of our economic growth. At this point, thankfully,
we have a commander in chief who is on top
of making sure our economy isn't slowing by adding a
bunch of tariffs that make things more expensive, so that
(18:50):
will slow consumer and enterprise spending. At this point, our
economy stagnates and declines, and tech has no other store.
There is no the reason that they did AI. In
my belief, and I said this last year in the
rock com bubble, that I believe that they did AI
despite this being nonsensical from the beginning because it is
an insane idea. It's because they don't have another cloud
(19:14):
storage thing. They don't have another growth market. They don't
even have the next LinkedIn, they don't have the next Facebook,
they don't have the next smartphone. They barely even got
the next smartwatch. So you've got no story economic development
and growth based on pretty much one thing from four companies,
four companies that will eventually be at the wheels of
the market who will not like the capital expenditures and
(19:36):
push them to drop them. Once those drop, so does
economic growth.
Speaker 1 (19:40):
What is the best case scenario here? Ed, What you're
saying is like we sort of are able to unwind
some of this exuberance as soon as possible and limit
economic fallout or something like that.
Speaker 7 (19:54):
I don't think there is any cushioning the fall anymore.
I said this a year ago. This would be bad,
really bad, and it would only get worse based on
the amount that we put into it. The media has
failed here categorically across the board. I'm not going to
name names, but there are people that should be ashamed
of themselves, and the media did allow this market to grow.
(20:15):
Had the media turned around and been like, I don't
know about this crap. Had the media not assumed that
I'm not talking about you, Stacey, Just to be clear,
I appreciate something that is search plus could become the supercomputer.
Had people stopped referring to this as the ultimate assistant,
had people stopped quoting every single thing that Sam Wulton did.
It's the same thing, Max, that you noticed with Elon Musk. Yeah,
(20:38):
that they just Whenever Elon Musk so much has farted,
everyone's like, we must write it up. But because this
was perpetuated, the market's also brought into it. But also
the markets are to blame. The markets are nonsensical growth
drunk idiots, and at this point they do not It's
very clear that the markets do not actually connect companies
with value. They connect companies with growth. And as long
(21:00):
as we obsessed with growth, we will keep creating these cycles.
Speaker 1 (21:04):
So Ed's podcast Better Offline, which you should subscribe to,
just dropped, essentially part one of a two part am
I right ed is only is it gonna be two?
Speaker 7 (21:13):
Or as two parts and then a third one explaining
how GPT five works because I did journalism.
Speaker 1 (21:18):
So if you want to if you want to learn
more on this, check out ed Substack and check out
the podcast which goes into this in a lot of
detail as well.
Speaker 7 (21:26):
Thanks Ed, Thank you, Ed, thank you for having me.
Speaker 2 (21:36):
So max. As you know, I am home visiting family
in Idaho.
Speaker 3 (21:40):
This week and visiting all my old haunts from high school,
which is very fun and nostalgic. And you know where
I used to spend a lot of my time in
high school was in the parking lot of the Taco
Bell because because you could buy a meal from Taco
Bell with the change in your car.
Speaker 2 (21:58):
Did this was this like a thing in New Yorkers?
Speaker 1 (22:01):
Yeah? I agree with you. I spent a lot of
my childhood in the suburbs and with cars and stuff.
I remember a lot of fast food parting lines. But
I totally relate to what you're saying. Taco Bell is
where you get the really cheap food. It's also and
I feel like if I don't say this, like everyone
will be thinking it it's where you go when you're stoned.
Speaker 2 (22:21):
I have heard that too, but mostly it was just
like so cheap.
Speaker 3 (22:26):
And there's a great article this week in Business Week
by the great Dina Shanker, who writes about food for
Bloomberg and Business Week, and she actually found that Taco
Bell is having this amazing moment, like they're really winning.
Speaker 2 (22:42):
Right now in the economy.
Speaker 3 (22:43):
And I think a mix of like being home and
sort of nostalgically driving by Taco Bell. And this article
made me really want to talk to her. Also, she's
wonderful she's joining us now. Hi, Dina, Hi, thank you
so much. So if you don't mind talk a little
bit just about the premise of your article, like why
is Taco Bell winning right now at a time when
(23:04):
so many companies are just really really struggling.
Speaker 8 (23:07):
Yeah, So, if you listen to fast food earnings calls,
for the most part, for a while, we've been hearing
about low income consumers pulling back. They're raising prices and
people are, you know, getting a little stingier with their
budgets and nobody wants to spend eighteen dollars on a
big mac meal and everything's getting too expensive.
Speaker 1 (23:28):
That is that what a big mac meal actually costs
these days.
Speaker 5 (23:31):
At certain locations.
Speaker 8 (23:32):
It can so franchises have some control, and you know,
varies by.
Speaker 5 (23:38):
Location, But basically, what was supposed to be like really.
Speaker 8 (23:41):
Cheap food has been getting significantly more expensive, and so
it really stood out when Taco Bell turns out is
growing and not only are they growing, they're actually they're
not even seeing pullback from low income consumers, which McDonald's
and Wendy's both reported that they were like within the
same week. So we were wondering, what is the secret
(24:05):
to Taco Bell's the secret sauce, And it turns out
that it has to do a lot with being super
cheap and also with just like constantly offering new limited
time offers and just like putting new things on the menu,
mixing things up. I mean, Crispy Chicken is big for everyone,
(24:26):
including Taco Bell, and it really plays into social media
because a never ending menu means never ending online content.
I mean, I watched a TikTok video where the woman
literally just opens up somebody else's preferred order for Taco
Bell eats it talks about it and that's it, and
(24:48):
the last I checked, it had more than sixty seven
thousand likes on it.
Speaker 3 (24:52):
The internet is an interesting thing and just really there's
a whole genre of that of people just ordering things
from Taco Bell and eating them on cam huh, and
it's you know, they've really struck a chord, I think,
because how many other places can you order like six
different things off the menu for less than ten dollars?
You know, do you mind like listing off some of
(25:13):
the offerings that Taco Bell has sort of cycled through.
Speaker 5 (25:17):
Sure?
Speaker 8 (25:18):
So there was the of course, like the cheese It
crunch Trap Supreme, which I.
Speaker 2 (25:22):
Think was with a huge cheese cheese it.
Speaker 8 (25:25):
Yeah, just like with the whole crunch Trap Supreme apparatus
around it. The cheesy chicken crispanadas, there's been recently a
barbecue chicken on top of fries. There's the milk bar Turo,
which has like icing on the inside and confetti sprinkles
(25:45):
on the outside. The I forget what the real name
was for this one, but this was an old one
called the Beef Canoe, which was like this like crispy
taco shell just like filled with beef. So like imagine
a beef canoe.
Speaker 5 (26:00):
That's exactly what it looked like.
Speaker 8 (26:03):
I mean, there were they've just what I love is
they're just you just get this feeling that they're like,
you know what, let's just try it.
Speaker 5 (26:09):
Let's just see if anybody will eat this, yes, like.
Speaker 2 (26:12):
We're just like throw some things at the wall.
Speaker 3 (26:13):
Well, I actually went to my local Taco Bell where
I used to go growing up, and decided to see
what Dina was talking about, what kind of like new
novelty items they had, And here is what they told me.
Speaker 7 (26:28):
Welcome to Taco Bell.
Speaker 1 (26:29):
Do you have anything it's new?
Speaker 4 (26:32):
Yes?
Speaker 2 (26:33):
Okay, maybe I'll try the street chelopas then you got it, and.
Speaker 9 (26:37):
Then the cinnabon twists okay, And do you have anything
else that's new?
Speaker 1 (26:48):
Oh?
Speaker 2 (26:49):
Is that the drink?
Speaker 1 (26:50):
Yeah, I'll try that. What is it midnight baha blast?
Speaker 7 (26:54):
Yeah it's mountain dew.
Speaker 1 (26:56):
Now our medium is a dollar for halfy hour? Is it? Oh?
Speaker 2 (27:00):
It's happy hour?
Speaker 1 (27:01):
Yeah?
Speaker 2 (27:03):
Okay, okay, yeah, why not.
Speaker 7 (27:06):
Gone for right now? We're eight hundred and sixty seven pennies?
Speaker 1 (27:09):
So much like to make that nine scholarship program? Uh sure,
nine dollars at the window? Thinks we're being so amazing.
Speaker 9 (27:17):
Thank you?
Speaker 1 (27:18):
Okay, wow, right, how many pies?
Speaker 2 (27:22):
Eight hundred and like sixty seven pennies? Look at this thing?
Speaker 1 (27:26):
I knew, I knew that's what you got.
Speaker 3 (27:29):
I have not tried it, and I have the streetlopis
too but the whole menu was I mean, this was like,
have you guys tried this?
Speaker 2 (27:37):
Is it just normal Mountain d that's dying?
Speaker 1 (27:39):
I want to see.
Speaker 2 (27:40):
It's like the miss no, have you tried a Dina?
Speaker 5 (27:44):
I can't say that I have Dina.
Speaker 1 (27:46):
I know you're a Bloomberg's you know columnists. How could
you not? Oh my god.
Speaker 2 (27:52):
It's like it's like Mountain Dew and Bubble Yum.
Speaker 3 (27:59):
Great got together and it had a sort of affair.
It's it's really sweet.
Speaker 1 (28:06):
So when we talk about like a Taco Bell doing well,
I'm kind of curious, like what we mean exactly like
their sales are, because like Taco Bell is part of
a larger company, Like, what exactly do we know about
about Taco Bell's performance?
Speaker 5 (28:19):
Their same store performance is positive?
Speaker 1 (28:22):
Got it?
Speaker 5 (28:22):
I think that it was up four percent?
Speaker 3 (28:25):
Okay, same store is like same store sales, Like you're aware,
so like it doesn't include like news stores.
Speaker 8 (28:31):
And meanwhile, if you look at like Wendy's or if
you look at Yum's other brands like KFC and Pizza Hut,
their sales are down for the year. So one of
the things that is so vexing to me is like
Yum has figured it out with Taco Bell, Like, why
can't they sprinkle some of that magic on their other chains?
Speaker 3 (28:48):
Why are fast food companies having a hard time right now?
This seems like a moment when they would really be thriving.
People aren't a tight budget. People are kind of nervous
and cutting back. It seems like a moment for fast food.
Why is Why is the struggling.
Speaker 8 (29:01):
Because if you are dependent on low income consumers, then
those consumers are pulling back, and uh, you know, an
eighteen dollars big mac meal is not so cheap, and
you're like, I'll just make.
Speaker 5 (29:16):
Dinner at home.
Speaker 8 (29:18):
Making dinner at home is always less expensive, and even
more so when the prices have gone up, which is
why so many of them are running deals. There was
news today that McDonald's plans to cut some prices even further.
But what's interesting to me about the deals that the
other fast food companies run is that their limited time
offers are often just come get the thing we already sell,
(29:41):
but get it for cheaper, which I'm sure brings people in.
It does bring people in, but it's not the same
as like, come get this insaneo spicy chicken crispy taco
wrapped in beef that is only here for three weeks
or until supplies last. Like that's a much more exciting
(30:02):
opportunity for some people.
Speaker 1 (30:05):
And we should say that McDonald's news announced Wednesday today
as we're recording this, which is Wednesday, August twentieth. Do
you think is part of this like some kind of
weird pandemic hangover? Like I sort of wonder if companies,
in an effort to deal with rising prices, raised prices
(30:26):
and sort of tried to move up market and then
left maybe left behind lower income consumers in a way
that is now catching up to them, and where Taco
bell as the kind of standard bearer of the cheap
ass food, is like well positioned to maintain.
Speaker 8 (30:44):
Yeah, I mean, we did see a lot of companies
during COVID and the immediate aftermath, as inflation was rising,
a lot of companies just raise their prices. Their costs
were going up, or they were expecting their costs to
go up, and they raised prices. And consumers had a
lot of money laying around because we weren't going anywhere,
so we had all those pandemic savings. There were other
(31:05):
forms of government assistants flying around, so people had money
to spend. So for a while, you know, we were
hearing from a lot of the consumer companies that the
American consumer is resilient, they can handle the higher prices,
and then things just crossed some line where people were like, wait.
Speaker 5 (31:24):
How much is that?
Speaker 3 (31:27):
It does seem like I do understand why fast food
companies have been raising their prices because the price of
everything has been going up, especially food, like since twenty
nineteen this started the pandemic. I think food prices are
up more than fifty percent. How has taco Bells stayed
so cheap?
Speaker 2 (31:43):
Do we know?
Speaker 1 (31:43):
So?
Speaker 8 (31:43):
One of the ways that they have like kept up
their their LTO calendar is by what's lto oh Limited
Time offer is basically one of the things that they
do is they introduce new items that are really just
new ingredients and you can mix some around and match
them and it seems like a whole new thing, but
it's not really a whole new thing. It's just a
(32:06):
slightly different version of the last thing. It's more deep
fried or as like three times as much beef in
it or whatever. And so I think that's probably helped
them on the cost as well, because they're not trying
to incorporate crazy new ingredients.
Speaker 2 (32:23):
And reinvent the taco every week exactly.
Speaker 1 (32:26):
Is this like a warning sign? I mean, Taco Bells
sort of being the exception to this larger trend of
fast food company fast food companies really struggling and struggling
in a way that seems even unusual in uncertain times.
Are people in the is this the Baja Sprite or
(32:47):
what was it?
Speaker 3 (32:47):
What was it calling?
Speaker 10 (32:48):
Yeah, the Baja Midnight You know, I think that the
actually the bigger warning sign came from the Sweet Green earnings,
which were really disappointing.
Speaker 3 (33:02):
Also because that's the fancy sounds eighteen dollars, solid place, that's.
Speaker 8 (33:06):
Right, And so there was a time when they were
pretty well protected from the from you know, bad economy
vibes because they weren't dependent on that low income consumer.
Speaker 5 (33:18):
They're a high income consumer.
Speaker 3 (33:20):
Stand in line in Midtown Manhattan, like a line of
like dozens of people.
Speaker 2 (33:24):
It was like it was like Beyonce tickets, We've all
to get a salad.
Speaker 8 (33:29):
Yeah, I mean, and it if people are pulling back
from Sweet Green, that means that the higher end of
the economy, which the high end consumers often sort of
like do a lot of work for the for the
rest of us in their spending, and if they're pulling
back on spending, then I.
Speaker 5 (33:46):
Think we have a pretty bad sign.
Speaker 8 (33:48):
And actually Chipotle also had bad earnings recently, and Taco
Bell said that part of their success was people trading
in from fast casual into Taco Bell, so.
Speaker 5 (33:59):
They didn't Chipotle.
Speaker 8 (34:00):
But you can imagine somebody who normally goes to Chipotle
being like, oh, well, I could spend eleven dollars on
a burrito, or I could spend seven dollars on a
box that includes a burrito, the taco, the chiloopa that
da da da da da da.
Speaker 1 (34:13):
All right, Dina, we should leave it there. Thank you
for joining us today.
Speaker 5 (34:17):
Thank you so much for having me. Thanks guys.
Speaker 1 (34:28):
All right, Stacey, it's that time again. It's the time
when we talk about the underrated story of the week.
And I guess you're going to try to tell me
that the FED is the underrated story of the week,
even though we talk about it every single week.
Speaker 3 (34:40):
Well and rightly so, I think we talk about the
FED a lot, and we don't talk about the FED enough.
So yes, I think the Federal Reserve is the underrated
story of the week. So the central bankers of the
world are meeting in Jackson Hole, Wyoming this week. They've
been kind of discussing all things central bank and later
today Jerome pal is going to give a very anticipated speech.
Speaker 2 (35:00):
It'll be the last such speech that he gives.
Speaker 3 (35:03):
And this is a moment when central bankers are like
a little looser than a normal press conference. I think
it's all the Western air and I think this could
be a really important speech from Jerom Power.
Speaker 1 (35:16):
Okay, for the record, the FED is not an underrated story.
But I actually now that as you're laying this out,
I feel like I need to say that just to
you know, stay on brand or whatever. But I actually like,
what do you think? Can you just say, like what,
like what people are expecting here? Like why this like
(35:36):
some speech at a conference? Like I cannot imagine a
more boring thing than a conference full of central bankers,
but why this speech is significant?
Speaker 3 (35:44):
Well, and it's true too that Federal Reserve speeches are boring,
but they are boring by design. They are boring on
purpose because the things that Federal Reserve chair say move markets.
This speech though could be a little different because right
now Donald Trump is really and the Trump administration, they're
really making a play to have much more control over
the FED, which has traditionally been quite independent. A lot
(36:06):
of people see this as a big threat to the
economy if that becomes politicized, if interest rates get cut,
because the president thinks it'll give the economy a little
sort of temporary like a sugar shot. And so I'm
really interested to hear what Jerome Pala says sort of
a moment. But you think he is that one moment.
Speaker 1 (36:25):
Igestion, He's going to be like, screw this, like I'm
never raising interest rates. F you, Donald Trump? Or like
is that the kind of like vibe where we're expecting.
Speaker 2 (36:35):
I mean, I think the Jerome Powell version of that.
Speaker 1 (36:37):
Yeah.
Speaker 3 (36:37):
I mean, first of all, a week of Western air,
which is gonna do some good.
Speaker 2 (36:42):
I think.
Speaker 3 (36:43):
Also, he is retiring later this year, like his term
is up. But this is a moment. This is not
an official speech. This is not you know, like this
is what we're doing with interest rates, which the normal
press conferences are. This is just a big global speech
that he gives. So and this is a moment in
the independence of the central banks underfire. I mean, this
is musky TV Max.
Speaker 2 (37:04):
This is like.
Speaker 3 (37:06):
The super Bowl of central banking this moment in time.
I think this is you have to like, this is
a musty TV. I am getting like, you have to
watch this. This is like watch this live.
Speaker 1 (37:20):
I mean I look forward to it. I look forward to,
you know, having you here next week to unpack the
nuances of what Jerome Pal says and we can talk
all about what that means for the.
Speaker 3 (37:35):
Economy, the instant replays for all of us. Yes, I
appreciate you hearing me out on this. I really do
think that this is an underrated.
Speaker 1 (37:43):
Story, Stacy. Before we go, and just to circle back
to AI, you know, we talked about a couple of
weeks this sort of question of price fixing, and Aaron,
a listener wrote in to flag a another domain where
this is happening, apartment rentals. There was actually recently a
(38:06):
settlement between the DOJ and a landlord, which company called
Gray Star Manages, something like basically a million apartments settled
with the DOJ over alleged price fixing. And Aaron, Aaron
just pointed this out, just super interesting. I feel like
this is going to be a thing that we keep
(38:28):
talking about over and over again. Just want to continue hearing.
Speaker 3 (38:32):
Like I have been proven right by this email because look,
AI is effective, it has an excellent business use case.
Speaker 2 (38:40):
It can now it's over price. Yeah, it's amazing. If
you're a crooked landlord.
Speaker 1 (38:46):
I guess the problem is that's a that's their people too.
One thing I need to say first of all is
that Gray Starr did not admit wrongdoing in this settlement,
So just any any question, and it believes that it's
at in a statement, it believes that it's use of
this revenue management software complies with the laws. On the
(39:07):
other hand, it has agreed not to use these algorithms.
And also, Stacy, I just want to say, like, really
appreciate the email from Aaron. Listeners, tell us what you
think about this latest AI segment with ed everybody's at
Bloomberg dot net. Everybody's with an ass at Bloomberg dot net.
Are you a hater or are you a lover? That's
(39:28):
what I want to know.
Speaker 2 (39:29):
Yeah, I mean do you think, like, how do you
use AI?
Speaker 3 (39:31):
If you use AI, I want to definitely if you
use AI and love AI right in if you don't
you know, do something else.
Speaker 1 (39:44):
This show is produced by Stacy Wong. Magnus Hendrickson is
our supervising producer and Amy Keen is our editor. We
get engineering from Blake Maples and Dave Purcell, fact checks
Sage Bauman heads Bloomberg Podcast Special thanks to Jeff Muscus,
Julia Rubin and Maria Lynn. If you have a minute,
please rate and review the show. It will mean a
lot to us and all people find it. And if
(40:05):
you have a story that should be our business, email
us at Everybody's at Bloomberg dot net. That's everybody with
an s at Bloomberg dot net. Thanks for listening and
we will see you next week.
Bloomberg Audio Studios, Podcasts, radio news. This is Everybody's Business
from Bloomberg BusinessWeek. I'm Max Chafkin and.
Speaker 2 (00:15):
I'm Stacy Bannocksmith.
Speaker 3 (00:16):
And this week, Max, I think the theme of the
week is like all hat no Cattle.
Speaker 1 (00:22):
That's like a cowboy reference or something, right, Stacy, that's
something you're having to do from your upbringing.
Speaker 3 (00:29):
I am home visiting family in Idaho. But I really
do think it fits because we have seen the markets
take a real hit this week a lot, because there
have been some signals that may be AI, which has
been this big, you know, touted, this big economic game changer,
might not be everything we thought.
Speaker 1 (00:46):
Yeah, We've got a really provocative conversation with Ed Zetron
of the Better Offline podcast. He is an AI hater
and he is here to explain to us why we
should be worried.
Speaker 3 (00:57):
Also, Max, the fast food industry starting to show some
signs of distress and some restaurants coming out and saying
that this is going to be a really tough stretch
for lower income consumers.
Speaker 1 (01:08):
Wait, but there's one fast food restaurant that is doing well, Stacy.
Speaker 2 (01:12):
That's true to Taco Bell.
Speaker 1 (01:14):
Yeah, we've got BusinessWeek Stina Shanker on to talk about
my favorite fast food restaurant, Taco Bell.
Speaker 3 (01:22):
And for underrated story, this one might be a little
bit more all cattle, no hat. The Federal Reserve meeting
in Jackson Hole, big speech coming later today.
Speaker 1 (01:31):
Everybody's business goes West. Yes, Stacy, I can't believe I'm
saying this, But before we start the show, I feel
like we have to talk a little, just for a
second about le Boo boo.
Speaker 3 (01:44):
Oh my gosh, the like little stuffed, demonic looking bunnies.
Speaker 1 (01:49):
So these are like beanie babies, but for kids of today.
They are sold by a Chinese company called PopMart. Popmark
reported its earnings this week. Stock went up to twenty percent.
And it's all because basically, people cannot stop buying these
little dolls and this has come I gotta unfortunately to
(02:10):
my house as well. Yeah.
Speaker 3 (02:11):
I mean, like, the little demon bunnies are out selling Barbie,
They're out selling hot wheels, and I don't understand it
because they just look they don't do anything high tech
or interesting. They also look very frightening. It looks like
they're happy that the world is burning or something.
Speaker 1 (02:26):
I don't know. Yeah, so I wanted to get to
the bottom of this and talk to some customers who
really understand this phenomenon. So, of course, like I asked
my own children who are ages ten, eight and five,
and we had a handful of other children who are
related to the show in one way or another way.
In let's give a listen. What's so special about le
(02:47):
boo Boo?
Speaker 2 (02:48):
I actually don't know.
Speaker 4 (02:50):
All I know is that they're popular because you're cute.
They're supposed to be monsters and sort of what bunnies.
Speaker 5 (02:58):
And when did you first hear about the laboo boo jam?
Speaker 4 (03:02):
And they like, they're really freaky faces, they're fair shape
of the cutters.
Speaker 5 (03:09):
Why do you think la booboos are so popular?
Speaker 4 (03:11):
They're heads and they could be like not just one
like borning, or because they're really new toys.
Speaker 1 (03:19):
The reason why.
Speaker 4 (03:19):
People like them is because they're freaky, maybe because they're collectible,
they're just cute.
Speaker 6 (03:24):
I completely disagree. They're not cute. They are just freaky,
weird toys. Also, I did not know why they are popular.
People just have bad taste these days.
Speaker 1 (03:36):
Why do you think they're selling so well?
Speaker 4 (03:37):
Probably just because like some popular person like bought it,
and now everybody thinks they need to get one maybe.
Speaker 1 (03:46):
Honestly cute monster. I guess that's the answer.
Speaker 3 (03:50):
I think if people have bad tastes these days, nailed in.
I think that was your son, just like these days,
like you know, people don't know what they're how.
Speaker 2 (03:57):
Old is your son?
Speaker 1 (03:58):
He's a he's a uh And.
Speaker 3 (04:03):
When he was like people have terrible to that is
Max Chafkins.
Speaker 2 (04:07):
That is Max Chafkins. Sn Lo's so cute. They don't
seem to know.
Speaker 3 (04:11):
That is so interesting to me that they seem as
puzzled as we are. It's just like they just are popular.
Speaker 1 (04:17):
What seems interesting to me about this phenomenon, in part
is that it's Chinese, and that it's like a Chinese
toy that has exported and gone global. And like there
was a line in one of the stories I read
saying that, you know, like Beijing is talking this up
as like a proud moment, and I think that's that's true.
Like we've been reading stories for like years and years
(04:38):
about like the Chinese film industry and the and the
role that Chinese consumers are playing in global entertainment companies
and so on, but this is like a true export.
You could imagine that there will be other things like
this that as China grows, you know, globalization, YadA YadA.
Maybe this is We're going to look back on this
as like a significant moment.
Speaker 2 (04:58):
The demonic bunnies are just a harbinger for things to come.
Speaker 1 (05:02):
Yeah, that's what I'm saying. All right, Stacy, I gotta
tell you, I'm getting worried about I'm worried about AI
as you.
Speaker 3 (05:18):
You're about Okay, I know you're you're a huge skeptic
of AI.
Speaker 2 (05:23):
We disagree on this.
Speaker 1 (05:24):
I am worried because we're seeing a bunch of economic
signs over the past couple of weeks that suggest to
me that maybe we're in a bubble. And so obviously
there's the risk that you hear from the AI industry,
which is that the AI is going to take over
the world. This is kind of the other side of
that coin. This is the risk that the AI just
(05:44):
like doesn't do anything, and all these businesses that are
spending tens of billions of dollars building data centers and
buying in vidio chips and buying stock, that all of
that is going to wind up being worth a lot
less than we think it is.
Speaker 3 (05:57):
Well, yeah, I mean a lot of companies have staked
a lot lot of money on this technology, and certainly
a lot of the stock market and even the economy
is kind of banking on this.
Speaker 2 (06:07):
So I hear where you're coming from.
Speaker 1 (06:09):
Yeah, And I thought it'd be useful at this moment,
at a time we have sort of stock prices dropping,
we have lots of bears signs, including a bunch of
the boosters, saying that we're in a bubble. Sam Altman
said this. The other day, Eric Schmidt, the former CEO
of Google, wrote an op ed saying the tech industry
had been too bullish on this technology. I thought it'd
(06:30):
be good to talk to a hater, a guy who
could kind of make the bear case, who could explain
why we're in an AI bubble and what the danger is,
And so I called up ed zytron Ed is kind
of an interesting guy. He runs a PR firm, it's
called Easypr, does PR essentially for tech firms, but he
also has a sideline as a substacker, and he's been
(06:52):
for years been writing essays and blog posts about the
ways in which AI is falling short. He wrote a
piece a couple of weeks back that I really enjoyed
and found interesting called a Hater's Guide to the AI Bubble.
He also hosts a podcast called Better Offline and Ed
is here now, Ed, how are you? I'm doing great.
(07:13):
I'm getting a lot of texts.
Speaker 7 (07:14):
I'm getting a lot of texts of people saying, hey,
you know those hundreds of thousands of words you've been
writing about that I've been somewhat doubting you on for years,
Well what if they were based on hours and hours
of research and careful analysis.
Speaker 2 (07:29):
So you're getting like the well, well, well emails?
Speaker 7 (07:32):
It really it really is, well, well, well look look
who darkens my text message. I'm not talking about you, Max, No,
it's because I just did this this more no, no,
but you did it respectfully. I have people who are
straight upset. I was crazy reaching out and being like wow,
no response, zero injuries.
Speaker 3 (07:49):
It has just been like the story of the economy
right now is that AI was going to transform everything,
and it seems quite plausible in a lot of ways,
because even just using it in different ways you can
see how AI can do a lot of a lot
of jobs.
Speaker 2 (08:03):
It didn't seem crazy.
Speaker 7 (08:05):
I got to disagree with you on that.
Speaker 2 (08:07):
Okay, yeah, talk to me about this.
Speaker 1 (08:08):
I've been saying this for a while.
Speaker 7 (08:10):
I wrote the open ai was a bad business at
the end of last year, but I wrote how does
open ai survive the middle of last year? And I've
been making the point that is it plausible because when
you actually look at what these models can do and
that actual outcomes, they don't do that much. They've not
been that useful. They never have been that useful. Can't
do my job, and my job muppy off for heavily
(08:30):
spreadsheet based. You'd think I would be the first guy to.
Speaker 1 (08:34):
Like pick this up.
Speaker 7 (08:35):
I am naturally someone that loves new technology. I mean
it's been like this from the beginning. They've never had
any kind of real use cases that they can point to.
If you go and look at the coverage of GPT four,
people were giving credit to that model for ordering a
goddamn task rab at because it was in the system
cut from the very beginning. Everybody's got this wrong.
Speaker 3 (08:55):
I will tell you briefly what I am always telling Max,
which is that I do use AI quite a bit
in like looking up research, and I always back it up.
Speaker 2 (09:03):
But it feels like it helps me in the same
way like.
Speaker 3 (09:07):
A very fast semi competent in turn would, So I
find it pretty helpful in terms of like, hey, can
you look up like where was a country that put
big tariffs in place that saw impact on its economy?
Speaker 2 (09:21):
So I do have to follow up with research.
Speaker 3 (09:23):
But I have found it enormously helpful as kind of
a personal assistant role.
Speaker 7 (09:28):
But you're even describing a personal assistant where you have
to check all the work and do the work yourself.
Speaker 2 (09:33):
I've never had a personal assistance, so it's still better.
Speaker 7 (09:36):
So I don't disagree that there are people using it
for research. This is describing what Google should have been.
Chan GPT's growth has come as a result of Google's
lack of innovation, of no one's real interest or curiosity
in making search more than what search was and is today,
other than the AI summaries that blow. And I think
that every description that I've heard of how people use
(09:57):
this is just what Google Search should be. Would be
fine with that if these things did not take hundreds
of billions of dollars of data centers, boiling lakes, gassing
people of color in various communities. But also, I'm not
that impressed by that. It's just like, Okay, it's better search. Sure, Oh,
it's for brainstorming as well. Okay, oh it's for coding. Well,
(10:20):
how good is it for coding? Well, not really clear
how good it is for coding.
Speaker 2 (10:24):
Well, like I said, I use AI as a research assistant.
Speaker 3 (10:27):
But there are some really exciting uses of AI happening
right now. We've got AI reading medical images. AI deciphered
the whale language. We were able to talk to whales
for the first time. Also, you know, going over ancient texts,
deciphering those. I mean, there's some really compelling use cases
for AI that seem really exciting to me.
Speaker 7 (10:46):
Well, the medical stuff. The thing is with that is
that are we talking about large language models? Are we
talking about AI and machine learning? Because that was happening already.
And one of the marketing tricks they do is to
kind of conflate the two, like they love to say
AI and then autonomous cars, which are not large language
model driven. Maybe there's one bit that there is, and
I think that still even these combined use cases don't
(11:08):
back up the market fervor around this.
Speaker 1 (11:12):
Yeah, well, you know, the thing is, and just to
put some kind of like some data I alluded this
to the top, but like MIT just put out a
study suggesting that ninety five percent of the generative AI
pilots that companies are pursuing are failing. I think lots
of people have kind of experienced this in their own
lives right where there are a lot of companies that
(11:33):
are like very enthusiastically embracing these technologies but not quite
yet sure what to do with them. That is where
I think the problem, the economic problems start.
Speaker 7 (11:45):
But that study was so much better because of course
I'm a curious creator and I went and read it.
So people have been misreporting that study. It's actually worse
because that study has one line in it that says
it's a gap, a learning gap, and people have said
that's the reason. No, not at all.
Speaker 1 (12:01):
The actual reason.
Speaker 7 (12:01):
Is enterprise adoption of AI is huge, it's everywhere. The
problem is it doesn't learn. It isn't good at complex tasks,
It isn't good at workflows. Like the actual reasons is
it sucks.
Speaker 2 (12:12):
Wait, what does that mean? It's not good at workflows?
Speaker 3 (12:14):
So companies are using it, they're adapting it, they're trying
it out for different things, and like how is AI
no delivering.
Speaker 7 (12:21):
I mean it can't do the actual things that they
want it to. The common thing within that study was
this mention of it feels good for a week then
stops being good these companies. What happens is they adopt
it because everyone's saying AIAIAI. Everyone's saying AI. The problem
is large language models are inherently limited in.
Speaker 1 (12:40):
What they can do.
Speaker 7 (12:40):
They're not good at automation, they are inconsistent. They hallucinate,
which is when they authoritatively state something that isn't true.
But hallucinations within massive workflows are cancerous for enterprises because
a hallucination will mean it does something wrong, it enters
data in the wrong place, or it can't enter data
at all. Making a linguistic model try and do distinct,
(13:02):
replicable tasks, it's actually kind of nonsensical. It's insane. We
let it get this far.
Speaker 1 (13:08):
Okay, let's start talking about the risks posed by all
this AI exuberance. That was kind of the meat of
the say you wrote. We could argue all day is
like chatch apt useful or not? And Stacy and I
I'll have that argument, continue to have it on this podcast.
But there is a possibility. I think we can all
agree that it's less useful than we believe, or that
(13:32):
many companies believe, and that the business isn't as big.
And that's where things, I think start to get scary ed.
Start with the stock market. Why is the kind of
dependence of the stock market and in particularly like the
SMP five hundred on this world such a problem?
Speaker 7 (13:48):
So there's a few things. One this entire thing is vibes.
Microsoft stopped volunteering the AI revenue in January. They said
at that point that a thirteen billion anialized revenue for
about a billion a month. Stop sharing that stat for
some reason, probably because it's flat or dropping open. AI
is compute which is served at cost or a round cost,
so not remote already a loss, but a bigger loss.
(14:11):
Now it's ten billion dollars or more this year, which
is more than ten percent of as your's total revenue.
All of these companies seeing growth from AI are not
seeing growth from AI. They are riding a bump of
already existent growth from expanding their services that already exist,
but it's not coming from AI. Easiest way to tell
that is because when you actually go and look at
(14:33):
the revenues they're making on AI, which are hidden and
analysts have they're like three or four billion dollars on
like eighty to one hundred billion dollars worth of capex.
On top of that, any narrative in markets is scary
because they can make the markets go to these pornographic
heights we've seen from the last few months, and then
they can drop the moment someone makes a sour fart
and everyone smells it. You don't have a story to
(14:56):
fall back on here because the actual technology itself is
not that useful. It's not integrated its scale, it's not
providing the kind of business repents, and it isn't making
anyone any money. Sales Sports themselves have already said earlier
in the year that they expect no growth from AI
this year.
Speaker 1 (15:12):
There's one company right that is doing super well, and
it's it's Nvidia. I mean to me, like that is
where you start to worry because and you make this
point in your piece. Yeah, but like something like today,
like forty percent of the stock markets value the S
and P five hundreds of value. So that and that
is where.
Speaker 7 (15:31):
Most people is the mag seven right now?
Speaker 1 (15:34):
Yeah, yeah, maybe even up a little bit so like
the mag seven, which is where you've seen most Magnificent seven.
That's that's like the big tech stocks. They're all going
up right now because of this AI story, and if
that story started to collapse, their values would collapse. Tesla, well,
(15:55):
Tesla's a meme stocks, so maybe not worth talking about.
But these companies are all trading at huge multiples, huge
historic multiples relative to their earnings, and so in other words,
they're worth a lot more money than they're currently making.
And maybe normally you wouldn't worry too much if a
handful of companies are potentially overvalued, but this is like
(16:15):
a significant part of our retirements. And then you have
this additional problem ad which is the data centers. All
this money that's going in to all this capital investment.
Speaker 7 (16:26):
There's actually another thing that makes things worse. So the
Magnificent seven makes up forty two percent of in Vidia's revenue.
Speaker 1 (16:34):
That is also bad.
Speaker 7 (16:36):
It's so bad, so very bad, because it means that
if their whims change, in Vidia's revenue drops. And also
the data center thing is also bad because data center development,
and it's mostly from four companies, Amazon, Meta, Microsoft and
Google made up more of economic growth than all consumer
spending combined. And the data center growth, by the way,
(16:57):
involves buying those Nvidia chips. So we kind of have
this systemic problem here. And the thing is, however you
feel about AI, this is terrifying because oh my goodness,
there's only so much space on Earth. Even if they
could afford to buy more GPUs every single day, it
would still they're going to run out of places. And
(17:18):
on top of that, this is the thing. At some
point in video is going to have to not increase
growth every quarter. Otherwise with what in video is going
to sell sixty billion, seventy billion, one hundred billion dollars
of GPUs every quarter by twenty twenty seven. Is that
anyone think that that's reasonable? It isn't going to happen.
Speaker 3 (17:38):
So walk us forward into like the risk that you
see potentially going forward as maybe this starts to kind
of come apart.
Speaker 7 (17:46):
So vibeespace market means that once the vibe sour money
go down, market go down. At that point the markets
would turn to fundamentals. They would say, okay, what about
the money from AI? You making money from AI? At
this point they will say, so I have to take
a phone call in another room. I will get back
to you in three years. So they don't really have
a story to tell them. So at this point they go, oh, crap, Well,
(18:08):
at least in Vidia is doing well, right except the
next earnings for these companies, the stock market might get
a little bit angry if they see all these capital
expenditures and where are those capital expenditures going GPUs and
data centers, So that slows, which brings down in video's value.
And by the way, the magnificent seven to thirty five
percent of the stock market's value, ninety percent of that
(18:29):
is in Vidia, So things start tipping there and at
that point, data center development slows down and we lose
a massive part of our economic growth. At this point, thankfully,
we have a commander in chief who is on top
of making sure our economy isn't slowing by adding a
bunch of tariffs that make things more expensive, so that
(18:50):
will slow consumer and enterprise spending. At this point, our
economy stagnates and declines, and tech has no other store.
There is no the reason that they did AI. In
my belief, and I said this last year in the
rock com bubble, that I believe that they did AI
despite this being nonsensical from the beginning because it is
an insane idea. It's because they don't have another cloud
(19:14):
storage thing. They don't have another growth market. They don't
even have the next LinkedIn, they don't have the next Facebook,
they don't have the next smartphone. They barely even got
the next smartwatch. So you've got no story economic development
and growth based on pretty much one thing from four companies,
four companies that will eventually be at the wheels of
the market who will not like the capital expenditures and
(19:36):
push them to drop them. Once those drop, so does
economic growth.
Speaker 1 (19:40):
What is the best case scenario here? Ed, What you're
saying is like we sort of are able to unwind
some of this exuberance as soon as possible and limit
economic fallout or something like that.
Speaker 7 (19:54):
I don't think there is any cushioning the fall anymore.
I said this a year ago. This would be bad,
really bad, and it would only get worse based on
the amount that we put into it. The media has
failed here categorically across the board. I'm not going to
name names, but there are people that should be ashamed
of themselves, and the media did allow this market to grow.
(20:15):
Had the media turned around and been like, I don't
know about this crap. Had the media not assumed that
I'm not talking about you, Stacey, Just to be clear,
I appreciate something that is search plus could become the supercomputer.
Had people stopped referring to this as the ultimate assistant,
had people stopped quoting every single thing that Sam Wulton did.
It's the same thing, Max, that you noticed with Elon Musk. Yeah,
(20:38):
that they just Whenever Elon Musk so much has farted,
everyone's like, we must write it up. But because this
was perpetuated, the market's also brought into it. But also
the markets are to blame. The markets are nonsensical growth
drunk idiots, and at this point they do not It's
very clear that the markets do not actually connect companies
with value. They connect companies with growth. And as long
(21:00):
as we obsessed with growth, we will keep creating these cycles.
Speaker 1 (21:04):
So Ed's podcast Better Offline, which you should subscribe to,
just dropped, essentially part one of a two part am
I right ed is only is it gonna be two?
Speaker 7 (21:13):
Or as two parts and then a third one explaining
how GPT five works because I did journalism.
Speaker 1 (21:18):
So if you want to if you want to learn
more on this, check out ed Substack and check out
the podcast which goes into this in a lot of
detail as well.
Speaker 7 (21:26):
Thanks Ed, Thank you, Ed, thank you for having me.
Speaker 2 (21:36):
So max. As you know, I am home visiting family
in Idaho.
Speaker 3 (21:40):
This week and visiting all my old haunts from high school,
which is very fun and nostalgic. And you know where
I used to spend a lot of my time in
high school was in the parking lot of the Taco
Bell because because you could buy a meal from Taco
Bell with the change in your car.
Speaker 2 (21:58):
Did this was this like a thing in New Yorkers?
Speaker 1 (22:01):
Yeah? I agree with you. I spent a lot of
my childhood in the suburbs and with cars and stuff.
I remember a lot of fast food parting lines. But
I totally relate to what you're saying. Taco Bell is
where you get the really cheap food. It's also and
I feel like if I don't say this, like everyone
will be thinking it it's where you go when you're stoned.
Speaker 2 (22:21):
I have heard that too, but mostly it was just
like so cheap.
Speaker 3 (22:26):
And there's a great article this week in Business Week
by the great Dina Shanker, who writes about food for
Bloomberg and Business Week, and she actually found that Taco
Bell is having this amazing moment, like they're really winning.
Speaker 2 (22:42):
Right now in the economy.
Speaker 3 (22:43):
And I think a mix of like being home and
sort of nostalgically driving by Taco Bell. And this article
made me really want to talk to her. Also, she's
wonderful she's joining us now. Hi, Dina, Hi, thank you
so much. So if you don't mind talk a little
bit just about the premise of your article, like why
is Taco Bell winning right now at a time when
(23:04):
so many companies are just really really struggling.
Speaker 8 (23:07):
Yeah, So, if you listen to fast food earnings calls,
for the most part, for a while, we've been hearing
about low income consumers pulling back. They're raising prices and
people are, you know, getting a little stingier with their
budgets and nobody wants to spend eighteen dollars on a
big mac meal and everything's getting too expensive.
Speaker 1 (23:28):
That is that what a big mac meal actually costs
these days.
Speaker 5 (23:31):
At certain locations.
Speaker 8 (23:32):
It can so franchises have some control, and you know,
varies by.
Speaker 5 (23:38):
Location, But basically, what was supposed to be like really.
Speaker 8 (23:41):
Cheap food has been getting significantly more expensive, and so
it really stood out when Taco Bell turns out is
growing and not only are they growing, they're actually they're
not even seeing pullback from low income consumers, which McDonald's
and Wendy's both reported that they were like within the
same week. So we were wondering, what is the secret
(24:05):
to Taco Bell's the secret sauce, And it turns out
that it has to do a lot with being super
cheap and also with just like constantly offering new limited
time offers and just like putting new things on the menu,
mixing things up. I mean, Crispy Chicken is big for everyone,
(24:26):
including Taco Bell, and it really plays into social media
because a never ending menu means never ending online content.
I mean, I watched a TikTok video where the woman
literally just opens up somebody else's preferred order for Taco
Bell eats it talks about it and that's it, and
(24:48):
the last I checked, it had more than sixty seven
thousand likes on it.
Speaker 3 (24:52):
The internet is an interesting thing and just really there's
a whole genre of that of people just ordering things
from Taco Bell and eating them on cam huh, and
it's you know, they've really struck a chord, I think,
because how many other places can you order like six
different things off the menu for less than ten dollars?
You know, do you mind like listing off some of
(25:13):
the offerings that Taco Bell has sort of cycled through.
Speaker 5 (25:17):
Sure?
Speaker 8 (25:18):
So there was the of course, like the cheese It
crunch Trap Supreme, which I.
Speaker 2 (25:22):
Think was with a huge cheese cheese it.
Speaker 8 (25:25):
Yeah, just like with the whole crunch Trap Supreme apparatus
around it. The cheesy chicken crispanadas, there's been recently a
barbecue chicken on top of fries. There's the milk bar Turo,
which has like icing on the inside and confetti sprinkles
(25:45):
on the outside. The I forget what the real name
was for this one, but this was an old one
called the Beef Canoe, which was like this like crispy
taco shell just like filled with beef. So like imagine
a beef canoe.
Speaker 5 (26:00):
That's exactly what it looked like.
Speaker 8 (26:03):
I mean, there were they've just what I love is
they're just you just get this feeling that they're like,
you know what, let's just try it.
Speaker 5 (26:09):
Let's just see if anybody will eat this, yes, like.
Speaker 2 (26:12):
We're just like throw some things at the wall.
Speaker 3 (26:13):
Well, I actually went to my local Taco Bell where
I used to go growing up, and decided to see
what Dina was talking about, what kind of like new
novelty items they had, And here is what they told me.
Speaker 7 (26:28):
Welcome to Taco Bell.
Speaker 1 (26:29):
Do you have anything it's new?
Speaker 4 (26:32):
Yes?
Speaker 2 (26:33):
Okay, maybe I'll try the street chelopas then you got it, and.
Speaker 9 (26:37):
Then the cinnabon twists okay, And do you have anything
else that's new?
Speaker 1 (26:48):
Oh?
Speaker 2 (26:49):
Is that the drink?
Speaker 1 (26:50):
Yeah, I'll try that. What is it midnight baha blast?
Speaker 7 (26:54):
Yeah it's mountain dew.
Speaker 1 (26:56):
Now our medium is a dollar for halfy hour? Is it? Oh?
Speaker 2 (27:00):
It's happy hour?
Speaker 1 (27:01):
Yeah?
Speaker 2 (27:03):
Okay, okay, yeah, why not.
Speaker 7 (27:06):
Gone for right now? We're eight hundred and sixty seven pennies?
Speaker 1 (27:09):
So much like to make that nine scholarship program? Uh sure,
nine dollars at the window? Thinks we're being so amazing.
Speaker 9 (27:17):
Thank you?
Speaker 1 (27:18):
Okay, wow, right, how many pies?
Speaker 2 (27:22):
Eight hundred and like sixty seven pennies? Look at this thing?
Speaker 1 (27:26):
I knew, I knew that's what you got.
Speaker 3 (27:29):
I have not tried it, and I have the streetlopis
too but the whole menu was I mean, this was like,
have you guys tried this?
Speaker 2 (27:37):
Is it just normal Mountain d that's dying?
Speaker 1 (27:39):
I want to see.
Speaker 2 (27:40):
It's like the miss no, have you tried a Dina?
Speaker 5 (27:44):
I can't say that I have Dina.
Speaker 1 (27:46):
I know you're a Bloomberg's you know columnists. How could
you not? Oh my god.
Speaker 2 (27:52):
It's like it's like Mountain Dew and Bubble Yum.
Speaker 3 (27:59):
Great got together and it had a sort of affair.
It's it's really sweet.
Speaker 1 (28:06):
So when we talk about like a Taco Bell doing well,
I'm kind of curious, like what we mean exactly like
their sales are, because like Taco Bell is part of
a larger company, Like, what exactly do we know about
about Taco Bell's performance?
Speaker 5 (28:19):
Their same store performance is positive?
Speaker 1 (28:22):
Got it?
Speaker 5 (28:22):
I think that it was up four percent?
Speaker 3 (28:25):
Okay, same store is like same store sales, Like you're aware,
so like it doesn't include like news stores.
Speaker 8 (28:31):
And meanwhile, if you look at like Wendy's or if
you look at Yum's other brands like KFC and Pizza Hut,
their sales are down for the year. So one of
the things that is so vexing to me is like
Yum has figured it out with Taco Bell, Like, why
can't they sprinkle some of that magic on their other chains?
Speaker 3 (28:48):
Why are fast food companies having a hard time right now?
This seems like a moment when they would really be thriving.
People aren't a tight budget. People are kind of nervous
and cutting back. It seems like a moment for fast food.
Why is Why is the struggling.
Speaker 8 (29:01):
Because if you are dependent on low income consumers, then
those consumers are pulling back, and uh, you know, an
eighteen dollars big mac meal is not so cheap, and
you're like, I'll just make.
Speaker 5 (29:16):
Dinner at home.
Speaker 8 (29:18):
Making dinner at home is always less expensive, and even
more so when the prices have gone up, which is
why so many of them are running deals. There was
news today that McDonald's plans to cut some prices even further.
But what's interesting to me about the deals that the
other fast food companies run is that their limited time
offers are often just come get the thing we already sell,
(29:41):
but get it for cheaper, which I'm sure brings people in.
It does bring people in, but it's not the same
as like, come get this insaneo spicy chicken crispy taco
wrapped in beef that is only here for three weeks
or until supplies last. Like that's a much more exciting
(30:02):
opportunity for some people.
Speaker 1 (30:05):
And we should say that McDonald's news announced Wednesday today
as we're recording this, which is Wednesday, August twentieth. Do
you think is part of this like some kind of
weird pandemic hangover? Like I sort of wonder if companies,
in an effort to deal with rising prices, raised prices
(30:26):
and sort of tried to move up market and then
left maybe left behind lower income consumers in a way
that is now catching up to them, and where Taco
bell as the kind of standard bearer of the cheap
ass food, is like well positioned to maintain.
Speaker 8 (30:44):
Yeah, I mean, we did see a lot of companies
during COVID and the immediate aftermath, as inflation was rising,
a lot of companies just raise their prices. Their costs
were going up, or they were expecting their costs to
go up, and they raised prices. And consumers had a
lot of money laying around because we weren't going anywhere,
so we had all those pandemic savings. There were other
(31:05):
forms of government assistants flying around, so people had money
to spend. So for a while, you know, we were
hearing from a lot of the consumer companies that the
American consumer is resilient, they can handle the higher prices,
and then things just crossed some line where people were like, wait.
Speaker 5 (31:24):
How much is that?
Speaker 3 (31:27):
It does seem like I do understand why fast food
companies have been raising their prices because the price of
everything has been going up, especially food, like since twenty
nineteen this started the pandemic. I think food prices are
up more than fifty percent. How has taco Bells stayed
so cheap?
Speaker 2 (31:43):
Do we know?
Speaker 1 (31:43):
So?
Speaker 8 (31:43):
One of the ways that they have like kept up
their their LTO calendar is by what's lto oh Limited
Time offer is basically one of the things that they
do is they introduce new items that are really just
new ingredients and you can mix some around and match
them and it seems like a whole new thing, but
it's not really a whole new thing. It's just a
(32:06):
slightly different version of the last thing. It's more deep
fried or as like three times as much beef in
it or whatever. And so I think that's probably helped
them on the cost as well, because they're not trying
to incorporate crazy new ingredients.
Speaker 2 (32:23):
And reinvent the taco every week exactly.
Speaker 1 (32:26):
Is this like a warning sign? I mean, Taco Bells
sort of being the exception to this larger trend of
fast food company fast food companies really struggling and struggling
in a way that seems even unusual in uncertain times.
Are people in the is this the Baja Sprite or
(32:47):
what was it?
Speaker 3 (32:47):
What was it calling?
Speaker 10 (32:48):
Yeah, the Baja Midnight You know, I think that the
actually the bigger warning sign came from the Sweet Green earnings,
which were really disappointing.
Speaker 3 (33:02):
Also because that's the fancy sounds eighteen dollars, solid place, that's.
Speaker 8 (33:06):
Right, And so there was a time when they were
pretty well protected from the from you know, bad economy
vibes because they weren't dependent on that low income consumer.
Speaker 5 (33:18):
They're a high income consumer.
Speaker 3 (33:20):
Stand in line in Midtown Manhattan, like a line of
like dozens of people.
Speaker 2 (33:24):
It was like it was like Beyonce tickets, We've all
to get a salad.
Speaker 8 (33:29):
Yeah, I mean, and it if people are pulling back
from Sweet Green, that means that the higher end of
the economy, which the high end consumers often sort of
like do a lot of work for the for the
rest of us in their spending, and if they're pulling
back on spending, then I.
Speaker 5 (33:46):
Think we have a pretty bad sign.
Speaker 8 (33:48):
And actually Chipotle also had bad earnings recently, and Taco
Bell said that part of their success was people trading
in from fast casual into Taco Bell, so.
Speaker 5 (33:59):
They didn't Chipotle.
Speaker 8 (34:00):
But you can imagine somebody who normally goes to Chipotle
being like, oh, well, I could spend eleven dollars on
a burrito, or I could spend seven dollars on a
box that includes a burrito, the taco, the chiloopa that
da da da da da da.
Speaker 1 (34:13):
All right, Dina, we should leave it there. Thank you
for joining us today.
Speaker 5 (34:17):
Thank you so much for having me. Thanks guys.
Speaker 1 (34:28):
All right, Stacey, it's that time again. It's the time
when we talk about the underrated story of the week.
And I guess you're going to try to tell me
that the FED is the underrated story of the week,
even though we talk about it every single week.
Speaker 3 (34:40):
Well and rightly so, I think we talk about the
FED a lot, and we don't talk about the FED enough.
So yes, I think the Federal Reserve is the underrated
story of the week. So the central bankers of the
world are meeting in Jackson Hole, Wyoming this week. They've
been kind of discussing all things central bank and later
today Jerome pal is going to give a very anticipated speech.
Speaker 2 (35:00):
It'll be the last such speech that he gives.
Speaker 3 (35:03):
And this is a moment when central bankers are like
a little looser than a normal press conference. I think
it's all the Western air and I think this could
be a really important speech from Jerom Power.
Speaker 1 (35:16):
Okay, for the record, the FED is not an underrated story.
But I actually now that as you're laying this out,
I feel like I need to say that just to
you know, stay on brand or whatever. But I actually like,
what do you think? Can you just say, like what,
like what people are expecting here? Like why this like
(35:36):
some speech at a conference? Like I cannot imagine a
more boring thing than a conference full of central bankers,
but why this speech is significant?
Speaker 3 (35:44):
Well, and it's true too that Federal Reserve speeches are boring,
but they are boring by design. They are boring on
purpose because the things that Federal Reserve chair say move markets.
This speech though could be a little different because right
now Donald Trump is really and the Trump administration, they're
really making a play to have much more control over
the FED, which has traditionally been quite independent. A lot
(36:06):
of people see this as a big threat to the
economy if that becomes politicized, if interest rates get cut,
because the president thinks it'll give the economy a little
sort of temporary like a sugar shot. And so I'm
really interested to hear what Jerome Pala says sort of
a moment. But you think he is that one moment.
Speaker 1 (36:25):
Igestion, He's going to be like, screw this, like I'm
never raising interest rates. F you, Donald Trump? Or like
is that the kind of like vibe where we're expecting.
Speaker 2 (36:35):
I mean, I think the Jerome Powell version of that.
Speaker 1 (36:37):
Yeah.
Speaker 3 (36:37):
I mean, first of all, a week of Western air,
which is gonna do some good.
Speaker 2 (36:42):
I think.
Speaker 3 (36:43):
Also, he is retiring later this year, like his term
is up. But this is a moment. This is not
an official speech. This is not you know, like this
is what we're doing with interest rates, which the normal
press conferences are. This is just a big global speech
that he gives. So and this is a moment in
the independence of the central banks underfire. I mean, this
is musky TV Max.
Speaker 2 (37:04):
This is like.
Speaker 3 (37:06):
The super Bowl of central banking this moment in time.
I think this is you have to like, this is
a musty TV. I am getting like, you have to
watch this. This is like watch this live.
Speaker 1 (37:20):
I mean I look forward to it. I look forward to,
you know, having you here next week to unpack the
nuances of what Jerome Pal says and we can talk
all about what that means for the.
Speaker 3 (37:35):
Economy, the instant replays for all of us. Yes, I
appreciate you hearing me out on this. I really do
think that this is an underrated.
Speaker 1 (37:43):
Story, Stacy. Before we go, and just to circle back
to AI, you know, we talked about a couple of
weeks this sort of question of price fixing, and Aaron,
a listener wrote in to flag a another domain where
this is happening, apartment rentals. There was actually recently a
(38:06):
settlement between the DOJ and a landlord, which company called
Gray Star Manages, something like basically a million apartments settled
with the DOJ over alleged price fixing. And Aaron, Aaron
just pointed this out, just super interesting. I feel like
this is going to be a thing that we keep
(38:28):
talking about over and over again. Just want to continue hearing.
Speaker 3 (38:32):
Like I have been proven right by this email because look,
AI is effective, it has an excellent business use case.
Speaker 2 (38:40):
It can now it's over price. Yeah, it's amazing. If
you're a crooked landlord.
Speaker 1 (38:46):
I guess the problem is that's a that's their people too.
One thing I need to say first of all is
that Gray Starr did not admit wrongdoing in this settlement,
So just any any question, and it believes that it's
at in a statement, it believes that it's use of
this revenue management software complies with the laws. On the
(39:07):
other hand, it has agreed not to use these algorithms.
And also, Stacy, I just want to say, like, really
appreciate the email from Aaron. Listeners, tell us what you
think about this latest AI segment with ed everybody's at
Bloomberg dot net. Everybody's with an ass at Bloomberg dot net.
Are you a hater or are you a lover? That's
(39:28):
what I want to know.
Speaker 2 (39:29):
Yeah, I mean do you think, like, how do you
use AI?
Speaker 3 (39:31):
If you use AI, I want to definitely if you
use AI and love AI right in if you don't
you know, do something else.
Speaker 1 (39:44):
This show is produced by Stacy Wong. Magnus Hendrickson is
our supervising producer and Amy Keen is our editor. We
get engineering from Blake Maples and Dave Purcell, fact checks
Sage Bauman heads Bloomberg Podcast Special thanks to Jeff Muscus,
Julia Rubin and Maria Lynn. If you have a minute,
please rate and review the show. It will mean a
lot to us and all people find it. And if
(40:05):
you have a story that should be our business, email
us at Everybody's at Bloomberg dot net. That's everybody with
an s at Bloomberg dot net. Thanks for listening and
we will see you next week.
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