February 5, 2025 • 32 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Opinion International Affairs Columnist Marc Champion and Dana Stroul, Senior Fellow at The Washington Institute for Near East Policy, discuss President Trump's proposal for the US to take over Gaza. Trivago CEO Johannes Thomas talks about earnings, travel trends and tariffs. Jeff Grabow, US Venture Capital Leader at EY, explains how AI deals are underpinning VC growth. And we Drive to the Close with Jeanette Garretty, Chief Economist at Robertson Stephens.
Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg Business Week, Insight from the reporters and
editors that bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio.
Speaker 3 (00:26):
All right, folks, focus with us, because there's stuff headlines
constantly coming at us. We do want to talk to
you politics. That's what we begin on this Wednesday. President
Trump's idea of depopulating and taking Overgaza was broadly welcomed
in Israel, with officials praising the surprise proposal as it
means to beeve up security following the war with Moss.
We were following that story late yesterday and obviously and
(00:48):
more into today, and just moments ago Tim noticing AFP
coming out and saying that this is from Secretary of
State Marco Rubio of the United States, saying that the
President only wants Palestinian to leave Gaza temporarily while the
territory is reconstructed. So again it feels like a little
bit of a rolling back of what we had yesterday.
Speaker 4 (01:07):
Well to that point, the wit the White House saying,
and this according to Fox News and the Washington Post
that Trump has not committed to putting US troops on
the ground in Gaza. So some a fast moving story
here that we're continuing to get clarification on.
Speaker 1 (01:19):
Yeah, and these are all important details.
Speaker 3 (01:21):
I should point out though in the Arab world his
suggestion of taking over Gaza was taken very differently. Saudi
Arabia called the plan and an infringement on the legitimate
rights of the Palestinian people, and that was a position
echoed by governments across the Middle East.
Speaker 1 (01:34):
So let's get to our round table with us.
Speaker 3 (01:36):
Right now is Bloomberg Opinion International affairs columnist Mark Champion.
He joins us from London. And then in DC we
have Dana Stroll. She's senior fellow and research director at
the think tank the Washington Institute for Near East Policy.
Among her roles in civil service include from twenty twenty
one to twenty twenty three, she was Deputy Assistant Secretary
of Defense for the Middle East, and that, of course
(01:57):
is the Pentagon's top civilians with responsibility for the region.
So great to pair pairing, I should say, to talk
about what's going on in the Middle East.
Speaker 1 (02:08):
Welcome to both of you. Mark, I do want to
start with you.
Speaker 3 (02:11):
Your column today makes the point that President Trump's proposal
to take over Gaza maybe more serious than initially thought,
with language and the judgic similar to a real estate
developer's approach. Again, we've just got some headlines that there
seems to be some clarification that he doesn't necessarily maybe
mean to take it over completely.
Speaker 1 (02:27):
But you say we should take this seriously. How come?
Speaker 5 (02:32):
Well? I think that what I'm trying to say is
that it's clear that he and the people around him
think in these terms. They've been talking about this, you know,
Jared Kushner, his son in law who's in real estate,
Trump himself, and of course his special ENVOYE Steve Whitcock,
also in real estate, and this is you know, I
think we should take seriously that this is the way
(02:54):
that they think about these things. You know that said,
you know that this is clearly very unlikely to go anywhere.
And what worries me slightly is that you know, here
you are at a juncture. You're you know, you're in
a peace process that's in several stages. The second one
is going to come up faster and when we you know,
(03:16):
then think and it will require the kind of further
forward looking strategy and planning in order to get that
through that has not been there until now because Israel
has not been willing and certainly how Maas has not
been willing to you know, to engage. So you know
(03:40):
what worries me is that, you know, the the administration
will be you know, thinking and talking in these terms
which really aren't going to go anywhere, and in the meantime,
we have an unsolved problem that will simply return to fighting.
Speaker 4 (03:54):
Dana, come on in here. I'm wondering if, if, given
your experience in the region, your experience when it comes
to dipplematic affairs, if you see this as having any
weight to it, or maybe perhaps an off the cuff
re mark or something that doesn't necessarily or should not
necessarily be taken seriously, how are you looking into it?
Speaker 6 (04:13):
Well, first of all, I don't think it's an off
the cuff remark. I think it's quite consistent with the
negotiating strategy we've seen from President Trump and just his
first two weeks in office here, which is to create
a crisis mostly with words and threats animate his team
to then have backchannel negotiations which de escalate a situation.
(04:34):
And then largely if you look at Columbia or Mexico
or Canada, each government has come with modest or moderate
reactions that appear to address Trump's concerns, and then all
of a sudden there's a delay in what he has
promised in terms of a harsh response. In this case,
NETANYAHUO was about to face a fork in the road.
(04:55):
If the Gaza ceasefire moves to pace to Israel would
have had to end this war. And we seen with
all of these hostage releases Hamas come out in their uniforms.
It certainly doesn't look like the total victory that Prime
Minister in Nathan Yahu promised the Israeli people. Now, rather
than talk about what Israel's going to do, or the
Palestinians or the region, all the talk today is about
(05:15):
what the United States is going to do. It's totally
shifted the dynamics and the focus of this conversation. And
I think Trump knows exactly what he's doing here.
Speaker 1 (05:23):
Well, And that's a really good point.
Speaker 3 (05:25):
And you know, Mark, come on back in, because I
think some of what we've been hearing is that, you know,
this is about President Trump taking the focus of what
really matters, what is the next phases of the ceasefire
between Hamas and Israel, and really figuring that out. Do
you agree that it's kind of like the flashy thing,
you know, look over here, but it kind of gets
(05:45):
everybody off the hook of thinking about what's the next
phase of the ceasefire.
Speaker 5 (05:51):
I think it is. I do think that's part of
what he's doing. It's simply that I don't believe he
has a thought through strategy that he's trying to you know,
unlike with the trade, where you know, he had things
that he could get. I simply don't think that he
has a strategy that will be able, you know, to
(06:13):
to get a movement forward, to get the Israelis to
on board, to to you know, get to a place
where you can have a serious proposal and therefore, you know,
this kind of real estate talk and so on. I
think it is serious in the sense that it's a
(06:34):
real distraction, you know, you know, I take it that
he knows what he's doing when he's doing making you know,
throwing up all these you know, balls of fire in
the air.
Speaker 7 (06:45):
So everybody's looking a different.
Speaker 5 (06:47):
Way, but you need to have something underneath there that
you can realistically get people to do, and that I
think is missing, you.
Speaker 1 (06:56):
Know, Dana.
Speaker 3 (06:56):
One of the things I think we keep thinking about
as we watch, you know, what's been going on in
terms of threats of tariffs, then maybe a little bit
of a rollback and you know, or things change or
they're postponed in terms of their enactment. Having said that,
you know, we thought about with tariffs, what's the goal
here of President Trump? What's the goal here in your
view of President Trump in terms of meeting with Benjamin
(07:20):
Netanyahu and what his real aim is. President Trump's aim
is for Israel and for the Palestinians.
Speaker 6 (07:30):
Well, first of all, what Trump wants is Israel's security,
and he doesn't want to see homos return to a
position of governance. And right now, the Arab leaders of
the rest of the Middle East aren't really cooperating. They're
unwilling to commit any sort of security presence or boots
on the ground, meaningful resources beyond humanitarian aid. Pressure on
(07:50):
the Palestinian authority in terms of what its leadership could
look like in gods or reconstruction or an actual day
after plan for Gaza. All he's heard from Arab leaders
is mostly know what they're unwilling to bring to the table.
Speaker 7 (08:04):
And now you see the dynamics sort of shifting.
Speaker 6 (08:06):
And of course next week the table is set for
King of Dullah of Jordan, followed by perhaps Egyptian President
c c All coming to Washington, and this is going
to be the focus. So you see a lot of
movement because of what Trump has said yesterday.
Speaker 4 (08:20):
Mark, does it threaten relationships that the US has in
the region, such as President Trump's relationship with the Kingdom
of Saudi Arabia for example.
Speaker 5 (08:32):
Well not at this point. I do think that there's
a huge difference in the situation between his first term
and this his second term. You know, in his first term,
the interests of the Gulf States and Israel were more
or less aligned. Their biggest concern was Iran, the threat
from Iran. And you know, so he was able then
(08:55):
to get the Abrams Accords, and after that the Biden
administration was able to talk to the Saudis a lot
about similar deals because there was no real impediment. And
this time around, since October twenty three, when you've got
the you know, you've had the war in Gaza in between,
and also the sort of interests of Saudi Arabian particular
(09:18):
have changed much more focused on the economy and stability,
less worried about Iran. You now have a different situation,
and I just think it's going to be quite difficult
to bring these different interests together where you've got the
domestic political concerns of Saudi Arabia and the Gulf State's
now focused on their own populations and their view of Gaza,
(09:39):
and it just makes it harder to bring everybody together.
And I'm not clear that you know he's got a
plan for.
Speaker 2 (09:46):
That, Dana.
Speaker 3 (09:46):
When we think about what is the plan though for Palestinians,
you know, Marx column gets into you know, Gaza is
a demolition site. You know, it's a mess, and to
think about the Palestinians going back there, I mean, how
do they live. There's no infrastructure, so there needs to
be some kind of rebuild. And you do wonder how,
you know, how this happens going forward, how do you
(10:09):
see it playing out in terms of Yeah, first.
Speaker 6 (10:15):
Of all, the estimates for the cost of rebuilding Gaza
are upwards of eighty billion dollars and we're probably talking
about decades to clear out the rubble and rebuild Gaza,
so there's not really a temporary relocation of Palestinians.
Speaker 7 (10:31):
And based on past US.
Speaker 6 (10:32):
Experiences for example, post conflict reconstruction in Iraq and then Afghanistan,
the difference in Gaza is how concentrated the destruction is
and the closed nature of the border, so civilians can't
move around when we're trying to get ordnance, unexploded mines
and bombs and the.
Speaker 7 (10:49):
Rubble cleared out.
Speaker 6 (10:50):
So this was always going to be a huge challenge
just on the on the remarks about the region, what's
totally different from Trump's first term is this strategic nature
of the Middle East. Iran is more vulnerable today than
it ever has been because of Israel's military strikes that
have taken out its air defenses. But Charyl Ossatt has
gone in Syria. There's also a ceasefire in Lebanon and
(11:13):
a chance an opportunity to reimagine Lebanon without a stranglehold
of Hazbolah governance, and the same thing in Amasque in Gaza.
Speaker 7 (11:21):
Trump can't do this alone.
Speaker 6 (11:23):
He needs the Europeans, he needs the Arab leaders, and
I think there's an opportunity here for different leaders to
bring things to the table.
Speaker 7 (11:30):
It's not only about Gaza.
Speaker 4 (11:32):
Well, sticking on Gaza does raise the question of what
the future of Gaza is if this ceasefire holds, if
and when the war does end, what is the plan
for Gaza? If the United States does not go through
with the plan that President Trump said yesterday at the
White House.
Speaker 6 (11:50):
On the current trajectory, without anything other than what we
see right now, Gaza is probably going to become something
like Mogadishu on the Mediterranean. There's no non Hamas alternative
to governing Gaza. We've seen that there's plenty of Hamas.
Guys who have come out of the tunnels, put their
uniforms back on, are distributing humanitarian aid and telling people
(12:11):
we're going to help you get back to your homes
and we're going to help you rebuild. So that means
that Hamas reconstitutes, it regains governance over Gaza, and its
remaining leaders have already threatened to do October seventh over
and over and over.
Speaker 3 (12:26):
Yeah, So hence you understand the difficulties in figuring the
way forward and what really is the next step. Dana,
thank you so much. Really appreciate your input. Dana Strol.
She's senior fellow and research director at the Washington Institute
for Near East Policy and someone who has been on
the inside within the US government really understanding and working
on this region.
Speaker 1 (12:45):
Dana, thank you so much.
Speaker 3 (12:46):
Hey, Mark, before we wrap up with you, we did
want to ask you about Russia and Ukraine, the role
the US and President Trump will play in what happens next.
We know US allies expect the Trump administration to present
a long awaited plan to end Russia's war in Ukraine
at the Munich Security Conference in Germany next week.
Speaker 1 (13:03):
This is coring to folks in the know.
Speaker 3 (13:05):
You've got a second column out today about President Trump
saying he wants some of Ukraine's resources in return for
continuing aid. Your note, or you note that this is
a price worth paying.
Speaker 5 (13:17):
Why, Well, first of all, it's something that President Zelensky
of Ukraine offered. So he put out this victory plan
last year, and one of the five baskets in there
was incentives for the West. But you know, it's quite
(13:38):
clear that he had a transactional Donald Trump in mind.
Incentives to say, look, you're not just helping us, you're
helping yourselves.
Speaker 7 (13:48):
After the war.
Speaker 8 (13:49):
We have a lot of.
Speaker 5 (13:50):
Resources and you know, we're willing to open them up
and you know, make them available to you. So there's lithium,
there's you know, magnesium, there's you know a number of
different resources that would be useful in industry and the
ev industry and so on. So you know, he was
just it's already there offered. Trump has taken up the offer.
(14:14):
It's exactly what Zelensky was trying to do. And you know,
given Europe's weakness militarily, its failure to really build military capabilities,
you know what's became clear that the peace devan of
the Cold War was over. It really isn't able to
do it on its own. So Ukraine needs the US
(14:35):
and Europe, you know, is if you could describe this
as the price that Europe should be willing to pay
allowing the you know, the US under Trump to have
access to some of these materials, to keep quiet about it,
because they need the American military, they need Trump Mark.
Speaker 4 (14:53):
We're three years into this reward, though, you know, how
does how does this actually end it?
Speaker 1 (14:58):
And just got about thirty seve and Mark.
Speaker 5 (15:01):
Yeah, I mean, we'll see what the US plan actually
is on offer, and you know, there are ways to
do it. I've written about it, but it's you know,
it's it's really not going to be easy, and you
know an instant overnight deal is highly unlikely.
Speaker 3 (15:19):
Yeah, there's a lot, it's a full plate, certainly when
you look around the world. Mark, thank you so much,
so appreciate you weighing in on both what's going on
potentially in the Middle East and then of course the
ongoing war there in Russia and Ukraine. Bloomberg Opinion International
Affairs columnist Mark Champion joining us from London.
Speaker 2 (15:38):
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Speaker 9 (15:52):
Quite a bit of news in the world.
Speaker 4 (15:53):
Adventure capital Cherry Ventures, it's a VC firm based in Berlin,
has raised five hundred million dollars in funding. That's the
back Europeans startups that come in from our Bloomberg team
across the Pond and the VC firm General catalyst Carol
checked this out they're getting into wealth management. They hired
twenty former staffers from First Republic Bank. Remember it's one
of the casualties of the twenty twenty three regional banking
(16:14):
crisis to create a wealth management business. I wonder if
you're gonna be able to at those two point five
percent mortgages that you're found for. Yeah, maybe the one
point nine percent that I've heard of.
Speaker 1 (16:24):
Maybe not anytime soon.
Speaker 6 (16:25):
Now.
Speaker 1 (16:26):
Jeff Garbo is with us. He's US venture capital leader already.
Why he joins us here in our Bloomberg Interactive Broker studio.
Speaker 5 (16:31):
Hello.
Speaker 3 (16:32):
Hello, We were remarking that it's been since pre pandemic
that you've actually been here in our studio.
Speaker 1 (16:37):
It's been a while.
Speaker 8 (16:38):
Yeah, it's great to be back. Thanks for having me.
Speaker 1 (16:40):
Well, it's great to have you here.
Speaker 3 (16:42):
You know, the M and A market has gone through
a lot, just like the rest of the world, right
through the pandemic, coming out of the pandemic, dealing with
a higher rate environment after a very low rate environment
in the cross of capital was nothing. How would you
describe the venture world right now?
Speaker 8 (16:59):
So it's a very interesting time in the venture world
because the pace of change probably has never been greater.
I was just up on sand Hill Road on Monday
with a top tier AI investor and he was remarking at,
you know, how fast things He's amazed at how fast
things are going. And that's something that we kind of expect.
And I'm drawing a lot of analogies to kind of
(17:20):
what's happened in the internet through the Internet phase.
Speaker 1 (17:22):
Is it really a fair comparison, do you think?
Speaker 8 (17:25):
I think so? And is it you know, is it exact?
You know, time will tell, but you know, there is
so much change. There is so much you know, you
take a step back and look at the big picture.
What were we going to do on the Internet, Well,
we were going to do like I was going to
buy something. I was gonna, oh catalog. So by the way,
(17:46):
I would never have to make another catalog if I
was a company, it was just oh, I would put
it up there and then I would never have to
reprint it. And if I wanted to dislike do it.
But now you think about, you know, twenty five years later,
if the Internet would went down, you know, the economic
engine of the United States runs and the world runs
on the internet. So yeah, I was gonna go ahead,
and so I just think I think that has that
same possibility and a lot of you know, with AI
(18:09):
and some of the things that are happening now, but
the stack is being built and over time that will
grow up and build and then it will collapse, but
you'll you'll have just much more efficiencies.
Speaker 4 (18:19):
Who's the company that sends out that huge catalog restoration hardware?
All right, yeah, we just got that. Yeah, I know,
they went right into the recycling.
Speaker 1 (18:26):
Multiple ones usually, right, Yeah, it.
Speaker 4 (18:27):
Was like they didn't get the memo of the nineties.
Is it moving even faster though? Than I mean, I
talked to somebody today today. He's in the AI space,
and he said, things move like we're talking three month
increments for revolutionary changes here.
Speaker 8 (18:42):
That's what it feels like. And it feels like it
is faster. And part of that maybe because of all
the capital that's out there. You know, we have multiples
of capital that are available through the venture pipeline. The
world has become flatter, You've got more international participation both
from an LP perspective, putting money into the pipeline as
(19:03):
well as direct investments. So it just feels like, yeah,
and one of the by products of that has been.
You know, in two thousand and five there were five
thousand venture back startups. At the end of twenty twenty four,
there are fifty five thousand venture back startups in existence.
So a venture cycle is about ten years. You know,
(19:23):
through the math on that you've got multiples of venture
cycles in twenty years.
Speaker 3 (19:27):
Is there a pets dot Com version of the AI
era and exuberance?
Speaker 8 (19:33):
Well, you're always you know, it's funny because you always
are we going to ultimately dot.
Speaker 1 (19:39):
Com of course being.
Speaker 3 (19:41):
A flop, a flop you could say web then too,
there's many of them, like you just through dot Com, right,
and like there was just models that didn't have any
kind of financials or profitability behind them, and it was
just like, yeah.
Speaker 8 (19:55):
There will be companies that don't succeed, but that's not
that's not necessarily just part of an era. That's part
of the business. You think about, This is a portfolio
management business, and I have to produce outsized returns on
the amount of money that I raise if I'm a
venture investor, So I have to take some really big swings,
and you know what, they're not all going to work
(20:16):
out because we're making bets based upon what we know
today what is today will not be what happened was
what is going on in three years.
Speaker 3 (20:24):
So do we get a bubble, there will be anyone,
There will be There will be over exuberants just.
Speaker 8 (20:32):
Because there's so much capital. But you never get advances
without taking those kind of leaps.
Speaker 9 (20:37):
What was the reaction on sand Hill Road about deep Seek?
Speaker 8 (20:42):
Well, I think the you know, we can't really comment
direct land companies, but I think at some point you
see the technology wave happen where costs always come down
and you're always going to have to be dealing with
cost curves. And so, as I was talking about earlier,
you have a scenario where thirty years ago you would
(21:02):
raise fifty million dollars to spend to start an internet company.
Today you can do that for fifty dollars, and you
could do it on consumption, on a swipe of a
credit card. Whars before you had to add full cost
of ownership. So you're going to see AI do that.
That's why I talked about the AI stack collapsing. It's
getting built up because it's being created and then at
(21:24):
time that will happen. It happened in networking with boxes.
Speaker 9 (21:29):
I'm not asking you to comment on deep seek.
Speaker 4 (21:31):
I want to know how freaked out the venture capitalists
are about the billions they've invested in the AI companies
that seem to be less efficient than deep seek.
Speaker 8 (21:41):
Why we don't have all the information on what's really
happened and what the ramifications are going to be. I
think you as an investor, you always need to be
taking into consideration what you're seeing. So I think one
of the things you know that will be one of
the things that may not have been talked about a lot,
you'll see more open source because a lot of this stuff,
(22:04):
a lot of the investments have been in closed environments,
and open source is cheaper, cheaper to develop, it's cheaper
to license, So that may be one of the by
products in and if we've truly reached efficiencies, then you
can start to build on top of that stack and
start to build the pyramid up.
Speaker 3 (22:25):
I mean, isn't that something venture capitals do like it's
it's about disrupting kind of the establishment. And already you
might say that in video is the establishment or open
AI is the establishment in AI.
Speaker 5 (22:34):
And so the.
Speaker 3 (22:35):
Expectation is that sure, we're going to come across probably
a model that costs a fraction of the existing AI
build that we are talking about today, and who knows
how long that takes or maybe it's already happened.
Speaker 1 (22:47):
You know, we don't know.
Speaker 3 (22:48):
You're right, deep seek We have to find out a
lot more information. But is it kind of the venture
perspective that of course we're going to find probably a.
Speaker 1 (22:55):
Faster way to do this, a cheaper way to do this.
Speaker 8 (22:57):
That's all was and that if there wasn't, if that
wasn't that proposition, there wouldn't be a venture business. You know,
it's innovation, it's driving change. And so does that mean.
Speaker 1 (23:07):
Investors the established investor who has plowed a ton of
money into Nvidia, and Nvidia so dominates the market that
they there's a possibility that they're not the ones who
dominate going forward.
Speaker 8 (23:19):
That also may open up opportunity because you know, think
about we're early when you think about the visions that
have been painted out. And I was talking about this
this morning. There was a talk a while ago about
Internet first the first people who are the Internet first workforce. Well,
just think what happens when you get the first AI
workforce and what the capabilities that they have a lot
(23:41):
of the stuff that they will be using. I'm talking
twenty years from now, haven't been built today. That needs
to get built. So but you need to have foundation
and because and you need to have that foundation and
infrastructure laid. It's the same thing.
Speaker 9 (23:56):
You know.
Speaker 8 (23:56):
The other analogy to look at is internet building. You know,
if you remember during bandwidth, everybody said, oh, we have
so much bandwidth over bandwidth, we'll never use it. We'll
guess what we burned through that usage in a fraction
of the time anybody ever thought it was so Oftentimes,
when you find you have abundance and overbuild, you don't
(24:17):
necessarily have that in these technology markets because it gets
used up. And that is also the mother of invention
and innovation.
Speaker 9 (24:24):
Where's the money going now?
Speaker 8 (24:26):
So obviously ai AI is taking up about forty percent.
Speaker 1 (24:31):
Well kind of AI though, like what Well.
Speaker 8 (24:33):
Obviously we've seen a lot of foundational model, yeah things,
we've seen some open source things, starting to see applications
going after professional services. We had that conversation earlier this
week on Sandhill Road. The other thing with the classification,
it's going to be you know, that's going to be
a little squishy because right now, if you're not. We
(24:54):
are in a have and have not environment. I talked
about the fifty five thousand venture backed startups in the world.
Half of them haven't read about half of them haven't
raised in three years. So you're going back to market
in an AI market and having to sell a story.
So you're going to have to pivot. So a lot
of people that may not have been AI native companies
now are positioning themselves as AI company. So you're going
(25:16):
to see that number influenced by that.
Speaker 1 (25:18):
I mean, how many of them are?
Speaker 3 (25:20):
Of those they have to go back for more money, right,
I mean they're not ready to go public, they're not
ready to do what have you?
Speaker 1 (25:29):
What kind of money is out there?
Speaker 8 (25:31):
So in that fifty five so oh, dry powder is
about three hundred and ten billion.
Speaker 1 (25:36):
How does that compare with where we've been.
Speaker 8 (25:38):
I don't know.
Speaker 1 (25:38):
The last couple of years.
Speaker 8 (25:40):
It's about par It hasn't grown substantially because interesting the
past couple of years have been down fund rate fund formation,
yeah years, and it kind of dropped. It lagged the
investment cycle by about a year. So when twenty twenty
two things slowed down in venture and the investment side,
(26:01):
and then twenty twenty three. The formation side started slow,
but twenty twenty four was an up year for the
first year and two years on an investment into companies
last year.
Speaker 1 (26:15):
Okay, okay, do you use.
Speaker 9 (26:16):
AI in your job?
Speaker 8 (26:18):
Yes?
Speaker 9 (26:18):
I do. How do you use it?
Speaker 8 (26:20):
I use it to help distill information. We've got something
called EYAI that basically we've you know, it's kind of
our large language model that we help feed information into.
Speaker 4 (26:30):
So essentially it's I'm guessing it's built on a LM
like an open AI for example, chat GPT.
Speaker 9 (26:39):
It's built on something like that, and.
Speaker 4 (26:41):
You copy and paste a large document into it and
get it summarized. What do you how do you do it?
Speaker 8 (26:47):
Summarization helping to analyze a lot of it, So, you know,
how do you prompt in? You know, that's that's a
key of how you can help get better value out
of it? Is what are the questions? It's funny it
used to be you know it now we're our tagline
is all lan. It used to be asked the better
you know one of the things on our ey private
has asked a better question.
Speaker 9 (27:08):
Yeah, and if you give a better prompt engineer, So if.
Speaker 8 (27:10):
We ask the better questions that helps, you know, distill
And that's actually you know, when you think about the
AI workforce, that's going to be critical thinking is going
to be something that's very important.
Speaker 9 (27:20):
I was I was talking.
Speaker 4 (27:21):
We were talking to Man Deep earlier from Many Intelligence,
and I mean we were off Mike and we were
talking about AI and he was saying, you know, everybody
who you know, you have to embrace this stuff.
Speaker 9 (27:33):
You have to experiment with it.
Speaker 5 (27:35):
Uh.
Speaker 4 (27:36):
If you want to understand the technology, you got to
start using it.
Speaker 3 (27:39):
Ethan Mollock, who we have had on is co author
of co Intelligence. Living and Working with AI is basically
like if you if you haven't been working and playing
with it, you are behind the curve in a big way.
Speaker 8 (27:49):
Telling you that Chicken Mary and by the time you
see it, it's too late. Yeah, that's the thing. That's
why you have to be ahead of the curve.
Speaker 1 (27:55):
Playing with it on my phone a little bit. Jeff Graybow,
thank you so much.
Speaker 3 (27:57):
Us Venture Kappa leader at Ey adding us right here
in our Bloomberg Interactive Broker studio.
Speaker 2 (28:05):
This is the Bloomberg Business Week podcast. Listen live each
weekday starting at two pm Eastern on Applecarplay and the
Android Auto with the Bloomberg Business App. You can also
listen live on Amazon Alexa from our flagship New York station,
Just say Alexa, I played Bloomberg eleven thirty.
Speaker 4 (28:23):
But once again, check out the stock market, Charlie, give
us giving us an update there, Carol, we are flat.
It's yellow on the Nasdaq. You don't see that every day.
It's not red, it's not green, it's yellow. Three tens
of one percent to the upside on the S and P,
five hundred and seven tenths on the dow to the upside.
Let's drive to the clothes and get an idea of
what Jennet Gerritty has to think about these markets.
Speaker 1 (28:44):
Yeah, exactly.
Speaker 3 (28:45):
She's managing director, chief economist over at Robertson Stevens, a
wealth management firm with more than seven billion in assets
under management, and she joins us on this Wednesday from
Menlo Park, California. Janette, good to have you back here
with Tim and myself. A lot coming out investors right now.
Speaker 1 (29:01):
We are seeing stocks.
Speaker 3 (29:03):
So pretty much at their best levels of the session,
but just a little bit higher here. How are you
looking at this investment environment? Are there more opportunities or
more reasons to be cautious.
Speaker 10 (29:14):
Well, there's a lot of opportunities, and I think your
previous speaker was highlighting some of them. There's a lot
going on. Sometimes there's a little bit too much going on.
I think that's been maybe the story of this week.
And the markets are appear to be and I think
most investors are sort of saying, Okay, let me focus
(29:35):
on the fundamentals as they are and look forward. And
the economic fundamentals are very good. It's an economy firing
on all cylinders right now, and I think that's carrying
through on how people are thinking about the immediate opportunities.
Speaker 11 (29:53):
Having said all of.
Speaker 10 (29:54):
That, there is risk here that things get disrupted, even
sometimes just by the things that are talked about. One
example of that would be, you know, the manufacturing sector
is now growing again. It's actually been in a bit
of a slump for a couple of months, as indicated
(30:16):
by the purchasing managers indices, and now it's picking up
and you can see things picking up in January. What
remains to be seen is to a degree, things kind
of come to a stop for a minute while people
try and figure out what the real substance is in
(30:36):
the discussion of tariffs or anything else.
Speaker 4 (30:39):
That's so it's you know, that's what we're trying to
figure out right now. I mean, I was joking earlier today,
it's like, is it only Wednesday, because it feels like
we've been talking about tariffs for two weeks at this point.
Speaker 3 (30:49):
Well, we expected on day one because that was a
tefic part of his campaign, right and then when it
didn't happen, we were kind of like, wait, what's going on?
Speaker 4 (30:56):
What were your clients doing on that? Were they calling
you Monday? Were they, you know, trying to figure out, Okay,
what's what's going on here? Is everybody because they've seen
this movie before, they're just like, Okay, sit back and
we'll wait to see what he does.
Speaker 11 (31:08):
Well to a certain extent, they've seen this movie before,
but not quite in this way. And and so, but
I think most of our clients we were talking about
them to them about this some time ago. Per the
point that this is this is should not be entirely
a surprise. The speed, the magnitude, the lack of clarity
(31:34):
as to what the objective really is, I think is
what surprised people is they say, we can understand why
this is being done. Then that gives us a certain
amount of sense of certainty. But that's been hard to absorb.
But they there's not enough there for them to be
worried about.
Speaker 7 (31:54):
Yet they're just a little bit worried.
Speaker 1 (31:55):
All right, Jeanette, Thank you so much. Jeannette Garrity.
Speaker 3 (31:59):
She's managing director economist at Robertson Stevens.
Speaker 2 (32:02):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal.
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg Business Week, Insight from the reporters and
editors that bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio.
Speaker 3 (00:26):
All right, folks, focus with us, because there's stuff headlines
constantly coming at us. We do want to talk to
you politics. That's what we begin on this Wednesday. President
Trump's idea of depopulating and taking Overgaza was broadly welcomed
in Israel, with officials praising the surprise proposal as it
means to beeve up security following the war with Moss.
We were following that story late yesterday and obviously and
(00:48):
more into today, and just moments ago Tim noticing AFP
coming out and saying that this is from Secretary of
State Marco Rubio of the United States, saying that the
President only wants Palestinian to leave Gaza temporarily while the
territory is reconstructed. So again it feels like a little
bit of a rolling back of what we had yesterday.
Speaker 4 (01:07):
Well to that point, the wit the White House saying,
and this according to Fox News and the Washington Post
that Trump has not committed to putting US troops on
the ground in Gaza. So some a fast moving story
here that we're continuing to get clarification on.
Speaker 1 (01:19):
Yeah, and these are all important details.
Speaker 3 (01:21):
I should point out though in the Arab world his
suggestion of taking over Gaza was taken very differently. Saudi
Arabia called the plan and an infringement on the legitimate
rights of the Palestinian people, and that was a position
echoed by governments across the Middle East.
Speaker 1 (01:34):
So let's get to our round table with us.
Speaker 3 (01:36):
Right now is Bloomberg Opinion International affairs columnist Mark Champion.
He joins us from London. And then in DC we
have Dana Stroll. She's senior fellow and research director at
the think tank the Washington Institute for Near East Policy.
Among her roles in civil service include from twenty twenty
one to twenty twenty three, she was Deputy Assistant Secretary
of Defense for the Middle East, and that, of course
(01:57):
is the Pentagon's top civilians with responsibility for the region.
So great to pair pairing, I should say, to talk
about what's going on in the Middle East.
Speaker 1 (02:08):
Welcome to both of you. Mark, I do want to
start with you.
Speaker 3 (02:11):
Your column today makes the point that President Trump's proposal
to take over Gaza maybe more serious than initially thought,
with language and the judgic similar to a real estate
developer's approach. Again, we've just got some headlines that there
seems to be some clarification that he doesn't necessarily maybe
mean to take it over completely.
Speaker 1 (02:27):
But you say we should take this seriously. How come?
Speaker 5 (02:32):
Well? I think that what I'm trying to say is
that it's clear that he and the people around him
think in these terms. They've been talking about this, you know,
Jared Kushner, his son in law who's in real estate,
Trump himself, and of course his special ENVOYE Steve Whitcock,
also in real estate, and this is you know, I
think we should take seriously that this is the way
(02:54):
that they think about these things. You know that said,
you know that this is clearly very unlikely to go anywhere.
And what worries me slightly is that you know, here
you are at a juncture. You're you know, you're in
a peace process that's in several stages. The second one
is going to come up faster and when we you know,
(03:16):
then think and it will require the kind of further
forward looking strategy and planning in order to get that
through that has not been there until now because Israel
has not been willing and certainly how Maas has not
been willing to you know, to engage. So you know
(03:40):
what worries me is that, you know, the the administration
will be you know, thinking and talking in these terms
which really aren't going to go anywhere, and in the meantime,
we have an unsolved problem that will simply return to fighting.
Speaker 4 (03:54):
Dana, come on in here. I'm wondering if, if, given
your experience in the region, your experience when it comes
to dipplematic affairs, if you see this as having any
weight to it, or maybe perhaps an off the cuff
re mark or something that doesn't necessarily or should not
necessarily be taken seriously, how are you looking into it?
Speaker 6 (04:13):
Well, first of all, I don't think it's an off
the cuff remark. I think it's quite consistent with the
negotiating strategy we've seen from President Trump and just his
first two weeks in office here, which is to create
a crisis mostly with words and threats animate his team
to then have backchannel negotiations which de escalate a situation.
(04:34):
And then largely if you look at Columbia or Mexico
or Canada, each government has come with modest or moderate
reactions that appear to address Trump's concerns, and then all
of a sudden there's a delay in what he has
promised in terms of a harsh response. In this case,
NETANYAHUO was about to face a fork in the road.
(04:55):
If the Gaza ceasefire moves to pace to Israel would
have had to end this war. And we seen with
all of these hostage releases Hamas come out in their uniforms.
It certainly doesn't look like the total victory that Prime
Minister in Nathan Yahu promised the Israeli people. Now, rather
than talk about what Israel's going to do, or the
Palestinians or the region, all the talk today is about
(05:15):
what the United States is going to do. It's totally
shifted the dynamics and the focus of this conversation. And
I think Trump knows exactly what he's doing here.
Speaker 1 (05:23):
Well, And that's a really good point.
Speaker 3 (05:25):
And you know, Mark, come on back in, because I
think some of what we've been hearing is that, you know,
this is about President Trump taking the focus of what
really matters, what is the next phases of the ceasefire
between Hamas and Israel, and really figuring that out. Do
you agree that it's kind of like the flashy thing,
you know, look over here, but it kind of gets
(05:45):
everybody off the hook of thinking about what's the next
phase of the ceasefire.
Speaker 5 (05:51):
I think it is. I do think that's part of
what he's doing. It's simply that I don't believe he
has a thought through strategy that he's trying to you know,
unlike with the trade, where you know, he had things
that he could get. I simply don't think that he
has a strategy that will be able, you know, to
(06:13):
to get a movement forward, to get the Israelis to
on board, to to you know, get to a place
where you can have a serious proposal and therefore, you know,
this kind of real estate talk and so on. I
think it is serious in the sense that it's a
(06:34):
real distraction, you know, you know, I take it that
he knows what he's doing when he's doing making you know,
throwing up all these you know, balls of fire in
the air.
Speaker 7 (06:45):
So everybody's looking a different.
Speaker 5 (06:47):
Way, but you need to have something underneath there that
you can realistically get people to do, and that I
think is missing, you.
Speaker 1 (06:56):
Know, Dana.
Speaker 3 (06:56):
One of the things I think we keep thinking about
as we watch, you know, what's been going on in
terms of threats of tariffs, then maybe a little bit
of a rollback and you know, or things change or
they're postponed in terms of their enactment. Having said that,
you know, we thought about with tariffs, what's the goal
here of President Trump? What's the goal here in your
view of President Trump in terms of meeting with Benjamin
(07:20):
Netanyahu and what his real aim is. President Trump's aim
is for Israel and for the Palestinians.
Speaker 6 (07:30):
Well, first of all, what Trump wants is Israel's security,
and he doesn't want to see homos return to a
position of governance. And right now, the Arab leaders of
the rest of the Middle East aren't really cooperating. They're
unwilling to commit any sort of security presence or boots
on the ground, meaningful resources beyond humanitarian aid. Pressure on
(07:50):
the Palestinian authority in terms of what its leadership could
look like in gods or reconstruction or an actual day
after plan for Gaza. All he's heard from Arab leaders
is mostly know what they're unwilling to bring to the table.
Speaker 7 (08:04):
And now you see the dynamics sort of shifting.
Speaker 6 (08:06):
And of course next week the table is set for
King of Dullah of Jordan, followed by perhaps Egyptian President
c c All coming to Washington, and this is going
to be the focus. So you see a lot of
movement because of what Trump has said yesterday.
Speaker 4 (08:20):
Mark, does it threaten relationships that the US has in
the region, such as President Trump's relationship with the Kingdom
of Saudi Arabia for example.
Speaker 5 (08:32):
Well not at this point. I do think that there's
a huge difference in the situation between his first term
and this his second term. You know, in his first term,
the interests of the Gulf States and Israel were more
or less aligned. Their biggest concern was Iran, the threat
from Iran. And you know, so he was able then
(08:55):
to get the Abrams Accords, and after that the Biden
administration was able to talk to the Saudis a lot
about similar deals because there was no real impediment. And
this time around, since October twenty three, when you've got
the you know, you've had the war in Gaza in between,
and also the sort of interests of Saudi Arabian particular
(09:18):
have changed much more focused on the economy and stability,
less worried about Iran. You now have a different situation,
and I just think it's going to be quite difficult
to bring these different interests together where you've got the
domestic political concerns of Saudi Arabia and the Gulf State's
now focused on their own populations and their view of Gaza,
(09:39):
and it just makes it harder to bring everybody together.
And I'm not clear that you know he's got a
plan for.
Speaker 2 (09:46):
That, Dana.
Speaker 3 (09:46):
When we think about what is the plan though for Palestinians,
you know, Marx column gets into you know, Gaza is
a demolition site. You know, it's a mess, and to
think about the Palestinians going back there, I mean, how
do they live. There's no infrastructure, so there needs to
be some kind of rebuild. And you do wonder how,
you know, how this happens going forward, how do you
(10:09):
see it playing out in terms of Yeah, first.
Speaker 6 (10:15):
Of all, the estimates for the cost of rebuilding Gaza
are upwards of eighty billion dollars and we're probably talking
about decades to clear out the rubble and rebuild Gaza,
so there's not really a temporary relocation of Palestinians.
Speaker 7 (10:31):
And based on past US.
Speaker 6 (10:32):
Experiences for example, post conflict reconstruction in Iraq and then Afghanistan,
the difference in Gaza is how concentrated the destruction is
and the closed nature of the border, so civilians can't
move around when we're trying to get ordnance, unexploded mines
and bombs and the.
Speaker 7 (10:49):
Rubble cleared out.
Speaker 6 (10:50):
So this was always going to be a huge challenge
just on the on the remarks about the region, what's
totally different from Trump's first term is this strategic nature
of the Middle East. Iran is more vulnerable today than
it ever has been because of Israel's military strikes that
have taken out its air defenses. But Charyl Ossatt has
gone in Syria. There's also a ceasefire in Lebanon and
(11:13):
a chance an opportunity to reimagine Lebanon without a stranglehold
of Hazbolah governance, and the same thing in Amasque in Gaza.
Speaker 7 (11:21):
Trump can't do this alone.
Speaker 6 (11:23):
He needs the Europeans, he needs the Arab leaders, and
I think there's an opportunity here for different leaders to
bring things to the table.
Speaker 7 (11:30):
It's not only about Gaza.
Speaker 4 (11:32):
Well, sticking on Gaza does raise the question of what
the future of Gaza is if this ceasefire holds, if
and when the war does end, what is the plan
for Gaza? If the United States does not go through
with the plan that President Trump said yesterday at the
White House.
Speaker 6 (11:50):
On the current trajectory, without anything other than what we
see right now, Gaza is probably going to become something
like Mogadishu on the Mediterranean. There's no non Hamas alternative
to governing Gaza. We've seen that there's plenty of Hamas.
Guys who have come out of the tunnels, put their
uniforms back on, are distributing humanitarian aid and telling people
(12:11):
we're going to help you get back to your homes
and we're going to help you rebuild. So that means
that Hamas reconstitutes, it regains governance over Gaza, and its
remaining leaders have already threatened to do October seventh over
and over and over.
Speaker 3 (12:26):
Yeah, So hence you understand the difficulties in figuring the
way forward and what really is the next step. Dana,
thank you so much. Really appreciate your input. Dana Strol.
She's senior fellow and research director at the Washington Institute
for Near East Policy and someone who has been on
the inside within the US government really understanding and working
on this region.
Speaker 1 (12:45):
Dana, thank you so much.
Speaker 3 (12:46):
Hey, Mark, before we wrap up with you, we did
want to ask you about Russia and Ukraine, the role
the US and President Trump will play in what happens next.
We know US allies expect the Trump administration to present
a long awaited plan to end Russia's war in Ukraine
at the Munich Security Conference in Germany next week.
Speaker 1 (13:03):
This is coring to folks in the know.
Speaker 3 (13:05):
You've got a second column out today about President Trump
saying he wants some of Ukraine's resources in return for
continuing aid. Your note, or you note that this is
a price worth paying.
Speaker 5 (13:17):
Why, Well, first of all, it's something that President Zelensky
of Ukraine offered. So he put out this victory plan
last year, and one of the five baskets in there
was incentives for the West. But you know, it's quite
(13:38):
clear that he had a transactional Donald Trump in mind.
Incentives to say, look, you're not just helping us, you're
helping yourselves.
Speaker 7 (13:48):
After the war.
Speaker 8 (13:49):
We have a lot of.
Speaker 5 (13:50):
Resources and you know, we're willing to open them up
and you know, make them available to you. So there's lithium,
there's you know, magnesium, there's you know a number of
different resources that would be useful in industry and the
ev industry and so on. So you know, he was
just it's already there offered. Trump has taken up the offer.
(14:14):
It's exactly what Zelensky was trying to do. And you know,
given Europe's weakness militarily, its failure to really build military capabilities,
you know what's became clear that the peace devan of
the Cold War was over. It really isn't able to
do it on its own. So Ukraine needs the US
(14:35):
and Europe, you know, is if you could describe this
as the price that Europe should be willing to pay
allowing the you know, the US under Trump to have
access to some of these materials, to keep quiet about it,
because they need the American military, they need Trump Mark.
Speaker 4 (14:53):
We're three years into this reward, though, you know, how
does how does this actually end it?
Speaker 1 (14:58):
And just got about thirty seve and Mark.
Speaker 5 (15:01):
Yeah, I mean, we'll see what the US plan actually
is on offer, and you know, there are ways to
do it. I've written about it, but it's you know,
it's it's really not going to be easy, and you
know an instant overnight deal is highly unlikely.
Speaker 3 (15:19):
Yeah, there's a lot, it's a full plate, certainly when
you look around the world. Mark, thank you so much,
so appreciate you weighing in on both what's going on
potentially in the Middle East and then of course the
ongoing war there in Russia and Ukraine. Bloomberg Opinion International
Affairs columnist Mark Champion joining us from London.
Speaker 2 (15:38):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Applecarplay and the Android auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 9 (15:52):
Quite a bit of news in the world.
Speaker 4 (15:53):
Adventure capital Cherry Ventures, it's a VC firm based in Berlin,
has raised five hundred million dollars in funding. That's the
back Europeans startups that come in from our Bloomberg team
across the Pond and the VC firm General catalyst Carol
checked this out they're getting into wealth management. They hired
twenty former staffers from First Republic Bank. Remember it's one
of the casualties of the twenty twenty three regional banking
(16:14):
crisis to create a wealth management business. I wonder if
you're gonna be able to at those two point five
percent mortgages that you're found for. Yeah, maybe the one
point nine percent that I've heard of.
Speaker 1 (16:24):
Maybe not anytime soon.
Speaker 6 (16:25):
Now.
Speaker 1 (16:26):
Jeff Garbo is with us. He's US venture capital leader already.
Why he joins us here in our Bloomberg Interactive Broker studio.
Speaker 5 (16:31):
Hello.
Speaker 3 (16:32):
Hello, We were remarking that it's been since pre pandemic
that you've actually been here in our studio.
Speaker 1 (16:37):
It's been a while.
Speaker 8 (16:38):
Yeah, it's great to be back. Thanks for having me.
Speaker 1 (16:40):
Well, it's great to have you here.
Speaker 3 (16:42):
You know, the M and A market has gone through
a lot, just like the rest of the world, right
through the pandemic, coming out of the pandemic, dealing with
a higher rate environment after a very low rate environment
in the cross of capital was nothing. How would you
describe the venture world right now?
Speaker 8 (16:59):
So it's a very interesting time in the venture world
because the pace of change probably has never been greater.
I was just up on sand Hill Road on Monday
with a top tier AI investor and he was remarking at,
you know, how fast things He's amazed at how fast
things are going. And that's something that we kind of expect.
And I'm drawing a lot of analogies to kind of
(17:20):
what's happened in the internet through the Internet phase.
Speaker 1 (17:22):
Is it really a fair comparison, do you think?
Speaker 8 (17:25):
I think so? And is it you know, is it exact?
You know, time will tell, but you know, there is
so much change. There is so much you know, you
take a step back and look at the big picture.
What were we going to do on the Internet, Well,
we were going to do like I was going to
buy something. I was gonna, oh catalog. So by the way,
(17:46):
I would never have to make another catalog if I
was a company, it was just oh, I would put
it up there and then I would never have to
reprint it. And if I wanted to dislike do it.
But now you think about, you know, twenty five years later,
if the Internet would went down, you know, the economic
engine of the United States runs and the world runs
on the internet. So yeah, I was gonna go ahead,
and so I just think I think that has that
same possibility and a lot of you know, with AI
(18:09):
and some of the things that are happening now, but
the stack is being built and over time that will
grow up and build and then it will collapse, but
you'll you'll have just much more efficiencies.
Speaker 4 (18:19):
Who's the company that sends out that huge catalog restoration hardware?
All right, yeah, we just got that. Yeah, I know,
they went right into the recycling.
Speaker 1 (18:26):
Multiple ones usually, right, Yeah, it.
Speaker 4 (18:27):
Was like they didn't get the memo of the nineties.
Is it moving even faster though? Than I mean, I
talked to somebody today today. He's in the AI space,
and he said, things move like we're talking three month
increments for revolutionary changes here.
Speaker 8 (18:42):
That's what it feels like. And it feels like it
is faster. And part of that maybe because of all
the capital that's out there. You know, we have multiples
of capital that are available through the venture pipeline. The
world has become flatter, You've got more international participation both
from an LP perspective, putting money into the pipeline as
(19:03):
well as direct investments. So it just feels like, yeah,
and one of the by products of that has been.
You know, in two thousand and five there were five
thousand venture back startups. At the end of twenty twenty four,
there are fifty five thousand venture back startups in existence.
So a venture cycle is about ten years. You know,
(19:23):
through the math on that you've got multiples of venture
cycles in twenty years.
Speaker 3 (19:27):
Is there a pets dot Com version of the AI
era and exuberance?
Speaker 8 (19:33):
Well, you're always you know, it's funny because you always
are we going to ultimately dot.
Speaker 1 (19:39):
Com of course being.
Speaker 3 (19:41):
A flop, a flop you could say web then too,
there's many of them, like you just through dot Com, right,
and like there was just models that didn't have any
kind of financials or profitability behind them, and it was
just like, yeah.
Speaker 8 (19:55):
There will be companies that don't succeed, but that's not
that's not necessarily just part of an era. That's part
of the business. You think about, This is a portfolio
management business, and I have to produce outsized returns on
the amount of money that I raise if I'm a
venture investor, So I have to take some really big swings,
and you know what, they're not all going to work
(20:16):
out because we're making bets based upon what we know
today what is today will not be what happened was
what is going on in three years.
Speaker 3 (20:24):
So do we get a bubble, there will be anyone,
There will be There will be over exuberants just.
Speaker 8 (20:32):
Because there's so much capital. But you never get advances
without taking those kind of leaps.
Speaker 9 (20:37):
What was the reaction on sand Hill Road about deep Seek?
Speaker 8 (20:42):
Well, I think the you know, we can't really comment
direct land companies, but I think at some point you
see the technology wave happen where costs always come down
and you're always going to have to be dealing with
cost curves. And so, as I was talking about earlier,
you have a scenario where thirty years ago you would
(21:02):
raise fifty million dollars to spend to start an internet company.
Today you can do that for fifty dollars, and you
could do it on consumption, on a swipe of a
credit card. Whars before you had to add full cost
of ownership. So you're going to see AI do that.
That's why I talked about the AI stack collapsing. It's
getting built up because it's being created and then at
(21:24):
time that will happen. It happened in networking with boxes.
Speaker 9 (21:29):
I'm not asking you to comment on deep seek.
Speaker 4 (21:31):
I want to know how freaked out the venture capitalists
are about the billions they've invested in the AI companies
that seem to be less efficient than deep seek.
Speaker 8 (21:41):
Why we don't have all the information on what's really
happened and what the ramifications are going to be. I
think you as an investor, you always need to be
taking into consideration what you're seeing. So I think one
of the things you know that will be one of
the things that may not have been talked about a lot,
you'll see more open source because a lot of this stuff,
(22:04):
a lot of the investments have been in closed environments,
and open source is cheaper, cheaper to develop, it's cheaper
to license, So that may be one of the by
products in and if we've truly reached efficiencies, then you
can start to build on top of that stack and
start to build the pyramid up.
Speaker 3 (22:25):
I mean, isn't that something venture capitals do like it's
it's about disrupting kind of the establishment. And already you
might say that in video is the establishment or open
AI is the establishment in AI.
Speaker 5 (22:34):
And so the.
Speaker 3 (22:35):
Expectation is that sure, we're going to come across probably
a model that costs a fraction of the existing AI
build that we are talking about today, and who knows
how long that takes or maybe it's already happened.
Speaker 1 (22:47):
You know, we don't know.
Speaker 3 (22:48):
You're right, deep seek We have to find out a
lot more information. But is it kind of the venture
perspective that of course we're going to find probably a.
Speaker 1 (22:55):
Faster way to do this, a cheaper way to do this.
Speaker 8 (22:57):
That's all was and that if there wasn't, if that
wasn't that proposition, there wouldn't be a venture business. You know,
it's innovation, it's driving change. And so does that mean.
Speaker 1 (23:07):
Investors the established investor who has plowed a ton of
money into Nvidia, and Nvidia so dominates the market that
they there's a possibility that they're not the ones who
dominate going forward.
Speaker 8 (23:19):
That also may open up opportunity because you know, think
about we're early when you think about the visions that
have been painted out. And I was talking about this
this morning. There was a talk a while ago about
Internet first the first people who are the Internet first workforce. Well,
just think what happens when you get the first AI
workforce and what the capabilities that they have a lot
(23:41):
of the stuff that they will be using. I'm talking
twenty years from now, haven't been built today. That needs
to get built. So but you need to have foundation
and because and you need to have that foundation and
infrastructure laid. It's the same thing.
Speaker 9 (23:56):
You know.
Speaker 8 (23:56):
The other analogy to look at is internet building. You know,
if you remember during bandwidth, everybody said, oh, we have
so much bandwidth over bandwidth, we'll never use it. We'll
guess what we burned through that usage in a fraction
of the time anybody ever thought it was so Oftentimes,
when you find you have abundance and overbuild, you don't
(24:17):
necessarily have that in these technology markets because it gets
used up. And that is also the mother of invention
and innovation.
Speaker 9 (24:24):
Where's the money going now?
Speaker 8 (24:26):
So obviously ai AI is taking up about forty percent.
Speaker 1 (24:31):
Well kind of AI though, like what Well.
Speaker 8 (24:33):
Obviously we've seen a lot of foundational model, yeah things,
we've seen some open source things, starting to see applications
going after professional services. We had that conversation earlier this
week on Sandhill Road. The other thing with the classification,
it's going to be you know, that's going to be
a little squishy because right now, if you're not. We
(24:54):
are in a have and have not environment. I talked
about the fifty five thousand venture backed startups in the world.
Half of them haven't read about half of them haven't
raised in three years. So you're going back to market
in an AI market and having to sell a story.
So you're going to have to pivot. So a lot
of people that may not have been AI native companies
now are positioning themselves as AI company. So you're going
(25:16):
to see that number influenced by that.
Speaker 1 (25:18):
I mean, how many of them are?
Speaker 3 (25:20):
Of those they have to go back for more money, right,
I mean they're not ready to go public, they're not
ready to do what have you?
Speaker 1 (25:29):
What kind of money is out there?
Speaker 8 (25:31):
So in that fifty five so oh, dry powder is
about three hundred and ten billion.
Speaker 1 (25:36):
How does that compare with where we've been.
Speaker 8 (25:38):
I don't know.
Speaker 1 (25:38):
The last couple of years.
Speaker 8 (25:40):
It's about par It hasn't grown substantially because interesting the
past couple of years have been down fund rate fund formation,
yeah years, and it kind of dropped. It lagged the
investment cycle by about a year. So when twenty twenty
two things slowed down in venture and the investment side,
(26:01):
and then twenty twenty three. The formation side started slow,
but twenty twenty four was an up year for the
first year and two years on an investment into companies
last year.
Speaker 1 (26:15):
Okay, okay, do you use.
Speaker 9 (26:16):
AI in your job?
Speaker 8 (26:18):
Yes?
Speaker 9 (26:18):
I do. How do you use it?
Speaker 8 (26:20):
I use it to help distill information. We've got something
called EYAI that basically we've you know, it's kind of
our large language model that we help feed information into.
Speaker 4 (26:30):
So essentially it's I'm guessing it's built on a LM
like an open AI for example, chat GPT.
Speaker 9 (26:39):
It's built on something like that, and.
Speaker 4 (26:41):
You copy and paste a large document into it and
get it summarized. What do you how do you do it?
Speaker 8 (26:47):
Summarization helping to analyze a lot of it, So, you know,
how do you prompt in? You know, that's that's a
key of how you can help get better value out
of it? Is what are the questions? It's funny it
used to be you know it now we're our tagline
is all lan. It used to be asked the better
you know one of the things on our ey private
has asked a better question.
Speaker 9 (27:08):
Yeah, and if you give a better prompt engineer, So if.
Speaker 8 (27:10):
We ask the better questions that helps, you know, distill
And that's actually you know, when you think about the
AI workforce, that's going to be critical thinking is going
to be something that's very important.
Speaker 9 (27:20):
I was I was talking.
Speaker 4 (27:21):
We were talking to Man Deep earlier from Many Intelligence,
and I mean we were off Mike and we were
talking about AI and he was saying, you know, everybody
who you know, you have to embrace this stuff.
Speaker 9 (27:33):
You have to experiment with it.
Speaker 5 (27:35):
Uh.
Speaker 4 (27:36):
If you want to understand the technology, you got to
start using it.
Speaker 3 (27:39):
Ethan Mollock, who we have had on is co author
of co Intelligence. Living and Working with AI is basically
like if you if you haven't been working and playing
with it, you are behind the curve in a big way.
Speaker 8 (27:49):
Telling you that Chicken Mary and by the time you
see it, it's too late. Yeah, that's the thing. That's
why you have to be ahead of the curve.
Speaker 1 (27:55):
Playing with it on my phone a little bit. Jeff Graybow,
thank you so much.
Speaker 3 (27:57):
Us Venture Kappa leader at Ey adding us right here
in our Bloomberg Interactive Broker studio.
Speaker 2 (28:05):
This is the Bloomberg Business Week podcast. Listen live each
weekday starting at two pm Eastern on Applecarplay and the
Android Auto with the Bloomberg Business App. You can also
listen live on Amazon Alexa from our flagship New York station,
Just say Alexa, I played Bloomberg eleven thirty.
Speaker 4 (28:23):
But once again, check out the stock market, Charlie, give
us giving us an update there, Carol, we are flat.
It's yellow on the Nasdaq. You don't see that every day.
It's not red, it's not green, it's yellow. Three tens
of one percent to the upside on the S and P,
five hundred and seven tenths on the dow to the upside.
Let's drive to the clothes and get an idea of
what Jennet Gerritty has to think about these markets.
Speaker 1 (28:44):
Yeah, exactly.
Speaker 3 (28:45):
She's managing director, chief economist over at Robertson Stevens, a
wealth management firm with more than seven billion in assets
under management, and she joins us on this Wednesday from
Menlo Park, California. Janette, good to have you back here
with Tim and myself. A lot coming out investors right now.
Speaker 1 (29:01):
We are seeing stocks.
Speaker 3 (29:03):
So pretty much at their best levels of the session,
but just a little bit higher here. How are you
looking at this investment environment? Are there more opportunities or
more reasons to be cautious.
Speaker 10 (29:14):
Well, there's a lot of opportunities, and I think your
previous speaker was highlighting some of them. There's a lot
going on. Sometimes there's a little bit too much going on.
I think that's been maybe the story of this week.
And the markets are appear to be and I think
most investors are sort of saying, Okay, let me focus
(29:35):
on the fundamentals as they are and look forward. And
the economic fundamentals are very good. It's an economy firing
on all cylinders right now, and I think that's carrying
through on how people are thinking about the immediate opportunities.
Speaker 11 (29:53):
Having said all of.
Speaker 10 (29:54):
That, there is risk here that things get disrupted, even
sometimes just by the things that are talked about. One
example of that would be, you know, the manufacturing sector
is now growing again. It's actually been in a bit
of a slump for a couple of months, as indicated
(30:16):
by the purchasing managers indices, and now it's picking up
and you can see things picking up in January. What
remains to be seen is to a degree, things kind
of come to a stop for a minute while people
try and figure out what the real substance is in
(30:36):
the discussion of tariffs or anything else.
Speaker 4 (30:39):
That's so it's you know, that's what we're trying to
figure out right now. I mean, I was joking earlier today,
it's like, is it only Wednesday, because it feels like
we've been talking about tariffs for two weeks at this point.
Speaker 3 (30:49):
Well, we expected on day one because that was a
tefic part of his campaign, right and then when it
didn't happen, we were kind of like, wait, what's going on?
Speaker 4 (30:56):
What were your clients doing on that? Were they calling
you Monday? Were they, you know, trying to figure out, Okay,
what's what's going on here? Is everybody because they've seen
this movie before, they're just like, Okay, sit back and
we'll wait to see what he does.
Speaker 11 (31:08):
Well to a certain extent, they've seen this movie before,
but not quite in this way. And and so, but
I think most of our clients we were talking about
them to them about this some time ago. Per the
point that this is this is should not be entirely
a surprise. The speed, the magnitude, the lack of clarity
(31:34):
as to what the objective really is, I think is
what surprised people is they say, we can understand why
this is being done. Then that gives us a certain
amount of sense of certainty. But that's been hard to absorb.
But they there's not enough there for them to be
worried about.
Speaker 7 (31:54):
Yet they're just a little bit worried.
Speaker 1 (31:55):
All right, Jeanette, Thank you so much. Jeannette Garrity.
Speaker 3 (31:59):
She's managing director economist at Robertson Stevens.
Speaker 2 (32:02):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal.
Hosts And Creators
Tim Stenovec
Carol Massar
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