August 22, 2025 • 33 mins
Watch Bloomberg Businessweek Daily LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump met with Intel Corp. Chief Executive Officer Lip-Bu Tan at the White House to finalize a deal giving the US government a nearly 10% equity stake in the beleaguered chipmaker.
Under the Friday agreement, the US will receive 433,323,000 shares of common stock — representing 9.9% of the fully diluted common shares in Intel — with the government pledging to release nearly $8.87 billion in funding under the Chips and Science Act, people familiar with the terms said, speaking on condition of anonymity to outline the deal before it was formally unveiled.
That represents the remaining Chips Act funding that was awarded but not yet distributed to Intel, they said. The shares are non-voting and there is no board seat for the US government, according to the people. Tan was at the Commerce Department building on Friday finalizing the deal.
The US taking partial ownership marks a stunning level of intervention in an American company, cutting against the principles of free-market capitalism that investors and policymakers have long considered sacrosanct except in the most extraordinary situations such as war or a systemic economic crisis.
Today's show features:
- Bloomberg News Economic Statecraft Reporter Joe Deaux on the US officially taking a nearly 10% stake in Intel
- Bloomberg TV Radio International Economics and Policy Correspondent Mike McKee on his takeaways from at the Jackson Hole Economic Symposium and Bloomberg Economics US and Canada Economist Stuart Paul on Canada plan remove retaliatory tariffs on US products
- Emily Green, Head of Private Wealth Management at Ellevest, on Friday's market rally
- Tejpaul Bhatia, CEO of Axiom, on the business of space travel and the company’s role in an upcoming launch of a data server to the International Space Station
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business finance and tech
(00:23):
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with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 2 (00:34):
Remember this number, four hundred and thirty three million, three
hundred and twenty three thousand. That's how many shares of
common stock. It represents nine point nine percent of the
fully diluted common shares in Intel that the government will
receive because of eight point eight seven billion dollars in
funding under the Chips and Sciences Act. This according to
(00:56):
people familiar with the terms of the deal, what we're
talking about is the US taking it close to ten
percent steak in Intel, clinching an unorthodox deal.
Speaker 3 (01:05):
We've got with us.
Speaker 2 (01:06):
Joe Dough, he covers economic statecraft for Bloomberg News. He
joins us here in the Bloomberg Interactive Brokers studio. So
we knew about the possibility of a deal for more
than the last week thanks to the reporting. Yeah by
you and the entire team at Bloomberg News who's been
all over this story. What are the details that we've
just now learned because it's official.
Speaker 4 (01:24):
Yeah, it's official. I mean people familiar with the terms
have said, it's this, this nearly ten percent stake. It's
a nine point nine percent steak at what is they
eight eight point nine billion dollars? So what that tells
us is they they're doing what Howard Lutnik earlier this
(01:44):
week confirmed from our reporting last week, and the president
today said, hey, it's a ten percent steak.
Speaker 3 (01:51):
But like.
Speaker 4 (01:53):
We point out in our story, one of the things
that analysts and experts around Intel say is like an
equity steak on its own, like doesn't do a lot
to move the needle for the company. You need customers,
you need partners. I think that's really where the interesting
part of the story is to me, And.
Speaker 5 (02:12):
I'm curious, you know, how influential is this. Of course
we know that this is a non voting stake that
they're going to be having. How big of an influence
would this be toward the company?
Speaker 4 (02:22):
So I think, you know, this is kind of just
talking to people around this space, right is like, well,
suddenly if you're a company with the government having a
stake in your company, the questions you ask if you
don't have them on as a board member is like
one person said, you got to start getting used to
having Elizabeth Warren calling you every day. And I think
(02:44):
that kind of encapsulates like like where you now have
the United States federal government as a partner, as an
equity partner, as a stakeholder. That means Donald Trump could
at any point just speak off the cuff about your company,
whether good or bad. Uh, And you're just going to
have a lot like there's there's going to be You're
(03:07):
going to be a target, There's going to be some
return that you want, right.
Speaker 6 (03:12):
And I think that is.
Speaker 4 (03:13):
Both maybe a problem but also one of the things
we're going out in our story, like it could be
good that the that intel has the thumb of the
president kind of over them to try and move ahead.
Speaker 2 (03:25):
Maybe maybe who knows we have this is a new
era for capitalism. It's totally the US as you've spoken about, Joe,
I wanted to ask about the structure of this and
the relationship with Chips and Sciences Act money. The President
has been outspoken for his regarding the disdain that he
has for the Ships and Sciences Act, which of course
(03:46):
was approved by Congress during and sign into law by
the President. I'm sorry, by President Biden. Yeah, the last president.
Is that the remaining Ships and Sciences Fund Act money
that Intel was supposed to be awarded, is that what
represents the stake.
Speaker 4 (04:02):
Yeah, I think most of that.
Speaker 2 (04:04):
No new money is coming from the US government to Intel.
Speaker 6 (04:08):
As we understand it.
Speaker 4 (04:09):
I mean, the details were that it's the remaining money
that they had been promised for the Chips Act, and
it was in the form of grants, is now going
to be converted to an equity stake. And I think
you're asking the right question, which is, well, you still
need capital. Right Like, they have this massive plant that
(04:29):
they have in Ohio that they've been building and a
significant amount of that money that in grants was being
put towards the building and this facility. And as one
person said to me earlier this week, was okay, great,
so you take an equity stake. Where's the other money
going to come from? If you do want this company growing,
that means they're going to have to be building and
(04:49):
they're going to need the capital to do that.
Speaker 6 (04:52):
So that.
Speaker 4 (04:53):
I mean, I don't know like that, we can't really speculate, right,
Like what we know now is the equity stake is happening,
and beyond that, there's really not a lot of detail, Like,
you know, what does the president want?
Speaker 2 (05:07):
You know what is he wants skin in the It
sounds like he wants skin in the game.
Speaker 4 (05:11):
Yeah, and and and what else? I mean the point
is you see them as a bit of a national champion.
You see them as central to national security for the
United States of America, central to economic prosperity, all these things, right,
But like the point of the game once you get
there is like catapulting this company ahead. It's flagged behind
(05:31):
competitors for years now. I mean, Matt Boyle, you're gonna
hear later he and I were talking about this earlier,
Like when's when's the last time the average person was
actually talking about Intel. This is a company that has
fallen behind competitors, and it does need partners to help
lift it up.
Speaker 5 (05:47):
So well, until it's not the only US base based
chip manufacturer, it is the only US headquarter company with
the leading edge in terms of manufacturing. So yeah, how
does this kind of all come into play? How is
this intergrale for the administration's mission to keep manufacturing here
in the United States?
Speaker 6 (06:05):
Yeah?
Speaker 4 (06:05):
I think you know. Listen, Donald Trump is a big
fan of the industrial economy, right He manufacturing has been
at the top of his list since the first term.
I mean all he did was talking about steel and
steel tariffs during his campaign in twenty sixteen. I think
he believes, on the one hand, yes, let's boost the
(06:26):
domestic capacity for production of chips here, but he also understands,
you know, this chip manufacturer in particular is important for
the AI battle that's going on. You do need Intel
with Nvidia and AMD, they can't just disappear. I mean,
you can talk to anybody in this space and say
(06:46):
is Intel too big to fail? And every single one
of them says yes.
Speaker 2 (06:50):
Jodo, You've been so generous with your time. The reporting
from you and the team has been fantastic. Have a
great weekend you too. Maybe we will not see you
in the next thirty minutes. We never know, Jodo. He's
a Bloomberg News Economic statecraft reporter. Stay with us more
from Bloomberg Business Week Daily coming up after this.
Speaker 1 (07:12):
You're listening to the Bloomberg Business Week daily podcast. Catch
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Listen on Applecarplay and Android Auto with the Bloomberg Business app,
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Speaker 2 (07:28):
Stocks surging after the Fed chair struck a more dubbish
tone than many expected during this highly anticipated final speech
at Jackson Hall. The vegli Are covered a lot in there,
during which treasuries rallied and the dollar tumbled too. He
addressed the dual mandate, the effect of tariffs, and emphasized
the committee's quote data driven approach.
Speaker 7 (07:48):
While the labor market appears to be in balance, it
is a curious kind of balance. This unusual situation suggests
that downside risks to employment are rising at the same
time GDP growth has slowed. Notablyffects of tariffs on consumer
prices are now clearly visible. We expect those effects to
accumulate overcoming months. With high uncertainty, a reasonable base case
(08:09):
is that the effects will be relatively short lived. It's
also possible, however, that the upward pressure on prices from
tariffs could spur a more lasting inflation dynamic. The baseline
outlook and the shifting balance of risks may warrant adjusting
our policy stance. FOMC members will make these decisions based
solely on their assessment of the data and its implications
(08:30):
for the economic outlook and the balance of risks.
Speaker 6 (08:33):
We will never deviate from that approach.
Speaker 3 (08:36):
At ved J. J.
Speaker 2 (08:37):
Powell in Jackson Hall earlier today, I want to bring
in Michael McKee, international economics and policy correspondent for Bloomberg
TV and Radio. He's on the ground in Jackson, Wyoming,
also with us here in the Bloomberg Interactive Broker studio
with Stuart Paul. He's US and Canada economist for Bloomberg Economics. Mike,
I want to start with you. As I mentioned, he
covered a lot of ground, and certainly we're seeing traders
(08:58):
happy with what they are heard. But beyond the idea
of a potential rate cut in September. Apart from that,
what was the biggest news your biggest takeaway from this
final Jackson Hole speech?
Speaker 8 (09:14):
I think anybody I'll also it's hard to get beyond that.
The next thing he did was outline the new framework,
which may be reassuring to people because they basically abandoned
the idea of making the labor market the primary determinant
of what their monetary policy is going to be that
was the old framework. They hadn't actually followed that since
(09:35):
we saw the pandemic disrupt everybody's economy, including the inflation levels.
So that was the second biggest thing for him there.
But the surprise was certainly that he was as dubvish
as he was and opened the door to a rate cut,
because most people coming into this, including the Fed folks
(09:56):
that I talked to, thought he would try to keep
his options open because we don't know what's going to
happen with the unemployment report coming up on September fifteenth
and the CPI report on September eleventh.
Speaker 2 (10:07):
Did he give you any insight in that speech as
to the evidence that he cited as to why he
does have that door.
Speaker 3 (10:13):
Opened for a twenty five basis point rate cut in September.
Speaker 8 (10:20):
We basically he addressed the tension between the two sides
of the Fed's mandate. On the employment side, what he
was saying is that because we are concerned about whether
companies are going to have to absorb a lot of
tariff hit, and because companies are nervous about the overall economy,
we could see unemployment start to rise He called it
(10:42):
a kind of unusual situation where you have a lot
of companies have stopped hiring, but you also have companies
not firing people, and they might be poised to fire people.
That could happen fairly rapidly, and the FED wants to
get ahead of that. At the same time, they have
to worry about inflation. But because the President has stretched
out the application of tariffs, because they're different for so
(11:05):
many different countries, because more are yet to come, it
is likely that the tariffs will hit individual sectors at
different time periods, and they will be sort of rolling
across the economy, but each one will be a one
time price increase, as Chris Waller, the FED governor, suggested,
what happen, and so they will have more time to
(11:28):
react to inflation than they might to the jobs numbers.
And that's why they're now looking at the labor market
as perhaps the trigger to this rate cut in September.
Speaker 5 (11:40):
I also wanted to talk to Stewart bring you into
this conversation here. Of course, we now know that a
lot of traders are pricing in the September rate cup
cut next month, and of course it's a conversation about
whether it's going to be a hawkish or dubbish cut here,
but how are you thinking about the economy during this
time period and how aggressive potentially the rate cut cadence
could be moving forward.
Speaker 9 (12:00):
I think that the Ray coun cadence is going to
be actually relatively slow. I think that we're going to
see something more along the lines of a hawkish cut
if we get one in September. There's still a lot
of data that we need to see before then. As
Mike was saying, a lot of the members of the
FOMC that he's been talking to in Jackson Hole, people
like Susan Collins from Boston, people like Austin Gouldsby, people
(12:21):
like Beth Hammock from Cleveland, they've all been actually a
little bit more hawkish regarding the current economic landscape than
we heard from Chairman Powell today. Now, Chairman Pell did
acknowledge that the labor market is becoming a bit more
of a concern than the inflation outlook, but he also
pointed to the point that growth has merely slowed. It's
(12:43):
not as though there's a certain amount of urgency right
now that we need to see, and so I don't
expect that we're going to get something like sequential cuts.
I think we'll probably get a twenty five basis point
cut if anything, in September, and maybe that's it for
the year.
Speaker 2 (12:57):
Stuart, which part of the duel mandate do you think
the Fed should be more cocerned about right now?
Speaker 10 (13:01):
I think the labor market is by far.
Speaker 3 (13:02):
Do you think they are more concerned about that.
Speaker 9 (13:05):
I think that right now they are favoring the inflation
side of the mandate.
Speaker 10 (13:10):
I would be a little.
Speaker 9 (13:11):
Bit more concerned about the labor market because again this
Chairman Pell did note the pace of hiring over the
last three months has slowed to an average pace of
about thirty five thousand jobs added. That's down from about
one hundred and sixty eight thousand jobs added last year.
As Mike pointed to, if we start seeing even just
incremental layoffs, the pace at which unemployment will accelerate is
(13:34):
going to be pretty rapid.
Speaker 5 (13:35):
So, Stuart, of course, we know that Powell tends to
really avoid anything that would represent him leaning toward commenting
on fiscal policy. He only focuses particularly on the economic impact.
I want to know here, how are we thinking about
tariffs though? In this situation and how it's affective the
economy and how the FED will really have to wiggle
through and figure out how to address these concerns.
Speaker 2 (13:55):
Because we got the Canada News absolutely today and you're
also uscon you're also canadianymous to yes.
Speaker 9 (14:01):
Yeah, So from the US perspective, we'll start there, because
we are thinking most about the FED on this Friday.
An average effective tariprate of about seventeen percent adds about
one and a half percentage points to core inflation.
Speaker 10 (14:16):
Over the period, over about.
Speaker 9 (14:18):
An eighteen to twenty four month period, and it also
creates drag on growth real drag of about.
Speaker 10 (14:24):
Two percentage points.
Speaker 9 (14:26):
And so from the US perspective, it just amplifies the
risk to both sides of the Fed's dual mandate. With
unemployment low, that's allowed the FED to remain on hold
favoring inflation for now, but again, labor market has the
potential to cool. Canada, as we saw, has been suffering
from the consequences of the trade war that's really been
(14:47):
amplified in the second quarter, and we're going to see
just how much of a toll the trade war has
taken on Canada next Friday, when we get their Q
two GDP numbers. I expect to see a modest contraction now.
Prime Minister Mark Karney announced that he'd be rolling back
some of the retaliatory tariffs that Canada has imposed in
response to US US tariffs on Canadian goods. The reality is, though,
(15:12):
that the effective tariff rate on Canada is just about
seven percent. Canada has avoided most of the muscular tariffs
imposed by President Trump, and unfortunately for Prime Minister Carney,
the fact that he's willing to reduce some of his
retaliatory tariffs isn't going to do much of the trick
(15:32):
in the short run. Negotiations are going to continue well
into twenty twenty six with the USMCA renegotiation.
Speaker 2 (15:39):
All Right, can I have to leave it there, guys,
Thank you so much to both of you for joining us.
Stuart paul Us and Canada economists for Bloomberg Economics here
in the studio. Michael McKee on the ground in Jackson
at Wyoming. He's International economics and policy correspondent for Bloomberg
TV and Radio.
Speaker 3 (15:56):
Stay with us.
Speaker 2 (15:56):
More from Bloomberg BusinessWeek Daily coming up after this.
Speaker 1 (16:04):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 5 (16:24):
This, of course, is a day where we were really
focused on the Federal Reserve at Jackson Hole in Wyoming.
Today we had the Fed Chair Jerome Powell speaking today,
and of course it really did elevate markets in terms
of how he essentially suggested that, you know, maybe there
could be a future in which the rest of this
year we could see traders were really pricing in a
rate cut for September. Here, but we have the perfect
(16:46):
person to break all of this down, and that's Emily Green,
head of private wealth Management at Elavest, and we really
want to chat with you a bit about what your
view is on the market right now. How are you
receiving this commentary from Jerome Powell?
Speaker 11 (17:00):
Yeah, No, I think it's really interesting because you saw
earlier this week the market had been thinking that we're
going to have a rate cut in September, and then
you know, we saw a rougher market week with inflation
data and people starting to think that maybe it was
becoming more unlikely that that was going to happen, and
Powell's comments really indicated that likely moving to a rate
(17:23):
cut in September. You know, I think it's really interesting
thinking about where the job market is in inflation and
taking that into account that the FED certainly doesn't have
an easy path ahead of them, and thinking about this
and you know, looking at what that means in terms
of the economy. I think we're really lucky that we
(17:43):
still have room to lower rates at this point when
we think about where you know that when we need
stimulus into the economy, that the FED actually has that
tool that we had raised rates a couple of years
ago to get to this point. Even though we're a
point lower than we were a year ago, there's still
the Fed still is a lot of room to.
Speaker 6 (18:01):
Do that work.
Speaker 2 (18:02):
Yeah, And I think one thing that we make sure
isn't lost in the conversation today is about why the
Fed could or would potentially lower rates, And you know
that is not necessarily the reason that the President wants
rates to be lower, the reason why he says rates
should be lower. Can you talk a little bit about
that tension with the dual mandate and what the FED
chair is seeing when it comes to some crack starting
(18:24):
to form.
Speaker 11 (18:26):
Yeah, I think it's really interesting. You're looking at a
weaker job market out there. I think we've started to
see that. I personally started to see it with working
with our clients and such. What we're starting to see
a weaker job market. At the same time, you are
starting to see some pressure in inflation. We started to
see consumer data pricing in slightly higher prices. You're starting
(18:46):
to see you're looking at annual inflation rate in July
at two point seven percent. You have to manage these
two things across this and so you really start to
worry about those unemployment numbers. And you look at there's
a slowing in both supply and demand for workers. So
what does that mean for our labor market going forward?
And the FED really needs to think about that and
(19:09):
really managing that. And so I don't think that they'll
have more aggressive rate hikes or rate rate cuts that
the President wants within here. I also think it's really important,
like one of the things that Powell did talk about
is the Fed's independence, and one thing that I don't
think that the administration totally appreciates within here is that
(19:30):
the Fed's independence is so important to where rates are
within here, and as soon as it seems like we're
losing that independence, you're going to have. It doesn't matter
if the FED starts lowering rates. If the market is
going to say the Fed is no longer independent, you
are going to see rates actually go up within there.
And so you forget like there's all these different market
(19:51):
things because that creates risk within the economy. And so
as much as you know the administration is pushing, pushing,
pushing Powell and to cut rates anything, it's right for
him to start to think about where the labor market
is and starting to do a cut in September. But
I do think that, you know, we really need to
be making sure that we're looking at this a completely
(20:11):
independent way. You know, we're continuing to see Trump put
pressure on the Fed even this week within here, and
so I think that him kind of calmbing the markets
through that was an important part of the commentary that
has not been talked about as much today.
Speaker 5 (20:26):
Great, I mean, that's definitely been something that has been
in focus in addition to all that's going on in
Jackson Hole as you mentioned the pressure that's being placed
on j Powell, but additionally Lisa Cook has of course
been under a microscope to say the least as of late.
But I want to know, there's a lot of things
going on right now, lots of uncertainty in certain places
in the market. You're focused on private wealth management, How
(20:47):
are you advising your clients during this time period? How
should they be investing, both over the near term and
long term.
Speaker 11 (20:53):
Yeah, I think it depends on the client within here.
You know what l of us we have clients of
all different ages and you know, from high network it's
to ultra networth individuals. And I think for those investors
who are long term investors, you know, it's really thinking
about that asset allocation, making sure that you have the
right portfolio put together, but being smart about what's going
on right now. I think the people who are going
(21:15):
to have the toughest time or people who just retired,
because one of the things that we have to remember
is that if inflation starts to tick up, fixed income
the bond market is actually becomes more correlated in those times,
it becomes less of that less of that debt, like
the the on the bottom that's really helping people out here,
(21:36):
and so it's not going to dampen that volatility as much.
It starts to be more correlated to the stock market
as inflation goes up. We've seen that in all the
downturn since twenty twenty within here, and so that is,
you know, you have all these people who maybe are
out of work and neat income from their portfolio, maybe
have taken a lesser paying job or maybe retired over
the past couple of years, and are really thinking about,
(21:59):
I need my portfolio grow, I need the income off
my portfolio. And that's where I think it's more difficult
to think about. It's like people who need things in
the near term. And I do think that there's a
lot of opportunity within the market today. You know, I
continue to see that there's what what happens when fixed
income is not the only thing that can diversify from
from stocks, and you really have to look at the
(22:20):
alternative investment space, and you know, you look at what's
a good what's good during times like this, and you
look at you know, real assets within here, and so
there's there's a lot of things to think about. But
I think making sure that someone has a well diversified
portfolio during times like this, and really just thinking about,
you know, we still have an enormous concentration, Like if
you buy an ETF today, you still have an enormous
(22:42):
concentration in the meg seven And so what does that
mean for you? What does that mean for your risk
in depending on the person, Like does that make sense
for you over the long term that thirty plus percent
of the index is in seven stocks within there, and
so really making sure that you have that versification across
your portfolio. And you're thinking about if you need income
(23:04):
in the short term, how are you going to make
that and how are you going to dampen that volatility,
knowing that fixed income may not be the best dampener
of that volatility over the next year.
Speaker 2 (23:14):
Hey, we got to have you back on the program
because we didn't really get to talk about the Great
Wealth Transfer, which I know you watch very closely, multi
family housing and more. But really do appreciate you taking
the time, Emily and joining us. That's Emily Green, head
of private wealth management over at Elves.
Speaker 3 (23:31):
Stay with us.
Speaker 2 (23:32):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (23:39):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (23:54):
I want to go to space now because there's some
news this week in the world of space. Boeing's X
thirty seven space plane, which the company describes as a
quote orbital test vehicle, last night blasted off on a
SpaceX Falcon nine from Kennedy's Space Center in Florida. It's
the eighth mission for the reasonable spacecraft. Jess bal Batia
is back with us. He watches all of those launches closely.
(24:16):
He's CEO over at Axiom Space. It provides mission services
and it's also working to build the next space station.
Tesch Paul, welcome back. I want to start with the
upcoming orbital Data Center launch. This is something do we
know when that the Do we have a date for
that yet?
Speaker 3 (24:32):
Yeah?
Speaker 12 (24:32):
Well, first, thank you for having me back, And second
I like that you said you want to go to space.
Speaker 6 (24:37):
Oh you started. I was like, I'll go with the season.
Would I know a guy who sends people?
Speaker 3 (24:42):
Yeah?
Speaker 12 (24:42):
I would go on to a heartbeat.
Speaker 6 (24:43):
Why haven't you been you know, for the last four years.
Speaker 12 (24:46):
At Axiom, in the last four months as CEO. You know,
it's been my dream since I was like three years old.
When I say dream, it's all I've been thinking about.
And as we as a company am now sending multiple countries,
multiple missions, sixteen astronauts to the ISS, and I figure
ab out how to go, I realized that my purpose
is much more about getting as many people up as
we possibly can, because I am certain that we will
(25:07):
have many opportunities to go.
Speaker 3 (25:08):
So do you think you will in your life now?
Speaker 8 (25:10):
Yeah?
Speaker 3 (25:10):
For sure? And how many years.
Speaker 12 (25:14):
You know, possibly this decade, definitely next decade, Okay, yeah, okay,
Before before that, though, data set.
Speaker 2 (25:23):
Can you explain what exactly this is because we talk
a lot about data centers here, but we never talk
about them in the orbital context.
Speaker 12 (25:31):
Yes, exactly. So it's interesting, like I'm smiling now because
I was thinking about going to space. You know, while
my first passion has always been space, actually the one
thing I'm probably another expert on in the world is cloud.
You know, my before getting the space had my own startups.
I worked at ESPN in the early days of HD streaming,
and I was at Google on the startup side while
(25:53):
we were ramping up Google Cloud, and as we know
on the terrestrial side, cloud is a phenomenal business right,
it's phenomenal business model. The markets growing faster than the
largest cloud providers combined. We believe space is going to
be exactly the same thing from a business model standpoint.
But then the question is why send a data center
up there when we have so many down here. And
(26:14):
the first thing I would say is, think of it
this way when we're talking about orbital data centers. And
we've been running cloud computing on the International Space Station
AXIOM Space along with Amazon since our axe edge compute
exactly and on every single mission we've done significant compute
on it, and between missions we've done workloads from the ground.
On the AX four mission, we sent up an or
(26:35):
ring that was checking the biometrics of the astronauts. I'm
gonna go, oh yeah, you give me the finger.
Speaker 6 (26:42):
I love it. I got it.
Speaker 12 (26:45):
I got it the first day I took the CEO role,
and I got it to track my stress.
Speaker 5 (26:49):
So it wasn't it was bestowed upon you.
Speaker 6 (26:53):
Sort of, Okay.
Speaker 12 (26:53):
I think I think the metric that I care the
most about is sleep. That's the one I track in
terms of my performance. But we were measuring all these
things on the X four mission and feeding it to
the snow cone on ISS, so actually using edge compute
cloud compute in space versus on the ground. But the
point here is when you think about orbital data centers
in the ISS, don't think of them as so far away.
(27:14):
It's literally two hundred fifty miles away.
Speaker 5 (27:16):
So how much power does it take?
Speaker 6 (27:18):
A lot?
Speaker 12 (27:19):
A lot? So it's the same a lot. It's the
same problem that we're going to have here on Earth.
Which is also interesting to me now with AI that
the limiting factor is power. And you're seeing this growth
for nuclear startups, and you're seeing this growth for AI
data centers needing nuclear power. When we're talking about space,
that's going to be the limiting factors.
Speaker 3 (27:40):
So is that the answer? Nuclear?
Speaker 6 (27:41):
Small modular reactors power? Think So it's a little Is there.
Speaker 3 (27:44):
Any other way to do it? Could you do it
with solar?
Speaker 6 (27:46):
You could?
Speaker 12 (27:46):
But at some point those are going to get so
big to give the power we need. And a lot
of people will say, and I'm not speaking as a
scientist here because I said the wrong thing first, Also,
which is well, you don't have to worry.
Speaker 6 (27:58):
About cooling there, do you have?
Speaker 12 (28:01):
Convection is something that is you know, you have to
for all the power you create, you have to dissipate
it as well, so that the surface area is going
to get so large. So I think ultimately that will
be the same solution. But the point about the orbital
data centers is for many people on the Earth, not
like us here in New York or in Virginia or
DC or other cities, that will be the closest data
(28:21):
center to someone at any given time.
Speaker 5 (28:23):
So how concentrated is this space? How many players are
here alongside you all?
Speaker 12 (28:28):
So we as Axiom, we're building the replacement to the
International Space Station and our modules that will connect to
the ISS due to our exclusive contract to connect the
commercial those are cloud first. To keep human life going,
you need cloud computing services. Now we could fractionalize those
and offer those to other companies. We're actually sending up
(28:48):
separate infrastructure later this year. You had asked when Q
four in the next couple of months. But the point
of this network ours we call a heterogeneous network. A
module could be a data center, a satellite could be
a data center. When you look at other constellations, those
are homogeneous networks all the same, but the point is
they're connected by data. Some are all one network, some
(29:09):
are federated. But this is where we're going, you know,
in terms of where the space is. I think people
are finally starting to wake up. Just even the fact
that you're talking about orbital data center odcs as we
call them. Just six months ago and people wouldn't know
what you were talking about. The words are very obvious
at data center that's orbiting the Earth, But still it's
just kind of like why. But I think we've gone
(29:30):
well past that and now it's how.
Speaker 2 (29:32):
And when you said that, the potential use case here
is that some people who live around the world, this
might be the closest data center to them at any
given moment, one that does orbit. But there are latency
issues with that and speed of connectivity issues that I
would imagine are better handled on the ground by wireline connections.
Speaker 6 (29:54):
So I love that question.
Speaker 12 (29:56):
I would have had the same thing when my team
came to me, gave me all the reasons why we
should do this, And again, I'm a cloud not and
a space not. I was looking for solutions for that like,
this is the literal cloud. Yeah, this is literally literal
cloud above the clouds, right, like not data centers around here.
One of the most powerful use cases of orbital data
(30:18):
centers is low latency AI. So it actually solves the
AI the latency problem for many distance issues like cars
driving around in remote areas, navigation for maritime needs. Now
there's many cases of that for Earth. But now when
you just go a little bit above the atmosphere and
(30:39):
look at space edge computing on labs in space edge
computing for other satellites, where it gets really crazy and
awesome for me is what happens when latency actually becomes
a problem because of distance. So we have laser and
optical communication. I'm not worried about speed and bandwidth. I
am worried about power. But what happens when you're this
(31:00):
is so long that actually synchronizing the Internet is a problem.
Or when two planets are on opposite sides of the Sun,
you don't even have a line of side. How are
we going to synchronize Twitter? How are we going to
synchronize you toube? How are we going to FaceTime? I
think those are just such cool problems for students around
the world to solve.
Speaker 6 (31:16):
So super quickly.
Speaker 5 (31:18):
The ISS is set to retire by the end of
twenty thirty. How confident are you in that timeline and
what risks does Axiom face if NASA extends its life
longer than expected.
Speaker 12 (31:29):
Yeah, I'm pretty confident it will come down. It's already
been extended, right. Originally, I think the expiration date was
twenty twenty four, and Congress has stretched it out. It's
a piece of equipment, right, it was designed with a
certain lifespan. Some parts are newer than others, but the
whole thing was designed to come down as one. So
(31:50):
I think it's a given it will come down, like
when we'll see but I think by twenty thirty, I
feel very confident about it. I don't think there's any
risk if the government extends it. I think it's great
if they extend it. But independent of that, if there
isn't a commercial solution, if Axiom Space is not up
and running by the time it comes down, the only
(32:10):
other space station in operation is the Chinese station, right,
so that is a very real i'll say competitive threat,
strategic competitive threat, and from a diplomatic standpoint, the leadership
that the US has provided and now the leadership that
company is like axiom Space. The diplomatic interest we can
push for the US around the world with all the
different countries will basically just be seding that to the Chinese,
(32:33):
and I don't think that's what we want.
Speaker 2 (32:35):
Toys Botia, good to see you, Thanks for having me back.
One hundred Day is the CEO of axiom Space.
Speaker 1 (32:44):
This is the Bloomberg BusinessWeek Daily podcast, available on Apple, Spotify,
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(33:05):
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(00:23):
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with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 2 (00:34):
Remember this number, four hundred and thirty three million, three
hundred and twenty three thousand. That's how many shares of
common stock. It represents nine point nine percent of the
fully diluted common shares in Intel that the government will
receive because of eight point eight seven billion dollars in
funding under the Chips and Sciences Act. This according to
(00:56):
people familiar with the terms of the deal, what we're
talking about is the US taking it close to ten
percent steak in Intel, clinching an unorthodox deal.
Speaker 3 (01:05):
We've got with us.
Speaker 2 (01:06):
Joe Dough, he covers economic statecraft for Bloomberg News. He
joins us here in the Bloomberg Interactive Brokers studio. So
we knew about the possibility of a deal for more
than the last week thanks to the reporting. Yeah by
you and the entire team at Bloomberg News who's been
all over this story. What are the details that we've
just now learned because it's official.
Speaker 4 (01:24):
Yeah, it's official. I mean people familiar with the terms
have said, it's this, this nearly ten percent stake. It's
a nine point nine percent steak at what is they
eight eight point nine billion dollars? So what that tells
us is they they're doing what Howard Lutnik earlier this
(01:44):
week confirmed from our reporting last week, and the president
today said, hey, it's a ten percent steak.
Speaker 3 (01:51):
But like.
Speaker 4 (01:53):
We point out in our story, one of the things
that analysts and experts around Intel say is like an
equity steak on its own, like doesn't do a lot
to move the needle for the company. You need customers,
you need partners. I think that's really where the interesting
part of the story is to me, And.
Speaker 5 (02:12):
I'm curious, you know, how influential is this. Of course
we know that this is a non voting stake that
they're going to be having. How big of an influence
would this be toward the company?
Speaker 4 (02:22):
So I think, you know, this is kind of just
talking to people around this space, right is like, well,
suddenly if you're a company with the government having a
stake in your company, the questions you ask if you
don't have them on as a board member is like
one person said, you got to start getting used to
having Elizabeth Warren calling you every day. And I think
(02:44):
that kind of encapsulates like like where you now have
the United States federal government as a partner, as an
equity partner, as a stakeholder. That means Donald Trump could
at any point just speak off the cuff about your company,
whether good or bad. Uh, And you're just going to
have a lot like there's there's going to be You're
(03:07):
going to be a target, There's going to be some
return that you want, right.
Speaker 6 (03:12):
And I think that is.
Speaker 4 (03:13):
Both maybe a problem but also one of the things
we're going out in our story, like it could be
good that the that intel has the thumb of the
president kind of over them to try and move ahead.
Speaker 2 (03:25):
Maybe maybe who knows we have this is a new
era for capitalism. It's totally the US as you've spoken about, Joe,
I wanted to ask about the structure of this and
the relationship with Chips and Sciences Act money. The President
has been outspoken for his regarding the disdain that he
has for the Ships and Sciences Act, which of course
(03:46):
was approved by Congress during and sign into law by
the President. I'm sorry, by President Biden. Yeah, the last president.
Is that the remaining Ships and Sciences Fund Act money
that Intel was supposed to be awarded, is that what
represents the stake.
Speaker 4 (04:02):
Yeah, I think most of that.
Speaker 2 (04:04):
No new money is coming from the US government to Intel.
Speaker 6 (04:08):
As we understand it.
Speaker 4 (04:09):
I mean, the details were that it's the remaining money
that they had been promised for the Chips Act, and
it was in the form of grants, is now going
to be converted to an equity stake. And I think
you're asking the right question, which is, well, you still
need capital. Right Like, they have this massive plant that
(04:29):
they have in Ohio that they've been building and a
significant amount of that money that in grants was being
put towards the building and this facility. And as one
person said to me earlier this week, was okay, great,
so you take an equity stake. Where's the other money
going to come from? If you do want this company growing,
that means they're going to have to be building and
(04:49):
they're going to need the capital to do that.
Speaker 6 (04:52):
So that.
Speaker 4 (04:53):
I mean, I don't know like that, we can't really speculate, right,
Like what we know now is the equity stake is happening,
and beyond that, there's really not a lot of detail, Like,
you know, what does the president want?
Speaker 2 (05:07):
You know what is he wants skin in the It
sounds like he wants skin in the game.
Speaker 4 (05:11):
Yeah, and and and what else? I mean the point
is you see them as a bit of a national champion.
You see them as central to national security for the
United States of America, central to economic prosperity, all these things, right,
But like the point of the game once you get
there is like catapulting this company ahead. It's flagged behind
(05:31):
competitors for years now. I mean, Matt Boyle, you're gonna
hear later he and I were talking about this earlier,
Like when's when's the last time the average person was
actually talking about Intel. This is a company that has
fallen behind competitors, and it does need partners to help
lift it up.
Speaker 5 (05:47):
So well, until it's not the only US base based
chip manufacturer, it is the only US headquarter company with
the leading edge in terms of manufacturing. So yeah, how
does this kind of all come into play? How is
this intergrale for the administration's mission to keep manufacturing here
in the United States?
Speaker 6 (06:05):
Yeah?
Speaker 4 (06:05):
I think you know. Listen, Donald Trump is a big
fan of the industrial economy, right He manufacturing has been
at the top of his list since the first term.
I mean all he did was talking about steel and
steel tariffs during his campaign in twenty sixteen. I think
he believes, on the one hand, yes, let's boost the
(06:26):
domestic capacity for production of chips here, but he also understands,
you know, this chip manufacturer in particular is important for
the AI battle that's going on. You do need Intel
with Nvidia and AMD, they can't just disappear. I mean,
you can talk to anybody in this space and say
(06:46):
is Intel too big to fail? And every single one
of them says yes.
Speaker 2 (06:50):
Jodo, You've been so generous with your time. The reporting
from you and the team has been fantastic. Have a
great weekend you too. Maybe we will not see you
in the next thirty minutes. We never know, Jodo. He's
a Bloomberg News Economic statecraft reporter. Stay with us more
from Bloomberg Business Week Daily coming up after this.
Speaker 1 (07:12):
You're listening to the Bloomberg Business Week daily podcast. Catch
US live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch US live on YouTube.
Speaker 2 (07:28):
Stocks surging after the Fed chair struck a more dubbish
tone than many expected during this highly anticipated final speech
at Jackson Hall. The vegli Are covered a lot in there,
during which treasuries rallied and the dollar tumbled too. He
addressed the dual mandate, the effect of tariffs, and emphasized
the committee's quote data driven approach.
Speaker 7 (07:48):
While the labor market appears to be in balance, it
is a curious kind of balance. This unusual situation suggests
that downside risks to employment are rising at the same
time GDP growth has slowed. Notablyffects of tariffs on consumer
prices are now clearly visible. We expect those effects to
accumulate overcoming months. With high uncertainty, a reasonable base case
(08:09):
is that the effects will be relatively short lived. It's
also possible, however, that the upward pressure on prices from
tariffs could spur a more lasting inflation dynamic. The baseline
outlook and the shifting balance of risks may warrant adjusting
our policy stance. FOMC members will make these decisions based
solely on their assessment of the data and its implications
(08:30):
for the economic outlook and the balance of risks.
Speaker 6 (08:33):
We will never deviate from that approach.
Speaker 3 (08:36):
At ved J. J.
Speaker 2 (08:37):
Powell in Jackson Hall earlier today, I want to bring
in Michael McKee, international economics and policy correspondent for Bloomberg
TV and Radio. He's on the ground in Jackson, Wyoming,
also with us here in the Bloomberg Interactive Broker studio
with Stuart Paul. He's US and Canada economist for Bloomberg Economics. Mike,
I want to start with you. As I mentioned, he
covered a lot of ground, and certainly we're seeing traders
(08:58):
happy with what they are heard. But beyond the idea
of a potential rate cut in September. Apart from that,
what was the biggest news your biggest takeaway from this
final Jackson Hole speech?
Speaker 8 (09:14):
I think anybody I'll also it's hard to get beyond that.
The next thing he did was outline the new framework,
which may be reassuring to people because they basically abandoned
the idea of making the labor market the primary determinant
of what their monetary policy is going to be that
was the old framework. They hadn't actually followed that since
(09:35):
we saw the pandemic disrupt everybody's economy, including the inflation levels.
So that was the second biggest thing for him there.
But the surprise was certainly that he was as dubvish
as he was and opened the door to a rate cut,
because most people coming into this, including the Fed folks
(09:56):
that I talked to, thought he would try to keep
his options open because we don't know what's going to
happen with the unemployment report coming up on September fifteenth
and the CPI report on September eleventh.
Speaker 2 (10:07):
Did he give you any insight in that speech as
to the evidence that he cited as to why he
does have that door.
Speaker 3 (10:13):
Opened for a twenty five basis point rate cut in September.
Speaker 8 (10:20):
We basically he addressed the tension between the two sides
of the Fed's mandate. On the employment side, what he
was saying is that because we are concerned about whether
companies are going to have to absorb a lot of
tariff hit, and because companies are nervous about the overall economy,
we could see unemployment start to rise He called it
(10:42):
a kind of unusual situation where you have a lot
of companies have stopped hiring, but you also have companies
not firing people, and they might be poised to fire people.
That could happen fairly rapidly, and the FED wants to
get ahead of that. At the same time, they have
to worry about inflation. But because the President has stretched
out the application of tariffs, because they're different for so
(11:05):
many different countries, because more are yet to come, it
is likely that the tariffs will hit individual sectors at
different time periods, and they will be sort of rolling
across the economy, but each one will be a one
time price increase, as Chris Waller, the FED governor, suggested,
what happen, and so they will have more time to
(11:28):
react to inflation than they might to the jobs numbers.
And that's why they're now looking at the labor market
as perhaps the trigger to this rate cut in September.
Speaker 5 (11:40):
I also wanted to talk to Stewart bring you into
this conversation here. Of course, we now know that a
lot of traders are pricing in the September rate cup
cut next month, and of course it's a conversation about
whether it's going to be a hawkish or dubbish cut here,
but how are you thinking about the economy during this
time period and how aggressive potentially the rate cut cadence
could be moving forward.
Speaker 9 (12:00):
I think that the Ray coun cadence is going to
be actually relatively slow. I think that we're going to
see something more along the lines of a hawkish cut
if we get one in September. There's still a lot
of data that we need to see before then. As
Mike was saying, a lot of the members of the
FOMC that he's been talking to in Jackson Hole, people
like Susan Collins from Boston, people like Austin Gouldsby, people
(12:21):
like Beth Hammock from Cleveland, they've all been actually a
little bit more hawkish regarding the current economic landscape than
we heard from Chairman Powell today. Now, Chairman Pell did
acknowledge that the labor market is becoming a bit more
of a concern than the inflation outlook, but he also
pointed to the point that growth has merely slowed. It's
(12:43):
not as though there's a certain amount of urgency right
now that we need to see, and so I don't
expect that we're going to get something like sequential cuts.
I think we'll probably get a twenty five basis point
cut if anything, in September, and maybe that's it for
the year.
Speaker 2 (12:57):
Stuart, which part of the duel mandate do you think
the Fed should be more cocerned about right now?
Speaker 10 (13:01):
I think the labor market is by far.
Speaker 3 (13:02):
Do you think they are more concerned about that.
Speaker 9 (13:05):
I think that right now they are favoring the inflation
side of the mandate.
Speaker 10 (13:10):
I would be a little.
Speaker 9 (13:11):
Bit more concerned about the labor market because again this
Chairman Pell did note the pace of hiring over the
last three months has slowed to an average pace of
about thirty five thousand jobs added. That's down from about
one hundred and sixty eight thousand jobs added last year.
As Mike pointed to, if we start seeing even just
incremental layoffs, the pace at which unemployment will accelerate is
(13:34):
going to be pretty rapid.
Speaker 5 (13:35):
So, Stuart, of course, we know that Powell tends to
really avoid anything that would represent him leaning toward commenting
on fiscal policy. He only focuses particularly on the economic impact.
I want to know here, how are we thinking about
tariffs though? In this situation and how it's affective the
economy and how the FED will really have to wiggle
through and figure out how to address these concerns.
Speaker 2 (13:55):
Because we got the Canada News absolutely today and you're
also uscon you're also canadianymous to yes.
Speaker 9 (14:01):
Yeah, So from the US perspective, we'll start there, because
we are thinking most about the FED on this Friday.
An average effective tariprate of about seventeen percent adds about
one and a half percentage points to core inflation.
Speaker 10 (14:16):
Over the period, over about.
Speaker 9 (14:18):
An eighteen to twenty four month period, and it also
creates drag on growth real drag of about.
Speaker 10 (14:24):
Two percentage points.
Speaker 9 (14:26):
And so from the US perspective, it just amplifies the
risk to both sides of the Fed's dual mandate. With
unemployment low, that's allowed the FED to remain on hold
favoring inflation for now, but again, labor market has the
potential to cool. Canada, as we saw, has been suffering
from the consequences of the trade war that's really been
(14:47):
amplified in the second quarter, and we're going to see
just how much of a toll the trade war has
taken on Canada next Friday, when we get their Q
two GDP numbers. I expect to see a modest contraction now.
Prime Minister Mark Karney announced that he'd be rolling back
some of the retaliatory tariffs that Canada has imposed in
response to US US tariffs on Canadian goods. The reality is, though,
(15:12):
that the effective tariff rate on Canada is just about
seven percent. Canada has avoided most of the muscular tariffs
imposed by President Trump, and unfortunately for Prime Minister Carney,
the fact that he's willing to reduce some of his
retaliatory tariffs isn't going to do much of the trick
(15:32):
in the short run. Negotiations are going to continue well
into twenty twenty six with the USMCA renegotiation.
Speaker 2 (15:39):
All Right, can I have to leave it there, guys,
Thank you so much to both of you for joining us.
Stuart paul Us and Canada economists for Bloomberg Economics here
in the studio. Michael McKee on the ground in Jackson
at Wyoming. He's International economics and policy correspondent for Bloomberg
TV and Radio.
Speaker 3 (15:56):
Stay with us.
Speaker 2 (15:56):
More from Bloomberg BusinessWeek Daily coming up after this.
Speaker 1 (16:04):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple Cocklay
and Android Auto with the Bloomberg Business app. You can
also listen live on Amazon Alexa from our flagship New
York station. Just say Alexa, Play Bloomberg eleven thirty.
Speaker 5 (16:24):
This, of course, is a day where we were really
focused on the Federal Reserve at Jackson Hole in Wyoming.
Today we had the Fed Chair Jerome Powell speaking today,
and of course it really did elevate markets in terms
of how he essentially suggested that, you know, maybe there
could be a future in which the rest of this
year we could see traders were really pricing in a
rate cut for September. Here, but we have the perfect
(16:46):
person to break all of this down, and that's Emily Green,
head of private wealth Management at Elavest, and we really
want to chat with you a bit about what your
view is on the market right now. How are you
receiving this commentary from Jerome Powell?
Speaker 11 (17:00):
Yeah, No, I think it's really interesting because you saw
earlier this week the market had been thinking that we're
going to have a rate cut in September, and then
you know, we saw a rougher market week with inflation
data and people starting to think that maybe it was
becoming more unlikely that that was going to happen, and
Powell's comments really indicated that likely moving to a rate
(17:23):
cut in September. You know, I think it's really interesting
thinking about where the job market is in inflation and
taking that into account that the FED certainly doesn't have
an easy path ahead of them, and thinking about this
and you know, looking at what that means in terms
of the economy. I think we're really lucky that we
(17:43):
still have room to lower rates at this point when
we think about where you know that when we need
stimulus into the economy, that the FED actually has that
tool that we had raised rates a couple of years
ago to get to this point. Even though we're a
point lower than we were a year ago, there's still
the Fed still is a lot of room to.
Speaker 6 (18:01):
Do that work.
Speaker 2 (18:02):
Yeah, And I think one thing that we make sure
isn't lost in the conversation today is about why the
Fed could or would potentially lower rates, And you know
that is not necessarily the reason that the President wants
rates to be lower, the reason why he says rates
should be lower. Can you talk a little bit about
that tension with the dual mandate and what the FED
chair is seeing when it comes to some crack starting
(18:24):
to form.
Speaker 11 (18:26):
Yeah, I think it's really interesting. You're looking at a
weaker job market out there. I think we've started to
see that. I personally started to see it with working
with our clients and such. What we're starting to see
a weaker job market. At the same time, you are
starting to see some pressure in inflation. We started to
see consumer data pricing in slightly higher prices. You're starting
(18:46):
to see you're looking at annual inflation rate in July
at two point seven percent. You have to manage these
two things across this and so you really start to
worry about those unemployment numbers. And you look at there's
a slowing in both supply and demand for workers. So
what does that mean for our labor market going forward?
And the FED really needs to think about that and
(19:09):
really managing that. And so I don't think that they'll
have more aggressive rate hikes or rate rate cuts that
the President wants within here. I also think it's really important,
like one of the things that Powell did talk about
is the Fed's independence, and one thing that I don't
think that the administration totally appreciates within here is that
(19:30):
the Fed's independence is so important to where rates are
within here, and as soon as it seems like we're
losing that independence, you're going to have. It doesn't matter
if the FED starts lowering rates. If the market is
going to say the Fed is no longer independent, you
are going to see rates actually go up within there.
And so you forget like there's all these different market
(19:51):
things because that creates risk within the economy. And so
as much as you know the administration is pushing, pushing,
pushing Powell and to cut rates anything, it's right for
him to start to think about where the labor market
is and starting to do a cut in September. But
I do think that, you know, we really need to
be making sure that we're looking at this a completely
(20:11):
independent way. You know, we're continuing to see Trump put
pressure on the Fed even this week within here, and
so I think that him kind of calmbing the markets
through that was an important part of the commentary that
has not been talked about as much today.
Speaker 5 (20:26):
Great, I mean, that's definitely been something that has been
in focus in addition to all that's going on in
Jackson Hole as you mentioned the pressure that's being placed
on j Powell, but additionally Lisa Cook has of course
been under a microscope to say the least as of late.
But I want to know, there's a lot of things
going on right now, lots of uncertainty in certain places
in the market. You're focused on private wealth management, How
(20:47):
are you advising your clients during this time period? How
should they be investing, both over the near term and
long term.
Speaker 11 (20:53):
Yeah, I think it depends on the client within here.
You know what l of us we have clients of
all different ages and you know, from high network it's
to ultra networth individuals. And I think for those investors
who are long term investors, you know, it's really thinking
about that asset allocation, making sure that you have the
right portfolio put together, but being smart about what's going
on right now. I think the people who are going
(21:15):
to have the toughest time or people who just retired,
because one of the things that we have to remember
is that if inflation starts to tick up, fixed income
the bond market is actually becomes more correlated in those times,
it becomes less of that less of that debt, like
the the on the bottom that's really helping people out here,
(21:36):
and so it's not going to dampen that volatility as much.
It starts to be more correlated to the stock market
as inflation goes up. We've seen that in all the
downturn since twenty twenty within here, and so that is,
you know, you have all these people who maybe are
out of work and neat income from their portfolio, maybe
have taken a lesser paying job or maybe retired over
the past couple of years, and are really thinking about,
(21:59):
I need my portfolio grow, I need the income off
my portfolio. And that's where I think it's more difficult
to think about. It's like people who need things in
the near term. And I do think that there's a
lot of opportunity within the market today. You know, I
continue to see that there's what what happens when fixed
income is not the only thing that can diversify from
from stocks, and you really have to look at the
(22:20):
alternative investment space, and you know, you look at what's
a good what's good during times like this, and you
look at you know, real assets within here, and so
there's there's a lot of things to think about. But
I think making sure that someone has a well diversified
portfolio during times like this, and really just thinking about,
you know, we still have an enormous concentration, Like if
you buy an ETF today, you still have an enormous
(22:42):
concentration in the meg seven And so what does that
mean for you? What does that mean for your risk
in depending on the person, Like does that make sense
for you over the long term that thirty plus percent
of the index is in seven stocks within there, and
so really making sure that you have that versification across
your portfolio. And you're thinking about if you need income
(23:04):
in the short term, how are you going to make
that and how are you going to dampen that volatility,
knowing that fixed income may not be the best dampener
of that volatility over the next year.
Speaker 2 (23:14):
Hey, we got to have you back on the program
because we didn't really get to talk about the Great
Wealth Transfer, which I know you watch very closely, multi
family housing and more. But really do appreciate you taking
the time, Emily and joining us. That's Emily Green, head
of private wealth management over at Elves.
Speaker 3 (23:31):
Stay with us.
Speaker 2 (23:32):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (23:39):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (23:54):
I want to go to space now because there's some
news this week in the world of space. Boeing's X
thirty seven space plane, which the company describes as a
quote orbital test vehicle, last night blasted off on a
SpaceX Falcon nine from Kennedy's Space Center in Florida. It's
the eighth mission for the reasonable spacecraft. Jess bal Batia
is back with us. He watches all of those launches closely.
(24:16):
He's CEO over at Axiom Space. It provides mission services
and it's also working to build the next space station.
Tesch Paul, welcome back. I want to start with the
upcoming orbital Data Center launch. This is something do we
know when that the Do we have a date for
that yet?
Speaker 3 (24:32):
Yeah?
Speaker 12 (24:32):
Well, first, thank you for having me back, And second
I like that you said you want to go to space.
Speaker 6 (24:37):
Oh you started. I was like, I'll go with the season.
Would I know a guy who sends people?
Speaker 3 (24:42):
Yeah?
Speaker 12 (24:42):
I would go on to a heartbeat.
Speaker 6 (24:43):
Why haven't you been you know, for the last four years.
Speaker 12 (24:46):
At Axiom, in the last four months as CEO. You know,
it's been my dream since I was like three years old.
When I say dream, it's all I've been thinking about.
And as we as a company am now sending multiple countries,
multiple missions, sixteen astronauts to the ISS, and I figure
ab out how to go, I realized that my purpose
is much more about getting as many people up as
we possibly can, because I am certain that we will
(25:07):
have many opportunities to go.
Speaker 3 (25:08):
So do you think you will in your life now?
Speaker 8 (25:10):
Yeah?
Speaker 3 (25:10):
For sure? And how many years.
Speaker 12 (25:14):
You know, possibly this decade, definitely next decade, Okay, yeah, okay,
Before before that, though, data set.
Speaker 2 (25:23):
Can you explain what exactly this is because we talk
a lot about data centers here, but we never talk
about them in the orbital context.
Speaker 12 (25:31):
Yes, exactly. So it's interesting, like I'm smiling now because
I was thinking about going to space. You know, while
my first passion has always been space, actually the one
thing I'm probably another expert on in the world is cloud.
You know, my before getting the space had my own startups.
I worked at ESPN in the early days of HD streaming,
and I was at Google on the startup side while
(25:53):
we were ramping up Google Cloud, and as we know
on the terrestrial side, cloud is a phenomenal business right,
it's phenomenal business model. The markets growing faster than the
largest cloud providers combined. We believe space is going to
be exactly the same thing from a business model standpoint.
But then the question is why send a data center
up there when we have so many down here. And
(26:14):
the first thing I would say is, think of it
this way when we're talking about orbital data centers. And
we've been running cloud computing on the International Space Station
AXIOM Space along with Amazon since our axe edge compute
exactly and on every single mission we've done significant compute
on it, and between missions we've done workloads from the ground.
On the AX four mission, we sent up an or
(26:35):
ring that was checking the biometrics of the astronauts. I'm
gonna go, oh yeah, you give me the finger.
Speaker 6 (26:42):
I love it. I got it.
Speaker 12 (26:45):
I got it the first day I took the CEO role,
and I got it to track my stress.
Speaker 5 (26:49):
So it wasn't it was bestowed upon you.
Speaker 6 (26:53):
Sort of, Okay.
Speaker 12 (26:53):
I think I think the metric that I care the
most about is sleep. That's the one I track in
terms of my performance. But we were measuring all these
things on the X four mission and feeding it to
the snow cone on ISS, so actually using edge compute
cloud compute in space versus on the ground. But the
point here is when you think about orbital data centers
in the ISS, don't think of them as so far away.
(27:14):
It's literally two hundred fifty miles away.
Speaker 5 (27:16):
So how much power does it take?
Speaker 6 (27:18):
A lot?
Speaker 12 (27:19):
A lot? So it's the same a lot. It's the
same problem that we're going to have here on Earth.
Which is also interesting to me now with AI that
the limiting factor is power. And you're seeing this growth
for nuclear startups, and you're seeing this growth for AI
data centers needing nuclear power. When we're talking about space,
that's going to be the limiting factors.
Speaker 3 (27:40):
So is that the answer? Nuclear?
Speaker 6 (27:41):
Small modular reactors power? Think So it's a little Is there.
Speaker 3 (27:44):
Any other way to do it? Could you do it
with solar?
Speaker 6 (27:46):
You could?
Speaker 12 (27:46):
But at some point those are going to get so
big to give the power we need. And a lot
of people will say, and I'm not speaking as a
scientist here because I said the wrong thing first, Also,
which is well, you don't have to worry.
Speaker 6 (27:58):
About cooling there, do you have?
Speaker 12 (28:01):
Convection is something that is you know, you have to
for all the power you create, you have to dissipate
it as well, so that the surface area is going
to get so large. So I think ultimately that will
be the same solution. But the point about the orbital
data centers is for many people on the Earth, not
like us here in New York or in Virginia or
DC or other cities, that will be the closest data
(28:21):
center to someone at any given time.
Speaker 5 (28:23):
So how concentrated is this space? How many players are
here alongside you all?
Speaker 12 (28:28):
So we as Axiom, we're building the replacement to the
International Space Station and our modules that will connect to
the ISS due to our exclusive contract to connect the
commercial those are cloud first. To keep human life going,
you need cloud computing services. Now we could fractionalize those
and offer those to other companies. We're actually sending up
(28:48):
separate infrastructure later this year. You had asked when Q
four in the next couple of months. But the point
of this network ours we call a heterogeneous network. A
module could be a data center, a satellite could be
a data center. When you look at other constellations, those
are homogeneous networks all the same, but the point is
they're connected by data. Some are all one network, some
(29:09):
are federated. But this is where we're going, you know,
in terms of where the space is. I think people
are finally starting to wake up. Just even the fact
that you're talking about orbital data center odcs as we
call them. Just six months ago and people wouldn't know
what you were talking about. The words are very obvious
at data center that's orbiting the Earth, But still it's
just kind of like why. But I think we've gone
(29:30):
well past that and now it's how.
Speaker 2 (29:32):
And when you said that, the potential use case here
is that some people who live around the world, this
might be the closest data center to them at any
given moment, one that does orbit. But there are latency
issues with that and speed of connectivity issues that I
would imagine are better handled on the ground by wireline connections.
Speaker 6 (29:54):
So I love that question.
Speaker 12 (29:56):
I would have had the same thing when my team
came to me, gave me all the reasons why we
should do this, And again, I'm a cloud not and
a space not. I was looking for solutions for that like,
this is the literal cloud. Yeah, this is literally literal
cloud above the clouds, right, like not data centers around here.
One of the most powerful use cases of orbital data
(30:18):
centers is low latency AI. So it actually solves the
AI the latency problem for many distance issues like cars
driving around in remote areas, navigation for maritime needs. Now
there's many cases of that for Earth. But now when
you just go a little bit above the atmosphere and
(30:39):
look at space edge computing on labs in space edge
computing for other satellites, where it gets really crazy and
awesome for me is what happens when latency actually becomes
a problem because of distance. So we have laser and
optical communication. I'm not worried about speed and bandwidth. I
am worried about power. But what happens when you're this
(31:00):
is so long that actually synchronizing the Internet is a problem.
Or when two planets are on opposite sides of the Sun,
you don't even have a line of side. How are
we going to synchronize Twitter? How are we going to
synchronize you toube? How are we going to FaceTime? I
think those are just such cool problems for students around
the world to solve.
Speaker 6 (31:16):
So super quickly.
Speaker 5 (31:18):
The ISS is set to retire by the end of
twenty thirty. How confident are you in that timeline and
what risks does Axiom face if NASA extends its life
longer than expected.
Speaker 12 (31:29):
Yeah, I'm pretty confident it will come down. It's already
been extended, right. Originally, I think the expiration date was
twenty twenty four, and Congress has stretched it out. It's
a piece of equipment, right, it was designed with a
certain lifespan. Some parts are newer than others, but the
whole thing was designed to come down as one. So
(31:50):
I think it's a given it will come down, like
when we'll see but I think by twenty thirty, I
feel very confident about it. I don't think there's any
risk if the government extends it. I think it's great
if they extend it. But independent of that, if there
isn't a commercial solution, if Axiom Space is not up
and running by the time it comes down, the only
(32:10):
other space station in operation is the Chinese station, right,
so that is a very real i'll say competitive threat,
strategic competitive threat, and from a diplomatic standpoint, the leadership
that the US has provided and now the leadership that
company is like axiom Space. The diplomatic interest we can
push for the US around the world with all the
different countries will basically just be seding that to the Chinese,
(32:33):
and I don't think that's what we want.
Speaker 2 (32:35):
Toys Botia, good to see you, Thanks for having me back.
One hundred Day is the CEO of axiom Space.
Speaker 1 (32:44):
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