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P&L: Where China Comes Into Play in U.S.-Russia Relations · Bloomberg Intelligence

• 0:04
  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:14
  Speaker 1: you and your money, whether at the grocery store or
• 0:16
  Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,
• 0:20
  Speaker 1: SoundCloud and at Bloomberg dot com. A new kind of
• 0:29
  Speaker 1: Cold war, perhaps one waged in trade policy and sanctions.
• 0:34
  Speaker 1: Here to tell us more Ariel Cohen. He is a
• 0:37
  Speaker 1: Senior Fellow at the Atlantic Council and also the director
• 0:40
  Speaker 1: of the Center for Energy, Natural Resources, and Geopolitics at
• 0:44
  Speaker 1: the Institute for the Analysis of Global Security. Ariel, thank
• 0:48
  Speaker 1: you very much for being with us. Now, I gotta
• 0:51
  Speaker 1: just by that introduction, I have to assume you know
• 0:53
  Speaker 1: just about everything there is to know, but you can't
• 0:56
  Speaker 1: foretell the future. But having said that, so, given your contact,
• 1:00
  Speaker 1: the context in which we operate right now, what is
• 1:03
  Speaker 1: the most crucial, UH kind of foreign policy issue that
• 1:07
  Speaker 1: you believe President elect Donald Trump will tackle. I think
• 1:11
  Speaker 1: the clear focus of Trump is on the Pacific UH.
• 1:16
  Speaker 1: I suspect that the one who is going to implement
• 1:20
  Speaker 1: the pivot to the Pacific that President Obama talked about
• 1:24
  Speaker 1: so much and didn't do much uh, and then got
• 1:27
  Speaker 1: an egg on his face with the Philippines. Of course,
• 1:30
  Speaker 1: the real pivot is going to be on the Trump
• 1:32
  Speaker 1: and it's not going to be pretty. Because China is
• 1:35
  Speaker 1: the rising power, it's rising great power. Uh. They have
• 1:39
  Speaker 1: a history and culture of playing strategic games. UH. Their
• 1:43
  Speaker 1: national game is go, which is capturing territory. UH, and
• 1:48
  Speaker 1: it's played for a long, long period of time. So
• 1:52
  Speaker 1: I suspect that Donald Trump is trying to butter up
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  Speaker 1: Putin uh detached Russia for China at toll order. Indeed,
• 2:02
  Speaker 1: I wasn't Russia three weeks ago, and the Russians told
• 2:06
  Speaker 1: me it'll take you a great effort to detach us
• 2:10
  Speaker 1: from China. Uh, and then there will be some kind
• 2:13
  Speaker 1: of a new Cold war trade war with Beijing. And
• 2:18
  Speaker 1: I really hope and pray that our country will come
• 2:20
  Speaker 1: out on top and in fact that we'll turn it
• 2:22
  Speaker 1: into a win win. Well, based on what you know
• 2:26
  Speaker 1: of President elect Donald Trump and also the books that
• 2:29
  Speaker 1: he has written, what's your estimate, what's it looked like
• 2:32
  Speaker 1: in the future. It looks like the art of the
• 2:35
  Speaker 1: deal is going to be the guiding principle, push the
• 2:40
  Speaker 1: other side as much as you think it's safe to
• 2:44
  Speaker 1: push them without losing the deal. What does Trump want?
• 2:47
  Speaker 1: He wants jobs, jobs, jobs for Americans. What does that mean.
• 2:51
  Speaker 1: It means that we cannot have our prime, prime industrial
• 2:56
  Speaker 1: competitor China with such a low exchange rate for that
• 3:00
  Speaker 1: you want. Uh, it means we'll have to find ways
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  Speaker 1: to make our industry more competitive. After all, if you're
• 3:06
  Speaker 1: looking at industrial production, uh, and not just services and
• 3:11
  Speaker 1: alto high tech. We have to compete against the workers
• 3:15
  Speaker 1: that are paid maybe a fraction of our workers are paid.
• 3:18
  Speaker 1: And when it comes to Russia, look, Russia is not
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  Speaker 1: our friend. Um. I was born there, I speak the language.
• 3:25
  Speaker 1: I met put In ten times, and I can tell
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  Speaker 1: you they don't like us. Having said that, there are
• 3:31
  Speaker 1: can you just hold on, Ario, just expand a little
• 3:34
  Speaker 1: bit on your your meetings with Vladimir Putin. Maybe just
• 3:37
  Speaker 1: give us some insight into the kind of person he's
• 3:40
  Speaker 1: he is, and what's it like to be in a
• 3:42
  Speaker 1: room with him and so on. Uh. You know, it's
• 3:46
  Speaker 1: a weird combination of intensity and being really cold. Um,
• 3:52
  Speaker 1: so it's cold intensity, I guess. Uh. He makes his
• 3:56
  Speaker 1: staff scared he got his translator that he kept correcting,
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  Speaker 1: very very nervous in front of the group of US.
• 4:06
  Speaker 1: But he commands a huge amount of information, keeps it
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  Speaker 1: in his head, doesn't use the queue cards or notes uh,
• 4:15
  Speaker 1: and sometimes makes really really big mistakes, which raises a
• 4:19
  Speaker 1: question who is briefing him? And I know who's briefing
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  Speaker 1: him to see his security services are briefing him. What
• 4:24
  Speaker 1: kind of mistakes are you talking about? Oh, he for example,
• 4:28
  Speaker 1: said that the United States was supporting the Gades in
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  Speaker 1: North Caucuses in Chechenna, and I don't buy it for
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  Speaker 1: a moment. We're not that crazy. Would you say that
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  Speaker 1: that's a mistake or rather, do you believe that he
• 4:40
  Speaker 1: is saying that because he he wants just to say that,
• 4:42
  Speaker 1: rather than knowing that it's a mistake or what what
• 4:45
  Speaker 1: is that? I think Russian should know that we did
• 4:48
  Speaker 1: not do that. And there's there's a huge difference between collection.
• 4:52
  Speaker 1: I asked him flat out, So what's your evidence for that? Said, Oh,
• 4:56
  Speaker 1: your intelligence officers met with it, where our intelligence officers
• 4:59
  Speaker 1: would meet almost with anybody to collect. But that does
• 5:02
  Speaker 1: not mean we would train and equip the jihadi is
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  Speaker 1: the Chechens who killed children and things like that. I
• 5:09
  Speaker 1: hope and pray we don't. All right, law, Let's turn,
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  Speaker 1: so what is what have you learned about Vladimir Putin's
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  Speaker 1: relationship with China that would be useful for an investment.
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  Speaker 1: And they have a strategic they have a strategic relationship. Uh,
• 5:21
  Speaker 1: energy is very important, that is aimed at us. Energy
• 5:25
  Speaker 1: is important. But if you look at the costs of
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  Speaker 1: building these two huge gas pipelines, uh, the Power of
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  Speaker 1: Siberia and the Altai. One is from East Siberia once
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  Speaker 1: from West Siberia. We're talking billions and billions, tens of
• 5:42
  Speaker 1: billions of dollars. And the Chinese were lending this money.
• 5:46
  Speaker 1: And to get their worth back, the Russians need high
• 5:50
  Speaker 1: oil prices. This is a paramount concern for the Russians.
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  Speaker 1: The oil prices as they are now are too low.
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  Speaker 1: Cents fifty two is not good for the Russians at
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  Speaker 1: not at all, not at all. And you remember everybody
• 6:04
  Speaker 1: was talking about this deal that rex Diderson cut with
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  Speaker 1: ross Neft, the Russian for the Socolon project. No after that,
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  Speaker 1: after the Arctic for the Arctic hundred billion dollars over
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  Speaker 1: thirty years. But guess what. The Arctic oil is not
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  Speaker 1: profitable when oil prices are below eighty and there, as
• 6:26
  Speaker 1: you said, fifty two now and nobody knows when they're
• 6:29
  Speaker 1: going to be eighty again. So Russia is an interesting play.
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  Speaker 1: There's plenty of oil and Russian UH and gas UH,
• 6:35
  Speaker 1: and some of it is still very economical, so they
• 6:38
  Speaker 1: want to compete. But they will push, push, push in
• 6:41
  Speaker 1: the Middle East and elsewhere for instability to drive the
• 6:44
  Speaker 1: oil prices up. Mr Putin is ahead of Russia oil
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  Speaker 1: and guests Inc. Meaning the gas prom and ross Neft
• 6:52
  Speaker 1: and other companies that they control and UH. He is
• 6:55
  Speaker 1: a tough negotiator. Mr Kitchen, the head of Ross's Neft,
• 6:59
  Speaker 1: is a very tough negotiator. He just pulled in UH
• 7:03
  Speaker 1: over eleven billion from Katar and Glencore to buy rosne
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  Speaker 1: Still valuations per barrel UH a much much lower than
• 7:13
  Speaker 1: x Ono, BP or Shell. But nevertheless, Russia is a
• 7:17
  Speaker 1: huge player. They want the sanctions um waived by Mr
• 7:22
  Speaker 1: Trump UH. And the question I'm asking is Mr Trump
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  Speaker 1: applying the art of the deal. What is going to
• 7:29
  Speaker 1: be the quickpro lall when you're negotiating with Mr Putson. Well,
• 7:33
  Speaker 1: maybe he's going to give you a call. We look
• 7:35
  Speaker 1: forward to it. You certainly have met Mr Puttin apparently
• 7:37
  Speaker 1: more times than President elect Donald Trump. Thank you very much.
• 7:41
  Speaker 1: Ril Cohen. He is a Senior Fellow at the Atlantic Council.
• 7:45
  Speaker 1: He's also the director of the Center for Energy, Natural
• 7:48
  Speaker 1: Resources and Geopolitics at the Institute for Analysis of Global
• 7:53
  Speaker 1: Security in Washington, d C. Of course home to Bloomberg
• 7:57
  Speaker 1: and one oh five point seven h d to. I
• 8:12
  Speaker 1: know that we've got on on Trin of us and
• 8:13
  Speaker 1: he joins us in studio and on you. You are
• 8:16
  Speaker 1: the expert when it comes to the semiconductor industry or
• 8:18
  Speaker 1: a hardware analysts to force here at Bloomberg Intelligence. Thanks
• 8:21
  Speaker 1: for coming in. UH tell us about what's going on
• 8:24
  Speaker 1: with the US chip industry and this idea that there is.
• 8:28
  Speaker 1: I was writing this down. There's the Committee on Foreign Investments.
• 8:32
  Speaker 1: It's a little hard to figure out exactly who they
• 8:34
  Speaker 1: are what they do, but they're important. If a foreign
• 8:37
  Speaker 1: company wants to buy shares in the U S company
• 8:40
  Speaker 1: that that that's right, PIM. This is a congressional committee
• 8:44
  Speaker 1: which has different UM. This is an agency that is
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  Speaker 1: formed with members from Treasury from UM. UH from justice,
• 8:52
  Speaker 1: from defense from state, and this collective group will weigh
• 8:57
  Speaker 1: in as to the whether mayor can interests are being
• 9:01
  Speaker 1: upheld or threatened as a result of any particular transaction.
• 9:06
  Speaker 1: This could be the American subsidiary of a firm, This
• 9:09
  Speaker 1: could be American manufacturing exposure, or this could be an
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  Speaker 1: American domiciles company. UM and in this in over the
• 9:17
  Speaker 1: last two years or so, the Chinese government has made
• 9:21
  Speaker 1: it a mandate of source to UM heighten its exposure
• 9:25
  Speaker 1: and interest in the in the global semiconductor space by
• 9:28
  Speaker 1: acquiring intellectual property, by acquiring companies outright. They wanted to
• 9:33
  Speaker 1: buy Extron right and that they did and they were.
• 9:36
  Speaker 1: They were indications of Chinese state owned in company interest
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  Speaker 1: in Micron as well, which is the last memory company
• 9:43
  Speaker 1: here in the United States. And all of this has
• 9:46
  Speaker 1: heightened the interest level by Cephius and they are both
• 9:51
  Speaker 1: UM more engaged as well as perhaps feel more threatened
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  Speaker 1: as a result of this heightened state owned interest, a
• 10:00
  Speaker 1: Chinese state interest in the semiconducting industry. They're worried that
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  Speaker 1: intellectual property could go overseas and that the us UM
• 10:10
  Speaker 1: interests could be threatened. Now in the case of Extron.
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  Speaker 1: And the reason I mentioned this is because here you
• 10:16
  Speaker 1: have a company that is in domicile in Germany, headquarters
• 10:20
  Speaker 1: in Germany, but because just as you described, it has
• 10:24
  Speaker 1: operations in the United States. This Committee on Foreign Investments
• 10:28
  Speaker 1: they have a say. Right the purview of this particular
• 10:31
  Speaker 1: agency isn't determined by whether the company is incorporated here
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  Speaker 1: UM or is domiciled here, it's UH, it's interests depending
• 10:40
  Speaker 1: on whether they have jobs here, there are this intellectual
• 10:43
  Speaker 1: property here, there's manufacturing here, there's sales here, and potentially
• 10:47
  Speaker 1: customers here, etcetera, etcetera. So loosely defined whether American interests
• 10:52
  Speaker 1: are are at risk or not, and you know that
• 10:56
  Speaker 1: you have to look at the context overall as well.
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  Speaker 1: The semikin of industry the last two years has going
• 11:01
  Speaker 1: through a substantial consolidation for a variety of reasons, whether
• 11:05
  Speaker 1: it's for scale, whether it's for margin expansion, sales expansion, UH,
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  Speaker 1: putting two products together, UM, logical product overlap, etcetera, etcetera.
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  Speaker 1: For a whole host of reasons, the consolidation has made sense,
• 11:19
  Speaker 1: and the Chinese state owned interest or state owned companies
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  Speaker 1: have been a participant in in that category. In a
• 11:27
  Speaker 1: substantial way. If you take that out, it takes a
• 11:30
  Speaker 1: little bit out of the um uh, the fluff out
• 11:35
  Speaker 1: of the semiconductor land takes a buy if if right,
• 11:38
  Speaker 1: it takes a buyer out. If you've got fewer bias,
• 11:40
  Speaker 1: chances are you're not gonna necessarily get that much bidding activities.
• 11:43
  Speaker 1: So maybe if the presses prices that these companies are
• 11:46
  Speaker 1: hoping to get absolutely so, one of the other routes
• 11:49
  Speaker 1: for Chinese companies, whether it's state owned or private, to
• 11:52
  Speaker 1: take in this in this scenario could be a partnership.
• 11:56
  Speaker 1: We've seen a lot of HP transactions as UM with
• 12:00
  Speaker 1: this sort of a model. We've seen as seen a
• 12:03
  Speaker 1: little bit of Intel do this similar things. We've seen
• 12:05
  Speaker 1: Qualcom do similar things. Maybe the nature of the m
• 12:09
  Speaker 1: and A or the nature of the transactions changes into
• 12:13
  Speaker 1: more of a JV structure, more of a partnership agreement
• 12:17
  Speaker 1: structure rather than an outright by which is going to
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  Speaker 1: be more difficult. The third parties get squeezed. I mean
• 12:24
  Speaker 1: companies that are doing manufacturing let's say in Taiwan or
• 12:28
  Speaker 1: in um you know, uh, South Korea, for example, are
• 12:32
  Speaker 1: they getting squeezed because it's either going to be you
• 12:34
  Speaker 1: make it in China and just strict rules or in
• 12:37
  Speaker 1: the introductional property comes from the the Actually, to be
• 12:40
  Speaker 1: quite honest, there's a more disrupting influence in this equation,
• 12:44
  Speaker 1: which is the US China trade relationship. And if there is,
• 12:48
  Speaker 1: if there's a wrench thrown into that kind of a system,
• 12:52
  Speaker 1: then UH, semiconductor manufacturing particularly will be will be threatened,
• 12:58
  Speaker 1: technology manufacturing gen really will be threatened, and we will
• 13:01
  Speaker 1: have to find a new home for all of these places.
• 13:04
  Speaker 1: One of the interesting UM by products is of the
• 13:08
  Speaker 1: of the new incoming administration, could be some shifts in
• 13:13
  Speaker 1: this particular landscape could certainly make a portent to shift
• 13:17
  Speaker 1: in where the money is coming. Absolutely, But the interesting
• 13:20
  Speaker 1: part of it is, look, US companies or global technology
• 13:24
  Speaker 1: companies don't manufacture in China because it's neat, it's it's
• 13:29
  Speaker 1: substantially cheaper, and you get substantial tax breaks, manufacturing incentives, etcetera.
• 13:36
  Speaker 1: To try and make UM your ecosystem there. And it's
• 13:40
  Speaker 1: also you've had a history of success there. All of
• 13:44
  Speaker 1: the companies are co located very efficiently from a geographic perspective,
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  Speaker 1: So all of these things make for UM an interesting location.
• 13:52
  Speaker 1: To make it and a movement there will be harmful.
• 13:56
  Speaker 1: Thanks very much on Entren of US and our senior
• 13:58
  Speaker 1: Semiconductor and hardware anal for Bloomberg Intelligence. We also want
• 14:12
  Speaker 1: to look at as the automobile companies because President elect
• 14:15
  Speaker 1: Donald Trump tweeted over the holiday, I guess respite that
• 14:21
  Speaker 1: the General Motors should be making the Chevy Cruise in
• 14:25
  Speaker 1: the United States. Well, when we want to know about automobiles,
• 14:28
  Speaker 1: we called David Welch, bureau chief for Bloomberg News in Detroit. David,
• 14:33
  Speaker 1: thanks for being with us. How many Crews automobiles are
• 14:37
  Speaker 1: made every year and where are they made? Well, So
• 14:41
  Speaker 1: GM sols a couple of hundred, and it's mostly the
• 14:45
  Speaker 1: sedan these days. Americans aren't really interested in compact cars
• 14:49
  Speaker 1: because gas is cheap, and they have never been interested
• 14:52
  Speaker 1: in hatchbacks. The crew hatchback is with the plant in
• 14:55
  Speaker 1: Mexico builds and it's mostly for the Mexican market, for
• 14:59
  Speaker 1: South America and to export to other places. The Cruise
• 15:03
  Speaker 1: that is sold mostly to Americans is building words toown Ohio.
• 15:07
  Speaker 1: So there's there's a bit of uh saber rattling over
• 15:11
  Speaker 1: a really small number of cars. With Donald Trump's tweet
• 15:16
  Speaker 1: this morning, I see, so that the point being that
• 15:18
  Speaker 1: the automobiles in question are typically for the Mexican market.
• 15:22
  Speaker 1: So I read a number that this accounts for maybe
• 15:26
  Speaker 1: like two two and a half percent of all the
• 15:28
  Speaker 1: production of cruise vehicles. And as you said, the hatchback
• 15:31
  Speaker 1: is not a big seller, correct, it's a very small number. Now,
• 15:36
  Speaker 1: the broader point, and you know, let's face it, Trump
• 15:40
  Speaker 1: has never really um bothered himself with with my new
• 15:44
  Speaker 1: details on things or specifics. His broader point is that
• 15:49
  Speaker 1: a lot of production has gone to Mexico, and about
• 15:52
  Speaker 1: two thirds, a little less let's call it, of Mexican
• 15:56
  Speaker 1: auto production is sent to the US or ended that.
• 16:00
  Speaker 1: So there is a wage difference. It's about five or
• 16:04
  Speaker 1: six hours an hour versus an average of about twenty four.
• 16:08
  Speaker 1: Uh So automakers are saving on that. And it's not
• 16:11
  Speaker 1: just US automakers. Everybody is down there now. And there
• 16:15
  Speaker 1: are also some great free trade deals that allow companies
• 16:17
  Speaker 1: to export cars all over over the world. Mexico is
• 16:22
  Speaker 1: kind of about flank to the US and Canada on
• 16:24
  Speaker 1: those deals. So there's a lot of stagments, and that's
• 16:27
  Speaker 1: that's his point. This particular car though, is not really Uh,
• 16:32
  Speaker 1: it wouldn't be of any consequence. GM cut a shift.
• 16:35
  Speaker 1: They used to make the Cruise on three shifts, now
• 16:38
  Speaker 1: they make it at two shifts in Lordstown, Ohio. If
• 16:41
  Speaker 1: you brought the Cruise hatchback to the US, that would
• 16:44
  Speaker 1: not add a shift. They would just camp up the
• 16:46
  Speaker 1: line speed a little bit and have the same workers,
• 16:49
  Speaker 1: you know, work a little quicker to make it. It's
• 16:50
  Speaker 1: just not a consequential number of cars. It certainly does
• 16:54
  Speaker 1: look like investors and kind of seeing through this latest
• 16:58
  Speaker 1: Trump effect, you might say in GM was down just
• 17:02
  Speaker 1: maybe half a percent or so before the opening bell,
• 17:06
  Speaker 1: and since then means stock has generally been higher. It's
• 17:10
  Speaker 1: up almost two percent at this point. So for the
• 17:12
  Speaker 1: same thing with Ford Motor Company. Ford Motor Company up
• 17:15
  Speaker 1: more than two and a half percent, right, and they've
• 17:17
  Speaker 1: certainly been in the cross hairs as well because of
• 17:19
  Speaker 1: their Mexican production. So you know, it's like people are
• 17:23
  Speaker 1: looking at what's coming out over Twitter and really trying
• 17:26
  Speaker 1: to make sense out of it, as opposed to just
• 17:29
  Speaker 1: knee jerk reacting to whatever the latest A hundred and
• 17:32
  Speaker 1: forty characters are saying, Well, David Welch. You mentioned something
• 17:36
  Speaker 1: about what Americans like to drive, and right now, with
• 17:40
  Speaker 1: gasoline prices where they are, it seems like if they
• 17:41
  Speaker 1: only want large automobiles, large vehicles, light trucks for example,
• 17:45
  Speaker 1: pretty much yeah, it's you pickup trucks are doing well
• 17:49
  Speaker 1: and and now that's often tired of the housing market.
• 17:51
  Speaker 1: But it terms were consumers by the family car is
• 17:54
  Speaker 1: now really the family crossover actual, So the Chevy Equinox
• 17:59
  Speaker 1: is GMS some mid sized crossover suv that's pretty new
• 18:03
  Speaker 1: to the market, always the newest generation is that's the
• 18:07
  Speaker 1: one that Trump actually could have made some hay out
• 18:10
  Speaker 1: of if he had really studied what GM was doing
• 18:12
  Speaker 1: in Mexico, because that vehicle is made in a plant
• 18:16
  Speaker 1: in Ingersoll, Ontario, and with the new version that's just
• 18:19
  Speaker 1: coming out, GM went from one plant, which is the
• 18:22
  Speaker 1: one in Canada, to three and the other tour in Mexico.
• 18:25
  Speaker 1: So you will see a number of very important vehicles
• 18:29
  Speaker 1: that sell for thirty thousand or more for American families
• 18:33
  Speaker 1: with a Chevy badge on coming up from Mexico. That's
• 18:36
  Speaker 1: really the one that if he wanted to make hay,
• 18:39
  Speaker 1: he could have the same kind of goes for the
• 18:41
  Speaker 1: link in m K very small volume vehicle that Ford
• 18:45
  Speaker 1: made in Kentucky. They were going to send it Mexico.
• 18:47
  Speaker 1: Trump got them to keep it. That was another kind
• 18:50
  Speaker 1: of similar to the Cruise, pretty small volume. If you
• 18:54
  Speaker 1: really want to go after these guys, you got to
• 18:57
  Speaker 1: find a big volume vehicle and a plant that and
• 19:00
  Speaker 1: started making production. Yet and you say it's the Equinox, Yeah,
• 19:05
  Speaker 1: is a big deal. How much? Just quickly? How many? About?
• 19:09
  Speaker 1: How many do they sell? You are they planning to sell? Oh?
• 19:12
  Speaker 1: It's you know, depending on how will they do it? Well?
• 19:16
  Speaker 1: Over two? Right and probably close to three. All right,
• 19:20
  Speaker 1: thanks very much. David Welch of your chief Bloomberg News
• 19:23
  Speaker 1: from Detroit. Part he's got his comfortable shoes packed. He's
• 19:38
  Speaker 1: getting ready for Consumer Electronics show in Las Vegas. But
• 19:42
  Speaker 1: before he goes out west, he joins us here in
• 19:46
  Speaker 1: the studio. David Garretty is the chief executive a g
• 19:49
  Speaker 1: v A Research, a columnist at Investo PDA, and he
• 19:54
  Speaker 1: is followable on Twitter at g v A Research. Alright,
• 19:58
  Speaker 1: followable at g v A You search, I like you know,
• 20:00
  Speaker 1: this is a whole new Twitter world, David, You've been
• 20:03
  Speaker 1: following technology for how long now, uh, since the last millennium? Yeah, okay,
• 20:07
  Speaker 1: since the lab right when was allowed. Is this a
• 20:10
  Speaker 1: new era where you have the President elect of the
• 20:14
  Speaker 1: United States tweeting about GM about building a car that
• 20:19
  Speaker 1: isn't actually that you know, widely sold the United States,
• 20:22
  Speaker 1: building it in Mexico and saying, you know, you better
• 20:24
  Speaker 1: build it in the United States, and then Ford coming
• 20:27
  Speaker 1: out and saying, on the other hand, we're not going
• 20:30
  Speaker 1: to build out that plant in San Potosi, San Luis Potosi,
• 20:34
  Speaker 1: in Mexico, the one point six billion dollar plant. This
• 20:38
  Speaker 1: is a tech store as much as anything. Do you
• 20:39
  Speaker 1: think it's very much of a tech story in very
• 20:41
  Speaker 1: much discussion here about the technology disrupting what had been
• 20:45
  Speaker 1: sort of well established patterns in this case of communication
• 20:49
  Speaker 1: and policy making and also the communication of policy. From
• 20:53
  Speaker 1: that standpoint, one has to be always concerned with respect
• 20:57
  Speaker 1: to technologies ability to outrun human comprehension. So from that standpoint,
• 21:05
  Speaker 1: we stand here at a maybe a dangerous point where
• 21:09
  Speaker 1: you know, things out strip, where events move faster than
• 21:13
  Speaker 1: people have the ability to actually manage them. And when
• 21:16
  Speaker 1: you're talking about you know the world's leading economy and
• 21:20
  Speaker 1: worlds leading military power the consequences should be concerning clearly,
• 21:26
  Speaker 1: having said that technology always has the mantra that if
• 21:30
  Speaker 1: there is a problem that technology creates, they also have
• 21:33
  Speaker 1: a solution, and in this case artificial intelligence, this is
• 21:37
  Speaker 1: going to be one of the trends that is going
• 21:39
  Speaker 1: to be featured at the Consumer Electronics Show. Tell us
• 21:42
  Speaker 1: about artificial intelligence very much so in terms of looking
• 21:45
  Speaker 1: at AI mean, we're looking here at arguably a technology
• 21:49
  Speaker 1: development that one might be considering as an apex, a
• 21:53
  Speaker 1: peak element in terms of dominating the technology ecosystem, and
• 21:57
  Speaker 1: this is something that potentially is going to be introduced
• 22:00
  Speaker 1: in a fairly wide range of areas. We certainly know that,
• 22:04
  Speaker 1: you know, there are elements in terms of chat bots
• 22:06
  Speaker 1: that are being developed by various social media companies, but
• 22:09
  Speaker 1: clearly this goes well beyond that, and we may be
• 22:12
  Speaker 1: looking here just given the amount of data that's being generated.
• 22:15
  Speaker 1: I mean, we're looking here potentially at something long so
• 22:18
  Speaker 1: you know, forty four zetta bytes of data being produced
• 22:21
  Speaker 1: by that's a lot of information to basically I don't
• 22:24
  Speaker 1: even know what a zetta byte is. I mean, I
• 22:26
  Speaker 1: know how many movies you know, you can get with
• 22:27
  Speaker 1: one gigabyte. That's kind of one. But Tesla I love
• 22:31
  Speaker 1: this example. Tesla has aggregated the data of eight hundred
• 22:37
  Speaker 1: million miles of driving already already, And obviously this is
• 22:41
  Speaker 1: only you get the opt out when you get into
• 22:43
  Speaker 1: behind the wheel of a Tesla and say, look, I
• 22:45
  Speaker 1: don't want my driving. I would imagine that you're going
• 22:47
  Speaker 1: to find a situation. I don't think that de'll be
• 22:49
  Speaker 1: able to because clearly the interest here in terms of
• 22:52
  Speaker 1: the people providing the products is to capture the information.
• 22:55
  Speaker 1: The value resides in the data and what you can
• 22:58
  Speaker 1: learn from this. And in the case of back to
• 23:00
  Speaker 1: artificial intelligence, we're probably gonna be seeing creation of new
• 23:03
  Speaker 1: market here called artificial intelligence as a service, and in
• 23:07
  Speaker 1: its full blown promise, it might lead to an improvement
• 23:10
  Speaker 1: in terms of productivity because clearly machines that have greater
• 23:15
  Speaker 1: computing power than possibly humans you know, maybe turned over
• 23:18
  Speaker 1: to do this work. The question is always going to
• 23:19
  Speaker 1: be what are the humans going to do in the
• 23:20
  Speaker 1: meanwhile with all this code augmented reality? Because that's trend
• 23:24
  Speaker 1: number two. Tell me about a are augmented reality? Well,
• 23:28
  Speaker 1: I mean, certainly, you know, uh, ces consumer electronic show
• 23:31
  Speaker 1: in twenty sixteen was very much taken up with you
• 23:33
  Speaker 1: know what Facebook was coming out with the Oculus Rift
• 23:36
  Speaker 1: and with virtual reality headsets, and that turn proved to
• 23:39
  Speaker 1: be a little bit bit of a bust because the
• 23:41
  Speaker 1: Rift didn't sell as much as Facebook did still sold
• 23:43
  Speaker 1: four un a thousand units, but not enough is the
• 23:45
  Speaker 1: millions that people might have thought. But here, clearly we're
• 23:48
  Speaker 1: looking at a situation that with you know, with augmented reality,
• 23:51
  Speaker 1: you know, technologies that are crossing the physical digital divide,
• 23:54
  Speaker 1: you know, do represent that the future of computing. And
• 23:57
  Speaker 1: from this standpoint, you know, we're looking at a wide
• 23:59
  Speaker 1: range of come but he's that be going to be
• 24:01
  Speaker 1: coming out, you know, we're thinking here that you're looking
• 24:03
  Speaker 1: at you know, at augmented reality headsets UM. You know,
• 24:08
  Speaker 1: certainly with regards to UM, you know, all the things
• 24:11
  Speaker 1: that are being advertised over the Christmas season in terms
• 24:13
  Speaker 1: of people like being able to use their Galaxy seven
• 24:15
  Speaker 1: when it wasn't bursting into flames, using it as a
• 24:18
  Speaker 1: virtual reality headset certainly, and use it an autonomous vehicle.
• 24:23
  Speaker 1: I guess you could, right because if you're not going
• 24:25
  Speaker 1: to be driving, you could put on that headset and
• 24:27
  Speaker 1: just you know, watch a movie, It's quite possible. I
• 24:29
  Speaker 1: mean from the standpoint that you're looking at automated vehicles.
• 24:32
  Speaker 1: Once they get into a highway, they probably will be
• 24:34
  Speaker 1: have a fully automated control system. So from that standpoint,
• 24:38
  Speaker 1: the person who is the otherwise driver is free to
• 24:40
  Speaker 1: do pretty much whatever they want. It could be augmented reality,
• 24:43
  Speaker 1: it could be virtual reality. I think I'm going to
• 24:45
  Speaker 1: need all those how all those realities to help me navigate.
• 24:49
  Speaker 1: And also David Garritty, thank you very much for coming
• 24:52
  Speaker 1: in and spending time. He's the chief executive of g
• 24:54
  Speaker 1: v A Research, a columnist for investor Pedia, and he
• 24:57
  Speaker 1: can be followed on Twitter at the g v A Research.
• 25:06
  Speaker 1: Thanks for listening to the Bloomberg p L podcast. You
• 25:09
  Speaker 1: can subscribe and listen to interviews at iTunes, SoundCloud, or
• 25:13
  Speaker 1: whatever podcast platform you prefer. I'm pim Fox. I'm out
• 25:17
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• 25:20
  Speaker 1: Twitter at Lisa Abramo. It's one before the podcast. You
• 25:24
  Speaker 1: can always catch us worldwide on Bloomberg Radio.