Latest / Bloomberg Intelligence / A Tale of Two Cities Emerges In Commercial Real Estate

Transcript

A Tale of Two Cities Emerges In Commercial Real Estate · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news. Kind the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. Well, we've been keeping a
• 0:20
  Speaker 1: close eye on real estate, particularly commercial real estate. Or
• 0:24
  Speaker 1: next to guest is the leader of b d os
• 0:27
  Speaker 1: us site selection team. So has he been busy? My suspicion,
• 0:31
  Speaker 1: as he'll say, yes, let's ask him directly. Tom Stringer
• 0:34
  Speaker 1: joins us. Tom, thanks for joining. What's happening out there
• 0:38
  Speaker 1: are companies still looking for sites, making plans, changing strategies. Well,
• 0:44
  Speaker 1: first of all, good morning, Fanny, thanks for having me.
• 0:47
  Speaker 1: It's great to be back. And yes, you are right,
• 0:50
  Speaker 1: we are busy. I mean, I think for the first
• 0:52
  Speaker 1: two months of the pandemic, folks were in shutdown and
• 0:55
  Speaker 1: wait and see mode and kind of a springtime turned
• 0:58
  Speaker 1: into summer, the wheel to commerce luckily started turning again,
• 1:02
  Speaker 1: certainly on on large Catholic investment projects, and you started
• 1:05
  Speaker 1: to see that. Obviously, today we have some great news
• 1:07
  Speaker 1: in New York City with what Facebook announced with the
• 1:10
  Speaker 1: Farley Post Office building taking a substantial block of space
• 1:13
  Speaker 1: in the Central Business District, which I think is really
• 1:16
  Speaker 1: probably great news for the brokerage communities across the country.
• 1:20
  Speaker 1: And in the last week or so, you've had some
• 1:22
  Speaker 1: some major investments in manufacturing, certainly with Tesla and Nicolo
• 1:26
  Speaker 1: with the groundbreaking on their factories and the automotive sector,
• 1:29
  Speaker 1: so wheels are starting to move, which is great news.
• 1:33
  Speaker 1: Is your client, we should we should mention exactly so.
• 1:36
  Speaker 1: So Tom, you know, I guess the debate is still
• 1:39
  Speaker 1: open about, you know, where people will work going forward.
• 1:44
  Speaker 1: A lot of us, most of us, a lot of
• 1:45
  Speaker 1: us are working from home right now, we have been
• 1:47
  Speaker 1: since March. Some folks unfortunately are unable to do that,
• 1:51
  Speaker 1: and there are on on the front lines. But how
• 1:54
  Speaker 1: is it the thought process evolving about how this is
• 1:57
  Speaker 1: going to play out? Are we ever gonna go back
• 1:58
  Speaker 1: to the office full force? It's a great an'swer, a
• 2:01
  Speaker 1: great question. I think the answer to that is probably not.
• 2:04
  Speaker 1: I think that any time you can take right the
• 2:07
  Speaker 1: two biggest costs on corporate balance sheets or people, we
• 2:10
  Speaker 1: all get that and then obviously real estates number two.
• 2:13
  Speaker 1: And anytime you can take your second leading cost and
• 2:16
  Speaker 1: and maybe half it or reduce it by even as
• 2:18
  Speaker 1: much as the third um, that's a huge difference. And
• 2:21
  Speaker 1: it also takes an account of people like working at
• 2:24
  Speaker 1: home to some degree. Some jobs people would certainly prefer
• 2:27
  Speaker 1: to be back to the office. But that has really
• 2:29
  Speaker 1: been injected into the thought process on the corporate real
• 2:31
  Speaker 1: estate side that hey, we're going to have to tack
• 2:33
  Speaker 1: a little bit here at you know, try to reconfigure
• 2:36
  Speaker 1: how we utilize space. Is it going to be that
• 2:38
  Speaker 1: big open concept anymore? Will that work? Do we need
• 2:42
  Speaker 1: a smaller footprint that's just going to be more hotel
• 2:44
  Speaker 1: and meeting space and and let most people office out
• 2:47
  Speaker 1: of their homes. So those discussions are really taking place,
• 2:51
  Speaker 1: and I think we're probably going to see a reduction
• 2:53
  Speaker 1: in overall office usage. But that's being picked up pretty
• 2:57
  Speaker 1: aggressively on the manufacturing and warehousing side right now. I mean,
• 3:01
  Speaker 1: you can't find warehousing space really anywhere around the country
• 3:05
  Speaker 1: in sizeable blocks anymore, which is is indicative of kind
• 3:08
  Speaker 1: of the rise of e commerce. Well, so you'd be
• 3:10
  Speaker 1: in a great position to tell us are those all
• 3:13
  Speaker 1: for server farms and for computers or the actual people
• 3:16
  Speaker 1: that are Like, I'm fascinated by this for NATO stories
• 3:18
  Speaker 1: seven square feet in the middle of New York City
• 3:22
  Speaker 1: right by Pen I mean it is Penn Station basically,
• 3:24
  Speaker 1: and uh, you know that's ten million square feet in total.
• 3:27
  Speaker 1: But is Facebook going to move people into that building
• 3:31
  Speaker 1: or is this another server farm? Yeah, no, that's a
• 3:34
  Speaker 1: good question. Um, we don't know what their internal plants
• 3:37
  Speaker 1: are yet. Focus has really been on the block of space.
• 3:40
  Speaker 1: But given where it is, given the locality, given frankly,
• 3:44
  Speaker 1: the utility rates and the costs of utilities in New
• 3:46
  Speaker 1: York versus putting servers in in more cost effective jurisdictions
• 3:49
  Speaker 1: or even upstate New York to take advantage of things
• 3:52
  Speaker 1: like Niagara Mohawk power, the odds are that this is
• 3:55
  Speaker 1: really going to be a people dominated facility, which is
• 3:58
  Speaker 1: great news, but also are around the country there has
• 4:01
  Speaker 1: been a lot of pick up really, as you point out,
• 4:03
  Speaker 1: in computer capacity in server farms coming online to handle
• 4:08
  Speaker 1: just the demand of e commerce and the fact that
• 4:11
  Speaker 1: really we're moving our infrastructure and architecture into the digital
• 4:16
  Speaker 1: world as opposed to physical plan But it's also being
• 4:18
  Speaker 1: picked up by warehouse I mean actual good old fashioned
• 4:21
  Speaker 1: inventory as really unsexy as that is, companies are building
• 4:26
  Speaker 1: that into their models now because the consumer markets are
• 4:28
  Speaker 1: driving Hey, you need to have these types of prescriptions
• 4:32
  Speaker 1: on hand, these consumer products on hand, so that that
• 4:35
  Speaker 1: kind of the death of the just in time inventory
• 4:37
  Speaker 1: models really taking hold. Hey, Tom, you know, let's talk
• 4:40
  Speaker 1: about New York City in particular. A couple of weeks ago,
• 4:43
  Speaker 1: I came into the city for the first time since
• 4:44
  Speaker 1: early March, and I was just shocked at the number
• 4:46
  Speaker 1: of vacancies, commercial vacancies along blocks that I'm very familiar
• 4:50
  Speaker 1: with where I know they were vibrant businesses just several
• 4:53
  Speaker 1: months ago. Where are we in terms of kind of
• 4:56
  Speaker 1: commercial vacancies and maybe even rates um in New York City. Well,
• 5:02
  Speaker 1: you asked a really good question, because even though office
• 5:05
  Speaker 1: and we're housing an industrial may be doing very well,
• 5:08
  Speaker 1: um certainly in the New York City marketplace right now,
• 5:11
  Speaker 1: and Facebook being a big help to that. The retail
• 5:14
  Speaker 1: and street level retail is a big issue, and that's
• 5:17
  Speaker 1: been an issue that's really been going on for two
• 5:19
  Speaker 1: and three years prior to the pandemic with landlords just
• 5:22
  Speaker 1: kind of holding out for higher price rents and small
• 5:26
  Speaker 1: mom and pop type of shops and able to make
• 5:28
  Speaker 1: it and make it just on a commercial lease standpoint
• 5:31
  Speaker 1: that couldn't afford the rent. This is, along with the
• 5:34
  Speaker 1: lockdown and shutting them out of any revenue, has really
• 5:38
  Speaker 1: been a significant problem for the city and it probably
• 5:42
  Speaker 1: will be for the foreseeable future. Um. You know, the
• 5:45
  Speaker 1: programs that have come out of the Federal Reserve, the
• 5:47
  Speaker 1: p PP, the extensions of it right have been helpful,
• 5:50
  Speaker 1: but but it doesn't replace real revenue. It doesn't replace
• 5:53
  Speaker 1: real consumer demand. It's it's a band aid, um that
• 5:56
  Speaker 1: that was designed to get us to right market demand
• 5:59
  Speaker 1: again that still has not come back yet. So I
• 6:02
  Speaker 1: think you point out a really good issue that that
• 6:06
  Speaker 1: retail and main street related issues for real estate not
• 6:09
  Speaker 1: just in the cities, but in the suburbs. I mean
• 6:11
  Speaker 1: that they're going through the same issues right now. That's
• 6:14
  Speaker 1: a problem. That's a problem that economic development is going
• 6:17
  Speaker 1: to have to deal with. That that legislatures at the
• 6:19
  Speaker 1: both the federal, state local are going to have to
• 6:21
  Speaker 1: deal with and we've never done that for that. Yeah,
• 6:27
  Speaker 1: it's interesting to see. It's gonna be a big turn
• 6:29
  Speaker 1: on Tom as you're suggesting. Tom Stringer, Corporate real Estate
• 6:32
  Speaker 1: Advisory Managing Director for accounting firm b DEO, giving us
• 6:36
  Speaker 1: his thoughts on the commercial real estate business again. The
• 6:38
  Speaker 1: big news in New York City was um Facebook taking
• 6:42
  Speaker 1: a huge piece of commercial real estate, the Farley Building,
• 6:44
  Speaker 1: which is right across street from Penn Station in Midtown Manhattan. Well.
• 6:50
  Speaker 1: Bloomberg Markets magazine is out with a special issue focused
• 6:53
  Speaker 1: on diversity, where black men and women share their experience
• 6:56
  Speaker 1: on Wall Street. Lauren Simmons is one of the contributors.
• 6:59
  Speaker 1: She's the youngest black woman ever to work on the
• 7:01
  Speaker 1: New York Stock Exchange and she joins us now, Lauren,
• 7:03
  Speaker 1: thank you so much. We really appreciate it. Entrepreneur found
• 7:06
  Speaker 1: their CEO of Lauren Simmons, We really appreciate you joining
• 7:09
  Speaker 1: us here, Lauren, Wall Street. Why can't they seem to
• 7:12
  Speaker 1: make any steady progress at all on diversity? You know,
• 7:17
  Speaker 1: I think it has to be an initiative that people
• 7:20
  Speaker 1: want to care about. And if you have people sitting
• 7:24
  Speaker 1: at the top that don't make this an importance, it's
• 7:27
  Speaker 1: not going to be an importance. UM. I know that
• 7:30
  Speaker 1: in two thousand and twenty these issues have been brought
• 7:33
  Speaker 1: up again. And once these issues are brought up, it's
• 7:37
  Speaker 1: no reason to turn a blind light, like you should
• 7:39
  Speaker 1: be going above and beyond to to do better and
• 7:43
  Speaker 1: to be better and to have more diversity inclusion within
• 7:45
  Speaker 1: your organization. But two thousand and twenties, since the first
• 7:49
  Speaker 1: time that these issues have been brought up in seventeen,
• 7:52
  Speaker 1: while I was still on the trading floor, it was
• 7:54
  Speaker 1: the year of the Woman, and since up until we
• 8:00
  Speaker 1: have made marginalized efforts, as you know, bringing more women
• 8:04
  Speaker 1: into this space, let alone bringing more minorities. So, Lauren,
• 8:09
  Speaker 1: how long did you work on Wall Street and did
• 8:11
  Speaker 1: you feel like there was any progress at all between
• 8:14
  Speaker 1: arriving and leaving. I worked there for two years, and uh,
• 8:20
  Speaker 1: there was one other lady who eventually joined the trading floor,
• 8:24
  Speaker 1: and she was much older, had been on the trading floor,
• 8:28
  Speaker 1: you know, back in the nineties, early two thousand and
• 8:31
  Speaker 1: and had came back. So from my experience, no, specifically
• 8:36
  Speaker 1: to the New York Stock Exchange, No, I don't think
• 8:39
  Speaker 1: there's been much improvement. So it's interesting, Lauren. You know,
• 8:43
  Speaker 1: I've worked on Wall Street for about thirty years and
• 8:44
  Speaker 1: what I noticed and this is probably has some relation
• 8:47
  Speaker 1: to corporate America as well as the incoming classes, whether
• 8:51
  Speaker 1: at a college, whether their investment banking analysts or their
• 8:54
  Speaker 1: new sales and people are traders. There's a fair amount
• 8:58
  Speaker 1: of diversity there, both gender diversity and all other types
• 9:02
  Speaker 1: of diversity. Yet when you get ten years forward, seven eight, nine,
• 9:06
  Speaker 1: ten years forward, when there's managing director decisions, partnership decisions,
• 9:09
  Speaker 1: those ranks are really thinned out and it does look
• 9:13
  Speaker 1: much less diverse. What do you think the industry has
• 9:16
  Speaker 1: to do to kind of keep those people in the workforce. Yeah,
• 9:21
  Speaker 1: so I don't think that there should be sponsorships. There
• 9:23
  Speaker 1: should be allies UM people actively involved in trying to
• 9:28
  Speaker 1: progress individuals careers. When I was on the trading floor,
• 9:32
  Speaker 1: I love that the men and it was mutual on
• 9:35
  Speaker 1: both sides me. But then we were coming together, what
• 9:38
  Speaker 1: can we do to help you with your career? You know,
• 9:42
  Speaker 1: I'm sure you don't want to stay on the trading floor.
• 9:44
  Speaker 1: What do you want to do in finance? And they
• 9:46
  Speaker 1: introduced me to many different people and they were definitely
• 9:50
  Speaker 1: helpful and facilitating that, But I know that that's not
• 9:53
  Speaker 1: the experience UM with throughout all of corporate America or
• 9:58
  Speaker 1: even within the financial industry. So I think there needs
• 10:00
  Speaker 1: to be a bridge and to go from there. Lauren,
• 10:05
  Speaker 1: what did you learn from Wall Street and would you
• 10:08
  Speaker 1: ever work on Wall Street again? I learned so many things. Um. Obviously,
• 10:14
  Speaker 1: working on the train floor was a very fast pace
• 10:18
  Speaker 1: alpha mel environment and I was the only woman on
• 10:22
  Speaker 1: the floor. Um. I think one of the best devices
• 10:24
  Speaker 1: that Richard Rose and Wise It could give me while
• 10:27
  Speaker 1: I worked at Rose bat Securities is you know people
• 10:31
  Speaker 1: are going to notice you regardless. And he didn't mean
• 10:34
  Speaker 1: anything by it, but he just said that, because I
• 10:37
  Speaker 1: am the other in the room, and you know I'm
• 10:41
  Speaker 1: essentially the elephant the room, make sure that I have
• 10:44
  Speaker 1: something to say, something of substance to say when people
• 10:47
  Speaker 1: approached me, because people are going to notice me either way,
• 10:51
  Speaker 1: and there's no way of hiding, um and encountering behind
• 10:56
  Speaker 1: other people. So I thought that was the best device
• 10:58
  Speaker 1: that I would give. As far as you running back
• 11:00
  Speaker 1: to Wall Street, I I don't think so. I very
• 11:03
  Speaker 1: much enjoyed my experience there, um, but I have been
• 11:07
  Speaker 1: showed off into doing uh many more things that I'm
• 11:10
  Speaker 1: passionate about that are making a much brander impact. Lauren Simmons,
• 11:15
  Speaker 1: thanks so much for joining us. We really appreciate your thoughts.
• 11:18
  Speaker 1: A fascinating story. Lauren Simmons, entrepreneur, founder and see of
• 11:21
  Speaker 1: Lauren Simmons l l C. Featured it in the Bluemore
• 11:24
  Speaker 1: Markets magazine. They have a special issue focused on diversity. Really,
• 11:27
  Speaker 1: uh suggest you take a look at that is where
• 11:29
  Speaker 1: black men and women they really share their experiences on
• 11:32
  Speaker 1: Wall Street and again, Vannie, it's just you know, my
• 11:36
  Speaker 1: sense that, um, there's just not enough support to get
• 11:39
  Speaker 1: them through the ranks. Again, I think they do a
• 11:41
  Speaker 1: pretty decent job getting people in the door, but keeping
• 11:44
  Speaker 1: them as a whole another story. Well, it's definitely a
• 11:47
  Speaker 1: question of willingness. And Lauren at twenty six, with that
• 11:51
  Speaker 1: kind of experience under her belt, is you know, a
• 11:55
  Speaker 1: great ambassador for somebody who went out there and did
• 11:57
  Speaker 1: that in spite of all the odds. I had a
• 11:59
  Speaker 1: conversation with her esterday and she was telling me that
• 12:01
  Speaker 1: she was the second black person to ever have worked
• 12:03
  Speaker 1: on the New York Stock Exchange, which, really, when you
• 12:06
  Speaker 1: think about it, the amount of people that have worked
• 12:08
  Speaker 1: down there over the year is the entire history of
• 12:11
  Speaker 1: the New York Stock Change heard the second black equity
• 12:15
  Speaker 1: trader down there is really quite something phenomenal, I think,
• 12:18
  Speaker 1: And if you read the Diversity Issue magazine, you'll see
• 12:22
  Speaker 1: that all of these people seem to be one off
• 12:24
  Speaker 1: and that's just not good enough. No, it's not And
• 12:26
  Speaker 1: as as she was mentioning, um, as Lauren was mentioning here,
• 12:30
  Speaker 1: there really has to be support. And we've heard a
• 12:32
  Speaker 1: lot of talk not just from the senior folks on
• 12:34
  Speaker 1: Wall Street, but just senior management is c suite in general,
• 12:37
  Speaker 1: you know, over the last decade plus about commitment to diversity,
• 12:41
  Speaker 1: but there it just doesn't bear out in the numbers,
• 12:43
  Speaker 1: and we see that time and time again. And so
• 12:44
  Speaker 1: that's why I think this Bloomberg Markets issue, there's a
• 12:47
  Speaker 1: really good job that goes below the numbers and really
• 12:49
  Speaker 1: talks to the people, interview some people that have worked
• 12:51
  Speaker 1: on Wall Street black men, men and women, and they
• 12:53
  Speaker 1: share their personal experiences and kind of really brings at home.
• 12:56
  Speaker 1: So it's a good job by the team of Bloomberg Markets.
• 12:59
  Speaker 1: And I'm gonna be looking forward to seeing what Lauren
• 13:02
  Speaker 1: Simmons does next because she's clearly a trailblazer in her fields.
• 13:05
  Speaker 1: So Thank you to Lauren Simmons for joining us and
• 13:08
  Speaker 1: speaking about her experience. It's time for Bloomberg Opinion. We
• 13:14
  Speaker 1: are joined this morning by Rachel Rosenthal, editor Bloomberg Opinion
• 13:18
  Speaker 1: based in Singapore, out with a fascinating column, and it
• 13:21
  Speaker 1: goes to that whole H one B visa issue that
• 13:25
  Speaker 1: is making. It's always a political issue, but it's even
• 13:27
  Speaker 1: a bigger one this year with President Trump looking to
• 13:29
  Speaker 1: rein that in and uh, interesting column. Um, Rachel's out
• 13:34
  Speaker 1: with this column, Big Tech wants you to believe in
• 13:37
  Speaker 1: a skills gap. Titles suggest that maybe Rachel doesn't necessarily
• 13:41
  Speaker 1: believe that. Rachel, thanks so much for joining us here.
• 13:43
  Speaker 1: I've always heard from Silicon Valley that these H one
• 13:47
  Speaker 1: B VISs are critical to their businesses because the US
• 13:51
  Speaker 1: does not produce enough skilled labor. What's the real take there?
• 13:55
  Speaker 1: Do you believe that? Um? Well, you know what, I
• 14:00
  Speaker 1: into Stanford, so in the heart of Silicon Valley, and
• 14:02
  Speaker 1: I very much believe the same. And you know, I
• 14:04
  Speaker 1: think I would have agreed with you until about about
• 14:07
  Speaker 1: feed or ten weeks ago when I started researching this piece. Um.
• 14:10
  Speaker 1: You know, you start looking at the data and it
• 14:13
  Speaker 1: just doesn't really add up. UM. And you know, if
• 14:16
  Speaker 1: you look at the number of graduates that we have
• 14:19
  Speaker 1: in computer science and engineering, if you look at the
• 14:21
  Speaker 1: number of them graduates overall, and then you look at
• 14:24
  Speaker 1: the number of openings, the number of vacancies, patterns of
• 14:27
  Speaker 1: wage growth, and you look at a whole host of
• 14:29
  Speaker 1: other things. Um, you start to see some that the
• 14:32
  Speaker 1: thread really starts to unravel there, and you start you
• 14:35
  Speaker 1: have to kind of ask yourself the bigger question. You
• 14:37
  Speaker 1: know what, um, what do you tech companies want? And
• 14:41
  Speaker 1: it's not just tech companies, it's companies across the tech industry.
• 14:45
  Speaker 1: You know, they're tech workers and all kinds of fields
• 14:48
  Speaker 1: that you know, I see you know, every kind of
• 14:50
  Speaker 1: company has I F workers for example, so um, they
• 14:53
  Speaker 1: could be in in retail, to restaurants. So UM. There
• 14:57
  Speaker 1: is a lot of incentive to claim the there are
• 15:00
  Speaker 1: enough skilled workers because you can get a pretty serious
• 15:04
  Speaker 1: discount on on foreign labor um. And these are guest workers. UM.
• 15:10
  Speaker 1: So I think. You know, there's a really fascinating paper
• 15:13
  Speaker 1: upon which a lot of my research was based, UM,
• 15:16
  Speaker 1: out of the Economic Policy Institute. It came out in May, UM,
• 15:20
  Speaker 1: indicating that you know, there are four wage levels for
• 15:23
  Speaker 1: each one vs UM, and the two lowest ones companies
• 15:26
  Speaker 1: can get a discount. UM. It was up to you know,
• 15:29
  Speaker 1: thirty six percent for the lowest wage bracket and eighteen
• 15:32
  Speaker 1: percent for the second lowest. Now that was that that
• 15:35
  Speaker 1: they had to look at a narrowest place within the
• 15:37
  Speaker 1: DC metro area in a certain computer occupation. UM. But
• 15:41
  Speaker 1: it was pretty telling to me that this kind of UM,
• 15:43
  Speaker 1: this kind of discount can really add up and create
• 15:45
  Speaker 1: huge savings and create incentives for this narrative to persist.
• 15:50
  Speaker 1: So Rachel talked to us about degrees earned versus openings.
• 15:54
  Speaker 1: So in the United States, for example, you know what
• 15:57
  Speaker 1: degrees are earned versus openings? Sure, um, So if you know,
• 16:02
  Speaker 1: I went through a lot of data which is UM
• 16:04
  Speaker 1: you know, and they're about uh, roughly five thousand stem
• 16:09
  Speaker 1: degrees UM in in the U s UM in the
• 16:12
  Speaker 1: latest year that they attracted, which was twenty eight keen UM.
• 16:15
  Speaker 1: So that's up six from a decade earlier. So people
• 16:18
  Speaker 1: are you know, American students are getting lots and lots
• 16:21
  Speaker 1: of degrees in in quote unquote STEM fields. And you know,
• 16:24
  Speaker 1: I think you know those knees europe impuls would be like, oh, well,
• 16:27
  Speaker 1: aren't all those graduates you know from abroad, and they're not.
• 16:30
  Speaker 1: You know, what I found was that actually north of
• 16:32
  Speaker 1: nine d son of them were actually American citizens and
• 16:35
  Speaker 1: permanent residents. UM. Now that picture can change as you
• 16:38
  Speaker 1: go up the scale in terms of UM graduate degrees,
• 16:41
  Speaker 1: and there's that's a little bit of a different metrics.
• 16:43
  Speaker 1: But UM, you know, when you look at the bachelor's
• 16:46
  Speaker 1: degrees that are earned, a whole lot of them are Americans,
• 16:50
  Speaker 1: Americans and permanent residents. And if you look at openings,
• 16:54
  Speaker 1: you know, you have to consider that there are certain
• 16:57
  Speaker 1: openings that go that typically would go to UM someone
• 17:02
  Speaker 1: who had a specific type of degree that's called computer
• 17:04
  Speaker 1: science degree or related computer science engineering field. UM. But
• 17:08
  Speaker 1: that you know, not everyone in these fields necessarily has
• 17:13
  Speaker 1: to have a computer science degree. I'm sure. I mean
• 17:16
  Speaker 1: Steve Jobs themselves is a very good example. UM. But
• 17:19
  Speaker 1: I know, you know, just from my time at Stanford,
• 17:21
  Speaker 1: I know a number of people who ended up in
• 17:23
  Speaker 1: tech who did not make during computer science UM. And
• 17:25
  Speaker 1: it was actually pretty interesting that you know, two thirds
• 17:28
  Speaker 1: of um I T occupation new entrants do not have
• 17:32
  Speaker 1: a computer science degree. So then you have to consider
• 17:35
  Speaker 1: the entire pool of UM American bachelor's degree owners as
• 17:39
  Speaker 1: potential people who could be trained. And I think UM
• 17:42
  Speaker 1: for for this type of work. And I think that
• 17:46
  Speaker 1: you know, that is really a key feature in some
• 17:48
  Speaker 1: of the research that I've done, is you know, why,
• 17:50
  Speaker 1: what's the incentive to train someone when you've got you know,
• 17:53
  Speaker 1: ready to work cheaper labor that's coming in from abroad.
• 17:57
  Speaker 1: What do the tech companies say, UM, in response to
• 18:01
  Speaker 1: kind of the economics of this the cheaper nature of
• 18:05
  Speaker 1: some of these foreign workers is what's typically the response? Sure,
• 18:10
  Speaker 1: I mean, I think the typical response would never be
• 18:12
  Speaker 1: to say they are cheaper. And I think that there
• 18:14
  Speaker 1: there is a tremendous backlash UM when Trump is issued
• 18:17
  Speaker 1: is executive were in June? Um, you know, And and
• 18:20
  Speaker 1: there are a lot of like really legitimate claims to
• 18:23
  Speaker 1: be made that you know, a lot of there's a
• 18:25
  Speaker 1: lot of intelligence and innovation and entrepreneurships UM that and
• 18:29
  Speaker 1: that America is built in the foundation of immigrants, which
• 18:31
  Speaker 1: I a hundred percent beliefs. But you have to remember
• 18:34
  Speaker 1: the hm vvs as holders are not immigrants, I mean
• 18:36
  Speaker 1: their guest workers, and and they are you know, get
• 18:39
  Speaker 1: trapped in what's a lot of people called some version
• 18:43
  Speaker 1: of indenture labor because they are tied UM, they're sponsored
• 18:46
  Speaker 1: by an employer UM, and it's really difficult to move
• 18:49
  Speaker 1: from one employer to another. So they you know, they
• 18:51
  Speaker 1: they're they're they're kind of stuck and you know, they
• 18:54
  Speaker 1: don't have UM. You know, they could be here for
• 18:56
  Speaker 1: three years, they could be here for six years. Sometimes
• 18:58
  Speaker 1: that six years gets extended, sometimes it doesn't UM. So
• 19:01
  Speaker 1: you know, it's they're they're they're really suck. And I
• 19:04
  Speaker 1: think that you know, they because their company sponsors their
• 19:09
  Speaker 1: visa and because their visas side of their immigration status,
• 19:11
  Speaker 1: and because their immigration status enables them to stay in
• 19:15
  Speaker 1: the US, pay taxes, have families, and be part of
• 19:18
  Speaker 1: you know, be part of the communities that they're part of.
• 19:20
  Speaker 1: You know, they can't whistle blow on their companies. So
• 19:23
  Speaker 1: I think, you know, it's very easy to paint this
• 19:26
  Speaker 1: picture is UM, you know, anti immigrant UM, but it's
• 19:30
  Speaker 1: really not, because I think the system actually really hurts
• 19:33
  Speaker 1: not only American workers but which want to be these
• 19:35
  Speaker 1: the holders as well. What happens to the American workers
• 19:38
  Speaker 1: that don't get those jobs then? So you know, there's
• 19:43
  Speaker 1: a number of things. You know, I think you could look. Um,
• 19:45
  Speaker 1: you know, I've often casually wondered to myself like, why
• 19:49
  Speaker 1: are there so many you know, computer engineers and finance
• 19:53
  Speaker 1: and you know, it was always just sort of a
• 19:55
  Speaker 1: curiosity to me that I never really thought twice about.
• 19:57
  Speaker 1: But you know, if you think about it, when you
• 20:00
  Speaker 1: know you're not seeing um wage growth, um, you know
• 20:04
  Speaker 1: that I should mention that the wages in the I
• 20:07
  Speaker 1: T sector, for example, are higher than the median UM
• 20:10
  Speaker 1: wages in the US broadly, but they're not necessarily growing.
• 20:15
  Speaker 1: I mean, I think there's this idea that you know,
• 20:17
  Speaker 1: if you get a computer science degree or programming, you're
• 20:20
  Speaker 1: you know, you know how to code, that you know,
• 20:22
  Speaker 1: you're you're you've got a ticket to success. And I just,
• 20:26
  Speaker 1: you know, I don't necessarily know that that's that that's
• 20:28
  Speaker 1: the case. Um, So you know, I think that, UM,
• 20:33
  Speaker 1: you know, this is this is something that you know,
• 20:35
  Speaker 1: you just have to consider all aspects of Rachel. It
• 20:39
  Speaker 1: is a fascinating bloombergiminion base, and we always love to
• 20:42
  Speaker 1: focus on these because they tend to put out a
• 20:45
  Speaker 1: little viewpoint that might differ slightly or even entirely with
• 20:50
  Speaker 1: what's out there sort of in the ether. So Rachel's
• 20:53
  Speaker 1: thanks for that. Rachel Wilson's Hall is editor at Zloomberg
• 20:56
  Speaker 1: Opinion and her piece today, big tech wants you to
• 20:59
  Speaker 1: believe in a bills gap subtitle, but what they really
• 21:02
  Speaker 1: want is a steady supply of cheap, dependent I T workers.
• 21:07
  Speaker 1: I think that might be called capitalism poll. Yes, exactly,
• 21:10
  Speaker 1: and it's certainly different from the narrative. What is the
• 21:14
  Speaker 1: latest between TikTok and the United States? What company is
• 21:17
  Speaker 1: interested in buying TikTok and will they be able to
• 21:21
  Speaker 1: Let's bring in Andrew Brown, Bloomberg New Economy editor, and
• 21:26
  Speaker 1: in fact he is the editorial director of New Economy. Andy,
• 21:29
  Speaker 1: very great to have you. We've had so many reports
• 21:31
  Speaker 1: over the last couple of days. Fox reporting today that
• 21:34
  Speaker 1: several companies, including Facebook might actually be interested Axio, saying
• 21:38
  Speaker 1: other companies are interested in the one we knew about
• 21:40
  Speaker 1: yesterday Microsoft to any of these companies have a better
• 21:44
  Speaker 1: chance than any other. Look, I'm not I'm not really
• 21:48
  Speaker 1: in a position of of weighing the merits of the
• 21:51
  Speaker 1: deal itself. Um. You know what, what what you have
• 21:56
  Speaker 1: here is a US president, um who has weighted into
• 22:01
  Speaker 1: this incredibly complicated corporate situation that touches on very fundamental
• 22:07
  Speaker 1: issues for the United States around freedom of speech, the
• 22:10
  Speaker 1: operations of a market economy, and he seems to have
• 22:13
  Speaker 1: decided in a in a peremptory, in almost arbitrary way,
• 22:17
  Speaker 1: that a deal, some deal, whether it's with Microsoft or
• 22:20
  Speaker 1: some of Facebook or some of the other actors that
• 22:22
  Speaker 1: you've you've mentioned, must occur by September fifteen. Otherwise one
• 22:29
  Speaker 1: of the most popular apps in the United States right now,
• 22:32
  Speaker 1: an app that's been downloaded a hundred and sixty five
• 22:35
  Speaker 1: million times. Um an app that gen z uh folks
• 22:41
  Speaker 1: live by. It's gonna be it's gonna be close, it's
• 22:44
  Speaker 1: gonna be closed down. And needless to say, um, Chinese
• 22:48
  Speaker 1: media absolutely outraged by what's going on. So Andy, let's
• 22:54
  Speaker 1: get to the heart of the matter. I think the
• 22:56
  Speaker 1: heart of the matter might be h security, national security,
• 22:59
  Speaker 1: and is there any evidence to suggest that there that
• 23:03
  Speaker 1: TikTok does represent a risk to the United States. Look,
• 23:08
  Speaker 1: there is no direct evidence that um uh, you know,
• 23:13
  Speaker 1: TikTok is giving us data to the Chinese government. There
• 23:19
  Speaker 1: is circumstantial evidence there are sort of there is what
• 23:22
  Speaker 1: ifs right. So what if the Chinese government said to
• 23:26
  Speaker 1: to Bike Dance, which owns TikTok, you have to hand
• 23:30
  Speaker 1: over this data. Would would TikTok to well they the
• 23:34
  Speaker 1: company insists that it wouldn't. Um, it's actually highly unlikely
• 23:39
  Speaker 1: that any company would say no to the to the
• 23:41
  Speaker 1: Chinese government to such a request. So it's all it's
• 23:44
  Speaker 1: it's all hypothetical, I mean, and that that hardly represents
• 23:47
  Speaker 1: smoking gun evidence that TikTok is a national security But
• 23:51
  Speaker 1: having said that, there are really genuine questions, uh, and fears, um,
• 23:58
  Speaker 1: you know about data security and the Chinese government. I mean,
• 24:01
  Speaker 1: and these go back years. In two thousand and fifteen,
• 24:03
  Speaker 1: you remember there was a there was the Chinese state
• 24:06
  Speaker 1: hack has got into the office of the U S
• 24:07
  Speaker 1: Officer of Personnel Managers Management and installed data of four
• 24:12
  Speaker 1: million you know, US government federal government workers. More recently,
• 24:17
  Speaker 1: these accusations of state hackers have been getting into labs
• 24:19
  Speaker 1: and stealing trying to steal secrets on the development of
• 24:23
  Speaker 1: COVID nineteen vaccines. So you know, there are legitimate concerns.
• 24:28
  Speaker 1: The question is is this the right way to address
• 24:30
  Speaker 1: these concerns exactly? And also you know, can the US
• 24:33
  Speaker 1: take a fee for doing so? I mean that's that's
• 24:36
  Speaker 1: the part that you know, almost becomes a funny at
• 24:39
  Speaker 1: that point, and Narricolo is just telling reporters right now
• 24:41
  Speaker 1: that is not your TikTok deal. Fee to the United
• 24:43
  Speaker 1: States is a quote key stipulation. I mean, where did
• 24:47
  Speaker 1: that come out of? Yeah, I I don't think the
• 24:51
  Speaker 1: the stipulations in this. I mean this is this is
• 24:54
  Speaker 1: this goes back to the sort of the this whole arbitrariness. Um,
• 24:58
  Speaker 1: you know there are presidents, right, so some years ago, um,
• 25:02
  Speaker 1: the Chinese owner of grind this this you know dating app,
• 25:07
  Speaker 1: was forced to sell after a review by Sippius, which
• 25:10
  Speaker 1: of course the U. S. Treasury body that that that
• 25:13
  Speaker 1: screens foreign investments. But but you know that this was
• 25:16
  Speaker 1: there was a process there. I mean it was it
• 25:18
  Speaker 1: was as all as all cipious processes are. It was secretive,
• 25:23
  Speaker 1: but nevertheless there was a process and companies could strategize
• 25:27
  Speaker 1: around that process. I mean, here you have, um, you know,
• 25:32
  Speaker 1: essentially it seems like a decision coming straight out of
• 25:35
  Speaker 1: the the the West wing. The owner of the company,
• 25:39
  Speaker 1: John Yeming, he's been telling employees he has no idea
• 25:42
  Speaker 1: really what's going on? But he thinks the ultimate aim
• 25:44
  Speaker 1: here is to close down, um, his app and that
• 25:48
  Speaker 1: that's what he thinks. The end game is so andy.
• 25:51
  Speaker 1: I know you have your ear close to uh, what's
• 25:53
  Speaker 1: happening on the ground in China. What's the response there?
• 25:56
  Speaker 1: I know the Chinese media has had some response here,
• 25:59
  Speaker 1: But if you heard some other people that you trust
• 26:01
  Speaker 1: your sources about kind of how they view the Chinese
• 26:04
  Speaker 1: view of what's going on here. Yeah, I mean, well
• 26:07
  Speaker 1: we we we've all seen the Chinese you know, state
• 26:10
  Speaker 1: media reaction, China Daily going one about the smash and
• 26:13
  Speaker 1: grab rate and who Hi Jin, who's the editor in
• 26:16
  Speaker 1: chief of the Global Times, is saying this is this
• 26:19
  Speaker 1: is open open robbery. I mean, um, look, this is
• 26:23
  Speaker 1: in many ways, TikTok is the avatar of of of
• 26:26
  Speaker 1: Chinese tech ambitions. I mean, Chinese people are incredibly proud
• 26:30
  Speaker 1: of of of what it's achieved. It's the first Chinese
• 26:33
  Speaker 1: internet company, social media company to come into the United
• 26:37
  Speaker 1: States take on the huge these gigantic incumbents and when
• 26:42
  Speaker 1: you know, I mean this this is it is the
• 26:44
  Speaker 1: essence of the of the capitalist success story. And you
• 26:48
  Speaker 1: know in China. Essentially, the view is they're they're trying
• 26:52
  Speaker 1: to trying to you know, close close down UM and
• 26:56
  Speaker 1: and an app that UM has taken on, and just
• 27:00
  Speaker 1: beta American companies that you know, this is basically trade protectionism.
• 27:05
  Speaker 1: If this happens, you know, kind of new company keep
• 27:09
  Speaker 1: it as successful. Will will people just be fine with
• 27:13
  Speaker 1: new ownership or you know, the people that have been
• 27:17
  Speaker 1: on TikTok, especially the younger fans, have shown themselves to
• 27:19
  Speaker 1: be pretty politically active. Will they sort of boycott TikTok
• 27:23
  Speaker 1: if Microsoft buyser? I mean, you can't answer that, I guess,
• 27:26
  Speaker 1: but it's an interesting question, right, Yeah, I'm I'm not
• 27:29
  Speaker 1: the expert on that. I'm not even the expert on
• 27:32
  Speaker 1: on on TikTok. I don't I don't use it myself,
• 27:34
  Speaker 1: but um, you know, it seems it seems to me
• 27:38
  Speaker 1: that the concept is brilliant and simple. I mean, this
• 27:41
  Speaker 1: is sort of sharing goofy video, it's family fund UM
• 27:46
  Speaker 1: very much now a part of the lifestyle of a
• 27:51
  Speaker 1: generation of young Americans, and they're not understanding why this
• 27:54
  Speaker 1: app needs to be closed down either. I mean, this
• 27:56
  Speaker 1: is why you need to have a national debate, why
• 27:59
  Speaker 1: you know, this is a serious issue. How are we
• 28:01
  Speaker 1: going to handle in the long run, um, Chinese investments
• 28:06
  Speaker 1: in this area? How how are we going to deal
• 28:08
  Speaker 1: with with with Chinese companies that that access US data? Um?
• 28:13
  Speaker 1: You know, the the the the approach now which is
• 28:16
  Speaker 1: is close it down? Um. I mean this is what
• 28:19
  Speaker 1: the Chinese would do. I mean, you know, if the idea, um,
• 28:24
  Speaker 1: you know, is to preserve freedom of speech in the
• 28:27
  Speaker 1: United States, to oppose the Chinese style of doing these, well,
• 28:30
  Speaker 1: you're actually acting rather like the Chinese would do exactly right.
• 28:34
  Speaker 1: Always fascinating talking to Andy Brown. He has a great
• 28:37
  Speaker 1: perspective all things China. Andy Brown, editorial director for Bloomberg
• 28:40
  Speaker 1: New Economy, talking about that crazy news about TikTok? Is
• 28:44
  Speaker 1: it going to be shut down? Is it going to
• 28:46
  Speaker 1: be sold? If it's gonna be sold, who's going to
• 28:47
  Speaker 1: buy it? Does President Trump and the government get an
• 28:50
  Speaker 1: investment banking fee? All kinds of things we are following
• 28:53
  Speaker 1: right now. We'll have that more for you coming up.
• 28:56
  Speaker 1: Thanks for listening to Bloomberg Markets podcast. You can sub
• 28:59
  Speaker 1: school ribe and listen to interviews at Apple Podcasts or
• 29:02
  Speaker 1: whatever a podcast platform you prefer. I'm Bonnie Quinn, I'm
• 29:06
  Speaker 1: on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm
• 29:08
  Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can
• 29:11
  Speaker 1: always catch us worldwide at Bloomberg Radio