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Bloomberg Audio Studios Podcasts Radio News this is
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Bloomberg businessweek 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 news as it happens. The Bloomberg Business Week Daily Podcast with
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A
Carol Massar and Tim Stanvak on Bloomberg Radio Hi everyone.
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B
Welcome to the Bloomberg businessweek Weekend podcast. This past week it was largely about the news flow from Washington to Wall street that included an escalation in Middle east hostilities as the US And Iran signaled a renewal of peace talks is unlikely in the near term as military attacks continued from both sides. Also volatility in the equity markets around semiconductors and AI related names as the start of the mega cap earnings season got underway thanks to results from TESL and Alphabet, many other companies came out with results this past week. We were pretty busy pouring over them, but we are really getting ready for this coming week's biggest drop of quarterly results, including four of the Max seven. Tim so we're going to be busy.
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D
Oh, we're going to be busy because we also have a Fed decision.
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B
Oh yeah, there is that.
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D
Yeah, it's the second meeting under Fed Chair Kevin Warsh. Inflation concerns being fueled by the ongoing war in the Middle east that has continued to push up oil prices. As always, you can find the latest updates and coverage on the Bloomberg terminal and@Bloomberg.com when it comes to earnings.
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B
This past week, though, we did get a read on investors thanks to Charles Schwab, which benefited from last quarter's market volatility and the SpaceX IPO. We talked about it all. Plus the push into prediction markets with Charles Schwab CEO Rick Worcester.
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D
Plus Bloomberg auto reporter Keith Naughton reflects on four decades on the global auto beat. All the twists and turns and bumps in the road, everything from bailouts and buyouts, Elon and EVs and to China's coming of age.
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B
All of that to come. We begin with the state of crypto. Robinhood is continuing its push into the world of digital assets by expanding its services into the UK and Canada.
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D
This is Analysts at Bernstein and Piper Sandler said this past week that Robinhood's revenue from prediction markets is set to overshadow that from cryptocurrency trading. We were curious what the company thought about that. For more we caught up with Johan Kerberat, senior vice president and general manager for crypto and International at Robinhood. We've got this decline in crypto trading and I think many people would argue it's it's related to the price action that we've seen since October, but at the same time a catalyst in prediction markets with the World Cup. I'm just wondering how you're thinking about this, this universe of these two different elements of trading and how that affects your users. Like are they doing less on crypto and more with prediction markets?
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E
We haven't seen that in our data when we look at our customer engagement on the platform. We do have contracts on the prediction market platform that are related to crypto index price and crypto action. But overall I think it's just one of the cycle where we see a bit the sentiment in crypto a little down and overall we are just focusing on building new tools and new features that people can utilize when the sentiment goes up.
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D
So when the sentiment goes up, not if the sentiment goes up like you're confident it will go up.
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E
You know, we've seen all of these different cycles a lot and I think this is not our first time, not our first radio and I think the sentiment will come back. We saw it with the launch of our Robinhood chain July 1st. We've seen very good metrics already 105 million transactions on the platform.
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D
So explain what the impetus behind that was. And why you guys launched that now.
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E
Yeah, we really wanted to create an infrastructure and a backbone for creating new products that brings the value of Defi and blockchain technology to our traditional finance systems. And so one of the first products that we launched with this chain is called Robin Earn. That gives you approximately 7% on the dollar that you're lending to the protocol. And I think it's really giving you the best of two worlds. The high yield that you can get from Defi and also the simple UX and UI that you can get from a platform like Robinhood.
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B
What do you guys really want to be? Prediction markets? Crypto. You've got a platinum card, like there's a lot of stuff and I think some or critics might say, wait, you just kind of are chasing what seems to be popular. So what is it that you really want to be?
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E
I think for us the main goal has been to be this all in one platform for all your financial needs. And for that you need to cater to customers at different stage of their life. From the very young people that are starting to think about retirement, opening their first retirement account on Robinhood like an ira, to the more advanced customers that want to use agentic trading or AI tools. And also at the same time, banking. Rails and credit cards are still something that you need on a day to day basis.
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B
But why not go to the establishment like to say, like we talked to the folk, you know, Rick Royster over at Charles Schwab, but why not go to the establishment who are also embracing kind of the new innovation, if you will, in finance.
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E
Yeah, we absolutely are as well. If you see our market share and the growth of our business, it shows that we've been able to grab some of these customer from these more established businesses. But I think for us it's been important to have a wide array of features and functionalities. If you think about our credit card, we launched a gold credit card. We have more than a million customers now with this credit card. It really shows that there are a lot of things that we are used to on the financial side that we can disrupt. And Robinhood, by launching the gold card with 3% cash back on, almost everything really changed the way that people were utilizing credit cards in the business.
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D
On the crypto side of things, we spoke to Nathan Dean of Bloomberg Intelligence. He said he actually agreed with Treasury Secretary Scott Bessant who said that we're at the 10 yard or the 1 yard line, excuse me, 1 yard line, with the Clarity act in the Senate. If that passes this year. What does it mean for your business?
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E
I think it really changed the way that we can launch product in the US Right now. We have a very fragmented situation where some states will have access to some features and not. And it's something that really frustrates our customers. So we want to be able to launch products across the entire US the same way that we are doing that in other region in the world, like EU for example. The second thing is a lot of institutions want to get into crypto. They understand that there is a value using stablecoin or tokenized asset, but they don't want to do it for the short term. If they don't have clear regulation, they are not going to be able to launch a project that will take five or six years to build. So it's really important to get this clarity which the name of the act is very apropos because we can after this bill really have a lot of institution company like ours invest in a long time for blockchain technologies.
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B
How do you think about politics and midterm elections and changes in the administration? This is certainly an administration that has been much more embracing, if you will, of digital assets. But I'm just curious how you guys factor it in and think about it in terms of strategy or what you might need to get done or think about before the midterms or how you're thinking about it it afterwards.
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E
Well, if you think about Robinhood, it exists since 2013. Right. And so we have seen very different administration across the existence of the company and where I used to work with different administration. Hopefully, I think this time when you see the entire world actually embracing crypto regulation, you think about MICA in the eu, you think about the FCA in the UK creating a new framework. We really saw a situation with the previous administration where the US were falling behind and companies, crypto companies wanted to build outside of the US So I think it's important that no matter the direction of the next administration will be that we have comprehensive regulation to embrace the technology and make people build in America.
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D
Again, you are also, you oversee the international business as well. And I'm just curious about the timeline or the pipeline that you have for products that we may not have in the US but you can have overseas or have overseas but but not have here in the US like what, what is the breakdown right now?
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E
Yeah, one of the main product we have overseas and not in the US is crypto perpetuals or future perpetuals. It's a primitive that was invented by crypto technology and we are seeing a lot of demand from our customers and you see platforms that are decentralized, seeing a lot of volume coming, like a hyper liquid for. Like a hyper liquid. For example, in the EU we have it available for crypto contracts, but also for commodities and ET contracts. And it's something that we see a lot of engagement with.
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D
Meaning you think that it would be something that could happen here in the US at some point?
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E
I think so. I think, you know, there are still some discussion happening at the CFTC level, but it sounds like it's something that we are looking to open in the US at the regulatory level and we have the technology ready to use. So the day that we have clear regulation, we'll be able to launch it.
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D
You know, one thing that we always try to get an understanding of is what people are doing on a specific platform, what they're doing in different parts of the world. We talked to a lot of folks who are managing money and about asset allocation. What about outside of the US demand for US stocks right now? What does that look like?
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E
It's still something that we are investing a lot. So we launch our tokenized assets, we call it stock tokens that give exposure to U.S. stocks and ETF. And in a lot of places, including in Europe, you still have platform that still charge commission. For example, one of the biggest ones still charge at least €1 per transaction when you want to buy a stock. So giving access to this stock token has actually been a way for them to access it without paying commission fees. We launched actually a study with European customers and more than 50% of them were interested by this type of product. And a lot of them were interested by the fact that you can trade them 24, 7 as well. Because on the weekend the world doesn't stop. And so the economy also has an impact. And also the fact that the time zone is very difficult right when the US market is open is often night for. For the eu. So I think that's a kind of evolution that we will see from the blockchain technology that will bring traffic into a new world, basically.
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B
What about things like the SpaceX IPO? And I'm just curious how that impacted or what kind of activity you guys saw around that and then how you are thinking about the upcoming IPOs, whether it's open air, anthropic.
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E
Yeah, we have a platform called IPO access where a customer can actually place demand and based on what alloc we get from the issuer, we're able to distribute it to our customers. SpaceX obviously was a large one, but it's a platform that we were seeing more and more demand on.
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B
And did you see a lot of demand with Space X?
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E
Yeah, it was definitely one of big demand because of the size of the ipo. One of your biggest days, I couldn't tell you the size exactly. But I think what's interesting is seeing more and more of the demand from our retail customer for early access to this company. A lot of these companies are waiting longer and longer before going public and therefore the retail customer is not able to also get the same upside that they were when they were participating into the Google ipo, for example.
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D
What is the way to access that in an environment where it's traditionally been restricted to these so called accredited investors which have specific barriers to net worth?
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E
That's probably one of the things that we need to change here in the U.S. if you think about other places like in the EU, you have an assessment test that you have to complete so it will ask you questions. And only if you pass this question you're able to access this type of product.
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D
Is it about net worth or is it about.
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E
No, it's about your knowledge and understanding the risk of the product. And I think that's a very big difference because no matter of your net worth, if you understand it, it should give you access, not necessarily just because you have a big bank account.
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B
John, we just have about 40, 50 seconds here. I mean, you talked about people wanting different things on the platform as they kind of get older.
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F
Right.
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B
And different things that you guys are offering. What is the biggest demo though, demographic on the platform or how is it changing?
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E
Yeah, our demographics still skew on the, on the younger side in the 35 to 40, but we also have new products. For example, we launched the Trump account which allows you to create an account for your babies and your child. And I think that's something that is very important because it's by starting to utilize this type of platform that you are able to start thinking about the future of your children.
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B
Are you seeing an uptick in that? Are you seeing activity around that?
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E
Yeah, absolutely. I don't have the exact number, but you will see that a lot of our customers were opening accounts for their children. And I think it's important the children needs to learn about this to start thinking about their future.
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D
Can you open an account for my children?
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E
Carol?
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I will do anything.
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D
Thank you.
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B
Absolutely. By the way, Robinhood reporting second quarter
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results on July 29, Johan Kerberat, senior Vice President General Manager of Crypto and International at Robinhood this is Bloomberg.
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A
Advisors. The best way to outperform client expectations is to choose funds and ETFs that outperform the market. Fidelity helps power long term growth in client portfolios with 300 plus Morningstar rated 4 and 5 star funds including active ETFs. Discover what sets Fidelity apart when it comes to performance@idoc fidelity.com topfunds across all fund share classes of Fidelity, Fidelity Advisor Shares and Fidelity ETFs as of 6, 15, 20, 26. Past performance is no guarantee of future results. Support for this show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public
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Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC SEC registered advisor complete
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disclosures available@public.com disclosures aging is real.
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F
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D
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
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B
Charles Schwab reported earnings that topped estimates as retail investors continued to jump in and out of the market amid volatility sparked by geopolitical uncertainty company reported a record 11.9 million daily average revenue trades in the second quarter, a 57% increase from a year earlier. Tim. Trading revenue also rose climbing 28% to $1.2 billion.
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Net revenue a beat to up 21%. Revenue per trade missed the Bloomberg estimate. Second quarter total net new ass, that's hitting $118.7 billion. That was a significant beat.
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B
We caught up with Rick Wurster. He's the president and CEO of Charles Schwab. He joined us here in studio to talk about the latest financial update.
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G
It was a really strong quarter and what gives us a great amount of pride and satisfaction is that our clients continue to trust us with more and more of their wealth and they continue to trust us to do more and more for them. So they're not just coming to us for investing and trading, certainly they're doing lots of that, but they're also coming to us and asking, asking for help with their wealth and they're helping for tax planning and they're asking for lending for us to help them with lending. And so we're doing more to help our clients financial lives. Their wealth is at an all time high and it's a great time to be in this business to support our clients and help them thrive.
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D
Rick, when you say that clients are trusting Charles Schwab with more of their wealth, where is that wealth coming from? I mean it's, it is essentially a zero sum game. So if they're, are they moving it from other platforms to you and sort of, how do you measure that?
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G
Well, first, I think a lot of our client wealth is being delivered by the returns you're seeing in the market over the last year. The market's up 21 ish percent I believe through June 30 and our client assets are up about 22%. So they've really participated. Their wealth has grown. I think where their additional dollars come from is their employment activities. Maybe they sell a house, other investment activities outside of Schwab. But with employment so strong, strong, it's not surprising and the market doing well, not surprising. They continue to bring us a fair amount of assets. The other place we see it is that we do a lot to serve independent advisors and independent advisors as a group are really taking share of the advice market. And so as they win and they bring more assets to us, we benefit from growth.
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B
What are they trading and what are they continuing to trade? I'm always curious about what exactly you're seeing across the platform.
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G
Yeah, it's been a pretty interesting. Actually I'll highlight a couple of things. Number one, which is fascinating to me is that we saw three and a half times more volume on down days in the market, which means that they're buying the dip.
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B
Okay.
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G
The other thing we've seen is a rotation. So they went from really interest in the mag 7 to more on the trade and that's been been a driver of of interest for our clients. And then the final thing I'd say is that because of some of the geopolitical risk in the markets, they are more actively trading so that we see more frequent trading but the trade sizes are often smaller and so they're making more incremental trades because they're not exactly sure what's going to happen with the geopolitical situation. So those are three of the themes that we've seen with our retail traders.
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D
How sustainable are these themes? I mean the Wall Street Journal, I think the headline was the Stock trading Boom is here to Stay citing you and your comments. Why do you believe it's here to stay? Why do you think it's sustainable?
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G
Well, a couple of things. I think they're great for our country because the more people invest at a young age, I think the better off they are over the long run run. And we have seen a real increase in young investors. Gen Z is 45% more likely to invest by the age of 21 than the prior generation. So we have that. I think the second structural change is when we went to zero on commissions and then all the other major brokers followed. It just took away the last barrier for investors. For people that were wealthy and trading in hundreds of thousands, the $5 commission didn't mean much. But for the person who had 5,000 or 1,000 and that was a barrier and now that's no longer a barrier. I also think AI is helping people get more comfortable researching stocks and taking positions and being an investor and learning about the power of compounding. So I think it's all adding up to just more engagement. We've seen the highest level of stock ownership of stocks that we've seen in the last 20 years. So it's great to see that kind of interest in markets. You all get to participate in this. The power of compounding is a great thing for investors and the more and more people that do that, the better off our country is.
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B
So you talked about like what clients are asking for, right? So do they want more sophisticated investments or they like they're doing just fine with stocks. Are they pretty happy with it, yeah,
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G
what's, what's great is we've got clients of all stripes and all different well sizes. One of the real themes that we've seen from our more wealthy clients recently is a high degree of interest in tax related strategies. We've got a lot of clients that have built up large positions, often concentrated positions, and they're wanting to manage the tax, the capital gain associated with this. The other thing we're seeing is a real increase in pledged asset loans. So people have built up wealth in a small number of stocks. They want to buy a house, they want to put their kid through college and they don't want to have to sell that position. What they're doing is they're taking out a pledged asset line so they're not having to sell that position. So between Tax Aware strategies and pledged asset lines, we're really seeing people be thoughtful about not paying big capital gains.
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D
Let's talk a little bit about SpaceX because in your commentary said you had a record trading day on the day of the Space X ipo. I'm just wondering what you learned from that to, to sort of prepare you and the team for what many think is the day that Anthropic will go public in the near future and Open Air will go public.
- [22:32]
B
And I thought you were going to ask him about the unlock, but we'll
- [22:35]
G
get to that next SpaceX. It's so interesting to have been a part of this. We've been around for 50 years and we've seen, you know, lots of bear markets, lots of bull markets markets, the Internet boom, all this stuff. The heaviest day of call volume we've ever seen in the history of the firm was space.
- [22:51]
B
Were you surprised? Was your team surprised?
- [22:53]
G
We weren't surprised. We knew it would be a busy day. But to be a record day in the top few days we've ever had in terms of client interest, it's pretty remarkable over one one company. So that's great. It just shows how engaged the retail investor is. And you know, our clients bought it. They tried to buy as much as they can and you know, what they received relative to what they put in probably wasn't what all of them wanted. And that's probably our learnings is really to, to be really clear about like
- [23:18]
D
demand was higher from your clients for the IPO and they weren't able to get it all.
- [23:22]
G
Demand was far higher. The level of retail interest. I've never seen a level of retail interest like this in an IPO or anything. It was off the charts and As a result, not everyone got the allocation they wanted. Now one thing we did do is we made sure everyone got something and so everyone walked away with some shares and with the, with the action in the stock, people had a chance to buy it actually below the stock price. So hopefully those didn't get filled. Have been out there buying if it's of interest.
- [23:46]
B
Are they still buying? Because you know, we've seen certainly the share price go below the IPO price for Space X. We've got the unlock coming. August six is going to be two days after the company reports earnings. How are you thinking about that or preparing for that?
- [23:58]
G
Yeah, the retail investor is still buying Space X. We still see volume and it's, it's largely one sided. So lots of activity and interest in Space X. And I know maybe we should move our, our headquarters to the space. Might be good for evaluation.
- [24:12]
B
He's working on it.
- [24:13]
E
He's working.
- [24:14]
D
Or go all in on.
- [24:16]
F
Right.
- [24:16]
D
Prediction markets. We always ask you about prediction markets and sort of, you know, you've talked to us about the difference in what you see as, as gambling versus what you see as being useful prediction markets. Can you give us a date on, on when and what Schwab clients will see?
- [24:31]
G
Yeah, we're working with the CBOE to make binary options available which would allow you to take a position on the S&P 500. It's possible that may extend into other financial related events like KPIs or certain macroeconomic indicators. I think we're open to anything that you can make a link to a client's portfolios. We serve a lot of active and very engaged traders. We want to make sure what they have and need to be successful. So that's what we're looking at. We don't have a timeline. We are actively working on it. The CBOE is as well. We will follow them and we're excited to be in that marketplace. But don't look to be able to bet on Taylor Swift's first child when that's when that child's born on our platform.
- [25:11]
D
But when we speak to you in October, do you think they'll have launched yet?
- [25:13]
C
Yet?
- [25:14]
G
Well, we'll see in October. I mean we're working hard at it. Cbo. We're still dependent on their timeline. So I can't. I'd love to give you a timeline but I really can't at this point.
- [25:22]
B
What if Taylor has an idea for the S&P 500 by the end of the year? Would that be a bet?
- [25:27]
G
That would be it's related to the S&P 500. We can make it work.
- [25:31]
B
What about crypto? What can you tell us about the early reception to the spot crypto trading rollout? What are you guys seeing?
- [25:36]
G
Well, for us, you know, crypto is an important part of being able to offer everything that our clients want. And our clients are already engaged in crypto in a big way. They've bought the etf. They participate in futures. They are invested in crypto in many different ways. At Schwab, we're excited for them if they have crypto outside the firm, to be able to bring it in. We'll make crypto available for transfers by the end of the year. You can buy spot crypto now with cash on our platform, and we're excited about that. You know, the level of interest in crypto right now I think is lower than it has been. It's really declined. You know, some of that's related to the price action. I'm sure there's other reasons, but main point for us is if our clients want it, we want to have it, regardless of what the interest is level is.
- [26:16]
B
I've got to ask you a question. We kicked this around in the newsroom because while we're talking about crypto, a lot has come up with the President and his financial disclosures. And Schwab is one of the investment counts along with UBS and JP Morgan. And I'm just curious, as people kind of look at this, do you think at some point Schwab might be asked to either testify before Congress about the President's accounts or anything? Has any of that come up?
- [26:40]
G
You know, we can't talk about who our clients are, but. But what I will say is what's been reported is that he uses a tax strategy himself, direct, direct indexing, where you can use. You racially replicate an index by owning, say 300 stocks that are going to give you the index return instead of holding, say, one position in ETF. And so if the market goes up 20% a year, but you hold 300 stocks and some have gone down, you can sell those and replace them with another. If Coca Cola went down over a short window, you sell it, you put Pepsi in there, there. You're still tracking the index, but you've harvested a loss. It's a very thoughtful strategy for a wealthy investor to use. And I would just say some of the commentary around this idea that he's timing the markets in some way because he sold a stock before or after he met. These strategies are run on a discretionary basis by professional money managers with no influence from the account holder. And the level of trading in them is very high because they're constantly trying to of pick up any loss in a security and replace it with another one. So I think some of the reporting that tries to link this to nefarious behavior I think is just misplaced.
- [27:47]
B
And to be fair, kind of I feel like I left out an important line. It does feel like it's a lot of political backlash and as we see kind of things make their way through the new cycle.
- [27:56]
G
Well, one of the things that we were pleased with was how the reporting might have shifted from, I think the original intent of that the reporting was seeking to when the facts came out and things were explained. I think the reporting was pretty accurate in terms of explaining what these strategies do and why you might have, you know, active levels of trading in a strategy like this.
- [28:16]
B
Appreciate that. Just to wrap up here, we're in this environment, Rick, where it feels like FOMO in terms of a lot of the trades and kind of chasing certain things. It also feels like there's a lot of nervousness out there when you look at the environment. Net net. I mean, coming off of this quarter, how would you describe the environment right now?
- [28:34]
G
Now, I still think clients are bullish. Okay, but. But there is some caution. And you do see them taking smaller positions than they normally would and maybe being a little more anxious about it. But. But all in all, they're still bullish. They're buying on the dips. They're going into the stocks areas of the market that, you know, have certainly have higher valuations to them. So they're not shying away from risk. And they're. And they're bullish, but they're doing so with an element of caution.
- [28:56]
B
That, of course, is Rick Worster. He is the president CEO of Charles Schwab.
- [29:05]
A
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- [30:46]
G
Hey everyone, it's Kal Penn, host of Irsay, The Audible and iHeart Audiobook Club. This week on the podcast I'm Sitting down with comedian Emily Lynn to talk about the Audible Original series Heads Will Heir Apparent, the second installment of the gloriously unhinged fantasy comedy she co created with her sister Kate McKinnon. An evil queen has to produce an heir before her 40th birthday, or a swamp demon comes to collect and her best friend is a cursed raven who gets turned into a toad.
- [31:20]
B
There was only one character that that immediately were like, we need Richard Kind for this. We had written this love addict, this like neurotic love addict. And originally we were just calling him General Richard Kind. And he was like, could you change my name? I don't necessarily want to be associated with this freak. And we were happy to do that.
- [31:46]
G
Listen to IRsay on the iHeartRadio app or wherever you get your podcasts.
- [31:55]
D
You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto
- [32:04]
A
with the Bloomberg Business app or watch
- [32:06]
D
us live on YouTube.
- [32:09]
B
BMW, pulling out of this year's Paris car show as its new CEO, cut costs following a major profit warning. Also on the Bloomberg Tesla Cybertruck may be on its way to becoming viewed as the greatest automotive flop of all time, similar to the Ford Edsel, which was introduced back in 1957. There is always.
- [32:28]
D
You don't see a lot of them on the road today.
- [32:31]
B
No, always a lot going on in the global auto industry. Covering all the twists and turns, the tight curves of the global auto industry, from bailouts and buyouts, Elon and EVs to China's coming of age. Bloomberg's Keith Naughton, who began his career back in 1985, coming to Bloomberg in 2009amid the great financial crisis and the big three auto bailout. He's written about all of it and more. We are delighted to have him in New York. His home purge has been in the Detroit area, but he is getting ready to wrap up his valued and very respected career here at Bloomberg. We can't even believe we're not going to be like, call Keith, we want to talk to him about I can't
- [33:06]
D
believe they're letting you retire.
- [33:07]
C
Yeah, yeah, yeah. Well, you know, it's time. It's time. Every, every good career, career has its moment and you know, leave out on a high, on a high note.
- [33:16]
D
Well, we are really happy for you. It is sad for us, as Carol mentioned, and we do want to start at the beginning of your career, all the way back in 1985, 41 years ago. Take us back to that time you were at the Indianapolis News and it's where you began your career. And I think it's so notable because it's like that was when so many US Automakers were concerned about Japanese cars.
- [33:37]
C
Yeah. So that was the big story in that time. The way I got the auto beat is my business editor at the Indianapolis News, this guy named Ed Lawler. He, he said, so I grew up in Detroit. He said, so you're from Detroit. So then you'll cover the auto industry. It's like, okay.
- [33:50]
A
But yes.
- [33:51]
C
So, you know, it was all about the Japanese coming to America in those days. Sounds like an echo, doesn't it? And, and so one of the big stories I was covering at that time was Toyota was looking for the location of their first American factory. All the states were, you know, vying for it, Indiana included. It ended up going to Georgetown, Kentucky. So I was there for the groundbreaking of that one and interviewing the governor at the time, Martha Lane Collins. And yeah, you know, and now here we are with when will the Chinese come to America and where will they locate and do the states want them? And, you know, it'll be very similar.
- [34:25]
B
Do you remember what car you were driving?
- [34:27]
C
Yeah, in those days I had a Renault alliance.
- [34:30]
B
Oh, wow.
- [34:31]
C
Made by UAW Hans in Kenosha, Wisconsin, when Chrysler and Renault had a joint venture.
- [34:36]
B
Well, I'm so glad you mentioned Chrysler because one of the, you know, icons or iconic Figures of the auto industry is Lee Iacocca. And we actually have a picture, 1989 of you with him.
- [34:48]
E
Yeah.
- [34:49]
B
Tell us about this moment. For those on radio, it is Keith Naughton a few years ago, a couple
- [34:57]
D
decades ago, more hair, no mustache, though.
- [35:00]
B
Lee Iacocca was.
- [35:02]
C
He was iconic. Yeah. No, so that's obviously a scrum. And I'm clearly laughing too hard to try and impress the chairman. But no, he was something. I mean, I remember when he came back from Japan and this is when the original George Bush had gotten sick on the lap of the Prime Minister of Japan. I don't know if you remember that moment in history. So Lido comes back and he gives a speech.
- [35:26]
B
It seems so charming amid the geopolitical backdrop today. But go ahead.
- [35:30]
C
He goes back and gives a speech to the Detroit Economic Club all about how we should essentially, and he used this kind of verbiage, go to war with the Japanese, which, you know, given the whole World War II thing was probably not the right way to put it. But that was Lee Iacocca. He pulled no punches and had to
- [35:46]
B
deal with his own crisis, though, right, at Chrysler?
- [35:48]
C
Oh, absolutely. I mean, he saved. Not more than kind of. He definitely saved Chrysler. They were in dire straits. And remember, he got fired by. By Henry Ford ii. Right. Hank the Deuce fired him. Iacocca is the father of Mustang. And then he, you know, rehabilitated himself by saving Chrysler. It was a great time to cover the industry because there were such swashbuckling characters in those days. Bob Lutz, all these guys that just said what was on their mind.
- [36:17]
D
It wasn't all the auto industry. For you, though. Some other highlights in your career. Even before coming to Bloomberg, senior correspondent at BusinessWeek, you covered the auto industry. Your auto report reporter at the Detroit News before Bloomberg, though, you were Detroit bureau chief for 10 years. Over at Newsweek, we covered the auto industry there, but also some other stories, including Stewart.
- [36:36]
B
Stewart and this little known man put on the COVID Oh, yeah, he's president today.
- [36:41]
C
Yeah, Donald Trump. Yeah, I spent a couple of days with the Donald and Melania. Yeah, there's the COVID Yeah, that's the
- [36:48]
B
one I wrote for those on radio. It says it's Donald Trump. Trump back in his apprentice days. You're fired.
- [36:53]
C
Right. So he was. I mean, the story on how that ended up on the COVID was this all sounds braggy, but I was talking to Jack Welch. I did this all in one day. I was talking to Jack Welch, you know, former chairman of ge, and he told me it was his favorite show to watch. He and Susie would watch it every night.
- [37:12]
B
On his network.
- [37:12]
C
Right, on his network. And so then, and so then, then we reached out to Trump, who in those days there were no PR people. You just called his secretary and he gets on the phone and he told me that in no uncertain terms we should put him on the COVID And I'm like, well, right now it's just a business story. We're going to do a business story in the business section. No, you should tell Rick Smith, who was the publisher at the time, put me on the COVID And then when it went to the meeting that day, the editor said, okay, let's put him on the COVID I called him back and. And he said, I'm glad you listened. So then we both flew to Mar A Lago and hung out for a couple days.
- [37:48]
D
Well, what did you find about him on that trip to Mar a Lago? Obviously, no prediction that he would one day become president and so on?
- [37:55]
B
No.
- [37:55]
C
Well, I mean, he was a Democrat then, and he had run as a Democrat, sort of run as more of a marketing exercise in the Gore Bush election, the election of 2000. So we talked a little bit about. And he and Melania at that time were engaged. They got married a year later. And of course, Bill and Hillary were at the wedding. There's the famous picture of the four of them together.
- [38:16]
F
Right.
- [38:17]
C
Changing times. So, yeah, but yeah, he was, you know, he was the Donald. We watched the Apprentice together and he would, you know, turn down the sound when it was the contestants segments. And then when he was on, he would turn it up to a deafening volume so no one in the room could talk.
- [38:36]
B
So fascinating. Like the places that being a journalist takes you. Right. And to certain people. All right, let's talk to your time at Bloomberg. Seventeen years. You came at what was a really difficult time for the world, for the US for the financial industry, and for automakers who can forget, Right. The automakers being called before Congress, the CEOs.
- [39:00]
C
Right. The bailout. Yeah. No, it was amazing because it was right as I was leaving Newsweek and starting at Bloomberg when I was here for my training in New York, Obama was being inaugurated for his first term and George W. Bush had sort of handed the. To save those companies. And famously, they were all asked. They got in trouble for. Oh, yeah, there we go. They got in trouble for flying in for the hearings and they're told they should. Should drive in for them. So that's what they did. They were all asked to give up their pay and everybody Except Alan Mulally at Ford said they would. Alan Mulally said, yeah, I'm fine. And they're the ones who didn't take the bail out.
- [39:39]
B
I was just going to say they didn't, did they?
- [39:41]
D
A lot has happened in the auto industry since then and it kind of brings us to almost to today, the rise of EVs and the way that even conversations that we had with you on our program in the last six years, at the beginning of that, and that's, that's how long I've been doing this. That's why I went with the six year number at the beginning of that. We talked to you about the huge investments that these US companies were making in EVs, how difficult it was to get a Ford Mach E and the wait list that a customer would have to wait on and getting a lightning pickup truck. And just a few years after that, we're learning that these investments are being paired back and the customers just aren't there for these.
- [40:18]
C
It was one of the biggest misses ever. And I think we, sometimes our view of it isn't long enough. We think, okay, so Trump got into office and he took away the EV incentives and that killed the market. No, the market was withering before he got elected. Americans just, we live in a very big country, so range anxiety is real. It's easier in other places that are more compact and that have a better infrastructure for recharging vehicles. So particularly in the vast middle of the country where I live, you know, people just aren't sold on EVs, particularly people who drive pickup trucks. The big bust of the whole ev, American EV cycle was putting in pickup trucks first. Because if you use an EV pickup truck to tow or haul, the battery is depleted in no time. So it's just not practical. So everybody has taken a step back. I actually think in some ways Trump does them a favor because it gives them to time to regroup. As long as they keep those barriers to the Chinese and hopefully they'll come up with a better solution.
- [41:18]
B
You know, we have another picture of you, I believe, with Alan Mulally. And this was in 2009. Former Ford CEO, you said, you reminded us he didn't take the bailout. Then where are you guys?
- [41:29]
C
We were, he was, I think in that picture, being inducted into the Automotive hall of Fame. And we're in Detroit, I think in.
- [41:37]
B
Was it 2009?
- [41:38]
C
Yeah, it might be a little later than that. I think it's more at the end of his time, but it was in 2009 that he avoided the bailout. And, you know, he saved Ford along with his boss, Bill Ford. Never forget, the Ford family runs Ford. So still. But yeah, but no, he was a rock star and he was great to work with and he also was one of those guys who pulled no punches and had things on his mind.
- [42:03]
B
You know, we were thinking about you. You really, you're a lot of fun to talk to and we just love covering this world with you. You've inspired a lot of us and it seems like you've also inspired someone who's very near and dear to you, your daughter. We have another picture we want to pull up and maybe could tell us a little bit about this. That's you. For those on radio, it's Keith, obviously. And then there's your daughter.
- [42:26]
C
Yeah, that's Nora behind me. And we're both scrumming Jim Farley, who is now Ford's CEO. I think that's at a New York auto show, maybe in 2019. So, yeah, Nora has worked in different places. She was also at the Detroit News like I was. She was the Wall Street Journal, Business Insider. So she's, she's, she's great. And it's great to have your, your child in the biz with you. So she's, she's, she's wonderful. And that was a great moment. And that was taken, that picture was taken by Ford's chief communications officer, Mark Truby. He was monitoring the scrum and he saw that shot and got our faces of skepticism, which you sometimes have to
- [43:08]
B
do when you're covering an industry. We've got to wrap up. But as you look forward to your world and are you going to be keeping an eye on the auto industry?
- [43:18]
C
Oh, I mean, I live in Detroit. It's hard not to.
- [43:21]
B
Well, what's your thoughts? Like we've only got 30 or 40 seconds. Like there's a big lesson for the.
- [43:25]
C
Yeah, I think it's a really perilous time for the American auto industry. They really do need to reinvent themselves before the Chinese arrive. And as Bill Ford said last week, they are going to arrive. And if the American auto industry isn't ready, lower priced cars, electric vehicles, if they aren't ready, they won't survive.
- [43:45]
B
Are you driving an ev?
- [43:47]
C
I'm not. So, see, I'm a Moss back.
- [43:51]
D
Not even a hybrid?
- [43:52]
C
No. My brother, my older brother has a hybrid. But yet I do not.
- [43:55]
B
I keep waiting for what's my car. There's another one. You're a gem. We wish you well.
- [44:02]
F
Thank you.
- [44:02]
B
Keith Naughton, Bloomberg News Auto Reporter. You will be missed.
- [44:06]
D
This is Bloomberg this is the Bloomberg Business Week Daily Podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from
- [44:18]
A
2 to 5pm Eastern on Bloomberg.com, the
- [44:21]
D
iHeartRadio app, TuneIn and the Bloomberg Business App.
- [44:25]
A
You can also watch us live Every
- [44:27]
D
weekday on YouTube and always on the Bloomberg Terminal.
- [44:38]
B
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