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- [00:02]
Carol Massar
When patients have a disease and the.
- [00:04]
Lucas Shaw
Cause is known, it usually ends up.
- [00:06]
Carol Massar
Needing a specific solution. On the podcast targeting the toughest diseases, we explore the innovative tools, methods and unique philosophy Vertex Pharmaceuticals is using to search for treatments for some of humanity's most challenging diseases.
- [00:24]
Lucas Shaw
Subscribe today wherever you listen to podcasts.
- [00:35]
Bloomberg Announcer
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- [01:01]
If a Lenovo computer for your business is on your holiday list, don't shop around, just go directly to the source Lenovo.com it's your last chance to get exclusive deals on the PCs you want for your business, like the ThinkPad X914 Aura Edition and Yoga 7i 2in1. So avoid all that shopping chaos and price comparing and just go directly to the source lenovo.com where PCs are up to 35% off. That's lenovo.com lenovo Lenovo.
- [01:34]
Bloomberg Audio Studios Podcasts Radio News.
- [01:40]
This is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.
- [02:04]
Carol Massar
It is a battle among, I feel like the old and new media titans. A deal we thought was agreed, right? Yeah, very much so. And a deal I thought was agreed to and then we got a hostile offer coming in today and we've got the White House's Commander in chief, Matt, definitely watching. I mean the target is Warner Brothers discovery.
- [02:21]
Matt Miller
Yeah, it's interesting that President Trump said there may be too much market share here with which by itself, you know, between Netflix and hbo. Max isn't a surpr. But then he said he's going to be personally involved in whether or not this gets through regulation. So I think that should be a bit of a concern for 10 Ted Sarandos, who has tried to do everything right I guess of late, but really Netflix is viewed as this globalist kind of left leaning, dare I say woke, you know, company and entity and it wants to take over this asset that Donald Trump sued to block Time Warner at and T, you know, this deal in 2017. So way back when.
- [03:08]
Carol Massar
Right. Like remember that. All right, so let's get to it because we've got our own Felix Gillette, Bloomberg news media and entertainment editor. You know, he's the author of It's Not TV the Spectacular Rise, Revolution and Future of hbo. He's right here in our New York studio and then out there at our Bloomberg Intelligence headquarters in Princeton, New Jersey. Bloomberg Intelligence senior media analyst Geeta Ranganathan. This is such a cool roundtable. So let's start, Felix, with you the details. We got the hostile takeover bid from Paramount. It does top Netflix's offer. I thought this was a done deal.
- [03:38]
Matt Miller
Not necessarily. Actually, it does not top Netflix's offer because in the Netflix offer they're spinning off the cable assets so they're not getting the CNN that Trump probably wouldn't want them to have.
- [03:48]
Lucas Shaw
Yeah, they're both saying that they have the higher offer and it depends on how you value those cable networks.
- [03:54]
Carol Massar
Is there a deal that's better, that's preferred? Felix, let's start with you. And one more likely to get regulatory clearance.
- [04:00]
Lucas Shaw
I mean, they're both saying that they both, you know, they're pointing at the finger at the other saying, oh, that will never get regulatory approval. You know, Paramount is saying essentially that, yeah, Netflix has over 300 million paying subscribers. If you combine it with HBO Max, you're going to have over 400 million. It's too much concentrated power streaming competition. They have a lot more. So that's Netflix's argument is that it's not just the competition isn't just between streaming networks at this point. It's competing for people's attention in the living room, which includes things like YouTube, TikTok. And in that world, they don't control that much attention share.
- [04:35]
Matt Miller
Which is a fun argument, but I mean, if this were just a technocratic DOJ decision, they try to take the narrowest view possible. So they're not going to include YouTube and TikTok. Even if Carol, you spend a lot of time consuming content on YouTube on those things. Yeah, but. And so do I. In fact, I often choose it over Netflix prime and hbo. But that's not how the DOJ traditionally views these kind of things.
- [04:58]
Carol Massar
So Gita, how do they view it and what's more likely to get done? What makes more sense or listen, we're going to be talking about this in the new year.
- [05:07]
Geeta Ranganathan
Yeah, it's, it's really anybody's guess right now, Carol. So traditionally, yes, they have taken the most narrowest definition possible. But, but I think the government also realizes that this whole video marketplace is rapidly changing. I mean, Netflix has been the biggest disruptor of the, of the video marketplace to begin with. You know, it's streaming, disrupted traditional tv. Now what netfl Netflix is worried about, and this is how a lot of investors are kind of viewing this deal, is does Netflix actually think that they can be disrupted by short form entertainment? And that's exactly the point that, you know, Felix was bringing up. Do we have to broaden the market? And you know, people will argue, yes, we do. Because if you kind of look at just share of online video viewing, Netflix and HBO Max combined actually have a lower viewing share than the dominant force, which is YouTube.
- [06:01]
Matt Miller
I got my math, by the way, from you this morning, Geeta. So Geeta pointed out that the Netflix bid is 2775 plus. You had about $4, which you'll get for the spin off of the cable assets. It gets you to basically 32. That's a little bit above Paramount. But Geeta, if, if Warner Brothers Discovery, because David Zaslav wants to get as much money as he can, right? If they somehow.
- [06:25]
Get broken up with by, you know, the FTC or the DOJ or whatever, and they get the 5.8 billion from, from Netflix and then do the Paramount deal, which it seems like President Trump would be much more in favor of, does that end up giving them more money than anything else?
- [06:44]
Geeta Ranganathan
It absolutely does. And you know, this whole bidding war, I mean, the one person who's really enjoying this I think should be David Zaslav. And you know, the Warner Brothers Discovery board, I mean, we, we started, we started Matt at $12. You know, that was, you know, on September 12th. And this is where we've ended up. I think the big worry today, and especially as you kind of see the Netflix stock trading, is that is Netflix really going to be forced to come in with $30 a share? Because you just kind of look at the optics of the deal. Paramount seemingly having the better offer, although the deals are different. But you know, just for a first look, it looks like they do have the better offer. So I think investors really concerned right now about whether Netflix bid up. And that's an even better situation for David Zaslav. So he's laughing, you know, all the.
- [07:33]
Matt Miller
Way to the bank here at the Screen Time event. Carol, you and Tim were out in California, right?
- [07:37]
Carol Massar
You want to go there?
- [07:38]
Matt Miller
Yeah, because I thought you guys did great coverage and Lucas had a fantastic event. And David Ellison gave an answer to the question about his family's closeness to President Trump.
- [07:51]
Odoo Advertiser
We have a good relationship with the, with the administration.
- [07:53]
Matt Miller
And look I think if you look to that, I do believe.
- [07:58]
Other things that have been rumored about right are very large scale players that would affect, that could potentially create monopolies obviously in the ecosystem. And again, I think when you look at the lens of consolidation for us, I'll keep going back to it. It's always how do you create long term value creation? How do you put yourself in a position to produce more content, not less? And how do you ultimately build something that is better for the consumer?
- [08:20]
Carol Massar
All right, so that is Paramount Skydance CEO David Ellison he talked about at Bloomberg screen time. That was back in October. So Felix, come on back in here. I is we also have Affinity Partners, the private equity firm led by Jared Kushner, who's of course the son in law of the President, you know, part of Paramount's hostile takeover bid for Warner Brothers. So do they have an advantage? It seems like a lot of things merging that they might have an advantage.
- [08:46]
Lucas Shaw
They said they have an advantage. And having the president's son in law as part of his bid is usually a pretty good sign. But at the same time we see that, you know, today Trump came out on Truth Social and you know, complained about the Ellison's management of CBS News in 60 Minutes because of the interview where he was criticized on the most recent episode. So these things can be somewhat fickle. And let's not forget that Paramount has, you know, sort of antitrust issues. Also, you know, the deal went through with Paramount. That's two Hollywood studios that would be combined two streaming services, not as big as Netflix. Granted you'd have multiple news outlets, CNN and cbs. So they have plenty of overlap and in some ways have more overlap than Netflix and Warner Brothers.
- [09:32]
Matt Miller
Can I ask you though about, I mean you cover the entertainment industry, right? I was talking today to Michael Wolff, he of MTV previously and now Activate and he says that the content creators or the creative community, let's say is much more in favor of the Paramount bid because. And when you listen to David Ellison's full interview with Lucas Shaw, they seem really focused on creating good original, you know, solid content, like not having AI make sequels of marketing products. So is that true that the, you know that Hollywood wants Paramount to buy it?
- [10:10]
Lucas Shaw
I think David Ellison has been out there making that pitch. We really support the creative community. Look at all these concerns already.
- [10:17]
Matt Miller
Sister have grown up watching all the.
- [10:19]
Lucas Shaw
Movies and Mr. Top Gun, he loves the movies.
- [10:22]
Carol Massar
It's also expensive though, unless it does really well.
- [10:25]
Matt Miller
They're so rich.
- [10:25]
Lucas Shaw
So, and you know you have people like James Cameron coming out recently and expressing concern about Netflix, you know, saying that basically, if you look at Netflix's history, they've been very, you know, hostile to the notion of long theatrical releases, that this would be kind of the deathbed for Hollywood and movie theaters. So, yeah, Ellison's the man who brought us Avatar.
- [10:47]
Carol Massar
That uses a lot of technology.
- [10:49]
Sri Natarajan
I'm just saying.
- [10:49]
Geeta Ranganathan
But go ahead.
- [10:50]
Lucas Shaw
But you know, saying, hey, this, we want to see this on the big screen. You need 100 days in theaters, exclusivity for this to be worthwhile. And, you know, you're kind of a sucker if you believe Netflix is really going to do that in the long term. Their business is providing entertainment for people.
- [11:06]
Matt Miller
It's a pretty convincing argument.
- [11:08]
Carol Massar
It's interesting stuff. Hey, Geeta, say 40 seconds for you to wrap up. So I don't know, does this go to. I don't even. Are we in a third round?
- [11:16]
Geeta Ranganathan
Are we.
- [11:16]
Carol Massar
I mean, Comcast is out, right?
- [11:18]
Geeta Ranganathan
So like, Comcast is out.
- [11:20]
Carol Massar
Yes. So what's the timeline we're looking at here?
- [11:23]
Geeta Ranganathan
10 days. So the tender offer expires in 20 days. The Warner Brothers Discovery Board has 10 days to respond to Paramount to see how they want to proceed with this whole tender offer. But they have confirmed receipt of this unsolicited tender from, from the Paramount Skydance people.
- [11:42]
Carol Massar
Am I remiss to ask, does David Zaslav have a job after it with a really good pay package?
- [11:48]
Geeta Ranganathan
He doesn't need one. He's going to be so red.
- [11:52]
Carol Massar
All right.
- [11:54]
Stay with us. More from Bloomberg Businessweek Daily coming up after this.
- [12:02]
When patients have a disease and the.
- [12:04]
Lucas Shaw
Cause is known, it usually ends up.
- [12:07]
Carol Massar
Needing a specific solution. On the podcast targeting the toughest diseases.
- [12:13]
Lucas Shaw
We explore the innovative tools, methods, and.
- [12:16]
Carol Massar
Unique philosophy Vertex Pharmaceuticals is using to search for treatments for some of humanity's most challenging diseases.
- [12:25]
Matt Miller
Subscribe today wherever you listen to podcasts.
- [12:32]
Bloomberg Announcer
If a Lenovo computer for your business is on your holiday list, don't shop around. Just go directly to the source Lenovo.com it's your last chance to get exclusive deals on the PCs you want for your business, like the ThinkPad X914 Aura Edition and Yoga 7i 2in1. So avoid all that shopping chaos and price comparing and just go directly to the source lenovo.com where PCs are up to 35% off. That's lenovo.com.
- [13:02]
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- [14:05]
Youm'Re.
- [14:05]
Bloomberg Announcer
Listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on yout.
- [14:18]
Carol Massar
The other thing, top of mind, no doubt about it, Matt, is the Fed decision and that may already be factored in when it comes to if you look at kind of the equity trade today. So I want to see what, say.
- [14:28]
Matt Miller
It'S at the bottom of my mind.
- [14:29]
Carol Massar
It is a Fed decisions at the.
- [14:31]
Matt Miller
Top of your mind, they're going to cut. I do I save you three days.
- [14:34]
Carol Massar
Oh my God. All right. But we're going to get. All right, just put him aside for a second. Let's bring in Kevin Gordon. He's head of macro research and strategy at Schwab center for Financial Research. It's like, I don't know, keeping cats in control here. Kevin is here right in studio. Kevin, though, is the cut already priced in and is it all about kind of what we get in terms of the summary of economic projections and whatever commentary we might get for the new year?
- [15:01]
Kevin Gordon
Well, yes, I think if you look at the word function on the terminal and then compare that.
- [15:04]
Carol Massar
We love that function.
- [15:05]
Kevin Gordon
Yes. Pricing, you know, for December actually, relative to the equity market. If you look at it over the past couple past months, both of those have been neck and neck. So, you know, I would say it's fully priced in the sense that, you know, every time the probability of a cut has increased sharply, the market's done well and vice versa. I think beyond that, you know, one of the, one of the reasons I think that we're probably not going to see as many cuts next year is because the inflation backdrop and we're putting out our outlook at some point later today. But I think that the inflation backdrop is going to be a little bit trickier in the sense that there's probably some upside inflation risk from tariffs that are expected to stay high, which have already put upward pressure on goods prices, but also fiscal stimulus coming from the big beautiful bill and I think still a, even if it's a wobbly but still relatively resilient labor market that keeps people spending on a month to month basis, if you add all of that together and put it into an equation, I still think you have upside inflation risk. Plus from a personnel standpoint for the Fed, you have to keep in mind that two voting members rolling onto the committee, onto the voting committee are the heads of the Cleveland and the Dallas Feds and they've been leaning much more hawkish recently. It's, it's Beth Hammack and it's Lori Logan. So I think that needs to be taken into consideration. When you think about especially the emphasis that has been now pushed on individual member commentary, that hasn't been the case up until maybe the past couple of months where we've been paying so much attention to what each individual member has been saying. Now there's much more focus on that. So I think for those reasons you probably don't get as many cuts next year as maybe some people expecting a narrative around that.
- [16:33]
Carol Massar
What do you think?
- [16:34]
Matt Miller
I mean it's, we're looking at with the work function getting down to a terminal rate rate of.
- [16:42]
3% even basically right. Between three and three and a quarter right now. So that's moved up a little bit. And as we hear so much about the economic growth that we're expecting next year, as we hear so much about the stimulus we're going to get from one big beautiful bill. I just wonder if it's going to be hard to even go that low because inflation, if you look at CPI, it's going the wrong direction and it's 50% over the Fed's target.
- [17:05]
Kevin Gordon
Yeah, we're averaging closer to 3%. That seems to be more like the floor. Even if you don't go because it's not our expectation that you go back to anything akin to 2022 or 2023. I mean getting close to, you know, 8, 9% on CPI, barring some major shock is just really not in the cards.
- [17:21]
Matt Miller
But we've been there. So this only 3% still hurts.
- [17:24]
Kevin Gordon
Well, but exactly so because prices haven't gone down.
- [17:27]
Carol Massar
Right.
- [17:27]
Kevin Gordon
And you're now four and a half years of the Fed being above its target. I think at some point that has to come into the equation and it'll matter in terms of how they set policy. So really, I mean, this is just them getting closer to neutral, what they think of as neutral. If it happens to be the case that inflation pressure is re accelerating and they're maybe too close to neutral, then you can maybe start talking about a hike. I think it's still a little early for that. But you just have to keep in mind that they've been now so far above their inflation target for so long and labor has essentially been at target almost the entire time. I mean, 4.4% for an unemployment rate, yes, it's risen over the past year, but it's been number one, gradual and number two, consistent with a fully employed labor market.
- [18:06]
Carol Massar
30 seconds. So what does this mean for the equity market markets? I mean, if, if there's earnings, if there's an economy that's growing, if the labor market doesn't fall apart.
- [18:13]
Kevin Gordon
Well, the earnings picture just by itself, I mean, if you, if you look at every sector so far, there's expectations that you're going to get pretty solid earnings growth. For all 11 gig sectors in the S&P, only three are expected to have earnings growth that is slower in 2026 relative to 25. So that in and of itself just shows you that it's not just a couple of sectors or even a couple of industries that are carrying the market higher. From an earnings standpoint, it really has broadened out. So we think that from an index perspective, maybe it's not as great, because if you don't have the mega caps contributing mostly to the gains, then the index performance might not look great. But you could have relatively healthy breadth under the surface and participation that could mean for maybe a better year for equal weighted relative to cap weight.
- [18:54]
Sri Natarajan
Thanks for coming by.
- [18:55]
Kevin Gordon
Thanks for having me.
- [18:56]
Bloomberg Announcer
You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 23 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [19:10]
Carol Massar
Well, changes afoot at Berkshire at JP Morgan Chase. There's kind of a connection between the two. We want to get to what you need to know. And with us is Sri Natarajan, Bloomberg News chief Wall street correspondent, right here in studio along with Bloomberg News U.S. insurance reporter Alex Rajmandari. First up, I want to talk about Berkshire Hathaway. So, Alex, talk to us about these leadership changes that are going on it is like the company getting itself ready for what happens post Warren Buffett. I mean, he's already announced his retirement, right. But once he's kind of officially off the leadership right. At the company.
- [19:43]
Alex Rajmandari
So what we know is Greg Abel is taking over next year in January. And this morning they announced a slew of new appointments and some departures as well. The big one and the one that everybody's talking about and we're going to talk about today is Todd Combs, who was one of the two stock pickers for Buffett along with Ted Weschler. And they were managing with Buffett this mammoth 280 billion stock portfolio. So he's gone. He was also the CEO of Geico. He's been doing a good job there. And analysts have been praising the turnaround at Geico that's been struggling in recent years, but gaining grounds in the past quarters. But that leaves a question mark as to what's going to happen to the stock portfolio and who's going to manage it. Because Buffett no longer in the picture, still as chairman, but not at the helm. That means Abel is going to do it with Wesler. But that's just two people for a big portfolio. And that's a big topic for, you know, Buffett watchers and Berkshire fans and investors because they look at what where the investments are going.
- [20:40]
Matt Miller
Is it fair to use the term exodus or even worse, brain drain?
- [20:45]
Sri Natarajan
Right.
- [20:45]
Matt Miller
If Warren Buffett's leaving and I didn't get the top job, like, I'm out.
- [20:50]
Alex Rajmandari
So this morning hasn't been only about departures. There's only been some appointments of people that were not in the light so far, but have been elevated to bigger roles. So that's important to point out. But yes, what you say, this raises a question as to how many people we want to work with able going forward. And there was an analyst this morning who put out a note right after the appointments to say that he expected more turnover going forward because it doesn't have the same cache to work for Abel and to work for Buffett.
- [21:19]
Carol Massar
Before we get to the JP Morgan, why did Combs leave Berkshire? How long was he there? A while.
- [21:24]
Alex Rajmandari
He had been there for more than a decade. It's not been said exactly why he's leaving, but he had deep ties with JP Morgan. So that might be an explanation.
- [21:33]
Matt Miller
Also, I'm sure they wanted him. I mean, as you say, he was in charge of a massive portfolio. That guy must have been sought after on Wall Street. But just to touch on what's happened At Berkshire, it's so weird. If you put up the shares versus the S& P from April, the S and P takes back off again. Right. Obviously we had the liberation day dip right from April. Berkshire Hathaway shares just come down like they've done. It's a mirror image of what the S and P has done. What is the concern about Berkshire Hathaway? Is it that Warren Buffett's finally leaving? Is this key man risk?
- [22:06]
Alex Rajmandari
Well, there was talk when he just, he announced he was retiring that there could be a Buffet premium that would evaporate that could be supporting that thesis. There's also a lot of other questions. You know, I've reported on the earnings in recent quarters and the softening of the economy in general.
- [22:21]
Carol Massar
Say they play big time into the economy.
- [22:23]
Alex Rajmandari
Right, exactly. And so not to say that the concerns for the economy are translating directly into the concerns for Berkshire.
- [22:30]
Carol Massar
Right.
- [22:30]
Alex Rajmandari
But there's been some softening of the top line growth and analysts have been, you know, voicing some concerns about that for the future. The company has had a very rare sell rating from an analyst recently because of all the headways coming the way. So, yeah, it's a big change.
- [22:46]
Carol Massar
Yeah. For companies so identified, obviously with its founder. All right, so Todd Combs leaving Berkshire after a decade. Let's bring in Sri Natarajan because JP Morgan has hired him. Talk to us. There was a relationship there already. There were ties. Tell us about what this news is about. What does this do for JPMorgan? Why is it happening?
- [23:05]
Sri Natarajan
Well, Jamie Dimon has been spending a lot of time talking about this national security initiative. You know, of having heard Jamie Dimon over the years, especially in the last 12 to 18 months, he has been talking about the geopolitical risk. He's been talking about the need to be independent and not dependent on other countries. And he has been putting money where his mouth is. They have talked up this $1.5 trillion financing commitment in this space that is in any industry where, you know, critical supply chain, electric grid, anything where you would look at it and say this is important and crucial for America. He's saying we have to make sure that we're not reliant on any other country. So in addition to that financing commitment, which is about a 50% increase over what they would have anyway done, is what JP Morgan says. They're also putting about $10 billion of their own balance sheet capital as direct equity investments. And that's where Todd Combs comes in and he will be in charge of overseeing that investment. He's not an alien to JP Morgan. For nearly nine years up until this announcement, he was on the board of J.P. morgan. When he joined the board as the 40 something, he was the youngest member of the board. And I checked this morning, as of the time of his departure, he was still the youngest member on the JP Morgan board.
- [24:22]
Carol Massar
Which is why I know, I tease like, could it have something to do with succession planning? Does it Possibly. I mean, this is a guy who's gonna have a direct line to Jamie Dimon on not just this, but other strategic issues, if you will, at the firm. It just, I don't know.
- [24:38]
Sri Natarajan
Look, it's a fair question and I know I eye rolled when you asked that question initially. Me too.
- [24:43]
Carol Massar
I didn't mean my daughter's eye rolls.
- [24:46]
Sri Natarajan
I will give you a reasoning for that is at this late stage, if Jamie Dimon had to turn to someone outside of the JP Morgan stable to find a successor, in some ways that would be considered a failure for Jamie Dimon. Right. He's been there for 20 years. The top of the. You assume that he's built a strong enough bench that he can pick from anyone.
- [25:04]
Carol Massar
He left Citi or was kind of pushed out, came to another firm.
- [25:07]
Sri Natarajan
Which is why we don't remember much about who was the predecessor to Jamie Dimon. Jamie Dimon certainly does not want to be forgotten. So again, if he were to go this route, it would be completely out of left field, which is why it's not the number one predicted scenario. Even though, because you asked the question, we will put it in the list of possibilities.
- [25:25]
Matt Miller
Oh, nice. You got a name in the list.
- [25:27]
Carol Massar
I got the eyeball.
- [25:28]
Matt Miller
But hey, speaking of, of big names, the advisors to Todd Combs on this strategic investment group are, I mean, masters of the universe. Paul Ryan. Right. Condoleezza Rice, Robert Gates. Those are just the Washington names. Jim Farley, Michael Dell, who just gave one of the biggest gifts in world history. I mean, these are Hu and Dunwoody. Huge, huge names.
- [25:53]
Carol Massar
Isn't Jeff Bezos.
- [25:54]
Matt Miller
Jeff Bezos, good point. Also an important guy.
- [25:57]
Sri Natarajan
You missed the most important name on the list.
- [25:59]
Matt Miller
Well, for me, Jim Farley is the most important guy.
- [26:03]
Sri Natarajan
But I will also tell you why I'm talking about Jeff Bezos, because there's another Todd Combs connection here. Because you will remember a few years back, Berkshire, JP Morgan and Amazon set out to, shall we say, solve the health care problem in the United States. And the connecting factor in, in those discussions or in that venture was dot com. He was critical to that mission. Of course, about Two to three years in, they disbanded and they realized that healthcare is a harder problem to solve than just three successful corporations taking a swing at it. But they did make a go of it. And if you consider the top of the house of those three firms, Warren Buffett, Jeff Bezos, Jamie Dimon and Todd Combs in the mix, he clearly knew these people well. And that also is another reason you have to assume he has Jamie Dimon's respect.
- [26:46]
Matt Miller
So in these guys, Alex, just to bring you back in, you cover Berkshire Hathaway, you cover insurance. It's not.
- [26:53]
Operating in a vacuum. They work with the biggest banks in the world on a regular basis. And particularly JP Morgan and Berkshire Hathaway have had it pretty close. Close relationship, yeah.
- [27:04]
Alex Rajmandari
Indeed. As Sridhar said, dot coms was an incremental part of the discussion around the health care venture. And insurers and banks are two critical elements of the financial system. And they work together to get financing to the economy in different ways. But they do work hand in hand a lot.
- [27:20]
Matt Miller
Hey, that health care thing didn't really work out, did it?
- [27:23]
Alex Rajmandari
No, they had to shut it down after a couple of years.
- [27:25]
Matt Miller
Why is it such a tough nut to crack? It's pretty easy because health care is.
- [27:28]
Carol Massar
Massive and it's complicated and it's, it's political and it's a lot of things.
- [27:33]
Matt Miller
I mean, it seems like it would be pretty simple to solve.
- [27:36]
Sri Natarajan
Why someone take Matt Miller to Washington?
- [27:38]
Matt Miller
It's pretty easy.
- [27:39]
Sri Natarajan
The health care problem.
- [27:40]
Matt Miller
Matt Miller, 2028 for Everyone.
- [27:44]
Carol Massar
One thing I want to ask you, what is Todd combs bring to JPMorgan?
- [27:48]
Alex Rajmandari
Well, I mean, this investment acumen that has been developing, developing over the years at Berkshire has a stock picker. He's going to be part of the deployment. You know, of those billions of dollars in the economy. That's definitely a big asset for, for JP Morgan in that venture.
- [28:05]
Carol Massar
All right, One thing I also want to do she while we've got you and we can continue talking about this, but Jamie Dimon, you know, when he speaks anywhere, we're all like, you know, kind of awake. He spoke in a panel at Reagan National Defense Forum. It was hosted by Bloomberg's Caroline Hyde. And he's, he got into, I mean, the whole conversation was talking about defense globally and so on and so forth. But his point, bottom line, was about Europe and its problems. So I want to bring that. Everybody, listen up. Europe has a problem.
- [28:31]
Lucas Shaw
If we ever write a book about how the west was lost, it will be because of the following. It will be because of we didn't get our act together here and we go through all the policies here that we didn't have the strongest military in the world and that we allowed Europe to fall apart. They have some wonderful things, but they've gone from 90% of the GDP of America to 65. That's not because America did anything bad to them. It's their own bureaucracy, their own cost, their own. They do some wonderful things on their safety nets, but they've driven business out, they've driven investment out, they've driven innovation out. It's kind of coming back. If they fragment, then you can say that America first will not be around anymore. It will hurt us more than anybody else because they are a major ally in every single way, including common values.
- [29:19]
Matt Miller
Which are really important.
- [29:21]
Kevin Gordon
All right.
- [29:21]
Carol Massar
That, of course, was JP Morgan's Jamie Dimon at the Reagan National Defense Forum. SRI I feel like when Jamie talks, we all listen. This was obviously a discussion about defense connections between the US And Europe, whether it's cockroaches, whether it's stormy seas, whatever what Jamie says, we take note. How should investors read what he had to say? Or what do you think's important there?
- [29:42]
Sri Natarajan
Look, at least from the business side of things, he's pointing out what any business executive will point out, that Europe, Europe is going through a bit of a challenge. And the economic numbers show that. But his broader, bigger point about fragmentation in Europe somehow disbanding this whole America first idea, that's a hard one to follow. But more interestingly, it potentially goes against the kernel in terms of how the Trump administration perceives Europe right now. If you have followed all the commentary and the discourse over the weekend, over the last week, in fact, going back to the start of the year when J.D. vance was at that Munich's Security Conference and that diatribe against Europe, it's very clear that the Trump administration wants to take a tough stance on Europe. And you know, Elon Musk was one of those who said Europe probably has to disband the European Union and it's much easier to deal with every country on their own and they will care for their sovereign sovereignty. But it seems to be a very interesting viewpoint that the Trump administration's taken that's counter to the worldview that has been adopted by the United States since the end of the Second World War.
- [30:48]
Carol Massar
A real change. Stay with us. More from Bloomberg businessweek Daily Coming up after this.
- [30:57]
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Gracelyn Bascoran
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Bloomberg Announcer
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- [33:14]
Carol Massar
Matt brought up rare earths and that is something that we are talking about a lot this year. It's kind of the land grab I feel of the last year or so. We're talking about the world in a war of sorts to shore up their critical mineral assets. And just today, we saw the German foreign minister claiming progress in efforts to secure supplies of rare earths from China, saying the government in Beijing had indicated it would be constructive in handling European orders for the materials and the metals. The New York Times out with a story on how Japan built a rare earth supply chain without China. And then, of course, they're all. Matt, those public private partnerships and investments that we've seen the US Government has been doing to build up its exposure.
- [33:51]
Matt Miller
Yeah, exactly. Investing in companies like John Paulson's company to. There's a lot of mine rare earths.
- [33:59]
Carol Massar
Yeah, exactly. All right, so we want to talk to someone that we've leaned on big time when it comes to this space. Gracelyn Bascoran. She's director of Critical Mineral Security Program at the center for Strategic and International Studies. She's with us from, I believe, from Washington.
- [34:15]
Matt Miller
Middleburg, Virginia.
- [34:16]
Carol Massar
Oops, I need to read our chat every once in a while.
- [34:18]
Matt Miller
Yes, you do.
- [34:19]
Carol Massar
She's from Middleburg, Virginia. Hey, good to have you back with us, Gracelyn. And here with Matt and myself. There is a lot going on, this land grab. I don't know, where are we in this process? And how do you make sense of some of the headlines that are going on? Our countries just kind of figuring out deals and is, I don't know, extra production, extra exploration underway.
- [34:39]
Gracelyn Bascoran
What a year it has been. If you had told me at the start of 2025 that rare earth would become the most powerful currency in negotiation in reforming our geopolitical alliances, I wouldn't have believed it. You know what we've really seen this year? And remember, ahead of the around the APEC summit, there were the third round of negotiations to restore access to Ra. So we saw them in London, we saw them in Geneva, and then we saw them in South Korea. Since then, the US Government has really done two things. You've seen both that acceleration of domestic efforts with the Vulcan deal for rare earths to mine and process those rare earths and get some permanent magnets. But you've also seen a proliferation of the continued international efforts. So most recently, you saw during MBS's state visit from Saudi Arabia that the U.S. department of War agreed to become a 49% shareholder in a refinery there. And what's really important is when you look at the spectrum of Earth, we are continuing to drill into two things. Those heavy rare earths. Right? Because here in the US we have the second biggest producing rare earth mine in the world. However, they are pretty lightly endowed on the Heavy rare earth. And we know that Saudi has bigger deposits of those. The second thing is we're really trying to build our permanent magnet manufacturing capabilities. We do not want to be held hostage any longer than we have to.
- [35:55]
Matt Miller
Yeah, I was going to say too late. I talked to Graceland Automotive executives a lot in my, in my side gig here and they have expressed real concern with the idea that we would ever process rare earth materials, that we would ever refine rare earth materials in the US Because a lot of these men and women who work for carmakers have toured the plants in China and say, like, I never want to go back there again. I wouldn't let my family anywhere near there. It's such a dirty and dangerous job that we simply cannot do that in the United States of America. What do you think about that?
- [36:31]
Gracelyn Bascoran
I don't think we have a choice, quite frankly. And I, you know, I'm originally from Detroit. I love our auto manufacturers, but at the end of the day, it was the auto manufacturers that stopped manufacturing in May when they had a supply chain disruption. So what we know is that, you know, having a close to home or at home supply chain is no longer an option. What I would also say to you is challenge the notion, what is the process like?
- [36:52]
Matt Miller
Walk us, walk us through the process. What makes it so dangerous, so dirty? And by the way, if I have a vote, they're not doing it in New York, not in my backyard, so I don't know where it's going to be.
- [37:02]
Gracelyn Bascoran
Certainly not in your backyard. I would probably agree with that in New York. Now here's the thing. You've got to mine those rare earths and then the process of separation is very pollution intensive. You're talking about air pollution, wastewater, waste gases, et cetera. It is messy. But what we also know is that the Chinese way of doing it is not the cleanest way of doing it. Mining and processing today is much cleaner than it was 20 years ago ago. So when we look at, like I was out at MP Materials Mountain Pass Mine, one of the really fascinating things is obviously this mine is in a desert. You have a lot of tension, particularly with the frequency of, you know, droughts and wildfires on water. They have a completely closed loop water system that actually keeps all of that water within the mine. And again, that's not a common, that's not commonplace in China. So we're actually learning how to innovate and do it cleaner and better than the Chinese have ever been able to.
- [37:53]
Carol Massar
So in the land grab, if you will, when it comes to critical minerals. I mean, where is everybody at this point? I thought I recently saw a story about just how much the US has progressed in this area in terms of lining up deals.
- [38:07]
Gracelyn Bascoran
Absolutely. The US has made a lot of progress. So I want to point to the fact that when we look at some of the bilateral agreements and deals that we've signed this year, you've seen these agreements being made and signed in the context of Japan, Australia, Saudi Arabia. You're seeing deals financing, our US government financing going to Brazil. Now we're also accelerating our, our mining production and processing here at home. So these are all really big steps that we're doing it. Are we going to be self sufficient? Secretary Besson said we'll be self sufficient in two years. That's pretty unlikely. We have to remember we're activating a very long term industry. You know, 10 years from now will look very different. We're also not talking about a huge market. This is a small market. So two years is a bit overambitious given how long the timeline to developing these capabilities is. But are, you know, this year is way ahead of where we were last year, Graceland.
- [38:56]
Matt Miller
And as someone from Detroit, you know how important rare earths are in our automotive production chain. Is it possible to engineer them out somehow?
- [39:05]
Carol Massar
And just got 30 seconds.
- [39:08]
Gracelyn Bascoran
Yeah. And we're starting to. I mean, if you look at BMW, they've produced the first engine that doesn't use rare earths. Right. But the difference is, you know, we're kind of getting to that nascent level of innovation, but to the point that we don't need them. Seat belt, steering wheels, door panels, that's still quite a ways away.
- [39:23]
Bloomberg Announcer
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Sri Natarajan
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Carol Massar
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