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The Bloomberg businessweek podcast with Carol Massar and Tim Stenbeck on Bloomberg Radio Retail sales last month are adding to a concern of a pullback in consumer spending in the US While a pair of business surveys suggested a growing caution, retail sales rising by less than forecast in February and the prior month was revised down to mark the biggest drop going all the way back to July of 2021. Combined with separate data on Monday, it showed a drop off in New York State manufacturing activity and a weaker homebuilder sentiment. The reports are consistent with expectations for slower economic growth. We've got with us Michael McKee's Bloomberg News Economics and policy correspondent. He joins us in the Bloomberg businessweek studio. Mike, weak spending on goods is what we got today. Is it seasonal? Is it more than seasonal? It's a little bit of all of it. The seasonal factors for February this year were very, very generous and so we were expecting a rise in maybe a better than expected rise in the core component which is what we got. But it really only netted out with a negative 1% revised down figure for January. So for the first two months of the year, it was flat. Of course, the headline numbers were not very good at all, which may have something to do with the weather. We just don't know at this point. But we'll keep an eye on that going into March. And Emily and I were talking about how we know you're going to go over to Ghirardelli and bring us back some nice chocolate. Do your anything for you, Mike? Yeah. Yes. What about E commerce activity? That's obviously something you can't buy at the Ghirardelli factory. No. Well, I bet you could, but that was the one good spot, up 2.4% during the month. And what that may be related to is the weather, the flu, the fact that people were inside more than usual. And we did see a decline in food and drinking places, down 1.5%. And that's, that's the most discretionary of things. So it tells you maybe that people were holding back. But also. Do you want to go out when it's four degrees, Mike? Yeah, I mean, I don't. Sometimes you have to, but you don't necessarily have to go buy a new car and look at cars on the lot when it's, you know, four degrees. I think the big question a lot of people have is we continue to get more and more data that is kind of pointing to at least a pullback or maybe a slowdown when it comes to the consumer. In your view, how is the consumer doing? Is the consumer doing much different than we were doing just six months ago? Well, it's pretty obvious that the consumer is not in a good mood. But this is the first hard data we've had on it, and it does suggest that maybe people pulled back some, but it's not enough to really give us a firm feeling on it because of the strength of the Internet purchases during the month. So we've got to get some more data on that. I can tell you the Atlanta Fed updated their GDP now numbers for the first time since that negative 2.4 earlier this month. That got everybody all excited and they came up with negative 2.1. Now, they admit this is distorted by all the gold shipment into the United States. And they ran a model on that 2.4 number and came up with the fact that it would be a 0.4% gain for GDP, so essentially zero during the month if today was the end of the quarter. And Chris Lowe of FHN Financial ran the same model today and said what you'd end up with is negative 110 of a percent. So any way you look at it, the numbers we've had up to this point are not good. But we've got another month, two months of data to go really well. Remind everybody what goes in. We're going to talk about the Fed a minute, but remind everybody what goes into that GDP now forecast and how it is this sort of snapshot in time. Well, they just incorporate the data as it comes out. So what we've got is January data and now we've got February data up through through the retail sales report, but there's still new home sales, existing home sales and other things like that to come yet. So we've got also the PC spending numbers. So there's a lot of data for February still out there. And then we got to get March data before they can give you a number that actually will resemble anything like what the GDP number is. But it doesn't suggest that first two months of the quarter have started off well. So Mike, in light of all of that, what are we going to get from the Fed this week? Is this going to be another one of those meetings where Powell says we're still in wait and see mode, we have to wait for that data to come in or is there going to be a little bit more action? You nailed it. That's what we're going to get. It's not going to be any action this time in the sense of guidance on future rate moves. We will get a new dot plot and my guess is it will still have two dots on there to two rate moves this year simply because they don't have evidence one way or another to change that. Not enough that the economy is failing to add and not enough that inflation's coming down to subtract. So at this point, status quo is going to be the word. It'll be interesting to see what kind of economic projections they make in the summary of economic projections because last time was December and we've obviously seen a big change in at least consumer attitude since then. But there doesn't seem to be a collapse in the labor market. So do they change unemployment, do they change gdp and where do they think inflation is? My guess is this will be a meeting where we see very little change in almost anything they do and they'll just go home and wait for the next one. But it does sound like it's the easiest job around. As the President said when he was running, you know, you just flip a coin and decide whether to move rates higher or lower. I'm not going to have you weigh in on that, Mike, but I do want to know, I do want to know about what the Fed is dealing with now versus what they dealt with at their last meeting. Their dual mandate is certainly, you know, maximum employment and stable prices. Which would you say that they're more focused on one now than the other? They're more focused on inflation, but that's been true for a couple of meetings because the labor market has been so stable. They want to make sure that inflation continues to go down. And we're getting mixed readings on that. CPI went down, PPE went up a little bit. And then some of the, all of the inputs into PC that we have gotten from those two indicators suggest the PCE is going to go up. So, so you've got mixed news on what's happening with inflation, none of it suggesting that inflation is going one way or the other very quickly. But it's something they have to keep an eye on so they'll operate as if inflation were just sticky, staying where it was. And that makes for a good reason to just leave rates unchanged. All right, perhaps that's a perfect segue to move on to a bigger discussion about the Fed. Our thanks to Michael McKee, Bloomberg News International economics and policy correspondent. Mike, I've got plenty of time to go to the Ghirardelli store and get you some chocolate on the way back from San Francisco. So we'll see what, you know, you get for St. Patrick's Day. Appreciate you joining us. Hey, speaking of the Fed, Jerome Powell does face that tricky task this week of both assuring investors and the economy that remains on solid footing while also conveying policymakers and stand ready to step in if necessary on that. Treasury Secretary Scott Bessen was asked on Meet the Press on NBC on Sunday whether he can guarantee the American people are there that there would be no recession on President Trump's watch. Here's what he had to say. You know, there are no guarantees like who would have predicted Covid. So I can predict that we are putting in robust policies that will be durable. And could there be an adjustment? Because I tell you that this massive government spending that we'd had, that if that had kept going, we have to wean our country off of that. And on the other side, we are going to invigorate the private sector. That was Treasury Secretary Scott Bessen on Meet the Press on Sunday. Liz McCormick is Bloomberg News chief correspondent for Global Macro Markets, and she and Janelle Marte write about Powell's balancing act. She joins us in the Bloomberg businessweek studio. Liz, what is the message that Powell needs to get across this week? Yeah, first can I say, I think Mike McKee set me up for a long day Wednesday because every time we say nothing's going to happen, something happens. But no, I never question his judgment. But I think yeah, from the markets. I mean, everyone in the markets knows Chairman Powell is going to be very cautious. He's got a balancing act. He's not going to say, oh, I'm worried about the stock market. But you know, they want to see if he will because like Mike said, of course no one expects any rate change. But the consensus seems to be that they keep that dot plot which shows two cuts as far as the last quarterly update in December for this year, that it probably stays the same, but that people in markets are thinking maybe in the presser he could give just kind of a stronger nod to something he's been saying, but just kind of more forcefully somehow that like if things worsen, if the economy starts to show more signs of trouble, we stand ready to do whatever we need to do, meaning if they have to cut rates a lot, they will. And of course he said that before. But I think some in markets are saying, you know, with the 10% correction and where bond yields have fallen from their peaks this year, kind of that fear of recession and some like Mike laid out, at least the soft data is doing a bit troublesome, especially with the survey data that could Chairman Powell at least give a little bit more of a nod to, you know, don't worry, we've got this, you know, we'll take care of it. Well, well, Liz, you mentioned what's happening in the bond market or what has happened in the bond market, but also what's what's happened in the equity market. Last time I checked, taking, you know, paying attention to a sell off in the equity market is not necessarily part of that dual mandate when it comes to inflation and stable prices. What is your view on this and to what extent the Fed actually cares about what happens in the equity market? Yeah, absolutely correct. It's that it's just financial conditions, you know, and I've seen some good stories. I forget all the writers, they're from Bloomberg who wrote them about how these financial conditions bleed into, they could into the real economy. When people look at, you know, their, their investment assets and they're going down, you can kind of stomach that for a while. But do you feel like, oh, I better keep It a little closer to the vest, you know, let me spend a little less because the money I had is, you know, a fifth of what it was, you know, or went down by a fifth. Let's say that maybe people start to spend less or are a little more concerned. Does it kind of bleed into. Because one thing about expectations like the Fed has laid out very clearly about like let's talk about inflation expectations that they feel like expectations can bleed into like, oh, you think inflation is going to get worse so you change your behavior. So you're right, they're, they're not gauging the stock market. That's not part of their thing. But I think someone is probably going to ask them, like markets seem to be pricing more risk of recession, is that a concern? And but so I think that's why it has to be like a clever dance around showing. Of course we're watching, we're aware we look at financial conditions. But you know, right now our dual mandate that inflation is not where they want it. They do not see a major problem in the economy. The labor market at like the jolts data, the recent jobs data wasn't bad. They really don't have the data like Mike was saying to really kind of do anything. You know, Anna Wong reached out to me on that story to say, hey listen Liz, I don't think the Fed's going to do that, you know, so I never kind of cross her. So she's saying she doesn't think Powell is going to sound any different. So we'll watch Anna, you probably right, but we'll see, you know. Well, Liz, do you think that Powell does have a more difficult job this week trying to convey that balancing act just because of what's happened in markets? Yeah, I think it's gotten a little bit worse in markets. Right. So he knows because people get concerned and I think he always wants to talk to Main Street. Right. You know, not just he doesn't care about investors and how they're doing in positions and losses, but it's Main street if they're worried about, oh, you know, is the economy going to get worse. You know, we hear of all these job cuts from Doge and companies saying they're kind of, you know, hiring less and they start to worry and their spending habits change. So I think he's always trying to like, maybe he'll show up on 60 Minutes 1 of these days. It's usually when he's talking to Main street. But to say like, you know, you know, inflation is top of mind inflation Hurts everyone, he always says. But that, you know, he's aware and if it's, you know, starts to bleed into the real economy, there's a lot they can do right now. You know, just standing pat is the best policy. He doesn't want to weed into politics. Right. So he said, you know, you know, we're looking at these policies. They don't know exactly like the market. Some of the tariffs have been laid out, others haven't. So they don't exactly know what, you know, how long the degree. And so they're starting to try to model that, but you kind of can't until you, you know, we have April 2nd coming with President Trump laying out a new round. So I think like Neil Duda says, they don't want to be the story this week. The Fed doesn't want to be the story. So I think Chairman Powell will have a lot of notes and he's going to have a lot of scripts that he's going to try to stick to. But yeah, I think it's gotten a little harder since he talked last because, you know, you're, you're an equity wizard over me. The market is a little bit worrisome. Yeah, we've seen a, you know, a significant drop since the last Fed meeting. You know, you mentioned inflation. That's something that obviously Main street cares a lot about. But from your angle, you're watching the bond market. What is the bond market telling us about? Expectations for inflation. Yeah. So the bond market break even inflation levels, if you look at them, they're not really out of bounds. I keep looking to it like the Fed likes the long run ones that smooth things out. If you look at the so called five year, five year forward, it's kind of like five year inflation five years from now. That is not at a troublesome level. So I think, but the University of Michigan, which was a survey, of course, that was really, the long run ones really, really jolted higher. They don't like to see that. But I don't think the bond market is screaming inflation concern either, Emily. So, you know, they do have some room to wait and we, we know when, if they need to move, they can go fast. Right. So I think he feels like, hey, we can do this. But I don't think the bond market's screaming, especially because yields are coming down, kind of leaning on the growth concerns. All right, well, Liz McCormick, Bloomberg News chief correspondent for Global Macro Markets, thank you so much as always. We'll be waiting for that Fed meeting coming up soon. Pinpointing the genetic changes that predispose us to disease Identifying the roots of mental illness treating congenital anomal even before birth At Boston Children's Hospital, we're investing in children's health today to ensure the well being of adults tomorrow. As home to the world's largest pediatric research enterprise and more than 260 specialty programs, Boston Children's is where the world comes for answers. Learn more@bostonchildrens.org there's nothing like sinking into luxury. At washablesofas.com, you'll find the Annabe sofa, which combines ultimate comfort and design at an affordable price. Price. And get this, it's the only sofa that's fully machine washable from top to bottom. 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Save money without missing out on the features you need. Odoo has no hidden costs and no limit on features or data. Odoo has over 60 apps available for any needs your business might have, all at no additional charge. Everything from websites to sales to inventory to accounting. All linked and talking to each other. Check out Odoo at o d o o.com that's o d o o.com you're listening to the Bloomberg Businessweek 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 YouTube. Nvidia's Jensen Huang looks like he's on top of the world. He's held babies, he's signed countless autographs. He's thrown out first pitches at MLB games. He's led tech conference crowds and chants. He's appeared on stage with CEOs from the likes of Goldman Sachs, Meta Platform, Salesforce and more. He's also chatted privately at the White House with President Donald Trump. Oh, yeah. He's also one of the wealthiest people in the world. Yet he's well aware that corporate fortunes can change and he's watched them do with brutal speed in the semiconductor industry. Here's a history of booms and busts for tech infrastructure companies because their products tend to become commoditized. So. Right. Joshua Brustein and Ian King for Bloomberg businessweek. Joshua is a Bloomberg Businessweek technology editor. Ian King is Bloomberg News US Semiconductor and networking reporter. Check out their story on the Bloomberg Terminal and at bloomberg.com/businessweek. Joshua joins our program this afternoon in New York. Ian is here in our San Francisco bureau. Ian King, I want to start with you. What do you think keeps Jensen Huang up at night right now? What's always kept him up at night? Right. I mean, he, you know, he tries to run this company like all of the cliches are worth 30 days away from going out of business. But that really, really drives him. What everybody thinks is, oh, he's the top of the world. But you got to remember this company spent most of its career, its 30 years in existence under the shadow of intel, under this permanent threat that what it does was going to be taken away. And that's really his mentality. Yes, this is great. This is their that moment. But he's already looking for the next thing. He's already looking to extend that run. He's always already looking at what might go wrong. That's who he is and that's how he does things. Joshua, describe what drives the Nvidia CEO because you guys have this great line in the businessweek story. Huang's tendency even when he's away from the office and noticeably tipsy, is to always be closing. Talk about that more. Yeah, Jensen Huang is always referred to as Jensen is a real sort of force of nature personality. He's very intense and he's always sort of evangelizing. For right now, it's for artificial intelligence and the things that you'd really need a lot of Nvidia chips for. And so you'll see him constantly telling you why the future is going to revolve around these enormous data centers full of Nvidia chips. And Ian, talk a little bit more about just the expansion here. What is the next phase of growth? Ian, for this company, the expansion is AI has to be Everywhere for this to work. Right now you have a very small group of companies, whether it's Microsoft or us, that are buying the majority of the gear, putting the majority of these capabilities in place. What really needs to happen is that it has to get out there in the wild, it has to get out there in the economy. Companies have to use it, consumers have to use it, it has to be part of factories, it has to be part of vehicles, it has to be part of everything to justify that massive spend that we've seen and to keep that massive spend going. Is it still, though, Ian, about AI inference and training AI models? Or is it about something bigger for Nvidia moving forward? Is it about driverless cars? Is it about humanoid robots? Is it about that next gen thing that, that Jensen's watching that we don't know about yet? Well, you refer to training and inference. Some experts will tell you that the training, the actual creation of the core of AI has kind of happened or is close to being sort of complete. What we need now are models that are more specific and tightly focused models that can drive your car, models that can tell your factory robots where to go, not to bang into each other and to do things in the most efficient way that what we need. And that is where inference comes in. Because then you have these more specific models that say, find their way around a factory. They have to know then and infer in the moment, hey, there's something coming towards me, I need to stop. Or, hey, there's a human being there coming around the corner, I need to not run them over. That's what we're getting to now. Right now a lot of AI out in the wild is kind of the chat bots. It's reacting to a very limited set of stimulus, text or voice. What we need is AI to be inferring more meaning from the world around it. And that's still a work in progress. Joshua, what is physical AI and how is Nvidia expanding into it? Because you guys mentioned that a number of times in your article. Sure. Physical AI is basically, instead of chat bots, AI that's operating in the real world. The most obvious example of it right now is autonomous vehicles, something that Nvidia has been working on for a decade and has actually said would be solved many years ago. But it's also looking at robots, automated factories, basically anything where the AI is moving something around the world. And Nvidia is very bullish on this because it needs as many applications as possible. And if it can unlock factories and cars and everything That's a lot bigger than just doing something on the Internet. Joshua, you've been covering technology for years, and I'm just curious, contextually, for you to describe this moment to us as a technology editor. Is this a bigger deal than the rise of the Browser in the 90s? Is it bigger than the rise of social media in the early 2000s? Is it on par with the rise of mobile? Like, where is this in your view as a tech editor? I think what we're looking at right now is that we've seen the sort of laying the groundwork phase of the artificial intelligence intelligence era, and now we're waiting to see that this is going to be the size of social media, that this is going to be the size of the browser, that the vision that Nvidia and other AI companies have laid out is actually going to sweep the economy with, with the force that they say it's going to, or if it's going to be something more modest. And as Ian said, considering how valuable Nvidia is, this can't just be a pretty big deal. It has to be an enormous deal for Nvidia to justify the amount of money it's worth right now. Ian, I imagine that, you know, while you were writing this, the idea of, of Deep Seek and other competitors came up in your reporting process. Can you talk a little bit more about just how Nvidia is reacting to the competition? And, you know, these companies that are saying that they can do AI cheaper? Yeah. I mean, it's important to note that for the fundamentals of what's going on, Nvidia really doesn't have any competition right now. If you want to train a large language model, you're going to do it on Nvidia's gear. At the same time, the enormous expense of doing that and then the exposure expense or the possible expense of deploying that in the real world has got everybody thinking, is there a better way to do this? Is there a faster way to do this? And Deepseek is arguably the most poignant example so far that raises the question, perhaps we can do this more cheaply, or perhaps we can sort of diffuse a little bit of what we've already done and snap that off and use that in a cheaper way. So there's so much energy, there's so much at stake here. And Peak is really an example of that. And Nvidia's reaction was great, this makes it cheaper. This means it's going to be everywhere that's ultimately good for us. And that's a typical Jensen response. You know, don't deny reality. Don't look back, look forward. Yeah. As you write and as you and Joshua, right, there's this history of booms and busts for the tech infrastructure companies because their products tend to become commoditized in. That's not happening yet within video. Yeah. And yet is a very powerful word in this sentence. Everybody is reacting like Nvidia is the king of the world. And they've been at this for years. They kind of have. But look at the numbers, right? Only like three years ago, gaming graphics chips were the biggest part of their revenue. This has happened really, really quickly and very dramatically. There's been a massive transfer of wealth. The key question is can that transfer of wealth become self sustaining? And that's what they're working on. Right. This isn't an intel that's been around for decades and in this dominant position, this is something that's happened really quickly and is a very quickly evolving situation. Joshua, Nvidia Stock is down 10% year to date. It's obviously up a ton in the last few years. But what do you think Jensen thinks about the recent moves in this company? Or does he not think about that stock price at all? I'm sure he thinks about the stock price because everyone in the world seems to think about the Nvidia stock price. You know, there's a lot of headwinds that Jensen Huang has been well aware of for quite some time. And they're all coming to a head, you see, with tariffs and other barriers on international trade, including US China trade war that could have national security implications that would restrict chips. Specifically, I think the rise of deep sea, while he will see, say that's a great thing, also shows that maybe some of the assumptions about how many chips are going to be needed for each subsequent step in the AI development. You know, maybe those assumptions aren't as ironclad as they thought. And that is why you see them sprinting ahead and trying to get to the next phase, to have these applications start to bear fruit and to have a new story to tell to keep, to keep that moving, that momentum moving. And to what Josh said, that if Jensen has a genius, it's, it's his ability to never sit still, to always be absorbing all of the input. So you mentioned the stock price. Whatever is bugging investors, he hears it. And then when you go into the next investor presentation, when you go into the next earnings, he's already moved beyond it. In the conversation, he integrates a bit of the concerns, such as deep seek into his presentation, into what he's saying, into the points he makes over and over again. And that's true whether it's regarding the stock price or that's true, whether it's regarding the technology, that he's always absorbing that information. That's where his genius lies. Whether he's ultimately right or not, whether it plays out like he says it's going to, that's another thing. But what we wanted to convey in this story as much as anything else is the level of intensity being brought by somebody who isn't doing a victory lap. So Joshua, how does he think it's going to play out? How does Jensen think this is going to play out? He thinks it's going to be everywhere. He's, you know, he will tell you that the robots are going to be here. We've been saying that it's going to take however long, but that this is the year that the, that the car problem is solved and you soon you'll see so many autonomous cars on the streets that health care will be over overhauled. You know he's there giving you the bull's case if you listen. And you know, whether he believes that deep in his soul, like we don't know, but he will make the most convincing case possible. Ian, I just want to let you wrap it up on this while we have you changing subjects very briefly. Intel has just been on a tear. We can't let you go without just giving us 30 seconds on intel and its new CEO. Yeah, we have a new CEO, but we don't know what he's going to do. We don't know whether he's the breakup guy who's going to preside over the end of intel as it exists or whether he's the guy who's going to take the existing plan and just make it into a better plan or better executed until we know that we don't know which way they're going to go. Well, investors are certainly betting big on him because the shares of that company have just been on a tear since that was announced. A really great story and really appreciate you both of you joining us. Joshua Brustein and Ian King writing for Bloomberg businessweek about in Video and Jensen Huang, of course, a big event Nvidia GTC happening this week in Northern California. Be sure to check out our coverage. You can do that@bloomberg.com and of course on the Bloomberg terminal as well. This is the Bloomberg Businessweek podcast. Listen live each weekday starting at 2pm Eastern on Apple CarPlay and Android Auto with the Bloomberg business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. Well, a cyber attack last week on X, of course, Elon Musk, social media platform. It was reportedly caused by insufficiently protected servers that were targeted by a distributed denial of service attack. In other words, DDoS attack. Cybersecurity analysts say the attack was possible because X's origin servers were not shielded behind tech that blocks DDoS attacks, making them vulnerable to attack. Now, pro Palestinian hacktivist group called Dark Storm Team took responsibility responsibility for the attack without providing any evidence. Bloomberg News wasn't able to independently verify the group's claims and representatives from X did not respond to a request for comment. It does show though that even the company owned by the wealthiest person in the world is vulnerable in this day and age. For more, we bring in Wendy Whitmore, senior vice president at Palo Alto Networks, where she works with businesses to defend them from cyber threats. Think ransomware, state sponsored espionage and more. Wendy joins us from the Bloomberg businessweek studio. Wendy, good to have you back with us. Give us big picture here. Where, where you are, where we are versus the bad actors. Are we still at least one step ahead of them? Well, so I think the story you presented is a great example of what we're seeing, which at a high level is the increase in speed, scale and sophistication from attackers worldwide. There's nation state activity which we've continued to see a massive increase in. And then on the cyber criminal side, what we're seeing is largely what you mentioned. So a focus on disruption. Right. Attackers intentionally wanting to disrupt business operations to do it in a way that's very visible that, you know, causes a disruption to an end consumer. And oftentimes they want to do this because they have a higher likelihood of commanding some sort of payment in return. Clearly wasn't happened in your story last week, but that certainly is often the intent and very consistent with what we're seeing. Wendy, you work specifically with businesses to defend them against these cyber threats. What, what do these cyber attackers really want out of businesses? Do you see a pattern in terms of like, I guess the biggest trend in terms of these, what these hackers actually want, the biggest trend is unfortunately still that focus on commanding a return of payment. So oftentimes, you know, if it's a cybercriminal they're looking to how can I generate the light, the highest payment in return for the attack that I've provoked? So they're going to take every avenue to do that, whether it's extorting the company, it's causing reputational damage, causing actual operational disruptions. We've seen that in the hospitality industry and health care, in technology as well. And now you just saw that, you know, on social media companies last week. Wendy, how vulnerable we, you know, we often talk about companies in the context of being vulnerable to hackers or toward malicious actors. How vulnerable, though, is the US Government in your view? Well, you know, I think you're hitting on a fundamental premise here, which is cybersecurity really is national security today. So I think as a, as a country, we're certainly well positioned to. We've got a lot of money in proactive defense and certainly in the ability to, to detect quickly when something is amiss. We're seeing more and more organizations, certainly including the federal government, move towards more proactive investment in security. So looking to invest on the front end whether than waiting until something occurs on the back end. And really having that visibility to one central location is critical to be able to make decisions quickly, analyze what's going on, and then get answers. What is investment in cybersecurity look like from a business angle? Is it, you know, companies training employees about safe digital practices, or are there actual pieces of infrastructure and software that these companies are investing in? Yeah, it really is both. Right. So one of the areas we specialize in at Palo Alto Networks is just that ability to have a platform that enables that central visibility. So that's investment in technology where you can get answers and cloud endpoint and the network. But the employment, the training employees piece is so critical because all of these attacks are successful because employees are successfully, you know, taken advantage of. So either their credentials are stolen, maybe it's a help desk that's targeted. With the onset of AI now with generative AI in particular, that human piece has become so real and so tangible. And the barriers that used to exist, like challenges in language, for example, that doesn't exist now because these attackers are able to use gen AI to facilitate and automate so many of those attacks and do them in a realistic way. Okay, so that's what really concerns me. And we've all seen the stories of people being misrepresented or, you know, you have a family member that's called, and they say they're being told that one of their loved ones is in jail and needs money or something like that. For years it was pretty easy to identify that that wasn't real. But I think those days are behind us. Agreed. It's. It's very concerning. So from a business standpoint, the reality is we have to fight AI with AI. So while attackers have leveraged AI to accelerate their attacks, to automate them, to make them faster at scale, that also the reality is businesses have invested in AI and if you haven't, and you need to, in the lens that you have to automate your defenses, you've got to be able to detect very quickly and rapidly so that you can make decisions to contain the spread of an attack in your environment. Well, okay, so how does that, how does that work though? If you're an individual and you're not a business, how does that work? If, you know, how can my parents protect the themselves or somebody's relatives, or how can we protect ourselves? I have those same concerns. Right. My parents are certainly aging and that's it. They're a target demographic for fraudsters, for criminals who are looking to take advantage of citizens. So I think the more awareness we can have, the better in terms of making sure that people are aware that there, you know, is this threat and a potential risk. With AI, they need to validate sources. If something seems too good to be true, or if you are, you receive a phone call, for example, or an email, and there's a sense of urgency like, hey, this has to happen immediately. I need an account information now. I need you to make a phone call. Those should all be red flags and triggers at the consumer level. We don't have a ton of time left. But I'm wondering just how optimistic you are that just as these attackers get more advanced in using AI to, to commit cyber attacks, companies can leverage AI to respond. I love that we're potentially ending. On a more optimistic note, I'm highly bullish as it relates to I, I see the investments we're making not only in the research to understand how attackers are using AI, but the investments in accelerating our workflows, our processes, having co pilots for tasks, tasks, tasks that used to take days, now take minutes and then sometimes seconds. So the reality is we can leverage our really smart people towards even more challenging tasks. And that's really exciting and motivating, and I think it's going to be a key to success moving forward. Hey, Wendy, 30 seconds before we let you go. Given the growth of AI and the way that companies are spending around AI, do you think companies are still spending sufficiently when it comes to protecting themselves? You know, what we're seeing is companies spending more of their budget on proactive security than on reactive security. And I think that's great. News, and it's going to continue to shift the ball forward in terms of making it harder for the attackers to be successful and encouraging that the organizations who are providing defense are going to win. Wendy Whitmore, senior Vice President at Palo Alto Networks, joining us from our Bloomberg Businessweek studio in New York. You're listening to the Bloomberg Businessweek 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 YouTube. The Buy American movement has been periodically invoked since the Boston Tea Party. The goal has been promoting economic nationalism and strengthening the US Economy. Yet despite its compelling logic, there is little evidence that Buy American campaigns actually work in reversing consumption trends or preserving manufacturing jobs, and their success is often tied to broader economic conditions. Amanda Moll is senior reporter for Bloomberg Businessweek and she writes about why Trump's Buy American campaign will not improve the U.S. economy. She joins us in the Bloomberg Businessweek studio. Check out her story and more on the Bloomberg terminal and at bloomberg.com/businessweek. Amanda, why doesn't this tend to work? Well, it depends on what you mean by work. Buy American campaigns are sort of on their face designed to increase consumption of American made products. Often that doesn't work because they do not meaningfully change the number of American made products available. So people generally buy what is in front of them, what is easy to get, what is financially feasible for them to buy. And buy American campaigns aren't really designed to change that in any meaningful way, even over a long time period of time. But I would argue, and I argue in the piece, that they're not really meant to do that, even though that's how they are presented to the public. They work quite well at stoking, you know, xenophobic sentiment, stoking anti immigrant sentiment, and aligning workers with the interests of their bosses, which I think historically that is what they're designed to do. And in that way they do work. Talk a little bit more about how these Buy America campaigns impact the job market specifically and what the data is showing us about whether these campaigns in history have actually brought jobs onshore. Historically, they don't move the job market that much industry by industry. Sometimes they can tweak the short term circumstances a little bit, but what really matters is how much federal investment, public investment there is in particular industries. Tariffs. If they're like really well designed to target particular industries and if they're combined with broad scale investment in those industries to build them at home, all of that sometimes Gets, like, bundled up with a buy American movement, and all of that together can impact the future of a particular industry. But just telling people to buy American in general doesn't really have any mechanism by which it would increase employment. Employment. But Amanda, if the way that the Trump administration is thinking about this is a bit different than in the past, like, let's say it's. I don't know, instead of encouraging people to buy American, they're making it so it's really difficult not to buy American. So that product that is in front of you is less, is. Is actually the least expensive one because there is not a cheap import available. Does it work then? I think that we're sort of about to see if it works then. But there's reason to believe that even under these circumstances, even when the. The alternatives are really onerous, it wouldn't work in a lot of situations. Because what does it mean to buy American in a. In an economy where the supply chains are globalized, different components come in from all kinds of different places and then are, in the end, assembled in America? A lot of things that are labeled as American goods contain foreign components or need raw materials from overseas that are then going to also be more expensive. And then there's just a lot of things that Americans want to buy that are not produced in any meaningful quantity in the United States, and there's really no way for them to be produced in the U.S. like, take coffee, avocados, like, you can't satisfy American, current American demand for these things with the American capacity to produce them ourselves. So you have this situation where buying American has become sort of like a meaningless slogan because, like, what is an American product? I get into it in the story a little bit, but it's really hard to say, like, what that even is. Yeah, this is a really detailed story, and I love that it starts with some American history and an homage back to the Boston Tea Party, which I didn't realize that you could trace the roots of that campaign all the way back to the beginning of the country. Maybe we could just end on where you see at least Trump's Buy America campaign going and how we'll judge the efficacy of it, you know, within four years from now. You know, it sort of depends where tariffs go, because something that we see historically over the course of, you know, a number of sort of like, large buy American campaigns, what the, you know, the volume of imports and the tendency to buy American goods really depends on is the overall economic situation. So if we end up in a recession, it is likely that fewer imported goods are going to come into to the country. But historically once that recession ends, the trend line on imported goods returns directly to whatever it would have been before the recession happened. So without like a, like a robust plan for public investment in particular industries in the US without more they are there, I really don't see how this is going to make any positive long term changes in U.S. manufacturing. Amanda Moll, Bloomberg Businessweek senior reporter, joining us back there in the Bloomberg Businessweek studio. Check out her story and more at bloomberg.com/businessweek and also of course on the Bloomberg Terminal. You're listening to the Bloomberg Businessweek 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 YouTube. While the backlash against Di has been swift, Cole is just the latest retailer to back away from using DI language amid criticism of the policies from the Trump administration. Under pressure, many companies across sectors including Victoria's Secret, Target, Better Platforms and Walmart have been pulling back from dei, some dropping diversity related hiring and promotion goals. Really curious what Jensen Harris has to say about all this. He's the co founder, the and CEO of Textio. The company makes software that removes bias from workplace communication. So think performance reviews, job descriptions and more. Textio says that a quarter of the companies in the Fortune 500 have used Texio. Full disclosure, Bloomberg is a customer of Textios. Bloomberg managers and other company leaders use the company software to ensure their job descriptions, performance reviews and manager feedback are written in a way that's clear, fair and equitable. Also, Bloomberg Beta, the early stage VC company backed by Bloomberg lp, the parent company of Bloomberg Media, is an investor in Textio. Jensen joins us from Las Vegas. Jensen, good to see you. Have you noticed companies embracing your software differently just in the last few months of as we've seen such a backlash to dei? Well, I think an important thing to realize is that most companies aren't actually stepping back from the principles of diversity, of fairness in hiring and in how they treat their employees. Even after these executive orders that came out a few weeks ago, 80% of American companies have said they're staying the course or they're actually more in ensuring that they're hiring the best folks for their companies and giving them the tools to get their feedback, for instance, that helps them grow and thrive. And so I actually think that almost every CEO understands that at the center of their business being successful are the people that they've hired and the people that they need to grow and promote to do great work. And so I don't think there's actually much controversy about when you want to hire the best people, you need to cast the widest net. I don't think that there's actually much controversy about you should treat your employees fairly and ensure that all of them have an opportunity to get the feedback they need to do a great job. And so I think kind of this is a bit of, you know, a tailwind actually for folks who actually want to invest in the people at their companies. So talk about how Textio has evolved because you launched the company in 2014. Obviously tech and AI has grown so much since then and DI has become, you know, much more of a hot button issue. What are the biggest changes that you've seen for Textio over the last few years? Yeah, so we were first to market as an artificial intelligence company to hr. We've been doing AI in the HR space for more than a decade now. And so last decade has really been for us taking our core technology, which is about helping optimize talent. And we've started with hiring a decade ago, ensuring that people could build recruiting content, job postings and brand language that can attract the widest set of qualified candidates to roles, really about hyper optimizing that content to perform well. And over the last decade we've just continued to get further and further into other important aspects of running company. So we have done performance feedback optimization, ensuring that, I mean, managers hate writing performance reviews and we built software that gives them the ability to write really effective performance reviews. In halftime, we have done peer feedback. We're actually tomorrow introducing interview feedback which is a new product that ensures and I think especially important in this world in which everyone is thinking about meritocracy and how can we ensure that we hire the best. The way you do that is by interviewing folks. And tomorrow we're announcing a product that actually optimizes interview feedback to ensure that is clear that it's fair, that it's based on merit, and to help companies know that they're hiring the best folks for the role. So that's really been the last decade for us and about broadening the application of our world class AI technology in a proprietary way to really transform all of hr. Hey Jensen, you said you were first to market with this type of AI. How do you train the AI? What is the AI powered by? You know, we talk about AI now in the context of a lot of the labs that are powering what's happening in other services and other platforms like, you know, Anthropics Cloud or OpenAI's Chat GPT. What powers your AI? Yeah, that's a great question. You know, we were one of the first companies that brought Generative to business back in 2019, so more than five years ago. And so the idea of how do you train AI to be safe, to use and effective is a really important one and one that we've been thinking about for a long time. So Textios data is really based on a whole bunch of different signals in the world. Some of it is trained from sort of our signals of what's happening, you know, for instance, in recruiting across hundreds of millions of job posts in the world and seeing what goes up, what goes down, how fast is a job filling, how do different companies sound online? And we can take all of those signals along with sort of our proprietary knowledge of what actually is filling, what jobs are filling, what industries are filling, what language works well in different locales around the world. Like I would talk to someone looking for a job from New York differently than I would London or San Francisco for instance. And we take it, which ends up being hundreds and hundreds of millions of data points and use that to create, refine the models. And then humans are actually responsible for ensuring that those models can be trusted, that they're safe, and most importantly that they actually work, that they actually create the optimizations that the models predict they will. Now we have a real advantage compared to a company like OpenAI for instance, which is we build models just for HR. We are not, you know, writing a letter to Santa, we're not writing your one pot chicken recipe. We don't care about any of that general purpose stuff. We optimize in a hyper way for HR scenarios and HR optimization. And so in a sense we have a, a real leg up on everyone else in this space. We talk a lot on this show about supply chains and chip designers. And I'm wondering as a company that uses AI, has it, has it gotten cheaper, has it gotten easier to leverage AI just in the last year or so? Certainly the pace at which optimizations are happening and the pace at which COMPUTE is becoming more and more easy to access in a cost effective way, it has leveled the playing field a little bit. That said, it's still pretty expensive. And a lot of companies that over the last year or two have decided to try to layer on artificial intelligence on top of their legacy systems have found that it's Victoria expensive proposition. And so I think that's a place where companies that really can embrace doing domain specific models for HR but or for finance, for sales are going to find that they have a much easier job because the models are right size for the tasks versus again an open AI general purpose model where you're paying for a lot of compute in some cases in order to get a relatively small amount of value. Back when you left Microsoft more than 10 years ago to launch Textio and Emily kind of alluded to this with the evolution of the company, what did you envision Textio would do versus what it's doing now? So we started Textio with a really clear vision that the world of HR was being left behind and that we could take the technology that we had to turn these incredibly important aspects of business right. I mean think about it. There's probably nothing more important for most businesses than who you hire. Are those people great? Are you getting access to the best talent? And then how do you help those people grow? How do they give them the food, the water, the help, the, you know, everything we think about, you know, a greenhouse, all the people at your company, how do you give them all everything they need to thrive? And that is clear feedback, that's fair feedback, that's ensuring that they can tell their manager what's working, what's not working. It ensures that you get visibility across your entire workforce about who actually should be promoted and maybe who needs to be let go because they're not a match. And so we knew that this was incredibly fundamental and the tools that HR teams were using were locked in the past, locked in the General Electric and IBM models of the 1950s of how to do those things. And so we thought that we could, with a dual strength in AI and user interface, create next generation tools that would be phenomenally easy to use but also transformative in terms of actually helping managers, for instance, not hate doing performance reviews. Right. Helping recruiters are stretched to the hilt with how many roles they have to fill now being cav tools to automate that making it easy year and to outpace their competitors in competing for talent. Jensen, going to have to leave it there. Do appreciate you joining us this afternoon. Jensen Harris is the co founder and CEO of Textio. Time for a sofa upgrade. 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Shop now at washablesofas.com Offers are subject to change and certain restrictions may apply. This is Jacob Goldstein from what's yous Problem? Business software is expensive and when you buy software from lots of different companies, it's not only expensive, it gets confusing. Slow to use, hard to integrate. Odoo solves that because all Odoo software is connected on a single affordable platform. Save money without missing out on the features you need. Odoo has no hidden costs and no limit on features or data. Odoo has over 60 apps available for any needs your business might have, all at no additional charge. Everything from websites to sales to inventory to accounting. All linked and talking to each other. Check out odoo@odoo.com that's o d o o.com in the heat of battle, your squad relies on you. Don't let them down. Unlock elite gaming tech@lenovo.com Dominate every match with next level speed, seamless streaming and performance that won't quit and push your gameplay beyond limits with Intel Core Ultra processors. That's the power of Lenovo with Intel inside. Maximize your edge by shopping@lenovo.com during their back to school sale. That's lenovo.com how about you let me drive? Oh no, no no no. This is not a toy. Who's gonna drive you home? Honey, please, I'll do the driving. Drive on. Excuse me, I want to drive. It's the question that drives us. This is the drive to the close. That funky music will drive us till the dawn on Bloomberg Radio. Well, we did just hear it from Charlie pellet just about 10 minutes 15 minutes ago in the close of trading here and we're seeing the S&P 500 off its best levels of the day, but still up 1% while the Dow outperforming up 1.1%. The Nasdaq Composite higher by just about 710 of 1%. Let's see what George Young has to say about this. He's partner and portfolio manager at Villary Funds. He joins us from New Orleans. He manages the Villary balanced funds. Vill X is the ticker year to date. It's in the 48th percentile, down just about 110 of 1%. George, how are you? Good to see you. Right. Doing all right. Hey. We're trying to figure out the actual effect on markets that this president is having right now because he's getting a lot of attention for the sell off that we saw in the last few weeks. Do you think the sell off is a result of uncertainty around tariffs and Trump's policies? I do. The market really does not like uncertainty. And you've had, you know, all sorts of different uncertainties. It's a lack of predictability. And that makes our job tough. That makes regular investors job tough. So you want to know about interest rates. You want to be economy. Well, that's going to be directly affected by tariffs and that is going to get passed on to the consumer. How the consumer reacts is the big question. So obviously a lot of the downturn in stocks as of late, I guess, has to do with all of that uncertainty on the horizon. When do you think the market downturn ends? I mean, we are up today, but when you look at the S and P year to date, we're. We're down about 3%. Yep, that's correct. Well, a couple of comments to that. The S and p is down 3%, but if you take out the Magnificent Seven, the S& P is actually up. So that's one of the things I think that we're focused on is you don't want to fall in love with stock. It won't love you back. So the Magnificent Seven have been darlings for the past year, the past couple of years. So we try to look for things that are undiscovered, that are unrecognized, that have value and that can offer a good dividend return, can offer growth. And specifically, you want to look long term. So I can't give you a date as to exactly when the market's going to turn this way or that way. But what I can tell you if you look at history, is that the stock market has outperformed the bond market. And the US Stock market in particular. We're domestically oriented, has outperformed what other indexes in the world have done. So we remain optimistic and we try to look past the, the vagaries, whipsawing. That can be problematic for investors. Well, George, you sent along some stock picks. I want to go through a couple of them. I want to start with Lineage, the global temperature controlled warehouse that that's comprised of cold storage warehouses. You're bullish on this company. It's a reit. Why do you love it? Well, we love for a couple of reasons, you get growth and you can also get the income. So it's set up like a reit, as you said. But what's interesting, they're the largest in the world that went public a couple of years ago. The founders still own about 30% of the company. So they put their money where their mouth is. They did go public for liquidity purposes, but at the same time they believed in this company long term. So the important thing is They've got over 400 centers around the world. They're the largest in the world. They've got 96 different patents and all the food that we. Not all the food, the vast majority of the food that we consume is shipped and stored in climate controlled warehouses. So it's important that you understand that they're the most efficient. They have. We just toured a facility about a month ago that's local here in New Orleans, they're the most up to date. It's not the old days where you had pallets who were being run around left and right. This is automated, this is mechanical, this is very efficient stuff. Okay, that's food warehouses. Tell us about copper because one of your other picks is report McMoran. Sure. So if you contrast that with something like oil that has anywhere from a 10 to a 30 year useful life in most drilling prospects. This has a 90 year life and there's no substitute for copper. Again, look at something another commodity like oil. There are arguably other substitutes, alternative energies, etc. When it comes to copper, that's all you can use. And they are investing very difficult places. Freeport Copper owns one of the largest the world, the Graspers Mine in Indonesia. Copper is dependent on demand and that is somewhat dependent on Chinese demand specifically. But if you look at every electric vehicle, everything you own, energy is electricity is clean energy and you need copper to make that work. We love Freeport. Hey George, before we let you go, Atlas Energy is a number another one of your picks. They own a sand in the Permian Basin in Texas. What's your view on Atlas? Well, it's interesting. They have the sand and they also have something called Dune Express which is a 42 mile conveyor belt throughout West. I just, I just heard about this conveyor belt in a podcast that I was listening to. Yeah. Over the weekend. This is. What is it? The largest conveyor belt in, in the country. Exactly. You're telling my story for me, this is great. So they've got a wonderful yield of about 4, 5%. They've been a little rocky recently because they made what we think is a great acquisition to provide energy electricity to these wells in difficult locations. So again, it's sort of like the Freeport story. Where is the copper? Difficult place, West Texas. Difficult to get energy out there. But more importantly, sand has been shipped by trucks heretofore, which is slow, expensive and very dangerous. So this Dune Express is going to save money, it's going to save lives. It great, great change. I feel like I got to do a remote broadcast from this conveyor belt just to see it or maybe go for a ride on this conveyor belt. George, really appreciate you joining us. Thanks so much for taking the time this afternoon. George Young is Portfolio Manager at Villari Funds. He joins us from New Orleans. This is the Bloomberg businessweek Podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal. Let's be Real life happens. Kids spill, pets shed and accidents are inevitable. Find a sofa that can keep up@washablesofas.com Starting at just $699, our sofas are fully machine washable inside and out so you can say goodbye to stains and hello to worry free living. Made with liquid and stain resistant fabrics, they're kid proof, pet friendly and built for everyday life. Plus changeable fabric covers let you refresh your sofa whenever you want. Neat flexibility. Our modular design lets you rearrange your sofa anytime to fit your space whether it's a growing family room or a cozy apartment. 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