Inflation Meets AI, Navy Buildout Challenges, Tariff Refund Fight

Summary

Wall Street Week – July 17, 2026

Episode Title: Inflation Meets AI, Navy Buildout Challenges, Tariff Refund Fight
Host: David Westin (Bloomberg)
Theme: Exploring the interplay between persistent inflation and the AI investment boom, America’s ambitious naval expansion, and the complex fallout of President Trump’s global tariffs—through the lens of top policymakers, industry figures, and business leaders.

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Episode Overview

David Westin leads a brisk, multifaceted conversation about three of 2026’s defining business stories:

• Why inflation remains frustratingly high despite recent improvements—and what AI's investment surge means for productivity, prices, and interest rates.
• The sweeping effort to expand and modernize the US Navy under President Trump's “Golden Fleet” initiative, with a close-up on America’s shipbuilding bottlenecks and lessons from global competitors.
• The ongoing saga of tariff refunds after the Supreme Court rejected President Trump’s emergency trade measures, as small businesses struggle to recover lost capital in a byzantine process.

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Main Topics & Key Segments

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1. Inflation, AI Investment, and the Fed’s Policy Dilemma

[01:59 – 12:53]

Key Points and Insights

• Persistent Inflation:

  • Inflation has hovered above the Fed’s 2% target for over five years. Recent numbers have eased, but underlying pressures—especially in core services—worry policymakers.

  • Fed policy isn’t “very restrictive” yet, raising debate about whether further rate hikes are needed.

    "I think the question the FOMC is going to have to ask itself is do we need to raise interest rates a bit... I think the tone is getting more that we're impatient with this inflation."
    —Loretta Mester, former Cleveland Fed President, [03:21]

• What’s Driving Inflation?

  • Fuel prices dropped, helping headline numbers, but core service inflation is sticky.

  • AI investment is a double-edged sword: raising prices today (especially for components) but expected to eventually boost productivity and dampen inflation—at an uncertain future date.

    "Right now it's an inflationary issue. The question is how long will that last... will that feed into other parts of inflation?"
    —Loretta Mester, [05:39]

• New Fed Chair’s Approach:

  • Chair Kevin Warsh has launched five task forces (communications, balance sheet, data, labor market, AI) to rethink Fed tools.

  • Mester applauds the mix of academic, central bank, and business expertise.

    "What I was happy to see is that the people he's chosen as leaders... really are experts."
    —Loretta Mester, [09:15]

• Labor Market Dynamics:

  • Labor market is stable, though payroll growth is low due to changing labor supply.
  • AI and economic uncertainty complicate prospects for young graduates.

• Market Volatility:

  • Expectations for rate increases have seesawed due to shifting inflation narratives—now less about tariffs, more about oil and cumulative inflation “bad readings.”

Memorable Quotes

• "If you look at core services excluding housing... that's been moving up. That’s got to be a concern for the FOMC."
  —Loretta Mester, [04:14]

• "You don't need as much hiring to keep supply and demand in balance... a lot of what's happening... is on the supply side."
  —Loretta Mester, [07:39]

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2. America’s “Golden Fleet” – The Challenges of US Naval Expansion

[15:38 – 27:27]

Key Points and Insights

• Trump’s Golden Fleet Plan:

  • Ambition: Modernize and expand the Navy substantially; mandates leap from 290 to 355 ships.

  • Budget for 2027 is a 40% increase over 2026, signaling long-term revenue for shipbuilders.

    "I have approved a plan for the Navy to begin construction of two brand new, very large... battleships... 100 times more powerful than any battleship ever built.”
    —President Donald Trump, [17:03]

• Bottlenecks and Hurdles:

  • Labor Shortage: Over a quarter of skilled shipbuilding workers are nearing retirement; effort is on for apprenticeships and talent pipelines.

    "A major constraint is definitely the workforce challenge..."
    —Seamus Daniels, Center for Strategic and International Studies, [18:50]

  • Supply Chain and Funding Gaps:
    Outdated contracts (pre-COVID, low inflation era) and delayed government funding slow progress. On-time, predictable funding is repeatedly flagged as essential.

    "Be on time, make sure the funding arrives on time, make sure the supply chain is safe..."
    —Christopher Kastner, CEO, Huntington Ingalls Industries (HII), [21:05]

  • Design Discipline:
    Late design changes add cost and delay; distributed construction (outsourcing to smaller yards) and modular designs are part of the solution—but introducing these innovations is complex.

    "Every time we change a requirement, change a design, it costs us a lot, both in dollars as well as schedule. So that's got to stop.”
    —Adm. Mike Mullen (Ret.), [22:29]

• Learning from Global Peers:

  • China focuses on sheer scale, while South Korea and Japan excel at process discipline.

  • US defense shipyards are distinct from commercial ones, but can still learn process improvements.

    “If you go into the defense shipyard, it looks very similar to this... it's a good comparison. You always need to know what the competition is doing.”
    —Christopher Kastner, [24:47]

• Technology & The Future Fleet:

  • US investing in autonomous vessels and a “high-low mix”—pricey, capable ships combined with cheaper, mass-produced platforms (drones, etc).

  • The Red Sea experience highlighted the cost imbalance of shooting down cheap drones with expensive missiles.

    “We were shooting down cheap drones with very expensive missiles, which is a losing game in the long run."
    —Adm. Mike Mullen (Ret.), [26:16]

  • Flexibility, order predictability, and fewer midstream changes are critical if the US is to adapt to new naval threats.

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3. Tariff Refund Struggles—After the Supreme Court’s Ruling

[30:36 – 41:30]

Key Points and Insights

• Background:

  • President Trump’s tariffs (under the International Emergency Economic Powers Act, IEEPA) hit thousands of businesses with higher import costs. Supreme Court recently ruled they were unlawful; $166 billion must be refunded.

    "We lost 15% of our cash flow for any business, but certainly for a small business that was terribly impactful."
    —Victor Schwartz, owner, VOS Selections, [31:41]

• Small Business Fallout:

  • Severe cash flow disruptions led to layoffs, inventory sell-offs, and a race to the bottom in pricing—especially tough in contracting markets like wine and spirits.

  • The Supreme Court win hasn’t delivered immediate relief: only ~$71 billion of $166 billion had been refunded within five months. Many refunds are stuck with third-party shippers or bogged down in paperwork, as businesspeople wait.

    "The judge was very much directing the process... CBP did a good job facilitating the largest refund in history. Just for a sense... CBP usually processes 338,000 entries. The IPA tariffs were going to involve processing 53 million entries.”
    —Sarah Albrecht, Liberty Justice Center, [35:00]

• Refund “Waterfall” Issues:

  • Most small businesses used logistics providers as “importers of record,” so refunds first go to FedEx, DHL, etc., who are then supposed to pass the money on—a slow, uncertain process.

    “It's pretty frustrating actually... I have to contact my vendor who is in turn waiting for a refund from the shipping company... It’s just really a big mess.”
    —Alison Budvarzon, Out of the Box Manufacturing, [36:41]

• Legal Loopholes and More Lawsuits:

  • The administration responded to the Supreme Court ruling by immediately reissuing many tariffs under a different statute. New lawsuits are underway; refunds for these are also in limbo.

    "Five hours after we won, they announced the Section 122 tariffs... So we filed a lawsuit... We won that lawsuit, the government appealed, and we're still waiting for our court date."
    —Sarah Albrecht, [38:59]

• Lasting Damage:

  • Even as refunds eventually arrive, business owners say uncertainty has stifled innovation and shrunk markets. The damage goes beyond what money can reverse.

    “The tariffs had the effect of slowing down the pace of innovation because there was so much waiting and unpredictability in components... I would advocate for predictability, stability, and support to regrow those industries within the United States..."
    —Alison Budvarzon, [40:12]

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4. Is the Rush to AI Harming Corporate Strategy? – Conversation with Blair Ephron

[44:15 – 56:34]

Key Points and Insights

• AI Boom—More Market Hype than C-Suite Reality:

  • AI dominates financial headlines and drives vast market capitalizations, but CEOs are moving more cautiously—focusing on targeted, appropriate AI investments, not following the herd.

    “It’s distorting the markets much more than it is the C-suite. Obviously, the markets are all about AI... At some point, investors will demand a return.”
    —Blair Ephron, Centerview Partners, [44:50]

• Economic Caution Grows:

  • After years of optimism, most CEOs now see the US as a “1.5% economy”—lower than previous years—as consumer spending cools and energy costs bite. There’s still faith in the US’s resilience.

• Capital Allocation and Liquidity:

  • Most S&P 100 companies are spending more on AI, but not to the extreme of the “hyperscalers” (massive tech firms). There’s abundant liquidity; large debt and equity issuances are not yet crowding out others.

    “There's a ton of liquidity. I am surprised that investors, particularly on the debt side, have been over-subscribing by multiples...”
    —Blair Ephron, [49:41]

• Europe’s AI Disadvantage:

  • The US overwhelmingly dominates AI by company value and actual implementation. Europe lags—fragmented capital markets, inconsistent regulatory policies, and lack of economic coordination are big barriers.

    "The fact of the matter is... 43 of the largest 50 companies in AI are US based. Europe has one."
    —Blair Ephron, [50:39]

• Media M&A—Content vs. Tech:

  • Wave of consolidation: media companies realize they must reach greater scale and integrate more closely with technology to compete as tech giants gain ground in streaming and distribution.

  • True winners will be firms that combine great content with deep tech fluency—not just pure tech or pure content companies.

    “If a content company doesn’t become really tech native, they’d have a problem. If you’re a tech company, you don’t actually understand quality content yet. So the key... is the company that can combine content with technology."
    —Blair Ephron, [55:43]

Memorable Moments

• “Tech companies are coming in—Apple, Google, Amazon—they’re highly effective... What Comcast did is in line with that trend... separating a distribution business from content.”
  —Blair Ephron, [53:19]
• "I think there is a highlighted concern... that AI is going to have a dramatic impact on employment levels. I see quite the opposite."
  —Blair Ephron, [54:17]

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Notable Quotes & Timestamps

• "Inflation's been above the 2% goal of the Fed for over five years. So we do have an inflation problem."
  —Loretta Mester, [03:21]

• "Shipbuilding gets in your blood. There's just something so rewarding about building a ship you know is going to go into service."
  —Christopher Kastner, HII CEO, [16:46]

• “We see improvements across both of our shipyards and we need to continue to improve to support their requirements."
  —Christopher Kastner, [17:53]

• “Government shutdowns are a major hindrance to actual effective shipbuilding...”
  —Seamus Daniels, [21:32]

• "Every time we change a requirement, change a design, it costs us a lot, both in dollars as well as in schedule."
  —Retired Admiral Mike Mullen, [22:29]

• “It's just really a big mess all the way around.”
  —Alison Budvarzon, Out of the Box Manufacturing, [36:43]

• "I think it's distorting the markets much more than it is the C suite."
  —Blair Ephron, Centerview Partners, [44:50]

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Timestamps for Major Sections

• Inflation and AI Discussion: [01:59–12:53]
• Navy Buildout Feature: [15:38–27:27]
• Tariff Refund Battle: [30:36–41:30]
• AI’s Corporate Realities with Blair Ephron: [44:15–56:34]

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Final Thoughts

This episode offers a granular, on-the-ground perspective on how macroeconomic trends and government policies are reshaping American business and national strategy—from boardrooms and shipyards to the halls of justice. Whether it's the stubborn riddle of inflation, the daunting complexity of industrial mobilization, or the unintended ripple effects of trade wars, “Wall Street Week” brings clarity and candid insight from a range of authoritative voices.

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Summary prepared by an expert podcast summarizer.

Transcript

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[Wall Street Week Narrator/Reporter]

Bloomberg Audio Studios Podcasts Radio News.

[David Westin]

This is Wall Street Week. I'm David Westin bringing you stories of capitalism. President Trump wants to build what he calls a golden fleet to transform the US Navy. What will it take to get it done? Are US Shipbuilders up to the task and can the government stay the course this time? Plus, it's one thing to charge $166 billion in tariffs, it's quite another to give it all back. The continuing saga of President Trump's IPA tariffs and whether Humpty Dumpty can ever really be put back together again. And Blair Ephron of Centerview Partners takes us through what the air rush is doing to American companies and the deals

[David Westin (interviewer)]

they are trying to make.

[David Westin]

Is there anything left for the rest of us? But we start with the global concern over inflation in a week that gave us new CPI numbers and Chair Wash his testimony on Capitol Hill. Are we facing higher long term interest rates? How much of it comes from that air rush? And what does it mean for Western economies if we can't get back to that magical 2% target? The round of Mester was president of the Federal Reserve bank of Cleveland and now holds positions at both Penn's Wharton School and Princeton.

[David Westin (interviewer)]

We got new inflation numbers out this

[David Westin]

week which were not as bad as

[David Westin (interviewer)]

they had been in the past.

[David Westin]

But there has been a growing concern,

[David Westin (interviewer)]

I think, about longer term inflation.

[David Westin]

Where are we?

[Loretta Mester]

Well, inflation's been above the 2% goal of the Fed for over five years. So we do have an inflation problem. I think it remains to be seen whether where interest rates are today are enough. Right. To actually move inflation back down. I think the question that FOMC is going to have to ask itself is do we need to raise interest rates a bit in order to add restrictiveness to the economy to bring inflation down? And I think they don't know that yet. I think the tone is getting more that we're impatient with this inflation, but I think they're going to wait for some more data before they make up their mind that they're going to need to raise rates. I think there's a good case for saying we need higher interest rates because it's hard to argue that where we are today is very restrictive on the

[David Westin (interviewer)]

economy and particularly maybe because the headline number came down really largely because of fuel.

[Loretta Mester]

That's right. I would say though that overall the report was a pretty good report. Even when you look at the components. I mean, one of the things that have been, I think troubling me is if you look at core services excluding housing, and I think that's a key indicator to look at that's been moving up.

[Sarah Albrecht]

Right.

[Loretta Mester]

We had the inflation coming down last year, even before the war in Iran. We saw that indicator, the services component excluding housing, starting to move back up. And I think that's got to be a concern for the fomc. You know, they've been forecasting inflation is going to come down. And even without oil prices pushing it back up, you still see that inflation has been pretty sticky.

[David Westin (interviewer)]

And so raises the question for some of us why? I mean, it's good to have the numbers know where numbers are, but then

[David Westin]

you want to know what is really

[David Westin (interviewer)]

driving that because you have some sense of where it's going to go next.

[Loretta Mester]

Well, I think that's the question about how restrictive really is policy.

[Sarah Albrecht]

Right.

[Loretta Mester]

Monetary policy is what's going to determine whether demand is outpacing supply and therefore putting upward pressure on prices or. Right. Whether it's restrictive enough and it's going to bring demand more into balance with supply.

[David Westin (interviewer)]

The one place where we know demand is up is in AI and all that comes with it. All the investments being made are really to me at least stunning.

[David Westin]

Does that in and of itself suggest

[David Westin (interviewer)]

that we probably are going to have continued inflation pressure for the foreseeable future?

[Loretta Mester]

Well, you certainly see prices for components that go into AI being elevated and that is a source of pressure, upward pressure on inflation. I think the question, this is something that the new chair, Kevin Marsh has been talking about is eventually he believes that I will increase productivity enough that it becomes sort of a disinflationary force. I don't think the timing really suggests that we're going to get there soon. I do think right now it's an inflationary issue. And the question is how long will that last and whether again that'll feed into other parts of the inflation and the consumption basket and therefore become a more of a broader inflation problem.

[David Westin (interviewer)]

And this week we had not just the CPI numbers but also Chair Warsh with his first appearance on Capitol Hill, where to my hearing said we really are serious about this inflation. And he recognized what you said, which is we've had it over 2% for a long time now. We've got to do something with that.

[David Westin]

At the same time, maybe, as you

[David Westin (interviewer)]

said, eventually it might come back down.

[David Westin]

How does he balance those two things and how long is eventually?

[Loretta Mester]

Well, this is always a question for the Fed and certainly I think it was great that he reiterated the commitment that the FOMC and the Fed has to 2% price stability. I would say as someone who was at the Fed, right. We were always committed to the 2% inflation target. That's not. And price stability and maximum employment, which are the goals that we've been given by Congress. So that isn't new. And the real question is in making those trade offs between the two goals when there are trade offs. Right. And I think they're going to have to take seriously whether their policy rate right now is in the right place or whether they're going to have to recalibrate that a bit higher to get inflation down.

[David Westin (interviewer)]

As you said, there's a dual mandate. It's both about price stability as well as employment. Does the nature of the employment situation I see right now actually give the

[David Westin]

Fed, if they wanted to use it,

[David Westin (interviewer)]

some room to raise rates up?

[Loretta Mester]

Well, you know, if you look at the labor market, it's an interesting labor market in the sense that it does appear to be pretty steady and in balance. I think what troubles people is when you look at the rate of payroll employment growth, it's much slower than it had been in the past. Right. It used to be that you'd say to keep the unemployment rate stable, you would need 150,000 jobs added per month. Now that number is much, much lower. Right. Many estimates are between 50 and 70,000amonth. So that's quite a bit lower. And that's because the supply side of the labor market has changed so much. So you don't need as much hiring to keep supply and demand in balance. So there's a lot of concern about the labor market in terms of those lower growth numbers. But actually it's been a pretty stable and the unemployment rate itself is low. That doesn't mean that there aren't problems in the labor market in terms of different aspects of it, as probably you know from and your listeners know. Right. Young college graduates have had to struggle to get jobs. Part of it may be AI, part of it may be uncertainty about the economy, but a lot of what's happening in the labor market is on the supply supply side, not on the demand side. And so yes, if the key concern right now in the economy is the inflation part of the mandate, not the labor side.

[David Westin (interviewer)]

You mentioned various Task Force 5. I think there are that Chair Warsh has named to deal with various aspects. I suppose it's sort of to be expected that when somebody comes in they want to take a fresh look at things.

[David Westin]

Were you surprised at how quickly and

[David Westin (interviewer)]

how extensively he's looking at some basic things at the Fed?

[Loretta Mester]

Well, not really because you know, he was very vocal before he became chair about some of the things that he thought could be rethought. Right. And so if you look at the task force, there's one on communications or one on the balance sheet. And he's been very vocal about the balance sheet and the use of quantitative easing. He's been very vocal about trying to find data sources that are more micro oriented data sources and more forward looking to help the Fed do its projections so that it can have a better sense of where the economy is going. In the last one, of course, we just talked about AI the labor market and he has particular views on that. What I was happy to see is that the people he's chosen as leaders of those five areas, they really are experts, you know, and it's a combination of academics, central bankers, not only US central bankers, but abroad who have been central bank experience in terms of actually doing monetary policy and some business leaders. So I think the combination of those people. Right. And with the staff help from the Fed, as he said. Right. I think we're going to get some very thoughtful results from that. And of Course, then the FOMC will have to take up some of those recommendations and debate them among themselves because they are the policymakers.

[David Westin (interviewer)]

Recently, the projections based on the markets have changed a fair amount about the likelihood of rate increase, for example, in July. It really has moved around a lot. You've dealt with this for a long time.

[David Westin]

Is that typical? Have you seen that before?

[David Westin (interviewer)]

Is this unusual that the expectations are changing fairly rapidly?

[Loretta Mester]

Well, I think the economy has been changing, right. It's, it's hard to read an economy where you had the tariff shock, right? Then we had the Iran war and the oil price shock. So there's a lot of uncertainty about what the trajectory of the economy is going to be. And of course, the on again, off again, you know, Iran war, the cease fire, that adds to sort of uncertainty because oil prices are a significant input into a lot of parts of the economy. So I'm not sure that I would say that it's more volatility than what should be expected given the uncertainty we've been facing the economy. And then layered on top of that, of course, you have a new Fed chair coming in.

[David Westin (interviewer)]

As you say, for several years now we've had an inflation problem and one question is, will it solve itself or do they have to get more restrictive?

[David Westin]

But from your perspective, do you think that the degree of that problem has changed over the last six months, nine months? Is it a bigger problem today than it was six months ago?

[Loretta Mester]

I think it's a different problem. Right. I think six months ago the focus was on how much of the tariffs were going to feed through to inflation. And remember, there is also some concern on some of the committee members.

[Sarah Albrecht]

Right.

[Loretta Mester]

About the labor market. I think the labor market is stabilized and I think they have a much better view of sort of the low payroll numbers, not necessarily meaning the labor market is weakening appreciably. I think there's recognition now that probably the tariff part of the inflation story is stabilized. Right. There's not going to be much more pass through that. We do have the oil price shock now, which is a new shock. But I think there's more recognition of the accumulation of bad readings in terms of inflation moving in the wrong direction, that I think that's really what's changed the narrative about inflation. I think there's better recognition that even though we're hoping that we're at a point where interest rates are enough to get inflation back down to 2%, that projection may not come to pass. And I think that's what's changed.

[David Westin]

Coming up, we go to Pascagoula, Mississippi to see firsthand what it will take for President Trump to get all those ships he needs for his so called Golden Fleet.

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[David Westin]

This is a story about staying the course. As America marks 250 years of independence, President Trump has plans for a much bigger Navy, what he calls a golden fleet. But to get from planning to doing requires more than just money. It requires workers, suppliers, shipyards, design discipline and executing on the plan over the course of years, even as the very nature of naval combat faces disruption. Bloomberg Scarlet Fu has the story.

[Wall Street Week Narrator/Reporter]

This is an America class amphibious assault ship currently under construction for the U.S. navy by Huntington Ingalls Industries, also known as HII.

[Christopher Kastner]

So we're the flight deck of LHA 8, which is really the ship that takes Marines into the fight. This deck will have between 12 and 20 F35s based on the configuration.

[Wall Street Week Narrator/Reporter]

They park here.

[David Westin]

Yeah.

[Christopher Kastner]

So it's a very capable ship. It's going to go to trials the end of this year and deliver next year.

[Wall Street Week Narrator/Reporter]

It's just one of several complex naval ships being built at the Ingalls shipyard in Pascagoula, Mississippi, where we got a tour from HII CEO Christopher Kastner.

[Christopher Kastner]

Shipbuilding gets in your blood. There's just something so rewarding about building a ship you know is going to go into service.

[Wall Street Week Narrator/Reporter]

Turning this steel into American naval power takes thousands of workers, millions of parts, and years of labor. Under President Donald Trump, Washington wants more ships fast.

[President Donald Trump]

I have approved a plan for the Navy to begin the construction of two brand new, very large, the largest we've ever built, battleships. They'll be the fastest, the biggest, and by far 100 times more powerful than any battleship ever built.

[Wall Street Week Narrator/Reporter]

His administration's plan calls for new combatants, auxiliaries, unmanned vessels, and a nuclear powered battleship. Currently, the US Navy operates roughly 290 battle force ships, well below the mandated 355 ships. The Navy is requesting $65.8 billion for their 2027 fiscal year. That's about $18 billion, or almost 40% more than it requested for 2026. For shipbuilders, that translates into years of expected revenue.

[Christopher Kastner]

The administration is investing in the right places. There's a lot of momentum behind shipbuilding. We see improvements across both of our shipyards and we need to continue to improve to support their requirements.

[Wall Street Week Narrator/Reporter]

Momentum aside, can the industry build a fleet at the speed and scale that this White House wants? Especially when construction of the most complex Navy vessels is split between two big players, General Dynamics and Hii.

[Christopher Kastner]

Hii provides 50% of the ships United States fleet. We build nuclear vessels, aircraft carriers and submarines in Newport News, Virginia. And then we build four classes of surface combatants here.

[Wall Street Week Narrator/Reporter]

One of the biggest limitations is labor. Shipbuilding depends on skilled Workers like welders, electricians and pipefitters. Today, more than a quarter of these maritime workers are approaching retirement age, which is a problem, according to Seamus Daniels of the center for Strategic and International Studies.

[Seamus Daniels]

A major constraint is definitely the workforce challenge, as shipyards are losing some of their more experienced workers and they're being replaced by workers who have less experience. So ultimately, that may contribute to some of the delays that the Navy is seeing in producing ships. As you're trying to train this workforce and really get them up to speed

[MTA Instructor]

again, I'm missing my 45 here. What's the takeout for that, Ned?

[Wall Street Week Narrator/Reporter]

To fill that gap, the Navy helps fund workforce initiatives, while shipbuilders develop their own pipelines. Both General Dynamics and and Hii have apprenticeship programs. Hii's yard in Mississippi employs more than 11,000 people, making it one of the state's largest manufacturing employers.

[MTA Instructor]

In this building at the mta, we also teach sheet metal joiners, pipe and hull insulators, and also a lot of electrician training. Being able to give some knowledge to them so that way they can take it with them out into the yard and better their career. And also the company, as well as

[Wall Street Week Narrator/Reporter]

the selling point for trainees, are paid training, a path to higher wages and a career that does not always require a four year college degree. Solving for a steady stream of skilled laborers is not the only challenge. The industry also needs to address supply chain issues on time contracts, design changes, and overall bureaucracy. And that is after the money has come through.

[Christopher Kastner]

We need to get funding on time to get the, the suppliers started. What we're doing is working through a backlog that was put in place under really difficult conditions and under a different economic environment. Our two largest contracts were executed in 2019. And you think about what was going on in 2019. No inflation, a more stable supply base. And those were put under contract. Then Covid hit. And so we had a, you know, the supply chain impacted, labor impacted, made it very challenging. So we're working through those. But the ships that are being put under contract now are putting under contract and schedule performance and schedule predictability, assuming what the supply chain can do right now, assuming the constraints we have in our shipyard.

[Alison Budvarzon]

If you were advising policymakers, lawmakers, the

[Wall Street Week Narrator/Reporter]

Navy, what would be one policy recommendation that would increase US Ship output?

[Christopher Kastner]

Yeah, be on time, make sure the funding arrives on time, make sure the supply chain is safe and can meet the requirements, and we don't get behind before we start. That happens from time to time in shipbuilding, where you get late orders, they hold the schedule consistent with what the initial contract said, you have no chance to meet it.

[Wall Street Week Narrator/Reporter]

Securing funding is just the beginning. There's also the sequence of how the money, contracts and ship designs move through the system.

[Seamus Daniels]

Government shutdowns are a major hindrance to actual effective shipbuilding and making sure that contracts and programs themselves are getting started. But I think there's a broader issue beyond the appropriations and funding process that comes down to the way that the Navy designs its ships as well. And this is about the requirements process that the Navy goes through. US Naval vessels are incredibly complex with combat systems, radar, and other technology. And so that means that the ships themselves and their designs are incredibly complex. But given the timelines it takes to design and build these, the requirements may evolve as the threat environment evolves over time. What that ultimately means is that the Navy may start constructing ships before the design is finalized. And that can be a major issue, especially when you're changing the design as you're building the ship.

[Retired Navy Admiral Mike Mullen]

Every time we change a requirement, change a design, it costs us a lot, both in dollars as well as in schedule. So that's got to stop. There isn't a day that I go to work that I'm not thinking about what's going on here and in other places around the world where you're certain.

[Wall Street Week Narrator/Reporter]

Retired Navy Admiral Mike Mullen served as Chief of Naval Operations under President George W. Bush and Chairman of the Joint Chiefs of Staff. And in the first few years of the Obama administration.

[Retired Navy Admiral Mike Mullen]

I think the biggest challenge that the Trump administration is going to have is execution and staying within budget and staying on schedule and holding people accountable. So I think all the pieces are there. Now the question is, can we execute one solution?

[Wall Street Week Narrator/Reporter]

Farm out the work. Today, only a tenth of Navy shipbuilding is done at distributed sites. The Navy wants to increase that to half by using qualified suppliers and smaller yards across the country to add capacity.

[Christopher Kastner]

We doubled our outsource capacity last year, another 30% this year, and we'll continue to increase that as the partners get qualified. We're very careful to do it correctly, because if you don't do it correctly, there's significant challenges with quality and schedule performance. So you have to be mindful with how you do it, but we will continue to outsource.

[Wall Street Week Narrator/Reporter]

That plan also relies on building ships differently, using more modular digital designs that can be spread out across multiple yards.

[Seamus Daniels]

So this is thinking through how to design ships and submarines in a way that different parts, different major segments of the ship can be constructed in different parts of the country, and then they can be combined in one major shipyard. But what that will ultimately allow the US to do is to leverage areas and smaller, potentially commercial shipyards or repair yards that can focus on these modules so then they can be combined. And what that would ultimately mean is being able to distribute shipbuilding need and capacity across other areas of the country.

[Wall Street Week Narrator/Reporter]

Then there's the contrast with how our global peers are building ships. China is achieving scale through a vast commercial and naval shipbuilding base, while South Korea, Korea and Japan are setting standards for their speed, process discipline, and production capacity of commercial ships.

[Christopher Kastner]

I think it's good to always compare yourself against the competition. There are different shipbuilding processes. Commercial ships are completely different from building a defense ship. If you were to go into a Korean shipyard or commercial, it looks very different than the shipyard here. But if you go into the defense shipyard, it looks very similar to this. Actually, their defense shipyards look more alike than ours than their commercial shipyard. So I think it's a good comparison. You always need to know what the competition is doing.

[Wall Street Week Narrator/Reporter]

China's shipbuilding surge is a big reason US Yards expect demand to stay elevated for years.

[Christopher Kastner]

I think the growth in China and the growth in their shipbuilding programs means that we're going to be building ships for a while here, and we need to continue to build.

[Retired Navy Admiral Mike Mullen]

We need to concentrate on that because China's building a big fleet. And while China's fleet is significant in numbers, they've got a ways to go from a quality standpoint, and we need to pay attention to to that as well.

[Wall Street Week Narrator/Reporter]

Even if America can build more ships, another question hangs over the what kinds of ships should be built? The ongoing conflicts in Ukraine and the Middle east make clear how relatively cheap drones and missiles can threaten expensive traditional vessels.

[Seamus Daniels]

I think what the Navy needs to pursue is what is generally referred to as a high, low mix of capabilities. So having your larger vessels that can perform exquisite tasks that are large and may be expensive in some cases, and combining those with cheaper, more affordable forces that provide a different sort of effects, but you can actually buy them in mass.

[Retired Navy Admiral Mike Mullen]

In the Red Sea. For literally months on end, we were shooting down cheap drones with very expensive missiles, which is a losing game in the long run. But we were able to protect the ships. We know this is coming out there. In terms of the drones, there's also

[Wall Street Week Narrator/Reporter]

the risk to the Marines onboard these ships. To reduce that danger and extend the fleet's reach, the Navy is investing in autonomous uncrewed vessels.

[Christopher Kastner]

We have a Romulus family of systems for surface vehicles. So we saw it coming. It's really a force multiplier it leads into their strategy or their hedge strategy where they have manned and unmanned ships working together and they've had that strategy for a while. The technology just hasn't been there to support it. Now the technology has the autonomy. Technology is coming to the place where the ships are more reliable and the integration between manned, unmanned is more reliable.

[Wall Street Week Narrator/Reporter]

But can the Navy learn from past mistakes and implement real changes to improve future fleets and sea warfare? What do companies like HII need from the government to be the premier shipbuilder?

[Christopher Kastner]

We just need predictable orders. We need a chance to be successful, we need to limit change and we need the orders on time. I'm going to build whatever they want me to build.

[Wall Street Week Narrator/Reporter]

Trump's golden fleet may signal a shift to a larger Navy, but the real test will be whether America can build a fleet that's responsive and flexible enough for warfare that is constantly changing, all while staying the multi year course that it takes for ships to go from blueprint to naval battlefield.

[David Westin]

Up next On Liberation Day in April last year, President Trump announced sweeping tariffs on imports from much of the rest of the world. Now the Supreme Court says he has to give it all back. We look at how that is going

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[David Westin]

This is a story about putting Humpty Dumpty back together again Small businesses were hit hard by the sweeping tariffs President Trump imposed under the International Emergency Economic Powers Act. So you'd think they breathed a big sigh of relief when the Supreme Court struck them down. But it turns out that getting a refund when you have overpaid is not as easy as it sounds, particularly when it's the government that has to pay you back.

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One of the most significant cases that the justices have decided in recent years

[Alison Budvarzon]

here the Supreme Court dealing President Donald Trump a major blow.

[David Westin]

The president does not have the authority to impose some of his sweeping global tariffs.

[Narrator/Reporter]

In April of last year, President Trump announced sweeping tariffs on imports from some

[President Donald Trump]

90 countries, a historic executive order instituting

[David Westin]

reciprocal tariffs which hit businesses throughout the

[Narrator/Reporter]

US that had to pay the tariffs to bring in parts and goods. Victor Schwartz's VOS Selections is one of those businesses.

[David Westin (interviewer)]

What did the tariffs do to your business?

[Victor Schwartz]

Well, it's terribly impactful. Out of the blue, we lost 15% of our cash flow for any business, but certainly for a small business that was terribly impactful. We had to make some quick decisions. One thing we had to look at is where can we raise prices to cover the tariffs? How much could we raise prices on which products? I tell you, we did not even begin to cover the tariff impact in terms of our price increases. So there was that what kind of inventory we could jettison because we had to come up with all this capital. Where is that going to come from? I don't have access to the to the credit markets, you know. So where are we going to come up with that money? Well, we Got to sell product off. And even worse is, think about it, it wasn't just about VOS Selections. Everybody was in the same boat in my industry. So if everyone's trying to open offload product, you've got a race to the bottom. I think we went through four different massive price changes over the course of the year. It was kind of head spinning what was coming next, when was it coming? Not an easy situation, not a good place to be. And then the cherry on top is the fact that people are drinking less alcohol. So the wine and spirits industry is contracting all over the world. So nobody was happy.

[David Westin]

We first met Schwartz exactly a year

[Narrator/Reporter]

ago, just after he filed the original Lawsuit in the U.S. court of International Trade that challenged Trump's tariffs.

[Victor Schwartz]

It's been a Mess. It was 20%, then it was 10%, then they threatened 50% in our industry. End of the day, we might make 5% as a net profit, 5 to 10%. So obviously, we can't afford 10%, we can't afford 20%, but 20% is really egregious.

[Narrator/Reporter]

Shortly after we last spoke, the Trump administration took Schwartz's case all the way to the Supreme Court. Earlier this year, it issued its ruling.

[David Westin (interviewer)]

So, Victor, a lot has happened since last we talked.

[David Westin]

You brought the case, you went to the Supreme Court and you won.

[Victor Schwartz]

We won.

[Narrator/Reporter]

But victory is a little more complicated than that. In the time that the tariffs were in effect, the Trump administration had collected $166 billion from more than 330,000 businesses, including big corporations like Walmart and Ford, but also many more small businesses selling anything from wine to women's bicycles. Businesses that may not have the resources of large publicly traded companies.

[Sarah Albrecht]

We just want the Constitution to serve all Americans. And so we thought, why not us file this case? And nobody else was stepping up. Big businesses who have all the resources could have done it.

[Narrator/Reporter]

Sarah Albrecht is chairman and CEO of the Liberty justice center, which has been litigating on behalf of a handful of small businesses, including VOS Selections, that want their money back.

[Sarah Albrecht]

I think we had a strong case. I had hoped we'd win, but I knew the biggest battle was going to be after we left the courtroom and. And refunding the money to the thousands of small businesses across this country that basically had had to hand over their entire working capital to the government while they sorted out this case.

[David Westin]

So what did, in fact happen? What was the process after it was

[David Westin (interviewer)]

remanded back down by the court, we

[Sarah Albrecht]

had to go back down to the Court of International Trade and kind of sort out how the process was going to go. And luckily the Court of International Trade is very specialized court that deals with exactly this type of situation. So they assigned us to a great judge and we worked kind of a three way process between cbp, the government and ourselves and kind of came up with a game plan on how this was going to go. The judge was very much directing the process and the government and cbp, I have to say, went along and did a good job kind of facilitating the largest refund in history. I mean, it was $166 billion. And just for a sense of what that means, CBP last year processed 338,000 entries. The IPA tariffs were going to involve processing 53 million entries. So they had to build out an entirely new system and portal to make it easy because a of lot the last thing we wanted is small businesses to have to spend more time filing and doing paperwork and waiting for the government to give them the money that was rightfully theirs.

[Narrator/Reporter]

US Customs and Border Protection has rolled out a three phase plan to return all that money. But as Albrecht expected, refunding tariffs is easier said than done. Five months after the Supreme Court's rejection of IIPA tariffs, the administration has returned only $71 billion of the $166 billion it collected.

[David Westin (interviewer)]

And now the Supreme Court has ruled and there's a fair amount of money, according to press accounts, that has been refunded of those tariffs. How much of that have you realized?

[Alison Budvarzon]

None.

[David Westin (interviewer)]

Well, how does that work?

[Alison Budvarzon]

It's pretty frustrating actually. So I have to contact my vendor who is in turn waiting for a refund from the shipping company so that I can still pass through that refund to my customer as well. It's just really a big mess all the way around.

[Narrator/Reporter]

Alison Budvarzon is the COO of Out of the Box Manufacturing, a contract manufacturer of electronic devices that imports components from all around the world. Like many other small businesses, it is still waiting for its refund.

[Alison Budvarzon]

We get tariffs charged on raw materials that we use in our manufacturing process for machinery, as well as the component parts that we use to put circuit boards together. So we're actually getting hit from multiple angles.

[David Westin (interviewer)]

Who pays the tariffs for you?

[Alison Budvarzon]

So it is a series of one person passing the cost down to another. Ultimately my end customer is paying for the tariff. I purchase a part from my vendor, they pass the tariff along to me and I pass it it along to my customer.

[Narrator/Reporter]

Out of the Box manufacturing is only one of many small businesses that use third party shipping vendors like DHL and FedEx. Those vendors will receive refunds first before the money gets to the small business owners who ultimately paid the tariffs.

[Sarah Albrecht]

So the way it's set up, since they paid the IEEPA tariffs initially, then the refunds went to them as the importer of record on behalf of the plaintiffs, other small businesses. And so the refunds will flow to those third party vendors and then a second refund process from the vendors back to their ultimate clients and customers. And hopefully that is also a speedy process. We are just starting to enter that phase because the third party vendors are just starting to get their refunds and then they have to pass it on.

[Narrator/Reporter]

And even as some refunds begin to flow, the legal battle is not yet over.

[David Westin (interviewer)]

The cases you brought were specifically about the so called IPA tariffs imposed under that statute. And the court said, no, you can't do that.

[David Westin]

The Trump administration pretty much immediately said, okay, fine, we have some other statutes

[David Westin (interviewer)]

we'd like to use.

[David Westin]

Where does that stand?

[Sarah Albrecht]

Yeah, literally five hours after we won, they announced that the section 122 tariffs, that was a tariff statute that also had never been used. Those tariffs started on February 24th. They will end on July 24th. So we filed a lawsuit against those illegal tariffs as well. And that was heard at the Court of International Trade. We won that lawsuit, the government appealed, and we're still waiting for our court date on the appeal. When the tariffs stop, that appeal will continue because we need to get that money back to not only our plaintiffs, but to every business who had to pay the Section 122 tariffs, which we believe were also illegally.

[Narrator/Reporter]

Albrecht and her team of lawyers say they will not stop until every small business gets its refund. But even if and when that happens, it doesn't mean that things will be restored to where they were before the tariffs were imposed. Business owners like Schwartz and Budvarson say much of the damage has already been done, with unintended consequences that money alone cannot erase.

[David Westin (interviewer)]

What about now, going forward, putting aside for the moment what's already been paid,

[David Westin]

has your business largely returned to where

[David Westin (interviewer)]

it was before the tariffs?

[Alison Budvarzon]

I want to say it's different. So we prior to tariffs and prior to the expiration of R and D tax credits, we did a fair amount of work in R and D that went away. I believe that the tariffs had the effect of slowing down the pace of innovation because there was so much waiting and, and unpredictability in components. So that really slowed that process down. The tariffs are not doing anything to move the supply chain in the way that they are. Intended to move the supply chain, but the reason is that the tariffs simply aren't high enough to make it painful enough for behaviors to change. I'm not advocating for higher tariffs. What I would advocate for instead is predictability, stability, and then support to regrow those industries within the United States so that we're treating this problem with a carrot rather than a stick.

[Victor Schwartz]

As a business person, I have to work here every single day in the market. I can't be waiting for things to happen through the courts, etc. And it's unfortunate. It has really contracted the market. It's something I said a year ago. I think I said it to you and it's all come true. The market has contracted

[David Westin]

Coming up, It's all about AI these days, but is the rush to invest in the next new thing affecting what companies are doing on all the rest of their businesses? We talk with Blair Ephron of Centerview Partners.

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[David Westin]

Whether it's the stock market or the bond market or capital investing, it's it seems that there's only one answer to just about every question these days. Artificial intelligence. Blair Ephron of Centerview Partners spends his time advising corporate CEOs on deals and investing going well beyond AI. We asked him just how is the rush to AI distorting the rest of corporate finance?

[David Westin (interviewer)]

Larry, you spend a lot of time with big corporations and their CEOs. All the talk right now seems to be about artificial intelligence. How much is that distorting? What's going on in the C suite?

[Blair Ephron]

First of all, thanks for having me, David. I think it's distorting the markets much more than it is the C suite. Okay. Obviously the markets are all about AI, $700 billion worth of investment. At some point, investors will demand a return. And if you're worth $1 trillion and you trade it 30 times, that's $35 billion in net income you need. You pick the company that has that profile. Every time this happened before, the markets will get to the right place. There will be dislocation. Whether dislocation is upheaval or not, I don't know. What I do know is that CEOs are absolutely tuned to this. They are better at managing through these kinds of issues more than ever. And they look at AI from a business perspective as important. You would argue that AI investment is adding 30 basis points to 50 basis points of GDP growth. And it's helping companies. Now, it's not helping companies quite as deeply or broadly as people think. It takes a long time for a company to figure out how to use it, use it as an appropriate tool. So I'm not one who thinks from a business perspective there's going to be a big cliff Unemployment, but it is on everybody's mind. The bigger question is, is the economy? And that's what CEOs always think about. And I think for the past five years or so since COVID most CEOs, if you talk to them in January about the year ahead, were always more optimistic than CBO would have been, imf, Bloomberg, and they'd be right. I think that has shifted a bit most recently. And I think there's a level of caution that I haven't seen so much before. And I think most CEOs today think the economy is a one and a half percent economy. They would have thought it was a two to two and a half percent economy early in the year.

[David Westin]

What has shifted? I mean, is that what they're seeing

[David Westin (interviewer)]

in their own numbers internally or more

[Blair Ephron]

broadly seeing their own numbers? And you're seeing some of the earnings that have been coming out. What shifted to the consumer? It is finally, I think, catching up with the consumer confidence index, that Michigan index that comes out every month, which is at all time lows, the consumer was still spending. Now you have consumers really having gone through their savings, savings built up when they weren't spending money during COVID and becoming much more cautious. So I think how that settles out, I think will be incredibly telling. And you combine that with energy price and from my perspective, its energy price as inputs for most of the products that a lot of our most important companies are using. And you can see where there's. There's a bit of turbulence. All that said, turbulence that will be managed. And I do believe the economy remains incredibly resilient for all the reasons everybody's thought over the past several years. And I think that when all said done will win the day.

[David Westin (interviewer)]

Perhaps the most important job of a CEO is allocation of capital. And as the CEO looks at allocation of capital, put aside from the hyperscalers, they're in a different category. There is some hydraulic pressure to invest in AI for just about every company I can identify, how do they do enough so they don't get left behind without going too far and having something that, as you suggest, doesn't have the return that they need.

[Blair Ephron]

So first of all, all it's a big difference if you have five companies spending $700 billion, five companies whose market cap together equals the GDP of China, second biggest country in the world.

[Victor Schwartz]

Right.

[Blair Ephron]

Most companies in The S&P 100 are making, actually even more broadly, are making appropriate investments in AI. They're spending more than they thought they would, but it's being implemented on a much Slower basis. I think it would. You are not tech native. You're not yet using AI anywhere close to its full potential. That moderates how they make capital investment decisions. They know this. Okay, So I think that if you look at the typical consumer company, they use AI exquisitely but they're spending 1 billion, 3 billion and 5, 5 billion in capital. I'm talking about the biggest Companies S&P 100 which is. Which is manageable. The bigger question is going to be when can they actually become effective enough to realize the promise of AI from where we are today, I don't see

[David Westin (interviewer)]

that in order to be able to make the capital investments these companies have to come up with the cash. These hyperscalers that has resulted in a lot of issuance, debt issuance and equity issued. It's really record. We see it in the bank results right now all the issuance going on.

[David Westin]

Is that crowding out at all what

[David Westin (interviewer)]

the corporations other than the hyperscalers can do?

[Blair Ephron]

Not yet.

[Christopher Kastner]

It is.

[Blair Ephron]

There's a ton of. A ton of liquidity. I am surprised that investors, particularly on the debt side have been over subscribing by multiples and willing to put money to work. The question of capital generally I'd say one very liquid, two at cost which is the key thing that is still relative to where fed funds are. I'd say reasonable. As soon as there is a turn in the hyperscalers I think we'll have a very different conversation.

[David Westin (interviewer)]

Centerview is global. It's not just you us. One of the themes that we've seen with respect to tech more generally and certainly is Europe for the United States Europe perception has been left behind. We had the Draghi report. There are various initiatives going on. Are you seeing from your work evidence that Europe is in the move to

[David Westin]

catch up or at least get closer?

[Blair Ephron]

I do, but what you use the word perception. It's a reality. The fact of the matter is 43 the largest 50 companies in AI are US based. Europe has one. Let's just talk about the market cap. They have one company ASML worth 800 billion. The next company 350 billion. That is less than 10% the size of video. They are. I don't believe in a position to catch up. You look at the economies of a Germany of a France flat. You look at the interest cost of it. Ukraine too high and the lack of coordination I think is a big issue. The fact is the regulatory environment there. They're trying to do just what you said, the merger and acquisition environment. The rules are changing. They Want to have more broad discussion as the regulator as to what is, what's an issue, what's not. Give them obviously some leeway there. And they look at the question of what is a accept merger or not with a much different lens. Okay. It hasn't changed the numbers at all. M and A is 50% of the M&A market. Past six months has been US driven, same level was last year. So I think it's a long time before Europe realizes the promise of what they want to achieve.

[David Westin (interviewer)]

Is it an even bigger problem for Europe not having a unified capital market? I mean, that's one advantage the United States has. It's one capital market over there. They have not been able to pull it together.

[Blair Ephron]

Not only do they not have one capital market, they don't have one view as to what kind of GDP growth and what kind of debt to GDP you have to subscribe to. There's exceptions every year. Italy makes the exception, Spain makes the exception. So they spend more time, I think with, call it intra family back and forth than they do focusing on the right thing. I do think as a place for intellectual capital.

[Loretta Mester]

Incredible.

[Blair Ephron]

They don't let that inner, that intellectual capital be unharnessed in a way that the US markets do.

[Narrator/Reporter]

One area of dealmaking where Efron and his Centerview partners have been particularly active over the years is media, including as an advisor to both Paramount and Disney.

[David Westin (interviewer)]

One area, particularly the United States, we've seen a lot of deals announced. At least is something you know terribly well, which is media.

[Blair Ephron]

A little bit about it with a

[David Westin (interviewer)]

combination of Fox and Roku going one way, I would say toward integration. And on the other hand, you have Comcast spinning off NBC, you going appears the other way, separating distribution from content.

[David Westin]

Where are we headed here?

[David Westin (interviewer)]

Why is this all happening right now?

[Blair Ephron]

So first of all, it's happening because people are realizing that scale really matters in that sector. Why does it matter in that industry? Because they're fundamentally becoming technology companies. The technology companies are coming in, they've been in whether it's an Apple, whether it's a Google, whether it's Amazon. And they're, they're highly effective. So there has been. There were too many small companies. There are too many companies doing streaming, keeping down the margin. In fact, there was only two companies that chose double digit margin. Netflix 30%, Disney at 12%. And then everybody falls off a cliff. So what Comcast did is actually in line with that trend. Because by separating, separating a very mature distribution business from a vibrant content business, they will have More choice. I think in the case of News Corp. Fox, they recognize without some sort of way to reach consumers through streaming, they'd have a lot of problem. So I think they're making the right moves. But that's what's driving some of this consolidation. I will tell you, I think there is a highlighted concern which has not been justified yet, that tech, that AI, is going to have a dramatic impact on employment levels. I see quite the opposite. And when you look at what happened with cgi, it opened the way for more employment. If I look at the question of AI, and you're doing an animated film and you're spending 200 million to put it out, 500 million total, and you have 500 people working on it, and it takes two years. Now you bring AI and it's 50 million to produce, it's six months to make. And so 50 people. You have just freed up a whole host of really smart, really creative people to increase content availability. And if you talk to the CEO of any of these companies, that's what, that's what you're hearing.

[David Westin]

Does tech win?

[David Westin (interviewer)]

And by that I mean if you look at the landscape right now, just in terms of amount of time spent viewing on screens, YouTube is just running away with it fast.

[Blair Ephron]

Netflix, Absolutely, absolutely phenomenal.

[David Westin (interviewer)]

It's a better mousetrap. In the end, do the tech companies win?

[David Westin]

And that doesn't necessarily mean buying.

[David Westin (interviewer)]

The studios might not want to buy the studios, but they basically get to dictate the terms.

[Blair Ephron]

So I wouldn't say they win. I would say that if a content company doesn't become really tech native, they'd have a problem. I will also tell you, if you're a tech company, you don't actually understand quality content yet. Okay? You don't understand on quality creativity. They know it. So the key for who is going to win is the company that can combine content with technology. If you look at what Disney's doing, making progress in that direction, if you look at what David Ellison is trying to do with Paramount, I say trying because we're not closed yet. It's all about the marriage of technology and content. So I think those companies actually are better positioned to get the two together than some of the bigger companies that don't have that creative DNA in their system. But they certainly know how to get out product and distribution.

[David Westin]

That does it for us here at Wall Street Week, I'm David Westin. See you next week for more stories of capital.

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[Blair Ephron]

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Yeah, fully.

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