Intel Has No Easy Options After Long, Stinging Fall From Grace

Published Sep 12, 2024, 8:11 PM

Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg News US Semiconductor & Networking Reporter Ian King shares the details of his Big Take story about Intel CEO Pat Gelsinger’s plan to spend the chipmaker back to relevance nears the end of its runway. Untuckit Founder Chris Riccobono and New York Yankees Hall of Fame Shortstop Derek Jeter discuss teaming up with Greatness Wins: athleticwear for the modern athlete. Hayley Berg, Lead Economist at Hopper, talks about the travel app's holiday travel outlook. Karalee Close, Global Talent & Organization Lead at Accenture, talks about using technology, data and AI to develop new ways of working. And we Drive to the Close with Aaron Kennon, CEO at Clear Harbor Asset Management.
Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.

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This is Bloomberg Business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

Let's get to one of the most read stories on the Bloomberg about a really important company in our world.

It's about the slow motion disaster at one of those most important companies in the modern tech industry. It's reaching a pivotal moment this week, so writes Ian King, Bloomberg News US semiconductor and networking reporter, in today's Bloomberg Big Take, which you can read on the Bloomberg and at Bloomberg dot com slash Big Take.

Yeah. In they're out speaking of property issues San Francisco. He's there in our San Francisco bureau. Ian I got to say, first of all, great story. We've been talking with you about the decline for Intel. I feel like more than a year, more than two years. It's been a while. We talk about this a lot. It feels like though it's coming to a head as you report. Tell us about the meetings that have been going on with Intel's board this week.

Yeah, I mean, I think it's important to be precise about our understanding of these meetings. These meetings that are going on, our board meetings. They're not the kind of barbarians at the gate, we're going to throw the management out type meetings yet, but they are considering basically what Intel should be doing, what perhaps it shouldn't be doing, in order to kind of martial resources to continue to try to fund this expansive plan that they have going forward. Clearly, its business operations are not able to do that right now. As we saw with its recent earnings release, things were considerably worse, and I think a lot of people had expected, including the management, And so really what this meeting is doing is trying to sort of get that track back on plan rather than potentially throw it out the window.

So I give us context here about just how precarious Intel's finances are right now, help us understand that.

Yeah, I mean, it's very simple. They are trying to spend an enormous amount of money at a time when they do not have that money coming in from their operations. Right that what they were good at and what they are still quite good at isn't paying like it used to.

They have fifty.

Billion dollars in debt, They're losing money, they have negative cash flow, and they need to spend and continue to spend over a number of years on projects that probably won't pay off for a number of years. It's a very difficult situation to be in.

Yeah, kind of amazing that this is what we're talking about in conjunction with Intel. Hey, another stark metric is the share price. It was once nearly a seventy five dollars a share stock. It's now below twenty a share. It's down more than sixty percent year to date, ninety percent gain though last year it got above fifty dollars this year, So that's a big swing in about a year or so. What are the ongoing disappointments? What are the hopes and possible pivots of this company that keeps it going for I don't know, years to come.

Yeah, I mean the share price I think has contributed to a lot of the speculation that we're seeing about. You know, where the company goes and who might be interested and is it affordable as a purchase. There's a lot of that going on outside of Intel. But to answer your question more directly, they need a win. They need a big customer for their foundry, their outsourced chip making effort that they're trying to get off the ground. They need some of these products that have been absolute dominant to return towards that to stop losing market share. They need this massive AI spend that we're seeing to look in their direction right now. That's just not the.

Case in the US government. Part of the story in recent years as well, with the Biden administration. You know, the idea is that they're going to give billions of dollars to Intel help us understand the position of the US government and where they stand in this.

Yeah, two aspects to that, And I think that's a very ger main question. All of the scenarios that are being floated outside of Intel about where it might be going, or who might buy it, or how it might.

Be split up.

The US government regards Intel as a strategic asset, that its technology is fundamentally important to this country. So all of those scenarios, and they are just scenarios at this point, would have to go through Washington, and Washington is going to take a very very critical look at those. So that adds a layer of complication, takes away from the standard Wall Street playbook in a lot of respects. And the other side of that is you mentioned the money that we are paying as taxpayers for Intel. It's not enough, right, It's helpful. It cuts out some of the differential in terms of what it costs Intel's overseas competitors to put plants in the ground, and hopefully makes it, you know, a level playing field. But it doesn't. It's not a bailout. It's not the kind of money that Intel needs. We're talking about ten of billions of dollars a year, over multiple years, just to play in this game.

Hey, in one thing, I wonder in your story you take a look back at what happened to Intel and why we got to this point where we're having this conversation with you today, why you wrote this story today. Having said that, you also note in your story that it didn't have to come to this. Is there anything Intel can learn by looking backward in terms of where it needs to go forward?

Yeah?

I mean, well, that's why Pat Gelsinger was brought in. That was a step backwards. He left Intel to become the VMware CEO at the height of its powers. His plan was to do what Intel's good at, leading manufacturing, have products that just are so good that people have to pay through the nose for them. That's his plan. That requires a lot of money. So that's what he's tried to go back to. But things have moved on since then. Competitors like TSMC, like Nvidia are now very strong, have the kind of dominance, have the kind of cloud that Intel used to have. So he's trying to you know, he's trying to play the greatest hits at a time when music cases have moved on.

One thing, I do wonder if AI for a year and a half ago, you know, Microsoft didn't do you know, their investment in open AI and touchypt if that hadn't happened, and I know it's not a good way to do this, but if it hadn't happened, would you have written this story about Intel being at kind of a critical juncture? Would we not be having this conversation. Is it just AI or it's something much more systemic in the Intel culture that is just kind of brought about its problems.

I would say that that's a very good question, and it's a mixture of the two. The AI opportunity has in shareholders' minds in technology, technology, and his mind has concentrated just how important and useful technology other than Intel's is right, And this was an opportunity that Intel should have taken and would have given it more time, would have given it more resources to be able to devote to putting some of these other things right. So it's a mixture of the two. It's definitely an accelerant, but it's not the root cause. The root cause are decisions that were made by Pat Gelsinger's predecessors, decisions that have turned out to have been terrible decisions. And indeed that's how he's characterized them.

It's hard to ask you a question in about what things look like in the future, but help us imagine a scenario. Is there one where a storied company like Intel just doesn't exist in a few years.

I mean the conversations that I've been having with people who look at the company, who have invested in the company, some of them who don't invest in the company. That is what it's come to. That it's the oh dear moment, shall we say, And even for that to be even a vague consideration around a company that just ruled the world like Intel did is frankly shocking. You've got to remember, I think the perfect illustrate of that is twenty twenty one was not long ago. They had three times as much total revenue as in Nvidia, and look where we are now.

That's an incredible decline right when you think about their business. Ian is always great stuff, and I know we continue to talk about this company and we'll continue to see what the next chapter brings when it comes to Intel. All right, so appreciate it, Ian King, Thank you. Thank you, US semiconductor networking reporter at Bloomberg News out there in our San Francisco bureau. By the way, this is among the most read stories on the Bloomberg and it is the Bloomberg Big Take, which you can check out on the Bloomberg terminal at Bloomberg dot com slash Big Take.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on applecar Play and then Bright Auto with a Bloomberg Business app or wants us live on YouTube.

All right, let me throw out one metric I guess I kind of got to do this. The global sportsware market size valued it nearly four hundred and thirteen billion dollars in twenty twenty two, estimated to reach nearly one hundred forty nine billion by twenty thirty one. And listen, there's a lot of players in it and looking to take a share of it. Is a partnership. Our next two guests, both with brands that are very well known now with a combined brand known as Greatness Wins.

So let's get to the interview with more joining us here in the studio. The founder of Vuantucket, who came up with the idea for his casual shirts while working at GE Healthcare. Chris Ricobono back with us, also with US Hall of Fame shortstop and five time World Series champion with the New York Yankees, also an e commerce investor to Derek Jeter, both here in the Bloomberg BusinessWeek studio. Okay, guys, first up, we want to know how you guys got together. How did this come together? Who called who, who had the idea for who to get involved? How did it come out?

That's a good question. You start. We'll see what version comes out.

I was going to say Derek reached out to me, but that's not how it worked. So I over the pandemic. I was looking to solve another problem in the fashion industry, and I thought about athletic apparel and it didn't exist for me something that had a great fit but also had foremance first in mind. So I came up with this concept in this idea, but now I wanted a few athletes behind me. And at the time, I think Derek might have still had a contract with Nike or it was winding down, and I didn't think that I could get to him or that he'd be interested. But after a year of bothering him and his agents, he actually called me and said, Chris, I'm just not that interested and excited in this. But I said, he can't get off say he can't get off the phone, Derek, how can I get you excited? So we talked for a while after that, and we kind of came together with both of our visions. You know, I'm apparel guy, That's the way I think about it. Derek's was a successful entrepreneur but also very successful, as you know, a Nike guy, so I knew that he had a lot of insight that I didn't have and he shared it with me, and we launched a brand about a year and a half ago and we're having great success.

Okay, you weren't excited and then he became excited. How that happened? How did you make that turn?

Well?

I think you know, first and foremost getting to know Chris, we talked about the idea. I've had relationships with athletic brands throughout my career in great relationships and I still do today, right, And you know, when I was first speaking to Chris, I was like, well, first of all, you know, this is a crowded space. It's not as easy to attack this space, and it's going to take some time and it's going to take a lot of energy. And I wouldn't say I wasn't excited, but I when I do something, I'm all in and if I'm not all in, I'm just not going to do it. And at that point when we were having the discussion, I said, you know, I don't think now is the time. And then we actually got together, we had a chance to look and feel and touch the product, and that started getting me very very excited about it. So I guess that's the best way to put it in our short period of time.

You do, though, Derek, probably get a lot of investment pitches, not just in the apparel world, but yeah, no question, from lots of different entrepreneurs who want your involvement. What was it specifically about this one with Chris with Untucket that really caught your eye.

I think it's you got to get to know the people any business that you're in the same thing, when you're on a team on the field.

You have to have the right people side.

Yeah exactly. I was gonna say that, but you didn't give me enough time say that. And you know, I just found Chris to be very, very passionate about it. You can't fake passion. You either are you aren't. And you know, even when I told him that I wasn't interested, he kept calling and we kept having the conversation, and I knew when you're if you're going to be successful, you need those types of people on your side.

I always think about that. I remember talking to a top m and a banker and he's like, the only way you get deals done is this. CEOs have to like each other, and that's how you get things come to the table. Would you say no to a great deal because you didn't like somebody, Oh.

Without a doubt. I mean you end up working a lot. It's funny when Derek said that he wanted to be more involved and he when he goes all in, I was thinking he was just doing that as an equity play to get some more equity. Yeah, that he actually wanted to be and Derek's liked I mean he he wants to talk about everything, every decision and you want somebody who I want something that guess because I don't know everything and I definitely don't know everything in the athletic apparel space. So it's been a this.

Is recorded, right, I'm gonna player. We're gonna play that.

You can do that, you can look it, you can loop it.

Yeah, exactly.

Well the same thing for you, I mean, Derek, when you get involved in something, how you know, we asked about what made this interesting, but in general, how involved do you want to be? I mean how much do you have to love the brand that you hook up with?

You have to be involved.

I mean otherwise you're just given your money and you're hoping someone else runs with it and makes you more. But when you're passionate about something, when you put in the time, you put in the effort. I think the best thing to say about us is we disagree probably more than we agree, and I think that's a good thing.

Yeah.

I mean, you don't want people that always think the same as you, Otherwise you're never going to make improvements. You're never going to make progress.

Is it hard to say no to? Derek?

Though?

We just talked with the leadership We are author of a leadership book, and they talked about CEOs who once they get to the top, they surround themselves with people who who don't say no.

Listen, I rolled the dice right from the beginning, and we went after each other a little bit. But like you said it, it's the best way to go about it. Like you want to leave at the end of the day and have people go against your views, because if they're agreeing with you, you're not going to always do the right thing. So I thought that was a great I wondered if he was one to because sorry, if he was going to want to continue to relationship a few times, but it really came together and now now we're on the same page and things are going really well for us.

Well, I do wonder when does it get a little tricky, Like any partnership, whether it's a marriage, whether it's working relationships, whether it's business relationships, there's always tough times.

What are some of those looking at me?

Yeah?

I was about to say, you guys, just keep going. You want to you answer that question?

No, But I really do feel like a little bit of debate or a little bit of arguing like gets you to a better place.

I think it does. You have to have a difference of opinion, like.

I said, I do like you tim.

Otherwise, like I said, you're not going to make any any progress moving forward. And we probably we disagree more than we agree, but we do it respectfully. And you know, there are some things that I know he's an expert. It's impossible to be the expert everything, right, you surround your people that are much more intelligent in different fields. And you know, Chris obviously has a lot of experience in the retail space, especially I have experience when it comes to athletic brands. So it's okay for us to disagree.

So Chris, let's go there because this is a really crowded space. You mentioned Nike, but I mean If you think about upstarts like Viori, Rhone, then there are the big players like Nike, Adidas and the like. How do you carve out a place for you specifically?

So it's funny, just like with on Tucket, I really needed this product. Then you might ask why. You know there's plenty of athletic brands and athlesier brands. For me, the athletic brands that existed, the quality wasn't there, the consistency of fit wasn't there. They were designed for performance, but they didn't have that modern fit. The athleisure brands have an incredible fit, very high quality fabrics, but not designed with performance first in mind. So I wanted a really high end athletic brand that had a great fit but also was meant to work out and would withstand being washed, not pilling. Something that all athletes, not just professional athletes, could use all the time. And it's not inexpensive, so you want it to last for a long time. And I think that that's where we are differentiate from these other brands. We're not athleisure, We're not athletic. We're kind of a blend of both, if that makes sense.

I've got yoga pants on that are pilling a little bit. So I totally get you. What's the kind of what's the growth trajectory? Tell me what we can tell we're Bloomberg. We love numbers, you know that. What's the growth on this?

Well, we need you to go buy some pants, just get right on it to help it's out. But I think for us, I'll let Chris follow up on it. I think what we want to show as a brand, this is only our second year. We want to show progress. You know sometimes when you when when you're building a company, a startup company, you want success right away to understand you're you're a startup company for I think they say ten years. I mean that's a long long time. So we want to show some steady progression. I'll let Chris get in a number.

Yeah.

Wait, so will it be ten years before you really feel like it's there?

Depends on how much you buy now.

I mean, there is so much competition. You want to just stay relevant. You want to make a great product. That's the first thing. You got to make a great product, you need your repeats to be there, which they are for us. The other thing that's really exciting with us is not just you have the e comm then eventually stores, which is what I did with on Tucket. We have a great wholesale business we're building at Greatness Wins. We have a golf business. We'll be in eighty clubs. We were in eighty clubs this spring. We have a bookstore business. Derek just wore a Michigan sweatshirt on his Honorey Captain in Michigan this weekend. We have a new dance relationship with Misty Copeland, who's our women this.

Foundary women who do a little bit of shopping.

So we have something that will be announcing soon. That's exciting. So I'm very happy with earlier are. People love the product, they love the quality, and we're just getting going, but very excited.

For the future.

All Right, We're going to just shift a little bit because I am curious, Derek, are you looking for any other investments, you know, in sports beyond baseball or maybe an MLB team or anything.

No, I've been down that path. No, I'm going to take a break from that. I spend a lot of time with my four kids who are seven and under, so it's a full time job, especially when you're talking about baseball ownership. So at this particular point, I think I have my hands full.

So you know whether, yeah, well when you say take a break, are you ruling it out for the future or do you want to get back in there.

I learned a law long time ago never say never yeah, because you never know. I just said it three times in a row. But you don't know where the future is going to lead you. But at this particular point.

Now, I do also wonder the two of you, like when you think about either ath leisure or athletic appareled you know, companies that you look at that you admire or leaders you admire. Let me ask you, Chris first, like, is there somebody that you look at and say, that's who I kind of get some cues from.

Or I mean we always talk about Nike and the Jordan brand. Those are the greatest, you know, probably the greatest brand maybe ever, so well, you know, you want to be them, but if you're half half of what they become, you're very successful. And I think the ath leisure brands are great too. I mean I won't name them because you know, but I think there's a lot of great brands these days. So we're just trying to differentiate, give a reason, you know why you might need our product versus those products, and yeah, hopefully it works.

Leader you look at your smiling.

No, there's there's a lot, you know. It's it's I want to come to mine, he said, Jordan Brand. You know, MJ's been like a big brother than me. And I think you know, I have young kids now, and you want them to choose their career path and find someone that they can look up to. You want them to see someone who's been successful. And you know, you talk about Michael on what he was able to accomplish on the basketball court, but I think you look at athletes post playing career, he's up there at the top what he's been able to accomplish from a business standpoint. So he's someone that I look to and go to for advice.

All right, you're going to go there, you go World Series. I know I have to do this. I have to do this, all right, So you're going.

To be in the booth, right I am, Yes? Yeah?

Who do you can you think about who might be there?

I don't know, it depends, you know. I'm not trying to skirt the question. I'm really not, but a lot of it is matchups. Okay, we'll know in a couple of weeks, because you know some teams I know during my careers to play Anaheim Angels all the time. We just couldn't beat them, and you know, finally we broke through and we were able to win in two thousand and nine. But it all comes down to matchups. So there's some good teams out there.

Chris, you talk baseball, and I'm curious what you might think for the World Series.

It knows nothing about basics. I know baseball.

I mean, did a deal with I don't bother Derek with it, but I'm a Yankees fan. We'll see it's they don't seem to be able to perform in the playoffs for the last what is it fifteen years.

Now, we'll discuss it on.

Hey listen, guys, got about forty seconds left here real quickly in I don't know, a year from now. What's the conversation around your company.

I think we'll start to look at stores. I mean, I love stores. Not many people do in retail. We have nine of them on Tucket and we're opening more. I think it's really important for the male shoppers. So I think we'll look at that, and we'll look at continued growth in these different areas that we discuss, bookstores, golf, e commerce. So it's very exciting.

Same thing for you, Derek, in terms of greatness, wins and a year from now, what are we gonna be talking about.

Oh, I think it's all awareness.

You want people to be aware. You want to walk around the streets and see people wearing And I'm very confident in the fact that someone buys our product and they wear it, they'll be happy with it, their return.

As a customer and no pilling.

You promise, Well, you got to tell me.

I got.

You're listening to the Bloomberg Business Week Podcast. Listen live each weekday starting at two pm Eastern on Apple, car Play and Androyd 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 eleven thirty.

All right, everybody, a story from the Wall Street Journal Today. We want to bring to your attention millennials. You know, those younger folks. You're a millennial art I'm.

An elder, millennial, elder, elder. It's a real things.

Yeah, all right, anyway, Younger folks, millennials, older millennials, elder millennials like Tim increasingly going on cruises.

Who knew it's not the cruise their parents parents went on the They want quick escapes, private islands. Yeah, so the Wall Street Journal notes.

Yeah, it's an interesting story. So yeah, you're there. Who doesn't want to go to a private island? Young and old anyway? With more in the travel scene in the upcoming holiday travel season, back with U, says Haleyberg, lead economists at the travel app Hopper, joining us once again from Boston. All right, first up, before we get into your holiday travel outlook, you guys recently have come out with a report travel, holiday travel, consumer travel. Is it slowing down? Are people looking for bargains? What are we seeing right now in today's environment.

We're seeing that this holiday season will be busy. Most Americans see holiday travel, if they do travel, as an essential expense, and that's reflected in what they're telling us right now. About seventy five percent of Hopper customers say that they're going to be spending more on holiday travel this year, or at least the same as last year. And to do that, about half our cutting back on other expenses and are looking for deals and discounts and ways to stretch that travel budget further. So the demand is there, but so is that sensitivity and a little bit of concern about being able to afford travel.

Are we too late, Haley? If we haven't booked our holiday travel yet.

You're not too late. Now is actually the perfect time to start planning your holiday travel. Our recommendation at Hopper is book your holiday travel both for Thanksgiving and Christmas by October fourteenth. That's the sweet spot when prices will be at their lowest and flights won't be sold out yet.

All right, So you know, in terms of where folks are going, where they should be going, where there are deals, what do you have for us?

Most folks are headed to bigger cities in the US over the holiday season. We see a lot of major hubs think New York City, La, Chicago, Atlanta. Most travelers going to bestic are headed home for the holidays, so they're hitting those hubs and then either being picked up or going some more local. But internationally, we do see a lot of travelers getting away, making a week of it, whether it be at Thanksgiving or Christmas, and those destinations are bigger names like London, Paris, Tokyo, and soul Haley.

What does the activity on Hopper tell you about disposable income for Americans right now? What story does it tell us about the economy. What's the narrative that you're seeing out there.

The majority of Hopper users are Gen Z and millennial. They're younger and they spend differently than older generations. What we've seen is that our users are willing to spend on travel. They're expanding their travel expenditure, and how they're doing that is being smart about when they book, so they might get the lowest price on their airfare, but then they'll spend forty dollars extra on a product like cancel for any reason or disruption assistance. So it's a generation of travelers who are price sensitive but very focused on value. They want to get the best price and they want to splurge on things are going to improve their experience, whether it's a fancy cruise or a product that lets them rebook if they're canceled or delay to the airport. Hailey.

If people do have flexibility, what are the best days to book holiday travel? I was actually looking at the difference between like flying on Christmas and New Year's Day, for example, and how much cheaper that was than flying let's say the Saturday before Christmas and then flying back the Sunday before New Year's I mean it was like sixty percent of the cost.

Absolutely, it'll actually save you, on average about two hundred dollars on any domestic holiday trip if you travel on the holiday itself, thank Christmas Eve, Christmas Day, Thanksgiving Day. We know not all travelers are that flexible. So if you are a little bit flexible and you can travel, say the Monday before Thanksgiving and return the Monday after, skip that Sunday return, you will save over one hundred dollars per ticket. And at Christmas, what you have to avoid is the Saturday to Saturday or Sunday to Sunday, making a week of the holiday.

Try to depart the.

Day before Christmas Eve or on Christmas Eve, come back on New Year's Eve. That's how you're going to get the lowest price.

Hey, I want to go back though, to what tim aster about discretionary spending or disposable income or disposable spending money, if you will that consumers have do you feel like there's any signs that consumers are really really pulling back.

What we're hearing is that pullback isn't happening on travel, but it is happening elsewhere. About fifty percent of our customers said, I'm going to cut back on other expenses in the next couple of months so that I can keep spending on my holiday travel. So there's definitely pressure on wallets. Discretionary spending is under pressure, but travel has really come out on top as one of those areas where travelers are working hard to maintain their expenditure.

All right, and before you go, those elder millennials like Tim, are they going on cruise ships? Are they doing? What are you hearing about the cruise? And just cut about twenty five seconds left.

You know, we're hearing that younger travelers are interested in value and packages. They want accommodations, transportation, and a great experience at a great price. So cruises are one way that they're achieving that. Other ways are finding great deals, package deals, whether it be through a platform like Hopper or one Travel.

So Tim on Theledo deck, it could happen.

I don't even know what that means.

That makes me just so upset that you don't know that, all right, Hilliburg, thank you so much. Lead economist ever at Hopper, you're.

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You might remember this Carol over the summer. Yeah, City Group came out with the study. They said AI is likely to displace more jobs across the banking industry than in any other sector. As the tech is poised up in consumer finance, it's going to make workers more productive. About fifty four percent of jobs across banking have a high potential to be automated, the bank set in that June report, an additional twelve percent of roles across the industry could be augmented with the technology City Group found. This is Carily Close's world. She's Global Talent and Organization lead at Accenture, where she works on projects that use data and tech like AI to figure out new ways of work, new ways to work. She joins us from Victoria, British Columbia. Carollly, good to have you with us. Are we approaching the conversation about AI correctly or incorrectly when it comes to work.

It's a great question. I think it is correctly in that it is fundamentally changing the way that work gets done, and it is fundamentally changing jobs. But I think the narrative ends up being a little negative the job loss. I think we're going to need to learn new ways of working with technology, as we've done with spreadsheets and other applications, and we're going to need to learn alongside this new technology. But you know, I do think it's going to be one of the more fundamental shifts in the working world over the next few years.

Can you can you walk us through some of the specific examples that you guys are seeing, maybe at accenture specifically on how it's changed AI, generative AI, large language models, how it's changing how you guys work already.

Yeah, so, I think it's quite publicly known. We've got over over a thousand client projects with jen Ai. We're also using gen AI in the delivery of our work quite extensively, and some examples of that, I guess in the client side of things, we're seeing a real movement in call centers and in marketing where the combination of data, AI and jen AI is actually creating new ways of solving customers issues, whether that's you know, whether you need a call center in the first place, or how you handle calls, to how you manage content and marketing, messaging and the like. Internally with an accenter, we're exploring the use of AI and jen AI and everything we do from how we understand client's issues from external data to know how we actually deliver projects and work.

I want to ask you about call centers only because I've gotten lost in a couple over the last week or so.

So what physically it's like you're walking around call centers or you're calling numbers?

Kind of lost my mind?

Yeah, I think you know where.

It's like, you know, you're talking and it's like, well, I want to know more. Is that what AI? Generative AI is? If we don't have huge like I'll be honest with you, I just kept like hammering until I could get to a human and then a human that got me to a supervisor to really resolve a problem. And I wonder what does generative AI mean in terms of call centers, and especially if it means reduced humans? Is it just a case that I keep getting options and drilling down. Is that what it's all about, because there are times where you need a human's brain to kind of understand what you were talking about. Not every problem fits into a box.

Yeah, and I think that's exactly right. And when you think about it, a call center is set up to resolve an issue that shouldn't have maybe happened in the first place. So quite oftentimes I think, you know, you could say, well, let's just you know, add AI to an existing construct, but I don't think that's the real impact. I think the real impact is really reimagining the way that work gets done, and so really reimagining what happens in a call center and what doesn't and how you use the technology to amplify the experience or improve the experience that a customer or an employee would have is sort of where we're seeing the big impact. But we're seeing actually about forty percent of working hours will will shift as a result of using AI and gen AI, and so really we encourage clients to really reimagine work and reimagine the skills that you need to do the work, so you know, fundamentally what happens in a call center should be reimagined, not just you know, automating the call flow that happens, but really more fundamentally redesigning processes so that the humans are doing the really value added activity and the technology does the other things.

I'm wondering, Carey, when you look out at the landscape, given all the work that you've done, how much you know about the space. What's a company out there that's doing this really well.

Well.

We step away from making specific examples of individual companies, but I think the companies that are doing this really well are they're reimagining the way that work gets done, and they're not layering new technology on old problems, but they're really solving the problems in a different way. And in that they're redesigning the work and they're adapting the workforce so the skills that happen within work. So we're finding actually that ninety five percent of people are really ready to learn new skills to work with GENAI, but only five percent of organizations are actually changing the way the workforce shows up actually reskilling their workforce. And so while the companies that are doing this well are not just saying well, add copilot or add a piece of GENI onto an existing workflow, but they're really refundamentally redesigning work and they're revisiting their learning and talent strategies to give people access to the opportunity to develop much more quickly. And there's a real gap between the skills that we need in the future and the skills that we have, and so the leading companies are really adopting their skills and learning organizations in order to provide opportunities for people to learn and grow at their organization.

Carly, one thing I do. So I'm listening to you talk about what organizations need to do to kind of rescale workers or make sure their workers have the right skills. So, in a generative AI world where people are working hand in hand with or some workers or call center individuals who work there are working with AI, do they need college degrees? Is it a case they get to a company and they get trained, Like, how are we thinking about what skills are really needed?

Yeah? And it's a very good point. I mean, I actually think there's a whole reinvention of talent and learning that will happen as a result of this, which can be quite exciting because a more fluid opportunity to develop at a different pace, and it's going to be exciting for workers against that as like sixty one percent of workers are globally going to need retraining by twenty twenty seven, that's not too far away. And so that whole like I go to school, I learn something, and then I get hired to do a job, and leading companies are really thinking about that differently, so thinking about the skills that they have, the characteristics of the people that they're hiring, and how to develop those skills at a different rate. So giving you a differentiated learning path, and that learning path isn't just about going to training, it's about a different experience that you have doing the work that you're doing, and a work learn fusion we like to call it. So the opportunity to learn on the job and be provided with new opportunities to not only learn but also developed skill is I think a source of innovation and resilience for companies that it's going to require another level of innovation around corporate learning and development and also career paths to provide people with flexible opportunities to developed skills and particularly help people develop skills in directions that meet workforce need. If you think about like five years of workforce planning, like a lot of organizations will deal like a multi year plan, I think we're going to see a lot more near term and understanding of the skills you have, the skills you need, and then flexibility and adapting those skills, whether that's sourcing them from different locations or whether that's developing them internally. And that's going to be a source of advantage for the companies that get it right.

Hey, Kelly, if you were advising recent graduates from college, or people who are entering college right now, or even people in high school because maybe college isn't even part of the equation for a career like this or a world like this, what would you advise them to do?

Yeah, I think I would advise people to I have a child that's going to start college very soon, and so it's a very near term piece of advice. I think the opportunity or the willingness that you have to learn and innovate throughout your career is going to be important. So learning to learn and learning to adapt the skills that you have is going to be important. Right, So ninety percent of CEOs say that talent scarcity and lack of skilled workers is going to be one of the top five business issues. So being able to learn on the job and be being able to be flexible and innovative and creative. And the other thing is I think the technology is never going to replace things like empathy and creative creative activities, and so thinking about like how you enhance your emotional intelligence and your aptitude for learning, it's going to be as important as which college you pick.

I like that.

Yeah, interesting, Hey thirty seconds. Just quickly the work your demands are hiring. Anything that you're seeing that's a slow down that you're not seeing as much work, because we're starting to see that some of the statistics and just got about twenty five seconds.

Yeah, there's a I slow down in some sectors and in an uptick in other sectors. And actually if you sort of go into it, there's different geos where you're seeing up and down. We are seeing I think I continued demand around technology skills, and I think that's a strong signal for us going forward.

Fairly close. Thanks so much for joining us on Bloomberg Global Talent and Organization lead over at Eccentric.

Bromuck on the journal.

How about you let me drive?

Oh no, no, no, no, who's going to drive?

Honey?

Please?

I'll do the riding gravels. Let's wat I want to drive?

It's good question. Try this is the drive to the globe punk commune.

Well build it on Bloemberg radio.

All right, but just under eighteen minutes left in today's trading session, getting ready to wrap up that Thursday trade. Bouncing around, but we're not. We're just a little bit off our highs of the session. So, as you heard from Charlie, still about one percent higher on the Nasdaq one hundred s and P five hundred again of almost eight tens of a percent. This as we got another readown on inflation, a read on weekly jobless that coming a little bit weaker, slightly hotter on the inflation print. Another two days in a row, slightly hotter inflation prints. And then we've got the FED meeting next week.

So let's go to one of our go tos. Back with us. Aaron Kennon, he's co founder and CEO over at Clear Harber Asset Management. They've got more than one point five billion dollars in assets under management. Joins us from Stamford, Connecticut. Aaron, good to see you happy.

I don't want to.

It's not the end of summer yet, Carol. You know officially almost.

End of the days are getting shorter. They're wrestling, the acorns are falling. I know, okay.

Anyway, say Aaron, next week J Powell twenty five, is that what's going to be?

It looks that way, although there's one hundred percent, one hundred basis point cut between now and year end priced into the FED fund's futures market, and so that would suggest that at some point, if the market's correct, well, we would need to see a fifty. I think a fifty next week could could.

Do more harm than good.

It seems as though the crowd of FOMC speakers prior to the quiet session that we're in now have intimated that they would embrace a cut that the data, as you just allude to earlier PPI CPI has certainly trended back towards the two percent target that the Fed has, but it's not there yet. And we experienced in early August what you know, currency volatility can do to overall capital markets, particularly equities and fixed income. When we saw that sort of yen carry unwind occurring, and so I don't think a fifty basis point cut would help in that regard, and I think the FED is very much inclined to go twenty five at this point. We'll have to see.

Hey, you know, I think about you know, you founded, co founded your firm, you are the CEO of your firm, and I'm just wondering, since the beginning days of it and your time and money management, what's more difficult about investing today? What's easier?

Oh my gosh, Well, there are many more products in the marketplace, and so that can be a huge opportunity because those products mean that there are different strategies. But it also, as an allocator of capital on behalf of clients can be a rather significant distraction. So I do think that that's something that we as a firm need constantly remind ourselves of because our day to day is, you know, working on behalf of our clients and being fiduciaries to them. So I think that's one variable that certainly is different the growth of alternatives, the democratization of alternatives, and that's a plus, But we sort of approach lots of things with skepticism, including the market itself. You know, we don't own everything, and so you know, parsing through more in this day and age around these new products is certainly challenging.

Okay, speaking of uncertainty moving forward, we haven't talked about the debate today, Yeah, Carol, but it's still really have it. But there's a Reuter's poll out that just came out in the last couple of hours that actually shows some gains for Kamala Harris post debate. We'll probably get more polling on that in the coming days, but I do want to bring that question to you aerin uncertainty around the election and sort of how you're watching this from an investment perspective.

Well, that's a big one. I mean, certainly we've seen some ebbing and flowing on the polling side. This debate was clearly a weaker one for the former president, a stronger one for the vice the current vice president. I think there are questions around spending, but that doesn't seem to be something that either candidates focus on. There are concerns about the growing debt to GDP deficit, again not a topic dsure for either candidate, which is just stunning at this moment where at the GDP is one hundred and twenty percent and growing, and we wonder why gold's reaching all time highs here today, up one and a half percent. So I think tariffs will be a big question. But again, it's been interesting the terriffs that the former president has placed on countries and products. Many of those terrafts are still in place. So are we going to really have a changing of the guard. Regardless who wins on the terraffront, it will be very interesting for us to monitor that. I think the regulatory environment is an area where we I think should expect a bit of a change if the former president wins, generally less regulation. I think the question around the sustainability investment that came out of the Inflation Reduction Act, around solar products need to primarily be made here in the US, for example, maybe a big question mark. If he were to gain in the polls, we could see some of those stocks come under pressure post debate. We actually saw those stocks yesterday rally quite significantly, and I think that was an indication that, well, maybe Kamala Harris is in a position to possibly win the election.

We'll have to see.

Hey, listen, do you think Aaron that. Listen, this has happened. At the end of last year, right investors were saying, Oh, we're gonna get six rate cuts. It's going to be pretty aggressive in terms of the Fed. Well, it didn't happen. Right here we are. That was the end of last year going into the beginning of twenty twenty four. Here we are September, mid September of twenty twenty four, and we're still waiting for that first rate cut by the Federal Reserve. It's expected next week. That expectation around one hundred basis points of cuts. Do you think that is There's a good chance that's way too aggressive.

Still, it could be, although it could break the other way if the data were to suggest otherwise, if the employment picture were to not just soften, but you know, look like maybe it's breaking a little harder. If the jobs claims were to like further they've they've been rising, but spiking, you know, spiking further, the unemployment rate were to accelerate to the upside even more than it already has over the last three months, and so you know, I think clearly, you know that's that's of concern. On the flip side, I mentioned tariffs if increased tariffs had an impact on the economy in raising prices, that that could put the Fed on on watch for maybe being a little less hawkish. And you know, so what we'll we'll have to see on all those fronts.

What about geopolitics, Oh my gosh.

Well, we we certainly monitor what's happening. I mean, certainly the economy in Europe is quite weak, Germany in particular, largest economy in Europe. We're keeping our eye on that. You know, what is happening in Ukraine and the sort of Western world working with Ukraine in its response to Russian it's Russian invasion. How we're dealing with with China and what that may mean too for you know, how we think about the dollar. You know, China may be hesitant to buy dollar based fixed income assets to bolster their reserves after looking at how and this is not a criticism on my parts, it's an observation, but how the West has dealt with freezing Russian central bank assets after the invasion of Ukraine. All these things have huge impacts on the sort of dollars ability to maintain its rifle I believe place as a global reserve currency.

All right, Really appreciate it. Aaron, take care. Aaron Kennon back with US co founder CEO Clear Harbor Asset Management, joining us from Stanford, Connecticut. Are folks you are listening and watching Bloomberg Business Week.

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