Verizon to Buy Frontier for $9.6 Billion in Broadband Push | Bloomberg Businessweek

[Music] Bloomberg audio Studios podcasts radio news 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 stenc from Bloomberg Radio okay so lot's happening today too when it comes to the micro uh some deal news Verizon agreeing to buy rival Telecom operator Frontier Communications parent for about $9.59 billion as Verizon looks to expand its high-speed internet business here's Verizon CEO Hans vestberg earlier today speaking on Bloomberg TV this is a very straight into our core strategy we are sort of in mobility and Broadband serve basically all types of customers in this market consumer smbs large Enterprise and governments uh this is just extending the offerings and optionality for the customers who have so this is a really good uh uh decision by us to to do with for more on the implications of the deal and why and how it came together we turn to Chris paary Bloomberg news entertainment editor as well as Michelle Davis Bloomberg News senior m&a reporter Michelle here in the studio with us Chris is out there in Los Angeles Chris we just heard In that clip from Hans vestberg that this is part of the company's core strategy is the BET here that we're just going to keep using more and more data as a result of the explosive growth of AI the excitement around AI is that what this is about absolutely that and and working from home which I happen to be now and on a fiber network from AT&T so uh yeah so that's part of it just uh and you know video of course the streaming evolution of TV and all of that is you know massive data feeds to the home and higher speeds and that's what fiber does Michelle tell us a little bit about how this deal came together the history of both Verizon and Frontier in the Telecom space and did Verizon get a good deal yeah so it we're in a bit of a new era right now where all the cellular providers AT&T Verizon Um T-Mobile they as Chris was saying you know are trying to get into the high-speed internet game and the last time we saw this big shift was when they were moving from landline to Cellular and so right now the idea is you know let's bundle cellular let's bundle High-Speed Internet and try to compete with the cable companies um in terms of the history I mean Frontiers claim to fame is their Broadband access Verizon has been you know the top uh wireless provider that we all know um but they hadn't really had a big presence in fiber with this deal if it closes they will be vaulted to the top ahead of AT&T who is right now the number one um fiber offerer among the wireless providers but you know even they hardly compete with the cable companies in terms of high speed internet access Michelle when we when we think about the history of the space I mean this is a history uh that has been just dominated by m&a that's how and and actually you know breaking up of large companies over the last century um if we think about Telecom regulatory hurdles for Verizon here are those is that something that regulatory risk is that something investors have to be worried about so if you look at Frontier stock today it is trading down and below the offer price some of that you know some of the decline is because yesterday people didn't know what Verizon was going to pay so that's you know they got ahead of themselves and a little bit of that decline has to do with this you know concern about regulatory scrutiny no one that I've talked to thinks that they're going to have any issues but in this environment um Regulators have just take been taking a a harder look at things they're taking longer to review things obviously you know if there's a change in administration um which there probably will be we just don't know how it will go um that could change um how long um you know Regulators take to review things um Chris I'm wondering how many details we have about where Verizon is going to actually deploy this high-speed internet because we know that millions of Americans actually don't have access to high-speed Broadband is this something where Verizon is kind of serving those underserved regions or are they competing with the incumbent cable providers in areas that already have internet uh a little of both but definitely uh they're they're looking at rural areas AT&T is as well there's a lot of fiber build out in places that historically didn't get it and that's part of this I think U Verizon said there'll be in 35 States uh uh with this acquisition so um yes a very bar offering geographically Chris what does this mean for customers of Frontier they have a couple million Broadband customers already do they just automatically become FiOS customers yeah that that's certainly the plan uh the CEO said he didn't expect you know this to result in like any kind of price war or something like that with anybody else uh but that always seems to be the case uh in Telecom I mean this in a way is a reflection of the challenges these companies have had with with uh mobile being sort of everybody has a phone or two at this point and where else can you grow and so they're returning really to this business that um you know they had offered back in the dialup internet days well Chris to that point I I thought that the future was all about Wireless even when it came to broadband delivery because it is very expensive to lay fiber and these companies are working on delivering Broadband wirelessly to the home with these receivers that people set up on their own they don't even have to call people out there to to come and hook stuff up to the to the telephone wires um what's going on with with that strategy right now you know that I I think this deal is really a recognition that that's only part of the solution that if you really want to get the super high speeds you need this fiber optic line even in some cases directly to the home if possible and that the wireless well as you said people are investing in and they're showing some good growth in in that way of accessing it's it's probably not going to be the the single you know main way people access yeah Michelle come on in on that because this the capex when it comes to laying fiber is incredibly expensive and also you got to get the neighborhoods on board yeah so I mean Verizon has a lot of work ahead of it in get making this a real thing but if you think about fiber FiOS I don't know if you guys have used FiOS I have FiOS yeah it is just you know lightning speed it's faster way more reliable than what you can get with wireless um so you know it's clear that it's not quite interchangeable but it is going to take them time to get to a place where this is the default I was going to ask a similar question but maybe what is the kind of History what do we know already about companies that have merged in the Telecom space have they been able to kind of successfully compete against those cable companies that you had mentioned earlier when you know they acquire these fiber companies so T-Mobile has been doing a bunch of um joint venture deals to try to broaden its uh fiber Broadband access um they recently did a a deal with KKR where they agreed to both invest in Metronet um and AT&T you know has been the leader in this space but the whole industry I mean when you think about Telecom cable media as we earlier were talking about it it was built on m&a using debt a lot of these companies have gone bankrupt and come back around again including Frontier um yeah that was a recent bankrupt a relatively recent bankruptcy relatively recently but you know they they find ways to reinvent themselves and you know get more debt and buy and separate and here we are Chris there's also a media story when it when it comes to this because Verizon is also a with with FiOS they they do offer traditional over-the-top um you know cable box service I guess is what we'd call it we wouldn't really call it over the top but they do offer cable box service traditional linear TV um how do you think about that in the context of where they're doing m&a right now this is it's part of the thing and one of the things Verizon's been active at is including other streaming services as part of their Broadband business as you know everyone knows the traditional Cable Bundle is is is collapsing and so this is really the next evolution of of of delivery of TV and uh and and and Hans vestberg said in our Bloomberg TV interview that you know having this multiple product offering to Consumers helps reduce the turn they're less likely to cancel if they have you know a Verizon mobile phone internet offering TV Michelle what's next what are you watching for in terms of timeline the big question is is AT&T or T-Mobile are they going to do something to get back ahead um after this um Chris Paul Mary we're lucky to have both of you today um and you're both writing a lot of stories but U I want to shift gears a little bit and talk about a story that you published just about an hour ago about the future of what happens with national amusements in Paramount uh the name Ellison is at the top of the story but it's not David Ellison it's actually Larry Ellison explain what exactly is going on here well you know this was always position this take over parent as David Ellison Larry's son and um but everyone always assumed that the money was coming from dad he's the founder of Oracle Corp of course and worth over 150 billion uh and but we hadn't quite seen it in writing and in this situation where you have to uh tell The Regulators in this case the Federal Communication Commission who's going to own these uh you know that cbst TV network and all those local stations and they their filing says well it's actually going to be Larry Ellison who controls it all so what does that mean for the company but also for what David's going to do at the company and who's actually going to be the one making the decisions here well David as the filing said will be chairman and CEO Paramount and our his spokespeople have said he will have operational control but you know it's you don't have to look far in the media landscape to find incidences where where uh you know fathers have fired their sons uh you think about the murdocks and all the changes they had over their media Empire uh the Dolan family as well in in cable TV had some dust UPS even when the redstones there was a period of time when Cher Redstone was out with her father and that so um I don't want to presume anything uh you know everything may work out fine between the Elis but uh you know as long as Larry is the controlling person there was always that that option yeah maybe no offshoot of succession at this point yet Chris um is the deal happening is this is this thing finally going to be put to bed yeah they've got a signed deal at this point the Paramount really can't consider other offers uh there's you know still issues regarding like this one Regulatory and that but it certainly seems like it's going to close next year okay certainly around the world when it comes to Telecom and media uh with Chris palmary out there in Los Angeles he's Bloomberg news entertainment editor also Michelle Davis Bloomberg News senior m&a reporter Michelle joining us here in the studio Chris joining us from Los Angeles a big thank you to both of you check out all of their reporting on the Bloomberg terminal and of course at bloomberg.com you're listening to the Bloomberg Business Week podcast catch us live weekday afternoons from 2: to 5:00 p.m. Eastern listen on Apple carplay and ambroid Auto with the Bloomberg business app or watch us live on YouTube as we've been discussing wall Street's anxiety running rampant in that countdown to the highly anticipated us jobs report it's not just the jobs report that has people wondering about what risks do lie ahead there's geopolitics there's uncertainty ahead of the election and for some people how Tech could continue to affect the economy really big picture stuff and fundamental stuff Dave Allison works with ultra high net worth clients at the raia platform Prosperity Capital Advisors where he's president and founding partner they've got about $3.5 billion in assets under management Dave joins us here in the studio Dave good to have you with us welcome to Bloomberg Business Week give us an idea of your typical client how much money they have work how much money they have deployed with you and um sort of give us the profile yeah definitely so we work with clients all over the the United States you know typical client is somebody that is you know 55 to 65 approaching retirement you know maybe a million to $10 million and that's at the firm level uh I typically spend my time with the families that have $10 million to you know maybe 50 60 70 million and helping them Implement their family wealth strategy so let's talk a little bit about those families and asset allocation there because traditionally we've heard a lot about at that level allocating assets to the private markets um but not necessarily in in recent years um as much discussion of that as there has been in the past what do you see as sort of the asset allocation breakdown for the ultra high net worth family that's trying to have generational wealth here yeah I think the the asset allocation breakdown is still you know pretty heavy in the public markets I mean obviously you can find outsized returns in the private Equity space or private Market space yeah on occasion I think there's a lot of hype and Buzz coming back post 2021 I think there was this great reset that happened and now you know there's a lot of still speculation around AI AA AI companies and some of the derivatives that'll come from this technology and and who's trying to build the next services and platform that'll be supported by AI so I think we're seeing you know A Renewed interest in that space But you know the reality of it is Public Market are still delivering great returns and there's still huge opportunities and so um you know it might be not as much hype as we saw maybe in 2020 or 2021 when you talk to your clients how are they currently feeling about both the US economy and also the stock market yeah well I think people are still fairly optimistic although as you just mentioned in your opening a lot of uncertainty and I don't know if that uncertainty is as much the economy or the stock market as it is everything else going on in the world political geopolitical Wars you know I think that drives a lot of the uncertainty which unfortunately starts to transition over to people's money in their portfolio but you know as much uncertainty exists in politics right now and in geopolitical events I think there's still this big wave of optimism of you know what's going to happen with some of these companies that that do have enormous upside from a productivity uh from the technologic technological innovations that that we're starting to see happen so what are some examples of of those companies or of those Services well I mean of course there's the big ones that we all know about right the big ones that have been number one benefactors of the hype around Ai and what it could do to their own internal productivity there's been the benefactors like in Nvidia that of course everyone knows about of the spend from these hyperscalers but I think what's interesting is to start to look at kind of the next derivatives of who's going to get beneficial productivity growth or Revenue through monetization of services and I think we're still in like the first ending of what that even looks like so um you know there's there's of course companies in different areas you know the big ones that we we know about and hear about all day long but you know I still think even in the small business side small company stocks are still trying to figure out how to harness or utilize some of the AI tools so how would that how would that end up looking for these other companies is this the is the idea here that the companies become more efficient and don't need as many employees and perhaps we see an uptick in unemployment as a result or do we see something else entirely where the companies become more productive but those people are still needed well I'm certainly hoping for the latter right I mean as an employer we're a small business we have about 75 employees do you use AI we are just starting initiatives you know obviously in the wealth management industry we have a lot more compliance and Regulatory concerns around how we use it but we're trying to empower our employees to use it and we're not doing it as a measure of cutting back we're using it a measure as a measure of how can we grow how can we impact more CL clients how can we be more efficient with our advisers and so you know I hope that most other Industries are looking at it more as an a tool of in abundance than than scarcity and so I I think that's a great reason to be optimistic I mean will jobs change of course jobs will change uh that happens in every major technological advancement or shift but I think you know companies are going to continue to see ways to grow productivity and and hopefully Drive earnings and more efficiency what does that mean for the breath in the market and the broadening out of the rally I was looking at a chart the equal weighted index S&P equal weight has outperformed the market cap weighted index over almost six percentage points uh since July do you see that continuing yeah I hope so I mean you know you wonder is that somewhat of cause or effect I mean the reality of it is what we saw through the first half of this year was the big names the hyperscalers getting so much attention and so much money thrown at them that the reality of it is kind of all the good things have to come to an end at some point and now we're to the point with those biggest companies it's like hey you're spending all this money start showing me some of the impact and we're also seeing a lot of people quite frankly just take gains off of those bigger company names and where's that money going to go it's going to go to the rest of the market I think you know we're still kind of early on to see how it's going to spread out where it's going to be dispersed what industries are going to be able to adapt and use these tools for productivity but you know I do anticipate that while we're still going to see these kind of bigname hyperscalers spend a lot of money gain a lot of momentum gain a lot of interest I I think you're going to start to see you know the rest of the market you know not just the S&P 500 like you mentioned the equal weight index but you know even hopefully looking at other asset classes like small cap you know start to benefit from some of these tools particularly if we start to get into a rate lowering environment where they can start borrowing money to generate their own capex spend at a small level let's talk about bonds as well what is the allocation to bonds because for the last few years investors really haven't gotten that much of a positive return if they're in bonds do you see that evolving have you had to change the kind of typical stock Bond portfolio composition with your clients well what's interesting about bonds is it really depends on the type of investor right if you're a younger investor in the accumulation phase you're not really needing income from your port P folio and you're of course focused on trying to generate the highest expected returns bonds probably aren't a big part of your asset allocation I mean you know bonds are the seat belt in a car they're there for safety they're there to generate income obviously for our retiree clients generating consistent cash flow and income is certainly a lot better today than it was two or three years ago there's a speculative element of bonds right as interest rates fall the principal value of bonds go up but I still think people are more bullish on the expected return of equities over bonds we are still sitting at of course for most of our growth oriented clients a higher Equity allocation than fixed income and again fixed income is a great place for that short-term money or when we're trying to generate cash flow but you know I don't see a whole lot of speculation happening on on Capital returns of fixed income just in the last minute that we have uh November election front and center certainly in terms of how we're thinking about coverage up till then um how is it on your radar yeah well I mean the reality of it is we all know the market hates uncertainty and there's an enormous amount of uncertainty and what we've been telling every one of our clients things are going to get bumpy things are going to get bumpy in September things are going to get bumpy in October we've seen this in almost every election year for as long as we have data September and October are not typically great months for the market and so it goes to are you trying to time the market or are you a long-term investor because as soon as the election results come in we tend to see a trend word upwards for for overall markets and so you know if you're trying to trade and get ahead in Market time hey there's probably some opportunities with all the volatility we're going to see but if you're a long-term investor stick to the course have a good portfolio look at what your bets are in these allocations that you have if there's opportunity to rebalance or reallocate and uh don't pay much Focus to the day-to-day that's happening Dave Allison at Prosperity Capital advisers thanks so much for joining us here on Bloomberg business week you're listening to the Bloomberg Business Week podcast listen live each weekday starting at 2:00 p.m. Eastern on Apple carplay and Android auto with the Bloomberg business app you can also listen live on Amazon Alexa from our Flagship New York station just say Alexa play Bloomberg [Music] 11:30 us always well when we talk polarization especially these days it's often in the context of politics but there's more to polarization than just political polarization that includes economic polarization which is as you guessed it people on opposite ends of the economic spectrum and according to our next guest economic polarization now showing up in the workplace and it has real implications when it comes to productivity Richard Edelman is CEO at the Global Communications firm Edelman he joins us from New York Richard we check in with you periodically thanks to the updates that you and the team over at Edelman do to the Edelman trust barometer it's a global survey it looks to understand why people think the way they do what did you find about economic polarization especially in the workplace so what we found is that in fact the um so-called Associates the Working Class People have a much lower opinion of Institutions than the executive class and that that Gap has just widened over the last five years profoundly and so now there's a 40 point gap between again what the work worker thinks and what the executives think about trust in business government media and Nos and that is to do with the experience of globalization the experience of covid um and than the experience of inflation and so um even though their wages have gone up people are terribly nervous also about the fear of AI does it does it also have to do with compensation though and the different way that people are paid for their work when they're I don't want to say at the entry or managerial level but no question that seite pay has absolutely exploded over the last couple of decades I mean we have it available on the Bloomberg terminal you can go look it up for publicly listed companies it's just mind-boggling how much these executives are paid I think to a lot of people um they would say that it's you know they're that that's the market rate and and that's what you know they're bringing that value but does that distinction at all have any effect on how people think about economic polarization it's certainly to do with pay um but it's also to do with the projection of economic future and when you look at the 45 to 65 year olds only 19% of our uh respondents said that they believe that they'll their families are going to be better off in five years whereas the younger 65% you you know the 18 to 35y olds they believe in the future and so again the 45y olds have seen globalization they have a huge fear of being in a sense exiled from from work by AI so upskilling becomes a urgent um matter for business so that people are calm about their future and if there's going to have to be change in your size of Workforce just tell them the truth and you know don't let it creep up on you how did the survey Define and measure economic optimism can you perhaps maybe share some of the questions that were asked of the surve survey participants so it's a very simple question which is do you feel your family is going to be better off in five years and we see a consistent diminution of expectations in the people in the lower uh economic echelons and particularly again the people who are 45 years old plus and it's partly the experience that they've had with globalization um which their younger group hasn't um and the projection of AI which everyone is nervous about but the younger feel somehow better equipped to do it and what did you guys find about just why economic optimism for those employees is so important I see in the notes um it driv employees to be more civically minded well from a practical point of view if you're a business owner it's more employee loyalty more employee advocacy and they're much more willing to engage in transformation um of the business so for example if you're optimistic about your economic future you're much more willing to accept AI but it shifts completely to the opposite if you're nervous about your economic future so all of this is circular and the virtuous circle that we need to do is Cal people people down about their future pay them well enough then they'll be your Advocates and loyal to your business and they'll also by two to one put in the extra effort that you know makes sure that the company will succeed what is what does it mean to pay someone enough how do you know what enough is I think enough is that people feel as if they are staying ahead of inflation that they have the chance for a better life for a house um for retirement because at the present um all of those are in question and you know this of course then becomes um political in in the end of you know which party has a better um idea for the future besides just pay how else are you seeing companies react to this low level of employee economic optimism so I think CEOs have thought in the last three or four years that one of the great plays is to be public Advocates on sustainability diversity inclusion geopolitics even that's reversing and there's a sort of rebalancing of stakeholders so Wall Street and customers and Regulators matter equally to employees so CEOs are well advised to continue to speak to their own workforces about these societal issues but not to become public Advocates also um companies are responding by what is termed as agency giving people within the company the chance to feel as if they're making an impact to give them a voice to listen to them to have town halls and other ways of expressing your desire to learn and listen Richard before we let you go we just have about a minute left but your CEO at at Edelman yeah are you using AI right now how are you using if you are so personally I I write my blog post every week um My chaty BT is my um English teacher and criticizing my ideas and my grammar which is very helpful um I also ask um the uh chat gbt to to help me on uh formulating my company strategy uh document that I um just have to prepare for my board for next week and I am pushing myself to use it and I'm also asking asking my younger employees how are you using it we're putting it on 5,000 desktops across Edelman in the next three weeks and you know we know that we have to be efficient we know also that we have to be smarter and um that's the key we don't want to take jobs away we want to make our work better so that we can get premium pricing for our work hey it's an interesting way to think about it uh Richard Edelman CEO at the Global Communications firm Edelman joining us this afternoon from New York you're listening to the blomberg Business Week podcast catch us live weekday afternoons from 2: to 5:00 p.m. Eastern listen on Apple carplay and Android auto with the Bloomberg business app or watch us live on YouTube I can't talk about it enough Emily we are all focused on that jobs report tomorrow 8:30 Wall Street time because fed chare J poell has put the labor market at the heart of the central bank's decision on when and how quickly to ease so how are things going to look tomorrow well if you go to go go on the Bloomberg terminal you can see that economists surveyed by Bloomberg are expecting 165,000 jobs for the month of August so we'll see if it comes in at that level higher or lower than the level and of course there's going to be a close eye on revisions and the unemployment rate which they're expecting 4.2% that would be a drop from the 4.3% prior but as Mike mcke told us watch the rounding yes because he's all about the three decimal places right they report in a three decimal place so Traders might not see that they might only see the you know 4.2 I'm curious what Martha heler is seeing she's founder and CEO at heler search it's an executive Search firm it specializes in it leadership roles she joins us from Massachusetts Martha good to have you back with us remind everybody this the sub segment of the workforce that you're looking at because you're not seeing the entire Workforce given you specialize in it leadership roles but remind everyone what you're seeing sure thing so what we look at is the technology Workforce across all Industries so yes high-tech but we're also Lo looking at retail and insurance and Manufacturing so it's every industry but that particular technology Workforce so for us we're of course Very in interested to see what the numbers tomorrow hold because they're either a bellweather for growth or they're going to indicate a shrinking uh of of uh a work Forest Market which of course we're not excited about but to me in what I'm seeing Tim and Emily is something bigger than whatever the jobs report shows tomorrow and that is really in how much AI Investments are driving job growth in the next 12 to 18 months if we're talking about a $600 billion overall investment in AI which is some of the numbers we're hearing you people need to give a return on that investment you need engineers and integrators and developers and analysts and data scientists and keep in mind every time we open a AI opportunity on our big businesses we open a security risk and and the fact is experienced AI security engineer is an oxymoron it doesn't exist yet so regardless of what tomorrow's numbers show I believe overall from Silicon Valley to Middle America manufacturing retail we're going to see an overall uh uh uptick in hiring in Tech due to the need for people to make that AI dream come true we'll see how that all happens but I think in the next 12 to 18 months we're going to see an uptick in technology hiring across the board and what trends are you seeing right now because would this be an uptick from you know a downturn in hiring just talk about maybe the last few years this demand for more jobs in it has it been steadily growing or did we see a peak just a few years ago and now we're kind of working back up to that we we saw a peak during and immediately after covid because we needed all those technology people to get all those people working at home once we had that we had a catalyst in terms of digital transformation maybe we wouldn't have all been so digital if Co hadn't come along and sort of force that on us more quickly and as a result of that we seemed tremendous highing we now need to to fund our digital products as an insurance company we now need to do more digital uh access for our people buying groceries that was all sort of put on turbo based on a sudden Health scare that got us into this space so I see this starting from before Co covid and increasing steadily yes we've had a hiccup with this jobs report or that jobs report but I think honestly since covid we've had a very strong uptick in hiring in it across these business when you talk to these it professionals where do they want to work because I understand that you know nearly every company and probably almost every industry needs these uh tech jobs and these it focused people but they might be in unconventional places where maybe a person who works in Tech isn't thinking oh I want to go work at a I want to go do a software engineering at a at a grocery store chain for example you know it it it's a fantastic uh question and the first thing I would say and it's so sort of Bal to talk about but they want to be remote they don't want to come into the office so that's first thing in terms of where they want to be I'll also say what they want is to work on complex technology problems they want to learn the new skills so they don't want to come upgrade a payroll system they want to run AI on a payroll process so indicating to these folks wherever you find them that you are for technology is the Forefront of what you're doing and they're going to get to do exciting meaning meaningful work that is the message to communicate in terms of where to go tools are getting easier AI is making software engineering easier or simpler so we don't need necessarily the MIT trained uh uh you know computer science uh PhD in our businesses we need people who can learn design thinking they can do good training they are they have a passion for the mission of the business so we can start to really expand where we get our technology people from particularly when AI makes some of those software engineering jobs repetitive and now we need people who can look at our businesses and say I have an idea for where AI can help us so that's really not any particular education at all right these are people who have passion they understand processes they want to create change they're not necessarily all technologists yeah it's pretty incredible to see what can actually be done on some of these llms already right this I I haven't I've played with them a little bit but I I don't even have the capability to do what some people are able to do on these Emily I saw on on Twitter SLX somebody posted a video of asking an llm to create an app for them that had these certain parameters and the thing completely spit out code it was amazing you have to know how to communicate with it you have to be a prompt is it a prompt engineer is that right Mar that's right it's a prompt engineer and even more when you bring up Tim that you played around with this if you had to invest $100 million in it to produce 300 million in Revenue suddenly that chat GPT or whatever you're using you might look at and say huh how yeah that sounds pretty good to me actually you have some ideas Martha I I have a lot of ideas yes okay hey um I'm curious about what you're seeing when it comes to compensation right now we watch wages really closely what what are you seeing what's typical compensation for somebody you place that's right so I mean you know our the folks we Place typically are the technology leaders in these Fortune 500 businesses so they've fully loaded packages with long-term and short-term I'm seeing them obviously in the seven figures and then it depends is it a fortune 20 company that now you're going to have I talked to a CTO of a major media conglomerate the other day and he's making eight million a year right the CI of a small company is not but what we're seeing overall is cios and CTO are now becoming officers of their companies they used to report to the co the CFO now they're reporting a click up to the CEO so their compensations are changing they're now in that EVP or SE level band and as such all of their people get a lift so as technology becomes Forefront to everything we're going to do and the way we're going to secure our data and and and all of that uh that becomes so important that compensation is going up could I give you a range over I'd say maybe 20% over the last couple of years oh wow but it's G it's going to vary from industry to Industry obviously that that's you know compensation and pay to what extent are these professionals looking for additional benefits I know you had mentioned that a lot of workers are looking to work from home and be fully remote that's right so that's one thing and I would say what they're looking for more than anything is is meaning in their work I could plug in this widget over and over again but how is this this widget helping people how is it having an impact on shareholders what's the meaning behind my work I think Co kind of threw everybody from Loop and said wait a minute I did everything I was supposed to do and then this thing happened and now my my course has been thrown off so what how do I want to spend my time I want to spend my time having an impact so so more than anything yes let them work at home fine give them a good culture let them have mentorship but they need to know the why of what they're doing that to me is the focal point for attracting good people we don't have a ton of time left but I'm wondering what you're seeing as the biggest risk to this industry right now are people fearing layoffs at all what the biggest fear that I'm starting to see bubbles of or or or or percolation of is the bubble how on Earth are we going to get all this return on this AI investment because remember it's cool to use chat GPT but when you have a $200 billion doll business and you've got every you have to get all your data integrated in a way that AI can even matter that's a big lift so what I think we're going to see is something akin to the com bust of 2000 where in two years all those AI startups they're not gonna I mean this you know again I'm this is just a prediction I think we're going to have a big AI bust and then over the next three to five years just as with happened with digital and e-commerce companies are going to understand how to use it we are going to get that return on that investment and I think out five years we're going to be living differently I don't know about you folks but remember analog I remember the telephone that I would pick up and dial uh and now life is so different I think life is going to be as different but we need five years to drive adoption of these tools and get our our companies in shape and get the profitability from them to make it worth the boards wild so so you know what's the risk I think the risk right now is an AI bubble right behind that is board level security preparedness for AI those I would say are the two okay so big changes coming in the next five years we'll be sure to check in with you quite a bit between now and then Martha heler founder and CEO at heler search the executive Search firm that specializes in it leadership roles joining us from Massachusetts turn radi how about you let me drive oh no no no no who's going to drive you home honey please I'll do the driving drive home excuse me I want to drive it's the question that drives this this is the drive to the close the Funky Music will drive us till the dawn on Bloomberg Radio well Tick Tock everyone less than 20 minutes to go to the close of trading on this Thursday afternoon just ahead of that August payrolls report which we'll get tomorrow 8:30 a.m. are you covering it live Emily no no you're not anymore not anymore you were I was I will be uh watching it I will be tuning in but my fingers won't be on a keyboard because you're busy later in the day yes okay coming back here that's awesome I love it exactly hey um someone also who is going to be watching this very closely I know is Jason Brit and he's founder in CIO at reflection Asset Management he joins us for our drive to the close from Mount Pleasant South Carolina Jason how are you I'm well Tim how are you we're doing well um you guys have about $6 billion dollar uh under advisement uh 200 million in two publicly traded funds with not an ESG Focus something that you like to call Se why is ESG no longer the way to describe how you're thinking about this stuff the great question and I get that all the time I think predominantly ESG is a term has been weaponized um by the right and that there's been a lot of stories and a lot of uh UNC Discovery and research around the quality of that data where that data is coming from and frankly how that data should be used and from our clients perspectives that they're corporate decision-making tools so we use SE because it's an Investor's perspective first stakeholders environment ethos are the way you think about those things so that's like a a screen for you it's actually a series of screens so its purpose is not that different than you've seen ESG be used before uh the difference is is rather than being a business decision tool for companies to avoid ESG risks ours is a process to uncover and label those companies so they can be aligned with investors values what do we know so far about whether you know looking at se contributes to positive returns because I know some complaints with some of those ESG funds um at least in the ETF space was that they actually looked just like the S&P 500 and so performed you know just like The Benchmark and there wasn't much out performance there so that's a great Point Emily ESG versus SE is a tool in the toolkit to be used uh neither one of those two things used in isolation will make up for bad portfolio management you still have to be thoughtful you're using it as a tool to narrow a list you still have to be responsive you still want to pick companies that are going to do well going into a falling rate environment just because it does well in ESG or SE metrics doesn't mean you want to own it in all Cycles it's still up to be good at stock selection so we have the jobs report coming up tomorrow we have a Fed meeting in 2 weeks not one I thought it was next week time flies though when you're having fun so it might feel like one week what are you watching right now as the biggest risk in markets is it further economic weakening is it actually data that comes in too hot and prompts the FED to maybe reg uh reverse these plans for a more dovish end of the year so that's a great question I think that there I would put them in the following order what happens tonight with broadcom will be a tremendous indication of how the market trades tomorrow up until that release uh 8:31 I think is the time that that thing drops uh and you'll be able to tell right away whether or not it's going to be a 25 basis point or 50 basis point reduction my view is that a 25 basis point reduction is best case scenario 50 basis points to me is scary because it'll mean that they're seeing something that the broader economy hasn't necessarily priced in yet and it'll make me a little more nervous about getting a little bit closer to the potential for recession 25 basis points that sorry Tim go ahead I was gonna say if you so what's the number that you see to know that it's going to be 25 basis points I think if we come in at or around where the non-farm payroll number is expected uh we should be fine it's it's going to be a really big surprise one way or the other or specifically you know to the downside that's going to cause them to to do that 50 basis point d right right now we are at least the Bloomberg economists are expecting an addition of 165 which would be an uptick from the 114 added what if we got an upside surprise Jason uh well so that's actually not something the market is pricing in uh into the September cut I think that if you saw an upside surprise you might see a change in the beige book language as it relates to but I still think you're going to get a 25 basis point cut I think chairman Pal's remarks at and Jackson Hall made it that there's not wiggle room there like they're really gonna something really dramatic would have to happen and I just don't see it in the cards I want to zoom out a little bit because we had a very volatile August we really had I think a moment in the beginning of August where people thought that the market had taken a turn and there was no going back stocks dropped and they were not going to rebound and then we had a pretty significant rebound now that we're headed into September I feel like Tim we've been asking people what do you expect do you expect the seasonality to take over to see stocks drop in September or are you more optimistic how are you feeling about the rest of the year in light of the fact that we did have you know such a significant Market move last month so I think we're going to continue to see the markets be very choppy between now and the end of the year even in a lowering interest rate environment uh right now everybody's Trad trading on news right I mean you saw it with just Nvidia and investors overreacting earlier in the week to The doj subpoena they had a great quarter numbers were good guidance was good and all of a sudden the stock fell off you know a cliff my opinion is that we should be really looking at you know diversifying out of some of the Magnificent Seven because they've had such tremendous runup and looking at some of the other sectors you know small cap did have a nice rotation trade there when the Yen trade Unwound uh consumer discretionary stocks things that will typically do well in Falling interest rates environments uh it'd be something I'd look to rotate out of the concentration in the big seven and into from a diversification perspective uh let's talk a little bit about what you said with regard to earnings in broadcom coming a little later today why are you looking so closely at results from that company uh I I just think that's the canary and the coal mine and the market the marketplace got they got their they got their number from Nvidia they reacted to it I think you'll see significant reaction here as well how do how does a uh report one way or another change how you're positioning yourself so the reality is is we try to convince clients that you shouldn't be trying to time the market it shouldn't be earnings report to earnings report despite how difficult it is to resist the temptation to try to trade some of these stocks I mean if you were well if you did a good job at timing Nvidia just in the last two months alone uh you could have captured some significant Alpha by being in and out and riding a momentum trade the reality is for most High net worth clients and for most investors thoughtful broad-based Diversified portfolios you're going to naturally be overallocated to Tech because of the size um which was back to Emily's Point around most ESG or SE products would look feel a lot like the index well those companies tend to score well in most models and they tend to be big drivers of how the the market both performs and also is reacted to so I think broadcom is going to do a nice job I I expect at least the whisper is that the quarter will be just fine it's really going to come down to how management handles the questions and what they're going to do in terms of guidance Jason Brittain founder and chief investment officer at reflection Asset Management joining us from Mount Pleasant South Carolina thanks so much Jason certainly do appreciate your time and we'll see you next time this is the Bloomberg Business Week podcast 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