High Stakes Summit, New Zealand’s Talent Troubles, Stablecoin Adoption, Sparkling Water Boom |...

0:00 [music]

0:02 Bloomberg Audio Studios.

0:04 Podcasts, radio, news.

0:18 [music]

0:20 This is Wall Street Week.

0:21 I'm David Westin bringing you stories of capitalism.

0:24 Losing valuable people to migration isn't that unusual,

0:27 but what does it mean when even

0:28 your former prime minister leaves to find opportunities elsewhere?

0:33 Plus, President Trump is a big booster of stable coins,

0:36 but what are they actually good for [music]

0:38 and what do they mean for the banking system?

0:41 And grocery shelves are packed with more

0:44 varieties of bubbly water than you can count.

0:47 Why are there so many and how many will survive?

0:52 But we start with the postponed Beijing

0:54 summit between President Trump and President Xi,

0:56 rescheduled because of a war in Iran that was supposed to be over by now.

1:00 How much will it affect discussions between

1:02 the two leaders assuming that they happen as planned?

1:06 Myron Brilliant is a senior counselor at the DGA

1:08 Albright Group and recently returned from China.

1:13 I think there's been a fair amount between the economic leaders, right?

1:17 So Vice Premier He Lifeng on the Chinese side and his counterpart here,

1:21 Secretary Mnuchin, and Ambassador Lighthizer have

1:24 had six or seven rounds of discussions.

1:27 So I think on that side there they

1:29 understand where the guardrails are, what can be done.

1:32 There are some questions about, you know,

1:34 how much can be done in areas like export controls,

1:36 but I think I think the United States

1:38 thinks they're going to get something on, you know,

1:40 market access, more beef, more soybeans, maybe Boeing planes,

1:45 something progress in those kinds of areas.

1:48 So I think that side of the equation is good.

1:50 The side that is less clear is the political side.

1:52 As you suggested, summits of this nature

1:55 with this high expectations tend to take months

1:58 to prepare with the president and the administration

2:01 distracted by the war in the Middle East.

2:04 Uh it's not had the same level of political connectivity between

2:08 say uh Foreign Minister Wang Yi and his counterpart Secretary State Rubio.

2:13 There is dialogue, but I'm not sure the infrastructure of the system has been

2:17 as deep and broad as you would expect of a summit of this nature.

2:22 If you think about the wish list from the two sides,

2:24 you just mentioned some of the things the United States would like,

2:26 selling more soybeans for example, Boeing planes or things like that.

2:30 But this is the first meeting these two leaders

2:33 since they really had sort of a trade dispute,

2:36 particularly over things like critical minerals.

2:39 Uh have they put it back together?

2:42 Well, 2025 was a tumultuous year in the US-China relationship, right?

2:46 There was the escalation on tariffs, and of course, you know,

2:50 I think China was more prepared, and they used their advantage.

2:53 They leveraged the critical minerals, rare earth issue to their advantage,

2:57 and they put some choke points on the United States,

3:00 not just the United States, Japan as well.

3:02 So, 2025 was an unpredictable and complicated year.

3:07 2026 hasn't been made easier by the situation in Iran,

3:10 cuz that's another dynamic in the relationship.

3:13 But both sides recognize that a global recession doesn't serve their interest.

3:17 Both sides are trying to manage a further deterioration of the relationship.

3:22 It's not because they want to be friends,

3:24 but it's because each side recognizes that stability is in their self-interest.

3:28 So, that's what they're managing.

3:29 They're trying to create a concrete list of deliverables.

3:33 It's not going to be a home run of a visit,

3:35 but even moving incrementally forward and having the optics

3:39 of the two leaders meet not just once,

3:41 but possibly two or three times this year, that's progress in one sense.

3:45 That creates some stability, but to me, it's not a ceiling, it's a floor.

3:49 You mentioned that President Trump said he'd

3:51 like to have several mini meetings this year.

3:53 Does that reduce the likelihood that any one meeting will have

3:56 a major breakthrough because the Chinese are thinking, "Wait a second,

3:58 we got more of these coming." Well, I was in Beijing, as you know,

4:02 10 days ago, and my sense is the Chinese are pretty confident.

4:06 They think they've cracked the code on President Trump.

4:09 They think they've, you know, they got a playbook,

4:11 and their playbook is not to appease the Trump administration

4:14 like they did try in Trump 1.0 and Trump 2.0.

4:19 They're punching back,

4:20 and we see a little bit of this on both sides, tip for tat.

4:23 US issues new regulations under the FCC,

4:26 the Chinese issue new exit bans that affect supply chains on critical minerals.

4:32 So, each side is feeling each other out, so to speak.

4:35 I think ultimately, China will do enough

4:40 to create some momentum out of this visit, but not so much that they deliver all

4:45 that they can deliver in this first summit.

4:47 They're going to test the market,

4:49 meaning they're going to test whether they can count on Trump delivering,

4:54 and that's that's pretty unpredictable right now.

4:57 What's on the Chinese wish list?

4:59 What do they want Trump to deliver?

5:01 I think a couple things, and I think they're going to be hard to get.

5:03 One is they want guardrails around export controls.

5:07 But, you know, from the administration officials I

5:09 talked to, they don't want to go there.

5:11 They view that as a national security imperative in the United States,

5:14 not something to negotiate in the China-US relationship.

5:17 But, that's clearly high on their list.

5:19 Second, they want some kind of clarity on tariffs.

5:23 There, there's a little bit of give and take.

5:25 Uh the administration seems to like this idea of a board of trade.

5:29 Each side gives up something on tariffs.

5:32 Uh it we want to get something back in return,

5:35 obviously, market access, but I think that is negotiable.

5:39 The third thing is, I think the administration has

5:41 to watch out for is the Chinese want something on Taiwan.

5:45 They'd love to see the president make

5:46 some kind of statement around peaceful unification.

5:50 We've had five decades where the United States

5:53 has stayed the course on its policy on Taiwan.

5:56 The Chinese think that dealing with the president of the United States,

6:00 they might be able to get something done on Taiwan.

6:02 I hope not.

6:03 That would be a game changer.

6:04 Is there any prospect that President Trump might

6:07 ask for help from President Xi on Iran?

6:10 I think that he'll lean in on that issue, but depending what you refer as help,

6:17 I think he'll lean in and trying to get the Chinese to back off helping,

6:22 but we know that China has already helped uh Iran on surveillance technology.

6:27 We know that they've helped on drone technology.

6:30 So, China has leaned in a little bit, but China has to be careful.

6:33 Their stakes in the Middle East are not

6:35 as high as their stakes in the US-China relationship.

6:38 Stability between China and the United States is still

6:40 a higher priority than coming to the aid of Iran.

6:44 They know that.

6:44 They do have 10% of their oil coming from Iran,

6:48 but they have diversified uh in the energy space,

6:52 not just on oil and gas suppliers, but also in solar and renewables.

6:56 So, therefore, they're less reliant on Iran than they used to be,

7:00 and that also factors into their equation.

7:03 You know China well.

7:04 You also know US business well.

7:07 Uh for US business people, leaders in this country,

7:10 what should they be looking at in this summit?

7:13 Well, you know, symbols matter.

7:15 So, we'll watch see what happens with China

7:18 and and the United States at the summit.

7:20 Do the leaders embrace some kind of pact?

7:23 Do they provide a little bit more business certainty?

7:26 Do they create space uh on both sides

7:29 where there's not going to be this tip-for-tat retaliation?

7:32 There's a lot of sensitivities.

7:33 There's a lot of competition.

7:35 I'm looking for symbols on AI.

7:37 Okay?

7:38 We're going to compete intensely with China on AI,

7:41 but we also have to think about the risk in the system.

7:44 And China raised that.

7:46 Government leader after government leader raised AI as Is this an opportunity?

7:50 I think business would encourage that.

7:52 Look, you know, during the height of the Soviet Union US Cold War,

7:57 we had a hotline between Moscow and Washington.

8:00 Should we create an AI hotline?

8:03 Should we have red lines on AI?

8:05 Should we create safety protocols?

8:07 So, these are the kind of things

8:08 that I think would be stabilizing in the relationship.

8:11 We're looking for that.

8:11 We're obviously also looking for each side to pull back

8:15 on some of the regulatory behavior that creates mischief in the relationship,

8:19 that creates irritants, and creates impediments.

8:22 And we'll hope to see some of that come out of this summit.

8:25 But the deliverables that we see at the summit are not going to be home runs.

8:30 They're going to be singles.

8:31 Singles matter.

8:32 You get enough singles, you score runs.

8:34 But I think we should be cautioned

8:36 against having high expectations at this first summit.

8:40 But it's still important to have.

8:43 It was the Iran war that caused the delay in the summit.

8:47 What we've seen over the past year and almost a half

8:50 between the two countries has been this kind of tit-for-tat diplomacy around

8:55 Economy, senior fellow at the Hoover Institution,

8:58 thinks that that will not be the central issue

9:00 for the leaders as they look for common ground.

9:03 There is a summit scheduled between President Trump and President Xi in Beijing.

9:07 First of all, will it happen?

9:09 I hear it's going to happen.

9:11 I think we're in the midst of a ceasefire.

9:13 I think the president is determined to hold the ceasefire in Iran

9:16 in order to have the summit if for no other reason.

9:19 How much will Iran influence the agenda at the summit?

9:23 I I think the Iranian issue and the the war

9:25 in Iran is is going to be a secondary issue.

9:28 I think for Xi Jinping and for Donald Trump,

9:30 this summit is really about finding a degree of stability in in I

9:35 think that's really the issue on which both sides are aligned.

9:39 And I think that's going to come in the trade and the investment realm.

9:42 So, I think Iran will be there, Russia,

9:44 Ukraine will be there, but they'll be very much secondary issues.

9:48 Do the Chinese trust President Trump because President Trump

9:51 is known for being sort of unpredictable at times?

9:54 Yes, I think that they trust that if he gets what he wants,

9:58 that he will also give to them.

10:00 And so, I think they've spent a lot of time trying to understand

10:03 what his priorities are and what he's prepared to give in return.

10:07 Of course, they were very pleasantly surprised by the president's

10:11 decision to allow the export of H-200s last summer.

10:15 That was a big win for the Chinese.

10:18 So, I think they're looking similarly for some new

10:21 technologies to be lifted out of the export control bucket.

10:25 I think they'd like to see a reduction in the tariffs.

10:28 Basically, they want to be treated as a normal power.

10:31 They don't want to have, you know, sort of the highest tariffs,

10:34 the highest number of export controls,

10:37 and the most investment restrictions placed on them.

10:40 A lot has been said about the competition

10:42 in AI between the United States and China.

10:44 Is there also a possibility for cooperation?

10:47 I see now the White House is now saying maybe

10:49 we should have some rules about releasing new models, LLM models.

10:53 Do you think President Xi is open to some sort of a multilateral agreement?

10:57 I think that would be a very, very complex negotiation.

11:01 What I understand is on the table for the summit at at a very

11:05 least is really a negotiation around both

11:09 sides agreeing to terms for keeping AI models,

11:13 certain AI models, advanced AI out of the hands of rogue actors.

11:17 I think that's the sort of starting point

11:19 for where the two sides might come together.

11:25 Coming up, the brain drain away from New Zealand.

11:28 What's causing it and can anything be done?

11:42 This is a story about a trade deficit,

11:45 not in goods or services, but in intellectual capital.

11:48 The ebbs and flows of migration mean

11:50 that any country's human resources fluctuate over time.

11:54 But what happens when they go only one way and over an extended period of time?

11:59 What can a country do to turn things around?

12:02 That is the question New Zealand is asking itself right now.

12:07 Can I just grab a long black, please?

12:08 In Melbourne, the so-called coffee capital of the world,

12:12 lawyer Shaun Collier has found a new home.

12:15 Thank you so much.

12:16 The New Zealander moved to Australia in 2023.

12:19 I would say pretty much entirely for economic reasons.

12:22 I was working as a lawyer in Auckland for about a year

12:26 and a half and I was essentially living at subsistence level.

12:30 Pretty much unable to save any money.

12:32 I was Once you get paid, it would just be rent,

12:36 groceries, gas, all the money's gone, essentially.

12:41 Everyone's got like a different sort of version of events, but for me at least,

12:45 I basically doubled my income in less than a year,

12:47 so and the cost of living went down.

12:49 So, the grass was very much greener.

12:51 Collier is part of a growing movement.

12:54 About 41,000 New Zealanders moved to Australia in 2025,

12:58 the highest level in 12 years.

13:00 With more than half of those estimated to be between ages [music] 20 and 39.

13:05 And earlier this year, former Prime Minister Jacinda Ardern joined them,

13:09 a move which made international headlines

13:12 and shone a light on New Zealand's economy.

13:15 There's a bit of a view that our economy

13:17 isn't performing quite as well as Australia's economy.

13:20 They're now feeding the narrative that people are

13:21 starting to hear at dinner parties that, you know,

13:24 all of our children are leaving or the health

13:26 care services are better or some other kind of thing.

13:29 Like Ardern, John Key is also a former Prime [music] Minister of New

13:33 Zealand and before that was global head of foreign exchange at Merrill Lynch.

13:38 The New Zealand economy is not as strong as we'd like

13:40 to be and maybe not as strong as historically it has been,

13:43 but it's not a story of universal lower growth.

13:47 Actually, Auckland and Wellington, the main centers have been weaker

13:51 and largely weaker because of negative house prices.

13:54 So, that's had a big impact on construction and all sorts of activity related

13:59 around housing and the sort of negative

14:01 wealth effect of people living in Auckland.

14:04 And when you think Auckland is home to 1

14:05 and 1/2 million people of a population about 5 million,

14:09 it has quite a big impact.

14:11 So, yeah, that that's been a bit negative,

14:13 but the rest of the country have been very strong actually.

14:15 Rural prices have been strong.

14:17 So, we're a big food producer.

14:19 Basically, started life as Britain's little farm and we continue to be that.

14:23 We are very much a strong food producer.

14:25 So, that part of the country's been

14:27 good and there's lots of exciting things happening.

14:29 Well, New Zealanders have always left for Australia.

14:32 Um question is whether they come home.

14:33 Um largely they do, but not always.

14:36 if you look at New Zealand, we're a home of say 5 million people now.

14:41 About 1/2 a million,

14:42 maybe as many as a million New Zealanders live in Australia.

14:45 So, it's quite a few.

14:47 And we're a little bit like Canada is to the United States.

14:50 And the And the United States is a is

14:52 a is a sort of magnet for talent out of Canada.

14:55 Pay packets are higher, opportunities are greater.

14:57 It's a little bit like that from New Zealand to Australia.

15:00 And every New Zealander has a free option.

15:02 So, you're free to go to Australia.

15:04 It depends on the conditions of how you go, but you are free to go.

15:07 So, it's a very open labor market.

15:10 And there's just no question that those jobs

15:12 and opportunities are bigger and the lifestyle is very similar.

15:18 But while New Zealanders have always sought the experience of living overseas,

15:22 be it Australia, the UK, or US.

15:25 Typically, they would return home eventually to start a family and buy a house,

15:30 often with more wealth and increased expertise from their time overseas.

15:34 I've always thought I would raise my kids in NZ.

15:37 You know, I've always like when I moved here the plan was

15:40 to sort of get a bunch of money together and go home.

15:42 And I I've spoken to a lot of Kiwis

15:44 over here and that's very much their intention as well.

15:47 Um but to be honest,

15:49 like all of the out of all the Kiwis I know that have moved here,

15:54 I couldn't I couldn't name more than like,

15:56 you know, three or four that have actually returned.

15:59 Um So, I think I don't know.

16:02 It's a it's a pretty big it's pretty big issue

16:06 like the it's looking less and less realistic for me.

16:11 And it's showing up in the numbers.

16:13 New Zealand's net citizen migration is at its

16:16 lowest since official data began in 2001.

16:20 In other words, people are leaving like they always did,

16:23 but now they're no longer coming back.

16:26 New Zealand has got a very big productivity

16:27 problem in that its economy is just muddling through.

16:31 Jillian Tett is provost at King's College, Cambridge.

16:34 There's a lot of self-inflicted wounds in New Zealand, not least for example,

16:38 the NIMBYs who prevent people from building enough houses to ensure

16:41 that everyone could get access to a house cheaply and easily.

16:44 So, you're creating in New Zealand a real intergenerational inequality problem

16:48 in that people are inheriting assets are doing well, others aren't.

16:52 So, New Zealand has got a lot of problems and that's

16:54 one reason why you've got New Zealanders leaving at the moment.

16:57 But in terms of trying to attract smart people and smart talent,

17:01 that really is the big new game in town.

17:05 New Zealand's problem is not unique.

17:07 Poland experienced a brain drain after joining the EU.

17:11 Ireland did so in the wake of the great financial crisis.

17:14 And Portugal is is latest in Europe.

17:16 In all three examples,

17:18 citizens saw new opportunities for higher pay and better jobs elsewhere.

17:22 But Ted says the loss of intellectual capital isn't always a bad thing.

17:26 Is the flow of intellectual capital necessarily a zero-sum game?

17:30 I saw a recent report that suggested actually both countries

17:33 could benefit because people when they go someplace else will maintain

17:37 relations back with their home country and there can be

17:40 a flow [snorts] of capital of business across the borders and boundaries.

17:44 Can it be something that benefit both countries?

17:46 One of the biggest mistake you will make is

17:48 regard intellectual capital as a zero-sum game and to assume

17:51 they have to hang on to their brilliant minds

17:54 at all costs and stop them from going around the world.

17:57 That was a disastrous mistake because history

18:00 shows very clearly that to get innovation,

18:03 you ideally need to have one or two things happening,

18:05 ideally both at the same time.

18:07 On the one hand, you need to have clusters

18:08 of brilliant minds who can bump into each other,

18:11 ideally from different disciplines to create

18:14 that kind of interdisciplinary collisions and creativity.

18:18 But you also need to have some

18:19 diversity and serendipity that allows people to bump

18:22 into entirely different ideas in a way

18:25 that enables them to be even more creative.

18:27 But in terms of people moving around and spending

18:30 stints of research time in different intellectual hubs and environments,

18:35 it's absolutely crucial if you want to keep ideas

18:39 flowing for the benefit of everyone and spark new ones.

18:42 And it makes my blood boil when I

18:44 see governments trying to shut the doors on people,

18:47 whether it's the European Union and the UK

18:50 which have not yet implemented a youth mobility scheme.

18:53 That makes my heartbreak frankly.

18:55 The fact that it's become harder

18:56 to move scientists back and forth across borders,

18:58 or not just scientists but social scientists and humanities scholars as well.

19:02 But also what America's doing at the moment

19:04 is not helpful in terms of sparking that extraordinary,

19:09 if you like, you know, chemical mix of brilliant minds coming together.

19:15 A healthy flow of intellectual capital may be a good thing for a country,

19:19 but it needs to flow in both directions.

19:22 Poland provides tax incentives and other support for citizens to return.

19:26 Ireland's corporate tax rate attracted foreign

19:28 direct investment to promote job growth.

19:31 And Portugal is looking to stem its brain drain

19:34 by offering tax exemptions for a worker's first decade of employment.

19:38 As politicians and I think even as business leaders,

19:41 we feel unclean about any kind of incentive to do something and so I mean,

19:46 for instance, in my day, I put up pretty big incentives for movies to be made.

19:50 That led to The Hobbit and so many other things happening.

19:53 Avatar and you imagine the skills

19:55 and technology and capacity that came off that.

19:59 But it caused a massive outcry that we

20:01 were essentially giving back some of the indirect

20:04 tax that we got in the form of subsidy cuz we didn't normally do that.

20:08 But Ireland's done that.

20:09 It's been quite prepared to do that.

20:11 I mean, Israel probably has incentives all over the show,

20:13 I'm guessing, in the technology space.

20:15 So, I'm not arguing that we need to go back to a sort

20:19 of stupid world where politicians allocate

20:21 resources and the wrong outcomes come.

20:23 I'm just saying I just wondered whether we we sort

20:26 of we let perfection get in the way of the possible.

20:29 During Key's time in office, HSBC labeled New Zealand a rock star economy.

20:34 Praise that enhanced its global reputation

20:37 and helped the country experience positive

20:38 net migration with Australia Australia for the first time in 24 years.

20:42 We had political stability.

20:44 You know, I was starting to go

20:45 through Australian Prime Ministers pretty rapidly.

20:47 We'd had one, myself.

20:49 Um and and by the end of it, that period of you know,

20:52 eight years in office, HSBC described us as a rock star economy.

20:56 So, people started saying, "Wow, there really are some great opportunities over

21:00 in New Zealand." They started coming over.

21:02 So, it's not an impossible thing to get.

21:05 Certainly what you see is I mean, in in a lot of ways it's a good thing,

21:07 but we have a very much an integrated economy with Australia.

21:11 So, CR closer economic relations is our free trade deal,

21:15 and it's a it's about the most comprehensive free trade deal you can get.

21:19 Um extremely comprehensive.

21:21 So, goods can travel either way.

21:23 There are no conditions.

21:24 Basically, investment can do the same.

21:27 So, one of the reasons why you see less

21:28 Australians coming over is their investment comes into New Zealand,

21:32 but then they stay in Australia and has someone running the operation here,

21:36 but they domicile the the operation in Australia.

21:40 So, look, it's a challenge.

21:42 There's no question about that.

21:43 But, then you've had isolated parts of the country.

21:45 Like, if you look at say Queenstown,

21:47 it's had enormous connectivity with Australia.

21:50 Deemed to be a kind of beautiful, the Aspen of the South.

21:53 It's attracted enormous number of migrants both from the United States,

21:57 United Kingdom, but Australia.

21:59 And you are seeing net positive net migration there.

22:02 So, it's not it's not every place, but it's certainly been hardest felt

22:08 in Auckland where people have left, I think.

22:13 New Zealand's government has also introduced a range of measures,

22:16 including active investor visas for wealthy

22:19 foreigners and tax incentives for investment.

22:21 [music] It's not yet driven the sort

22:22 of economic opportunities to attract Kiwis back home.

22:26 But, for now, Key says New Zealand should lean into [music] what it's known for.

22:30 It can be a little bit negative, but I don't know.

22:34 I look at New Zealand and say, "Okay,

22:35 yeah, I understand that." But, with 5 million people,

22:38 we really are the last last bus stop on the planet,

22:41 but we're kind of a paradise as well.

22:43 In a world where there's global insecurity, we seem like a really safe place.

22:48 We are incredibly beautiful.

22:51 I mean, there's a lot of things going for New Zealand.

22:53 So, I'm kind of of the view to say, "Yeah,

22:55 we need to acknowledge that the economy needs

22:57 to be a bit stronger and create more opportunities,

23:00 but let's not sort of panic that all is not fixable

23:04 at least in New Zealand because I I actually believe it is.

23:07 In terms of actually fixing these problems, I think yeah, like in a nutshell,

23:12 we need to be looking at things that'll

23:13 actually attract young people back to the country.

23:16 I think so many people have left now,

23:17 it's not going to be good enough to just stop them leaving.

23:20 We actually need to to look at things that will bring people back.

23:24 And for my generation,

23:25 like the main problems are house like being able to afford property,

23:29 being able to have kids, job stability, you know,

23:32 AIs ruining job stability for a lot of people.

23:35 So, I think our government should be looking at ways

23:39 to sort of guarantee that if you work hard in New Zealand,

23:42 you'll actually be able to have a good quality of life,

23:45 which is not the current situation over there.

23:51 Up next, President Trump likes them and the Genius

23:54 Act provides a US law to regulate them.

23:56 But, what is the real use case for stable

23:58 coins and how much will they transform the banking system?

24:15 This is a story about cutting through the noise.

24:18 I think Bitcoin is the king of this market.

24:20 It will remain the king of this market.

24:21 I'm laser-like focused on Bitcoin.

24:23 I think Bitcoin is digital capital.

24:25 I think it's going to outperform the S&P index over the indefinite future.

24:30 There was nothing that couldn't be done in crypto better,

24:32 faster, cheaper, more transparently.

24:34 There's been a lot of noise about cryptocurrencies.

24:37 It's sometimes hard to sort out the crypto noise from the signal.

24:41 But, whatever the reality behind all the hype,

24:43 there [music] is one particular version of cryptocurrency that is growing

24:46 in use that seeks to deliver on the promise of combining

24:49 the speed and ease of blockchain with the relative stability

24:52 of currencies and that you may be using without even knowing it.

24:56 According to supporters, 2025 was the year of the stablecoin.

25:02 In 5 years or 10 years,

25:04 the overwhelming majority of the payments that happen in the world

25:07 just by sheer number of payments are happening via stablecoins.

25:11 It can be fundamental to changing not just the financial system,

25:14 but the way the broader economic system works.

25:17 And as of last year,

25:18 the stablecoin subset of crypto now has the regulatory backing of the US.

25:23 This could be perhaps the greatest revolution in financial

25:27 technology since the birth of the internet itself.

25:30 A lot of people are saying that.

25:31 I don't know.

25:32 What do you guys think?

25:32 Yes?

25:34 The answer to President Trump's question may lie in the wallets of people

25:38 around the world who simply want to send money across national borders.

25:42 According to Bloomberg Intelligence,

25:44 the total amount of money sent using stablecoins

25:47 will reach over 56 trillion dollars by 2030.

25:51 But however big it ultimately gets, it's starting small with many people sending

25:55 just a few hundred dollars at a time.

25:58 People like Hannah Nicole Dano.

26:00 [music] I have been living in New York

26:02 for 8 years and I am a restaurant manager.

26:05 I send money home to the Philippines.

26:07 I would say about like between $500 to $1,000 a month.

26:11 I prefer sending money home through apps like WorldRemit or Remitly.

26:18 [music]

26:18 Dano is one of 2 million Filipinos living abroad.

26:21 Together, they sent 35 billion dollars back to the Philippines in 2025,

26:26 equal to over 7% of the country's GDP.

26:29 For Wei Zhou, the CEO of Philippine-based Coins.ph,

26:33 this is stablecoin's biggest opportunity.

26:36 10 years ago, the cost of remittance of every dollar, it was 8%.

26:40 With technology, with better connectivity and banking rails,

26:43 that cost went down to like 2 to 4%.

26:45 By using stablecoins, we can lower that cost to anywhere between,

26:49 you know, 0.5% or 50 bips.

26:51 And we hope to lower that even to like 20 to 30 bips.

26:53 When you're running $40 billion remittance,

26:55 for every 1% that you save, you know,

26:58 that's like $400 that goes back into, you know, the people's pockets right away.

27:03 Coins.ph partners with online money transfer

27:05 platforms to bring stablecoins to users' wallets.

27:08 It partners with, among others, Remitly.

27:11 Its CEO is Sebastian Cunningham.

27:13 Every time that you do a send transaction,

27:16 we have a transaction engine that chooses the best way

27:19 to send that money at low cost and at speed.

27:22 So, we use the stablecoins rails,

27:25 the machine decides, is the stablecoin rails better,

27:29 faster, cheaper than any alternative, and therefore we use it.

27:32 So, we were we're adopting it where it's where it makes sense,

27:37 where it beats price, where it beats speed.

27:40 This process is called a stablecoin sandwich.

27:43 A user in the US deposits dollars with Remitly,

27:46 which converts the funds [music] into stablecoins.

27:49 These stablecoins travel instantly across

27:51 a blockchain to Coins.ph in the Philippines,

27:54 where they are converted into [music] local pesos.

27:56 Although users can hold the stablecoins in a digital wallet,

28:00 for most, the blockchain path is entirely invisible.

28:04 [music] Customers interact only with the dollars at one

28:06 end and the pesos at the other end,

28:08 enjoying the speed of crypto without the complexity of managing it.

28:12 We have crypto, we have stablecoins.

28:14 There's been a fair amount of volatility in cryptocurrencies.

28:17 Does that affect stablecoins?

28:19 For stablecoins, it is moving towards sort of, you know,

28:23 just another word for money.

28:24 Stablecoins are a type of crypto, right?

28:28 But, it's sort of like it has grown out

28:30 of crypto and can be its own segment now.

28:33 What do you regard as your largest opportunity for growth?

28:36 Basically, lowering the transaction cost and then decreasing the transaction

28:40 time for to move money in and out of the Philippines.

28:44 I think right now, what we see is that there's like almost

28:46 15 to 20 million Filipinos that work overseas either as domestic helpers,

28:51 work on cruise liners,

28:52 as factory workers in the Middle East and Korea and Japan.

28:55 The financial services they need are actually back home in the Philippines,

28:58 whereas they get paid in the local dollar.

29:01 We really believe that by sort of um

29:03 using stablecoins as sort of the the conduit,

29:06 we can actually be able to deliver financial services that they

29:09 need at home here in the Philippines uh while working overseas.

29:14 Last [music] year, some estimates put the volume

29:16 of stablecoin transactions at around $35 trillion,

29:19 but a new report from McKinsey's [music] Matt

29:21 Higginson suggests the reality is much more modest.

29:25 How large is the stablecoin [music] market right now,

29:28 and how fast is it growing?

29:30 So, you'll hear in the media

29:32 the trillions of dollars of stablecoin payments today.

29:35 99% of that is crypto-related, not the sort of payments we think about,

29:41 which is company to company or even paying remittances person to person.

29:45 And so, we look at this situation today and say,

29:48 how much real payments volume is there out there?

29:51 And we think it's probably the order of a billion or two a day, which is tiny.

29:55 The latest assessments we have are $390 billion in the total year.

30:02 And that compares with several trillion dollars of regular payments per day.

30:06 So, a small amount right now.

30:08 How does it compare with last year,

30:10 and how does it compare with forecasts for next year?

30:13 The data shows that the volume of real payment

30:16 transactions using stablecoins probably doubled over the last year.

30:21 When you look at the volume of stablecoins in circulation,

30:23 that went from around $150 billion to $300 billion today.

30:28 It's doubling, which by any measure is substantial in terms of growth.

30:33 How much of that is cross-border, international essentially,

30:36 and how much of it is domestic?

30:38 The vast majority is cross-border.

30:40 It's interesting, we've been looking at the geographic source

30:43 of those payments with our research partner Artemis Analytics.

30:47 What they found is about 60% originates from Asia.

30:51 And that surprised a little bit because a lot of the talk

30:53 has been in North America or Europe about the potential of stablecoins.

30:58 Asia was one of the first regions to recognize the utility

31:02 of stablecoins and became a frontrunner in regulating the space.

31:05 For over a decade, Sopnendu [music] Mohanty was

31:08 the chief fintech officer at the Monetary Authority of Singapore,

31:11 where he built the country's digital asset strategy.

31:14 The single biggest unsolved challenge in the world

31:17 of payment is the cross-border payments.

31:20 Where today we have to depend on traditional correspondent bank,

31:24 in that particular use case, a stablecoin is a great product.

31:29 Singapore generally is recognized as a leader

31:34 in the use of and and regulation of stablecoin.

31:37 Why?

31:37 Why Singapore?

31:38 As a country, we uh we look at options,

31:42 innovation, and we actually relentlessly focus on use case.

31:46 We don't do technology for sake of technology.

31:49 In Singapore's case, our focus on stablecoin has always been

31:54 well-regulated stablecoin issued under a strong regulatory framework.

32:00 [music]

32:00 Japan and Singapore were among the first to establish a framework requiring

32:03 companies to maintain liquid reserves representing

32:05 100% of the stablecoins they issued.

32:09 Mohanty says robust regulation must lead the way for stablecoin to scale.

32:13 [music] The principle of regulation should

32:15 not change because payment is a payment.

32:18 Know your customer, money laundering,

32:20 terrorism financing checks are, I would say, hygiene.

32:24 They are like non-negotiable.

32:25 I personally believe an existing payment regulation

32:30 with some incremental coverage for a stablecoin's unique

32:34 technical requirement is good enough to be consistent

32:37 a good enough regulation to manage this risk.

32:41 And payment companies agree.

32:43 Regulatory clarity allows companies to bring the product to more customers.

32:47 Scale matters, which means once you have the infrastructure,

32:52 we can move a hundred billion dollars a year in that infrastructure,

32:55 but we could also move a trillion dollars a year without much more.

32:59 Building trust is expensive, doing compliance is expensive,

33:03 getting the license is expensive.

33:05 Once you put all that in place, it's a highly scalable business.

33:09 Today, stablecoins are still small players against a colossal banking system,

33:14 but they are gaining momentum with growth expected to speed up

33:18 as the genius [music] act in the United States comes into effect.

33:21 The genius act will come into force by the end

33:23 of the year and other regulations I expect will follow.

33:26 So, we haven't really gone live yet at scale.

33:31 So, I think we have a little time before that train leaves the station.

33:34 The sobering part of that is when it does leave the station,

33:38 we're going to have adoption at scale.

33:39 We've got groups of banks, potentially dozens of banks,

33:42 suddenly all participating together and I think

33:45 there will be a bit of a scramble to position myself as a bank between

33:50 stablecoin and customer to provide the best interface.

33:55 What does [music] your success potentially mean for traditional banks?

33:59 There's one bank here in the Philippines that was like top 10,

34:02 maybe like six or seventh,

34:03 but because they were the only one or the first one to bank,

34:07 you know, exchanges like ourselves, they're now now a top three bank.

34:12 Fast is nice, but when it comes to our money,

34:15 there's also something to be said for slow.

34:17 So, stablecoins are something I would be willing to try.

34:20 It's just going to be a matter of convenience

34:22 and then I'm just not too educated about it.

34:24 I would also consider if it's also going to be

34:26 convenient with my family because they're not really tech-savvy,

34:30 so I want to make sure that it's going to be easy for them as well.

34:33 Trusting an app is really important for me because it's my hard-earned money.

34:37 The use of stable coin for cross-border transfers is

34:40 more for small and medium-sized businesses rather than big businesses.

34:44 Why don't the big businesses use it for that purpose?

34:47 Well, I I used to joke that if if

34:50 one thing you don't want to be instant and quick,

34:52 it is large transfers because no nobody

34:55 is looking to instantly transfer $5 million.

34:59 You want to be as slow as possible,

35:01 as as friction in between so that you don't make mistakes.

35:05 But you don't want to apply those principles on a small $200 transfer

35:09 across the border because you're taking

35:11 a speed versus the amount calibrated risk here.

35:17 I've been a crypto for about 8 years.

35:20 [music] And then, you know, when I first came in, I was like,

35:22 "Ah, like let's go unbanked, you know, like you know,

35:25 let's take it to Wall Street." But now now

35:27 I've been in the industry for such a long time,

35:28 I've come to appreciate the role that banks serve.

35:31 Right?

35:31 Like sometimes you just feel safer with your money in [laughter] a bank, right?

35:35 In a vault.

35:36 And they've been attacked left, right, front,

35:38 and center by all kinds of, you know, bad actors.

35:40 But I think for them to grow,

35:43 you know, I think those that embrace this technology, embrace stable coins,

35:46 I think it's going to grow leaps and bounds faster than those that that do not.

35:50 Work with us and grow together, or you can,

35:53 you know, continue just to be a bank.

35:56 [music] Technology might be driving us all toward a future that's faster,

35:59 cheaper, and more convenient.

36:01 But it's not necessarily for everyone or for every transaction.

36:05 And for stable coins to reach their full potential,

36:08 they may need more regulation with the aim of fitting

36:11 in to the legacy banking system rather than replacing it.

36:18 Coming up, from Spindrift to Liquid Death,

36:21 grocery shelves are packed with every kind of carbonated water.

36:25 Why so many, and how many will survive?

36:37 [music] This is a story about saturation.

36:42 Walk down the aisle of your favorite food store and you're

36:45 likely to find more varieties of bubbly waters than you can count.

36:48 Everything from LaCroix to Spindrift,

36:51 not to mention Liquid Death and Waterloo and a host of others.

36:55 Why do we need so many variations of what is essentially water?

36:59 And why is there room in the marketplace for so many competitors?

37:05 The whole beverage category is atomized.

37:09 At the end of the day, there's almost so much real estate

37:11 in that grocery store that you go shopping down.

37:13 Dave Burwick is now CEO

37:15 of higher-end fruit-infused sparkling water maker Spindrift.

37:18 [music] After serving as CEO of Peet's Coffee

37:23 and Boston Beer and spending 20 years at Pepsi.

37:26 All those brands have to prove themselves to the to those retailers

37:30 who own those shelves that they're worthy of being on that shelf.

37:33 So again, it's what makes the category really challenging.

37:36 For me, it's what I love about the category because, you know,

37:40 nothing nothing worth doing in life is really

37:41 easy and this this is this is not easy.

37:45 If it's hard to succeed in the carbonated water business,

37:49 why are so many companies going into it?

37:53 Part of the [music] answer is that it is easy to get a foot in the door.

37:57 Adam Waglay is co-founder and CEO of Butterfly,

38:01 a venture investment firm focused on all areas of the food industry.

38:05 It's become a lot easier,

38:06 a lot lower barriers to entry to creating these brands than ever

38:09 before because the infrastructure around creating

38:12 these brands has enabled that, you know,

38:15 in the last 10 years that we've kind of gotten into this space.

38:18 This used to work in the past is you'd have to kind of do

38:21 everything yourself from scratch from kind

38:24 of developing the brand to developing the formulation,

38:27 maybe even getting into manufacturing,

38:29 finding out how to get your product placed, etc.

38:33 Today, there are many different

38:35 outsourced businesses that support this ecosystem.

38:38 So, you can in fact go to a co-manufacturer who can actually make the product.

38:43 Uh, they can formulate it for you.

38:45 They'll usually work with a packaging company

38:47 that can help you put the packaging together.

38:50 And then you can go to outsourced marketing organizations that can

38:52 tell you how to launch a brand online or you know,

38:56 from a social media standpoint,

38:58 and kind of get going in in those kind of formats, um, if you will.

39:01 So, there's this sort of infrastructure of companies that we

39:04 call enablers here at Butterfly that actually support uh,

39:09 the different infrastructure that a founder or CEO

39:11 needs to go create a business from scratch.

39:14 The bubbly water business is part of a global beverage market

39:17 that sold over a trillion dollars worth of soft drinks last [music] year.

39:21 More than a third of that was sodas,

39:23 the ubiquitous Cokes, Pepsis, [music] and their brethren.

39:26 But, those soda sales have come down 27% over the last two decades,

39:31 giving up market share to various forms of water,

39:33 which now account for over a quarter of all beverage sales.

39:36 Carbonated water is only a modest share of that, but it

39:39 is growing noticeably faster than its peers [music] in the US.

39:44 Among the driving factors, a desire for healthier alternatives to soda.

39:49 That's what led Nicole Bernard Dawes to launch her product, Nixie.

39:53 While the snack aisle and the produce aisle,

39:55 even the the dairy aisle were getting more and more healthier organic products,

39:59 the beverage aisle was still filled with sugar

40:03 and plastic and almost no certified organic products.

40:07 I really saw an opportunity,

40:09 and I also really felt it was important to have zero sugar, because I, you know,

40:13 I think liquid sugar is just not a healthy thing for anybody.

40:17 We knew we wanted it to be a healthy beverage brand.

40:19 Like that's our mission.

40:20 That's who we are.

40:21 We started with sparkling water, which, you know,

40:23 we felt was one of the cleanest.

40:25 [music] We felt it really defined kind of what we were trying to achieve.

40:29 And then, after we got that out into the market,

40:31 we started working on a zero sugar soda.

40:34 Zero sugar is still one of the largest drivers of even conventional beverage.

40:38 For the conventional soda brand,

40:39 zero sugar is [music] their biggest part of the growth for their business.

40:43 Um and I think that also was exciting to me because,

40:47 you know, with you when you have a category that large,

40:50 you know, there's a segment of the population not being served

40:52 by the products that are the number one or number two products.

40:55 You're hearing the term modern soda a lot.

40:58 And if you went into a grocery store, you know, a few years ago,

41:01 you might have two or three feet for this this new type of soda.

41:06 And now you're going in and you're seeing, you know,

41:09 chains like Walmart expanding from two feet to eight or 12 feet.

41:13 That growth of the bubbly water segment makes more attractive

41:16 a business that's easy to get into in the first place.

41:19 A form of making it up on volume.

41:22 It's a great business, which is why I do it.

41:25 [laughter]

41:24 Like I mean, I I love big categories because, you know, think about it.

41:28 If you're talking about a $10 billion category,

41:30 you don't have to be a significant part of that to be a significant business.

41:33 What is the opportunity you see for Spindrift?

41:36 When we came in about a year and a half ago,

41:38 it was about a $300 million business.

41:40 We'll be close to a half a billion dollar business

41:42 at the end of this year, so after 2 years.

41:44 And I think there's a clear path to a billion dollars and beyond for this brand.

41:48 The sparkling beverage business is is still growing

41:51 25 to 30% as more people come in.

41:54 And when they do come in, they get to try our brand,

41:56 which we think is better than others, and we we like that.

41:59 But we're also looking at other uh adjacent categories where

42:03 we can take sort of that core equity what Spindrift is,

42:06 which is real squeezed fruit.

42:08 How do we take that real squeezed fruit and bring it to other categories?

42:11 So, most recently, we launched a non-carbonated

42:14 tea product that we we're really excited about.

42:16 So, between the core business of sparkling water,

42:20 adjacencies like tea, we've also launched a soda,

42:23 a healthier, better-for-you soda product that can get us to a billion dollars.

42:28 It's a growing business segment,

42:29 but that doesn't mean it's easy to carve out a niche for any particular product,

42:33 much less succeed over the long term.

42:36 The concern though is there are many out there and to try to figure out

42:40 for us as investors companies are going to last

42:42 and make it and really created something special.

42:45 We got to really be picky about what we

42:47 get behind because many can kind of get in business.

42:49 Now, it's also scale and get to a substantial level,

42:54 you know, will require a lot more than that.

42:57 What about price?

42:58 Where do you want your product to exist in the spectrum on price?

43:02 We definitely want to exist in the high end and as we know,

43:05 it's been much talked about a we're in a K K-shaped economy right now.

43:08 We serve that upper K.

43:10 We want to bring everybody in, but you want to be in the premium segment.

43:14 I think you want to focus on gross margin improvement

43:18 so you can cuz that's really the oxygen of our business.

43:20 So, when we sell at a premium price point,

43:22 we can we can improve our gross margin then reinvest to grow to grow the brand.

43:26 Also, interestingly, like within the health and wellness space where we play,

43:30 we're seeing more and more low and middle-income households actually trading

43:34 up to premium brands when it comes to health and wellness.

43:37 And there are very specific ways of measuring, even day to day,

43:40 how successful a company is,

43:42 including how it's doing in the water competition wars.

43:46 Velocity is how many units of your product you sell in each store each week.

43:50 And I think velocity is the truest measure of success.

43:54 You know, you can't fake velocity.

43:55 You can't cheat velocity.

43:56 It's if a customer's coming in and buying your product

43:59 and then they're coming back again next week and buying it again.

44:02 You know, you can tell the health and success of a brand.

44:05 And you know, it's like it's how we gauge new products,

44:08 it's how we gauge new chains, and I think it's very important for for brands

44:13 to to watch their velocity closely and make sure that, you know,

44:17 your velocity is where you want it to be.

44:20 And if it's not, that you're learning why and fixing it as quickly as possible.

44:24 Looking at sales, obviously are we selling in, you know,

44:27 to our to our retail customers,

44:29 so to Walmart and to Costco and to Target and all those folks.

44:32 We get a look at that every day with what

44:33 those what the health of orders are building up.

44:36 We also want to look at syndicated data.

44:39 Right now, we only have about 8% of households

44:40 that buy us during the course of a year.

44:43 And that's pretty low, but that's that's a good thing because that means there's

44:46 a lot more places we can go with this with this brand.

44:49 So, we'll we'll look at that.

44:50 We also look at things like trial,

44:53 how many people are trying our product and what's the repeat purchase?

44:55 That's another really important one.

44:57 Everybody will try anything at any given time.

45:00 But the real measure is how many people come back

45:02 to your product for the second time and the third time.

45:05 So, we also we also look at that.

45:07 It's a growing segment with an awful lot of competitors,

45:10 but can it be a good investment?

45:12 Wagley finds that the very factor that lowers

45:15 the barriers to entry may be the key to investing.

45:18 One third of what we do at Butterfly is investing in consumer brands.

45:22 And we think we're good at picking them

45:25 and finding winners and and making it work.

45:27 But two thirds of what we do is investing in those enablers.

45:30 It allows us to not have to take the brand risk, right?

45:33 We can just say, "Okay, we're going to bet behind hydration

45:36 and the flavors that go into hydration." And so,

45:38 let's go find a flavor company that powers all these different hydration brands.

45:42 And we don't have to sit here

45:43 and determine which hydration brand's going to win.

45:46 So, if we can go against

45:48 the packaging companies that supply these hydration businesses,

45:51 I think it's a great idea.

45:52 Flavoring again is a big flavor is essence,

45:56 ingredients in general are another area where we play and find

45:59 amazing companies that are supplying those different sort of vendors.

46:03 And then finally a huge ecosystem that we

46:05 spend a lot of time on is co-manufacturing.

46:08 So a lot of manufacturing has been outsourced to these companies that are

46:12 very professional at doing it and can do it for big brands, small brands.

46:16 Finally, I'd say there's also the distribution and logistics

46:20 of moving these beverages around which are really interesting players,

46:24 both national distributors but also regional

46:26 distributors that might specialize in certain channels.

46:29 Those so-called enablers may be good investments,

46:33 but those at the center of the business

46:34 believe there's no real substitute for doing it yourself.

46:38 I've always talked about how you want to start sort of with this product truth.

46:42 What's the truth about your product that's really special?

46:44 For us it's real squeezed fruit.

46:46 It's been around since 2010 and it's really

46:49 ridden the wave of consumers gravitating toward healthier,

46:52 better for you beverages that happen to be refreshing

46:55 and have a nice has a nice flavor profile.

46:58 In most businesses, saturation is a bad thing.

47:01 Success usually comes from scarcity.

47:04 And when it comes to carbonated water,

47:05 the fact is that many of the brands will likely fail.

47:10 But those devoted to the business believe deeply that in the end,

47:13 despite [music] the odds,

47:14 there's room even for all those versions on your grocery shelf,

47:18 provided they have the right [music] taste.

47:21 The reality is that most things fail, you know,

47:23 80% of new products will fail just because just being just showing

47:28 up at the at the party doesn't make you interesting or relevant necessarily.

47:32 Taste always comes first because if a product isn't taste delicious,

47:36 it doesn't matter how meaningful your mission is or how

47:39 important [music] all of the the backstory of your brand.

47:42 If people don't love the way they taste,

47:43 they're not going to come back again and again to buy it.

47:47 That does it for us here at Wall Street Week.

47:49 I'm David Weston.

47:50 See you next week for more stories of capitalism.

47:57 [music] Woo!