1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P and L 6 00:00:20,840 --> 00:00:31,000 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Food 7 00:00:31,040 --> 00:00:34,199 Speaker 1: delivery business, it seems like there's so many competitors out 8 00:00:34,240 --> 00:00:37,680 Speaker 1: their door Dash, Uber Eats. We have h Adam Price, 9 00:00:37,720 --> 00:00:40,840 Speaker 1: CEO of Waiter Holdings. Adam, thanks so much for joining 10 00:00:40,880 --> 00:00:42,839 Speaker 1: us so in this food delivery business. First of all, 11 00:00:42,840 --> 00:00:44,560 Speaker 1: tell us about Waiter Holding solus about the history of 12 00:00:44,600 --> 00:00:48,159 Speaker 1: the company and kind of your strategy. Yeah, absolutely so. 13 00:00:48,159 --> 00:00:52,160 Speaker 1: So Waiter was founded in Louisiana and we focus on small, 14 00:00:52,200 --> 00:00:54,960 Speaker 1: medium sized markets around the US. So whereas in the 15 00:00:54,960 --> 00:00:57,040 Speaker 1: big cities you have the big companies like door Dash, 16 00:00:57,080 --> 00:00:59,920 Speaker 1: grub Hub, Uber Eats, and the small cities around the 17 00:01:00,080 --> 00:01:03,040 Speaker 1: US you have Waiter and we operate another brand called 18 00:01:03,040 --> 00:01:06,720 Speaker 1: Bite Squad. There's a feeling that there's been too much 19 00:01:06,760 --> 00:01:09,560 Speaker 1: hopium around the food delivery services. And I'm sure you've 20 00:01:09,560 --> 00:01:11,520 Speaker 1: read all of these articles and I'm sure you shake 21 00:01:11,560 --> 00:01:14,640 Speaker 1: your head and you say, they just don't get it. Uh. 22 00:01:14,680 --> 00:01:16,800 Speaker 1: What do you think right now of some of the 23 00:01:16,840 --> 00:01:19,880 Speaker 1: backlash that we've been getting from all of the investment 24 00:01:20,000 --> 00:01:23,160 Speaker 1: in food delivery services. Yeah, it's it's a great question 25 00:01:23,200 --> 00:01:26,520 Speaker 1: that the real crux of the of the arguments right 26 00:01:26,520 --> 00:01:29,399 Speaker 1: now is what is the sustainability of the space? You know, 27 00:01:29,400 --> 00:01:33,360 Speaker 1: if consumers are expecting free delivery and you have to 28 00:01:33,400 --> 00:01:36,360 Speaker 1: take a portion of the sale value from the restaurant, 29 00:01:36,680 --> 00:01:38,720 Speaker 1: you know, where does this space live in its entire 30 00:01:38,760 --> 00:01:41,520 Speaker 1: There's been so much money that's flown into it, and 31 00:01:41,600 --> 00:01:45,480 Speaker 1: are these businesses sustainable and can they be profitable? And 32 00:01:45,480 --> 00:01:48,440 Speaker 1: and we really feel that Waiter, the focus needs to 33 00:01:48,440 --> 00:01:52,320 Speaker 1: be around consistency and really aiming for a consistent customer 34 00:01:52,360 --> 00:01:55,160 Speaker 1: experience so the customers stay sticky to the platform and 35 00:01:55,200 --> 00:01:57,920 Speaker 1: stop jumping around from platform and the platform, and then 36 00:01:57,960 --> 00:02:01,560 Speaker 1: focusing on the operational efficiens. Uh, in order for the 37 00:02:01,560 --> 00:02:05,200 Speaker 1: sustainability and the long term profitability that there's consistency. That's important. 38 00:02:05,360 --> 00:02:07,880 Speaker 1: So is making money and that's proven to be difficult 39 00:02:07,960 --> 00:02:11,200 Speaker 1: given the fact that there is competition including getting in 40 00:02:11,240 --> 00:02:13,240 Speaker 1: your car or using your legs and going and getting 41 00:02:13,240 --> 00:02:15,160 Speaker 1: the food yourself, right, I mean, how do you how 42 00:02:15,160 --> 00:02:18,960 Speaker 1: have you found profitability? Well, there's a clear shift in 43 00:02:19,000 --> 00:02:22,360 Speaker 1: the consumers willing to pay for convenience, So so the 44 00:02:22,360 --> 00:02:24,639 Speaker 1: the competition of a consumer going to pick it up 45 00:02:25,040 --> 00:02:27,920 Speaker 1: that that is a clear deviation. And what you're seeing 46 00:02:27,919 --> 00:02:30,280 Speaker 1: in terms of consumer behavior, people are willing to value 47 00:02:30,320 --> 00:02:32,520 Speaker 1: their time, they're willing to pay for convenience. So food 48 00:02:32,520 --> 00:02:35,240 Speaker 1: delivery isn't going anywhere. The question is what makes it 49 00:02:35,280 --> 00:02:39,200 Speaker 1: sustainable and profitable and and in our system, what really 50 00:02:39,280 --> 00:02:42,560 Speaker 1: drives that profitability is is the attachment of the customer base. 51 00:02:42,639 --> 00:02:45,760 Speaker 1: You can't continuously be paying to acquire new customers, and 52 00:02:45,800 --> 00:02:48,680 Speaker 1: that's really done through consistency and then the streamlining of 53 00:02:48,720 --> 00:02:51,359 Speaker 1: the operations. And that's what gets you to that profitability. 54 00:02:51,639 --> 00:02:53,640 Speaker 1: And one of the items we use, which is dramatically 55 00:02:53,680 --> 00:02:56,560 Speaker 1: different than our competitors, is we use W two drivers 56 00:02:56,560 --> 00:02:59,280 Speaker 1: as opposed to contractors, which allows us to pull some 57 00:02:59,320 --> 00:03:01,400 Speaker 1: of those operation levers that I can get into details 58 00:03:01,400 --> 00:03:03,520 Speaker 1: if you like. All right, so let's talk about profitability. 59 00:03:03,520 --> 00:03:05,320 Speaker 1: I'm looking at the Bloomberg terminal right now, the f 60 00:03:05,440 --> 00:03:09,160 Speaker 1: A function and uh Waiter Holdings is not profitable. We 61 00:03:09,200 --> 00:03:11,480 Speaker 1: even had so, and you guys been in the business 62 00:03:11,520 --> 00:03:13,040 Speaker 1: for a few years. I'm looking at at the forecast 63 00:03:13,080 --> 00:03:16,679 Speaker 1: for still not forecasting to be profitable UH. I look 64 00:03:16,680 --> 00:03:19,640 Speaker 1: at Uber which has got scale out the wise Zoo. 65 00:03:20,200 --> 00:03:22,359 Speaker 1: They even say that their Uber Eats business is the 66 00:03:22,440 --> 00:03:26,840 Speaker 1: weaker and the least profitable of relative to their ride business. 67 00:03:27,600 --> 00:03:30,840 Speaker 1: What is the model to profitability? What levers have to 68 00:03:30,840 --> 00:03:33,680 Speaker 1: be pulled? Well, there there's a couple of things. All 69 00:03:33,800 --> 00:03:38,040 Speaker 1: of these groups just exploded in growth because of geographic expansion, 70 00:03:38,680 --> 00:03:41,040 Speaker 1: and you have to be in. Step one in being 71 00:03:41,080 --> 00:03:44,080 Speaker 1: profitable is realizing you know what markets do you have 72 00:03:44,440 --> 00:03:47,640 Speaker 1: that put you on a path to scale and profitability, 73 00:03:47,680 --> 00:03:51,640 Speaker 1: that allow you to operationalize and bring in that sustainability 74 00:03:51,680 --> 00:03:53,840 Speaker 1: with that scale. So one of the things we've actually 75 00:03:53,840 --> 00:03:57,120 Speaker 1: done recently UH is pulled back on our market share 76 00:03:57,240 --> 00:03:59,840 Speaker 1: or on our markets. We close thirty eight markets UH 77 00:04:00,120 --> 00:04:02,560 Speaker 1: will be finishing in the next fifteen days or so 78 00:04:02,600 --> 00:04:04,760 Speaker 1: that we announced in our last quarterly call. You have 79 00:04:04,800 --> 00:04:07,000 Speaker 1: to be very careful not to be over extended in 80 00:04:07,000 --> 00:04:10,560 Speaker 1: this space. What's interesting to me also is how the 81 00:04:10,640 --> 00:04:13,880 Speaker 1: consumer access is waiter right, I mean, do they go 82 00:04:13,920 --> 00:04:17,200 Speaker 1: to waiters website or do they go to the restaurant 83 00:04:17,240 --> 00:04:19,080 Speaker 1: that they want to order from and then there's a 84 00:04:19,120 --> 00:04:22,960 Speaker 1: tab from waiter, So which is it? It's both, you know, 85 00:04:23,040 --> 00:04:25,279 Speaker 1: you're trying to acquire customers and multiple fronts. We have 86 00:04:25,320 --> 00:04:27,920 Speaker 1: an app, a mobile application, just like you know most 87 00:04:27,960 --> 00:04:30,120 Speaker 1: of the players in this space. We also put order 88 00:04:30,160 --> 00:04:32,680 Speaker 1: now buttons on the restaurant's website which drive people to 89 00:04:32,720 --> 00:04:35,839 Speaker 1: download the mobile app. Um. So there's multiple channels, but 90 00:04:35,839 --> 00:04:37,680 Speaker 1: the primary channel that we receive all our orders as 91 00:04:37,720 --> 00:04:41,599 Speaker 1: the mobile application. So it's interesting. So uber eats some 92 00:04:41,640 --> 00:04:44,200 Speaker 1: of these bigger market ones grubub, are you finding that 93 00:04:44,240 --> 00:04:47,559 Speaker 1: they are now coming down into your midden small size 94 00:04:47,600 --> 00:04:49,320 Speaker 1: markets and if so, how do you compete against those 95 00:04:49,320 --> 00:04:51,960 Speaker 1: big companies? Yeah? Absolutely, So what you've seen is that, 96 00:04:52,279 --> 00:04:56,480 Speaker 1: you know, in an effort to continue the rapid revenue growth, 97 00:04:56,920 --> 00:04:59,760 Speaker 1: geographic expansion has been in the primary tactic. So you 98 00:04:59,800 --> 00:05:03,320 Speaker 1: have almost in all of our markets you have two 99 00:05:03,360 --> 00:05:05,919 Speaker 1: to three primary players. Now in food deliver you have 100 00:05:06,000 --> 00:05:10,080 Speaker 1: grub uber waiter or grub door dash waiter, so you 101 00:05:10,120 --> 00:05:13,279 Speaker 1: see multiple players in every market. The key to owning 102 00:05:13,320 --> 00:05:17,560 Speaker 1: that market again is around consistency of customer experience. Anybody 103 00:05:17,680 --> 00:05:20,239 Speaker 1: can go into a market and start offering customers free food, 104 00:05:20,400 --> 00:05:22,240 Speaker 1: and they're gonna get customers. If you don't have to 105 00:05:22,279 --> 00:05:24,920 Speaker 1: pay for delivery, you're gonna start using or trying the platform. 106 00:05:25,240 --> 00:05:28,320 Speaker 1: What's critical is the way to retain those customers is 107 00:05:28,320 --> 00:05:31,240 Speaker 1: by consistently having a good experience on the delivery side. 108 00:05:31,440 --> 00:05:33,960 Speaker 1: How much are people willing to pay for delivery? It 109 00:05:34,120 --> 00:05:36,360 Speaker 1: ranges based on markets. One of the nice things about 110 00:05:36,360 --> 00:05:38,920 Speaker 1: smaller medium sized markets is you do get a larger 111 00:05:38,960 --> 00:05:44,200 Speaker 1: appetite for paying for delivery fees, all right, because people 112 00:05:44,240 --> 00:05:46,680 Speaker 1: are that much more willing to But it's still you know, 113 00:05:46,880 --> 00:05:49,240 Speaker 1: I we recently changed in the in most of the 114 00:05:49,240 --> 00:05:51,080 Speaker 1: way to brand in markets are delivery feed from five 115 00:05:51,080 --> 00:05:54,080 Speaker 1: dollar support dollars because it resonates better with the customer. 116 00:05:54,279 --> 00:05:57,359 Speaker 1: So you see downward pressure in that consumer delivery fee 117 00:05:57,839 --> 00:05:59,400 Speaker 1: that you have to adapt to on a market by 118 00:05:59,400 --> 00:06:01,479 Speaker 1: market basis, Are you still I know you said you're 119 00:06:01,560 --> 00:06:04,760 Speaker 1: downsizing closing some markets. Are you still adding some markets selectively? 120 00:06:04,839 --> 00:06:07,040 Speaker 1: Round Now it's very selectively. One of the things when 121 00:06:07,040 --> 00:06:10,360 Speaker 1: a space becomes highly competitive like this is you really 122 00:06:10,400 --> 00:06:13,720 Speaker 1: have to leverage your brand in geographic proximity. When you 123 00:06:13,800 --> 00:06:16,760 Speaker 1: expand markets so so as you grow, you need to 124 00:06:16,760 --> 00:06:20,640 Speaker 1: be very careful not to jump geographies and be overexposed 125 00:06:20,680 --> 00:06:24,120 Speaker 1: to competitive pressure in that area and grow very organically, 126 00:06:24,360 --> 00:06:26,640 Speaker 1: almost from a geographic stampliat. How often do you order in? 127 00:06:27,440 --> 00:06:29,440 Speaker 1: I order in several times a week? Yeah, what about you, 128 00:06:29,520 --> 00:06:34,560 Speaker 1: Paul rarely? Yeah? Do you go pick it up? Are you? Yeah? 129 00:06:34,720 --> 00:06:36,680 Speaker 1: Why are you driving? I know it's a good question, 130 00:06:36,720 --> 00:06:38,960 Speaker 1: it's good no, But I also love the idea that 131 00:06:39,040 --> 00:06:42,239 Speaker 1: it's um people like to value their time could also 132 00:06:42,320 --> 00:06:45,520 Speaker 1: be translated into people are lazy and they don't want 133 00:06:45,560 --> 00:06:47,719 Speaker 1: to get off the couch. But actually it is true, 134 00:06:47,800 --> 00:06:49,920 Speaker 1: especially if you have a family or something like. Yeah, 135 00:06:49,960 --> 00:06:52,760 Speaker 1: And that's what's beautiful about the small medium sized markets 136 00:06:52,839 --> 00:06:56,200 Speaker 1: is it's a much higher concentration of families. So so 137 00:06:56,279 --> 00:06:58,719 Speaker 1: you end up at time is our only finite resource. 138 00:06:59,120 --> 00:07:02,400 Speaker 1: So if anything, that should be the most valuable item 139 00:07:02,440 --> 00:07:04,159 Speaker 1: that we have in our in our day to day lives. 140 00:07:04,240 --> 00:07:06,720 Speaker 1: Thank you so much for being with us. Adam Price 141 00:07:06,839 --> 00:07:10,280 Speaker 1: is a chief executive officer of Waiter Holdings, which is 142 00:07:10,280 --> 00:07:13,200 Speaker 1: based in Louisiana. Joining us here in our Bloomberg Interactive 143 00:07:13,200 --> 00:07:25,560 Speaker 1: Broker studios. Copium is the word of the week at 144 00:07:25,640 --> 00:07:27,800 Speaker 1: least hopium that there will be some sort of deal, 145 00:07:27,880 --> 00:07:30,920 Speaker 1: despite the fact that we have no concrete evidence. We've 146 00:07:30,960 --> 00:07:34,240 Speaker 1: seen this before, we've seen we have really we're really 147 00:07:34,240 --> 00:07:37,960 Speaker 1: getting close, but we have nothing again and again and again. 148 00:07:38,080 --> 00:07:40,320 Speaker 1: Joining us now to talk about with the hopium is 149 00:07:40,360 --> 00:07:43,240 Speaker 1: real in or in terms of market reaction and how 150 00:07:43,240 --> 00:07:47,360 Speaker 1: it should persist. Heading into David Kotok, Cumberland Advisor's Chief 151 00:07:47,400 --> 00:07:52,080 Speaker 1: investment officer, David, I know that you've been bullish on equities. 152 00:07:52,240 --> 00:07:54,720 Speaker 1: Do you continue to be even after the recent leg 153 00:07:54,760 --> 00:07:57,680 Speaker 1: higher in the recent new all time highs that we've seen. 154 00:07:58,880 --> 00:08:03,520 Speaker 1: At the moment, I am getting very nervous. We entered 155 00:08:03,840 --> 00:08:08,040 Speaker 1: the market, went to fully invested structure lisa UM the 156 00:08:08,200 --> 00:08:13,200 Speaker 1: last week in August, and we have been there since then. 157 00:08:14,240 --> 00:08:18,880 Speaker 1: And at this level with of markets and with the 158 00:08:18,960 --> 00:08:23,800 Speaker 1: current news flow, I'm very, very concerned. The market is 159 00:08:23,840 --> 00:08:29,000 Speaker 1: discounting all the positive outcomes and it's being fueled by 160 00:08:29,040 --> 00:08:33,360 Speaker 1: a very expansive federal reserve policy, which is creating huge 161 00:08:33,520 --> 00:08:38,120 Speaker 1: liquidity that doesn't last forever. So the answer is am 162 00:08:38,120 --> 00:08:42,640 Speaker 1: I concerned and worried? Absolutely? Yes? And would I be 163 00:08:42,800 --> 00:08:46,760 Speaker 1: making changes? They could come at any time. So the changes, David, 164 00:08:46,760 --> 00:08:48,480 Speaker 1: this is interesting because I think obviously, over the last 165 00:08:48,520 --> 00:08:51,160 Speaker 1: several times we've had you on, you've been very correctly 166 00:08:51,280 --> 00:08:54,640 Speaker 1: in the bullish camp. So this is a from our perspective, 167 00:08:54,720 --> 00:08:57,559 Speaker 1: a little bit of a turn for you. How do 168 00:08:57,559 --> 00:08:59,680 Speaker 1: would you proceed if you were to continue to be 169 00:08:59,720 --> 00:09:02,120 Speaker 1: cause it's kind of changes would you make. I would 170 00:09:02,160 --> 00:09:08,800 Speaker 1: raise cash, lower equity exposure. I might consider switching to 171 00:09:09,280 --> 00:09:17,120 Speaker 1: more defensive, less aggressive sectors. Um Our quantitative work has 172 00:09:17,160 --> 00:09:21,880 Speaker 1: been guiding us because it's capturing these um changes in 173 00:09:22,000 --> 00:09:28,960 Speaker 1: market sentiment, and the market sentiment has become extended a 174 00:09:29,040 --> 00:09:32,839 Speaker 1: variety of ways to estimate that we never know for sure, 175 00:09:33,720 --> 00:09:37,040 Speaker 1: but we're seeing it. And our view is the market 176 00:09:37,400 --> 00:09:43,680 Speaker 1: is reflecting changes in headlines which are affecting sentiment. Fear 177 00:09:43,920 --> 00:09:49,280 Speaker 1: of wealth taxes, the Warren Sanders approach seems to be 178 00:09:49,360 --> 00:09:56,040 Speaker 1: subsiding as the politics change. Um whether impeachment would be 179 00:09:56,160 --> 00:10:01,800 Speaker 1: conviction in the Senate seems to be subsiding the houses. 180 00:10:02,520 --> 00:10:06,280 Speaker 1: Maybe an assumption, but the political risk is now the 181 00:10:06,840 --> 00:10:14,400 Speaker 1: Clinton impeachment model, not the Nixon impeachment attempt model. So 182 00:10:14,600 --> 00:10:18,280 Speaker 1: markets are making adjustments, and I think part of that 183 00:10:18,440 --> 00:10:21,520 Speaker 1: is due to an assumption. The assumption is there will 184 00:10:21,559 --> 00:10:27,440 Speaker 1: be some form of truth trade reduction of tension, and 185 00:10:27,720 --> 00:10:31,679 Speaker 1: that's necessary for economics to start to improve. The economic 186 00:10:31,880 --> 00:10:36,280 Speaker 1: landscape is terrible because we see manufacturing sector shrinkage and 187 00:10:36,320 --> 00:10:39,920 Speaker 1: all the news flow that your you report every day 188 00:10:40,200 --> 00:10:43,600 Speaker 1: is sending that kind of a message. So to us 189 00:10:44,120 --> 00:10:46,840 Speaker 1: it says, okay, we had a big pendulum swing where 190 00:10:46,880 --> 00:10:50,440 Speaker 1: at all time new highs and I never saw a 191 00:10:50,480 --> 00:10:53,599 Speaker 1: client complaint when you took a profit and put it 192 00:10:53,640 --> 00:10:55,439 Speaker 1: in the bank. All right, So where would you take 193 00:10:55,480 --> 00:11:00,600 Speaker 1: profits here? Well, I would cut back on the high 194 00:11:00,679 --> 00:11:06,319 Speaker 1: beta sectors which have really really raised ahead. So you 195 00:11:06,760 --> 00:11:12,000 Speaker 1: cut back on Apple and yeah, the big names, the 196 00:11:12,040 --> 00:11:17,679 Speaker 1: tech sector among them. Um um, the defense hasn't had 197 00:11:17,720 --> 00:11:21,800 Speaker 1: a terrific run. Maybe it'll have more. I you know, 198 00:11:21,880 --> 00:11:24,640 Speaker 1: these are This has to now become an e t 199 00:11:24,800 --> 00:11:28,000 Speaker 1: F by E t F sector by sector, industry, industry 200 00:11:28,080 --> 00:11:34,600 Speaker 1: by industry decision. But for the run from August, the 201 00:11:34,679 --> 00:11:38,440 Speaker 1: wind has been at our back because the we were 202 00:11:38,480 --> 00:11:42,200 Speaker 1: in cash in our quantitative models from the end of 203 00:11:42,280 --> 00:11:46,680 Speaker 1: February to August, and we have had a terrific year 204 00:11:47,200 --> 00:11:50,440 Speaker 1: by having cash during a period of time of high 205 00:11:50,600 --> 00:11:54,360 Speaker 1: volatility and uncertainty and the way we measure it, and 206 00:11:54,400 --> 00:11:56,960 Speaker 1: then we had the triggers, so we went in an 207 00:11:57,000 --> 00:12:03,480 Speaker 1: ox i. It's been a remarkable uh here and at 208 00:12:03,480 --> 00:12:06,560 Speaker 1: this juncture you have to ask yourself, how much more 209 00:12:06,679 --> 00:12:10,640 Speaker 1: can you expect? I'm above my targets for year end 210 00:12:11,320 --> 00:12:14,200 Speaker 1: on the S and P. It was a three thousand target, 211 00:12:14,280 --> 00:12:18,440 Speaker 1: you may recall we've discussed it on the show over 212 00:12:18,640 --> 00:12:23,240 Speaker 1: the years. Well, we're above it, and we look as 213 00:12:23,280 --> 00:12:26,760 Speaker 1: like we have stability now in the monetary area, at 214 00:12:26,800 --> 00:12:30,800 Speaker 1: least it appears, so you can't expect much improvement beyond that. 215 00:12:31,559 --> 00:12:36,840 Speaker 1: And we are seeing little uptick signs in inflation and 216 00:12:37,160 --> 00:12:41,600 Speaker 1: uptick signs in some of the bond interest rates. And 217 00:12:41,679 --> 00:12:45,720 Speaker 1: what that suggests is the wind has been at our back, 218 00:12:46,280 --> 00:12:50,480 Speaker 1: but maybe it's now subsidy. Hey, David, thanks so much 219 00:12:50,520 --> 00:12:53,160 Speaker 1: for joining us. We appreciate your color as always in that. 220 00:12:53,360 --> 00:12:55,400 Speaker 1: Clearly we sensed a little bit of change in tone 221 00:12:55,400 --> 00:12:57,080 Speaker 1: from you, so we appreciate your sharing that with us. 222 00:12:57,120 --> 00:13:00,480 Speaker 1: David Kotak common Advisor's chief investment off So that was 223 00:13:00,559 --> 00:13:03,439 Speaker 1: news for me, Lisa, because David's been consistently I think 224 00:13:03,480 --> 00:13:07,079 Speaker 1: constructive and now he's saying, you know, he's had a 225 00:13:07,160 --> 00:13:10,600 Speaker 1: nice run here, as obviously has. The market has um 226 00:13:10,600 --> 00:13:12,120 Speaker 1: and it's not the worst thing to perhaps take a 227 00:13:12,120 --> 00:13:14,040 Speaker 1: little bit of money off the table, maybe get a 228 00:13:14,040 --> 00:13:18,080 Speaker 1: little bit defensive. We've heard that from some people as well. 229 00:13:18,640 --> 00:13:21,120 Speaker 1: Others are still saying, hey, we've got more to run 230 00:13:21,200 --> 00:13:23,719 Speaker 1: in this market. But you know, a grizzled veteran like 231 00:13:23,800 --> 00:13:26,200 Speaker 1: David Kotok say, let's get a little bit cautious. Very 232 00:13:26,240 --> 00:13:42,000 Speaker 1: interesting change in tone for him. So we got retail 233 00:13:42,040 --> 00:13:46,720 Speaker 1: sales out this morning, and they did gain, but they 234 00:13:46,760 --> 00:13:49,559 Speaker 1: were a little bit more muted in certain areas. That 235 00:13:49,679 --> 00:13:53,480 Speaker 1: gave certain economists concerned that perhaps the consumer, the stalwart 236 00:13:53,840 --> 00:13:57,240 Speaker 1: of the economic expansion, was running out of steam. Joining 237 00:13:57,280 --> 00:13:59,959 Speaker 1: us now Mark Vitner, senior economist. It was Fargo Security, 238 00:14:00,080 --> 00:14:02,520 Speaker 1: and Mark, I really do want to hone in here 239 00:14:02,559 --> 00:14:05,440 Speaker 1: on the consumers, since it has been so pivotal in 240 00:14:05,559 --> 00:14:08,800 Speaker 1: driving growth here in the United States. Do you view 241 00:14:09,000 --> 00:14:11,800 Speaker 1: the retail sales that we got out this morning as 242 00:14:11,840 --> 00:14:15,680 Speaker 1: potentially a warning sign? I don't know that it's that 243 00:14:15,760 --> 00:14:17,319 Speaker 1: much of a warning. We're coming off a lot of 244 00:14:17,360 --> 00:14:20,600 Speaker 1: strength in the third quarter, and there's also there was 245 00:14:20,680 --> 00:14:24,160 Speaker 1: some supply disruption in the auto sector, and I think 246 00:14:24,160 --> 00:14:26,880 Speaker 1: that that may have weaken what would have been even 247 00:14:26,880 --> 00:14:30,600 Speaker 1: stronger auto sales. So, you know, I think that the 248 00:14:30,600 --> 00:14:33,600 Speaker 1: consumer seems to be in reasonably good shape. While job 249 00:14:33,640 --> 00:14:36,120 Speaker 1: growth is slow, the unemployment rate is very, very low. 250 00:14:36,120 --> 00:14:39,360 Speaker 1: There's no sign that layoffs are picking up, so folks 251 00:14:39,360 --> 00:14:42,680 Speaker 1: aren't concerned about their job security, and wages and salaries 252 00:14:42,640 --> 00:14:46,200 Speaker 1: are are accelerating. So I actually think there's too much 253 00:14:46,240 --> 00:14:49,920 Speaker 1: pessimism about the consumer. And if we had numbers just 254 00:14:50,040 --> 00:14:52,960 Speaker 1: like this every month, every month, month after month, we 255 00:14:53,000 --> 00:14:55,760 Speaker 1: would still be better off than what most folks have 256 00:14:55,880 --> 00:14:59,400 Speaker 1: forecasts for the next year. So, Mark, how concerned are 257 00:14:59,400 --> 00:15:04,560 Speaker 1: you about, uh? The manufacturing sector business investment continued weakness there. Yes, 258 00:15:04,600 --> 00:15:06,720 Speaker 1: that's a smaller part of the U. S economy relative 259 00:15:06,760 --> 00:15:08,960 Speaker 1: to the consumer, but how do you kind of view 260 00:15:09,040 --> 00:15:13,320 Speaker 1: that mosaic? Well, manufacturing is a smaller part of the economy, 261 00:15:13,360 --> 00:15:15,240 Speaker 1: but it still accounts for most of the swing. When 262 00:15:15,240 --> 00:15:17,800 Speaker 1: we went from two percent growth to three percent growth, 263 00:15:17,840 --> 00:15:20,960 Speaker 1: two thirds of the acceleration came from manufacturing, and the 264 00:15:21,080 --> 00:15:23,560 Speaker 1: move from three percent back to two two thirds of 265 00:15:23,600 --> 00:15:25,760 Speaker 1: the acceleration has been because of a slowdown in the 266 00:15:25,800 --> 00:15:29,000 Speaker 1: factory sector. Part of that is due to the ongoing 267 00:15:29,080 --> 00:15:32,720 Speaker 1: uncertainty about where we're headed with trade negotiations with China. 268 00:15:33,080 --> 00:15:35,440 Speaker 1: If we get a trade deal with China, manufacturing out 269 00:15:35,520 --> 00:15:38,760 Speaker 1: activity will probably pick up, investment will probably pick up 270 00:15:39,480 --> 00:15:42,520 Speaker 1: um six months out. The other thing that has been 271 00:15:42,560 --> 00:15:44,560 Speaker 1: happening is that when growth, when the economy was growing 272 00:15:44,600 --> 00:15:47,440 Speaker 1: two percent, you needed less inventory than when we were 273 00:15:47,480 --> 00:15:50,880 Speaker 1: growing three And now that we're back at two businesses 274 00:15:50,920 --> 00:15:54,680 Speaker 1: have been reducing inventories, and that's weight on manufacturers. That 275 00:15:54,680 --> 00:15:59,160 Speaker 1: that pool to manufacturing activity from from inventory d stocking 276 00:15:59,280 --> 00:16:02,120 Speaker 1: is now probably behind us. So I think in the 277 00:16:02,200 --> 00:16:03,800 Speaker 1: very near term we're gonna see a little We're gonna 278 00:16:03,800 --> 00:16:06,880 Speaker 1: see some better numbers on industrial production and better numbers 279 00:16:06,880 --> 00:16:12,040 Speaker 1: in the ISM Manufactured Survey. The estimate for your over 280 00:16:12,040 --> 00:16:14,880 Speaker 1: you GDP growth in the United States right now one 281 00:16:14,920 --> 00:16:19,520 Speaker 1: point eight percent. For how close are we to stall 282 00:16:19,560 --> 00:16:23,960 Speaker 1: speed here, well, one percent is about what we've averaged, 283 00:16:24,480 --> 00:16:27,040 Speaker 1: what we average from two thousand ten to two thousand sixteen. 284 00:16:27,040 --> 00:16:29,040 Speaker 1: I guess if you look over the entire business cycle, 285 00:16:29,600 --> 00:16:32,960 Speaker 1: we're right at two point three percent since the recession ended. 286 00:16:33,000 --> 00:16:34,560 Speaker 1: So it's a little bit slower than where we've been. 287 00:16:35,240 --> 00:16:37,520 Speaker 1: But if we grow one point eight percent per year, 288 00:16:37,600 --> 00:16:41,640 Speaker 1: that's probably enough to keep the unemployment rates steady. And 289 00:16:41,640 --> 00:16:44,360 Speaker 1: we're at three point six percent. So if not horrible, 290 00:16:44,400 --> 00:16:46,800 Speaker 1: I would rather see growth somewhere more to two percent. 291 00:16:47,640 --> 00:16:51,040 Speaker 1: I think the greater risk is that when growth slows, 292 00:16:51,480 --> 00:16:54,480 Speaker 1: we're more vulnerable to some sort of exogenous shock. If 293 00:16:54,520 --> 00:16:58,320 Speaker 1: something bad were to happen somewhere in the world, maybe 294 00:16:58,320 --> 00:17:02,240 Speaker 1: if China took a harder line on Hong Kong, um 295 00:17:02,320 --> 00:17:06,280 Speaker 1: that that might tip the balance into recessions. We walk 296 00:17:06,359 --> 00:17:08,240 Speaker 1: through that a little bit because we have been seeing 297 00:17:08,240 --> 00:17:11,240 Speaker 1: these headlines about how things have been accelerating and tensions 298 00:17:11,240 --> 00:17:13,600 Speaker 1: have been rising increasingly in Hong Kong with the death 299 00:17:13,960 --> 00:17:16,959 Speaker 1: of a student. How does that end up being the 300 00:17:16,960 --> 00:17:21,080 Speaker 1: exogenous factor? Uh that disrupts the global economy more significantly. 301 00:17:21,880 --> 00:17:24,240 Speaker 1: But you never really know what the exogenous factor is 302 00:17:24,320 --> 00:17:27,000 Speaker 1: until it happens. That's why they're called black swans. But 303 00:17:27,000 --> 00:17:29,359 Speaker 1: but my senses, if China did have to come in 304 00:17:29,440 --> 00:17:34,040 Speaker 1: harshly than the than the response from the West would 305 00:17:34,040 --> 00:17:37,760 Speaker 1: probably be trade sanctions and the economic sanctions on China, 306 00:17:38,480 --> 00:17:41,359 Speaker 1: which would be far worse than the trade war, and 307 00:17:41,520 --> 00:17:43,879 Speaker 1: we saw how much the trade wars loclobal economy. So 308 00:17:44,480 --> 00:17:46,919 Speaker 1: if if sanctions would have to be put in place 309 00:17:47,320 --> 00:17:49,640 Speaker 1: on businesses doing business in China, then that that would 310 00:17:49,640 --> 00:17:51,720 Speaker 1: be an all another ball game, which I think would 311 00:17:51,840 --> 00:17:54,760 Speaker 1: would really slow the global economy. But that's there really 312 00:17:54,800 --> 00:17:56,600 Speaker 1: wouldn't be any choice in the matter. Would be similar 313 00:17:56,600 --> 00:17:59,639 Speaker 1: to what we saw in Russia with CRIMEA, So it 314 00:17:59,680 --> 00:18:01,760 Speaker 1: would be, uh, you know, it would be similar circumstance 315 00:18:01,800 --> 00:18:04,520 Speaker 1: to that. So, Mark, do you think the Federal Reserve 316 00:18:04,840 --> 00:18:07,440 Speaker 1: is taking the right tack here after that last rate 317 00:18:07,480 --> 00:18:09,600 Speaker 1: cut to say, maybe a little bit of a pause 318 00:18:09,640 --> 00:18:11,200 Speaker 1: here and we will take a look at the data 319 00:18:11,200 --> 00:18:14,600 Speaker 1: as it comes in. Yeah, I think they are. I mean, 320 00:18:14,720 --> 00:18:17,600 Speaker 1: and you know, and I don't want to you just 321 00:18:17,600 --> 00:18:19,800 Speaker 1: say one last thing on China. That's certainly not something 322 00:18:19,840 --> 00:18:21,879 Speaker 1: that we're looking for. I think that I really doubt 323 00:18:21,880 --> 00:18:24,359 Speaker 1: that we would ever see a scenario like that. But 324 00:18:24,960 --> 00:18:27,000 Speaker 1: but I think that the FETE is holding off to 325 00:18:27,040 --> 00:18:29,000 Speaker 1: see are we going to get a trade deal? And 326 00:18:29,040 --> 00:18:31,399 Speaker 1: if we get a trade deal, does it cause the 327 00:18:31,440 --> 00:18:35,640 Speaker 1: economy to re accelerate? And uh, if it does, then 328 00:18:35,640 --> 00:18:39,000 Speaker 1: they're probably done. But I think a lot of folks think, hey, 329 00:18:39,000 --> 00:18:40,800 Speaker 1: if we get a trade deal, the Feds done. I 330 00:18:40,800 --> 00:18:43,239 Speaker 1: don't think it's that simple. I think we gotta get 331 00:18:43,240 --> 00:18:44,439 Speaker 1: a trade deal and then we have to see if 332 00:18:44,440 --> 00:18:48,280 Speaker 1: that trade deal actually impacts the economy in a meaningful way, 333 00:18:48,320 --> 00:18:51,359 Speaker 1: and if it does, then they probably are done. But 334 00:18:51,600 --> 00:18:55,119 Speaker 1: right now we still have another cut by the funds 335 00:18:55,200 --> 00:18:57,639 Speaker 1: rate in March. We have another quarter point cut in March. 336 00:18:57,920 --> 00:19:00,239 Speaker 1: But they're clearly in a wait and see mode right 337 00:19:00,240 --> 00:19:02,560 Speaker 1: now until we get to March. Do you think if 338 00:19:02,600 --> 00:19:04,800 Speaker 1: we get if we don't get a trade deal, that 339 00:19:05,000 --> 00:19:09,360 Speaker 1: the one point eight percent prediction for it seems right 340 00:19:09,480 --> 00:19:12,240 Speaker 1: or do you think it would be substantially lower. Well, 341 00:19:12,240 --> 00:19:15,040 Speaker 1: when we came up with our forecast at one growth, 342 00:19:15,040 --> 00:19:18,040 Speaker 1: we were we were assuming no trade deal or a 343 00:19:18,080 --> 00:19:23,320 Speaker 1: minimal trade deal, and and so you know, I it's 344 00:19:23,400 --> 00:19:25,199 Speaker 1: really hard to say, but I would say that the 345 00:19:25,240 --> 00:19:27,879 Speaker 1: downside risk of the economy would certainly increase if we 346 00:19:27,880 --> 00:19:30,480 Speaker 1: don't get a trade deal, because it's not it's not 347 00:19:30,560 --> 00:19:33,240 Speaker 1: just the immediate effects on the US economy. It really 348 00:19:33,240 --> 00:19:36,560 Speaker 1: works through the dampening effects, the further dampening effects on 349 00:19:36,600 --> 00:19:39,640 Speaker 1: global economic growth, and how that comes back to impact 350 00:19:39,640 --> 00:19:42,919 Speaker 1: the US because the US really is not a We 351 00:19:42,960 --> 00:19:45,920 Speaker 1: don't have much of our economy tied to the global economy, 352 00:19:46,000 --> 00:19:49,439 Speaker 1: certainly not as much as as other industrialized nations do. 353 00:19:50,280 --> 00:19:52,560 Speaker 1: So jobs has been a big part of supporting this 354 00:19:52,640 --> 00:19:54,480 Speaker 1: consumer we've had to kind of slow down. Are you 355 00:19:54,480 --> 00:19:58,600 Speaker 1: concerned about jobs? I'm not as concerned about the slowdown 356 00:19:58,640 --> 00:20:00,800 Speaker 1: in jobs, And actually the slowdown is greater than what 357 00:20:00,880 --> 00:20:04,000 Speaker 1: the reported data indicate. Because in August we got the 358 00:20:04,440 --> 00:20:07,720 Speaker 1: quarterly Senses of Employment wage data which showed the job 359 00:20:07,760 --> 00:20:10,800 Speaker 1: growth from March of eighteen to March of nineteen, which 360 00:20:10,840 --> 00:20:12,680 Speaker 1: is the source of the revisions that we get early 361 00:20:12,760 --> 00:20:16,080 Speaker 1: next year. It was half a million jobs less then 362 00:20:16,160 --> 00:20:19,080 Speaker 1: was previously reported. Most of that downward revision is in 363 00:20:19,119 --> 00:20:22,240 Speaker 1: retail trade because of the loss of jobs to online retailing, 364 00:20:22,720 --> 00:20:25,520 Speaker 1: in the leisure and hospitality sector because of rising wages, 365 00:20:26,119 --> 00:20:29,679 Speaker 1: total income earned from those jobs is actually stronger than 366 00:20:29,720 --> 00:20:32,160 Speaker 1: have been previously reported, so that more than off. That's 367 00:20:32,160 --> 00:20:34,040 Speaker 1: the fact that job brother is slower than the slow 368 00:20:34,400 --> 00:20:36,359 Speaker 1: Mark Whittner, thank you so much for joining us. Mark Whittner, 369 00:20:36,400 --> 00:20:51,000 Speaker 1: senior economists at Wells Fargo Securities. We works back in 370 00:20:51,320 --> 00:20:53,760 Speaker 1: the news coming across the Bloomberg terminal. Right now, WE 371 00:20:53,880 --> 00:20:58,440 Speaker 1: Works is said to face SEC inquiry into possible rule breaches. 372 00:20:58,840 --> 00:21:00,679 Speaker 1: Uh so we want to dig into that. Matt Robinson, 373 00:21:00,720 --> 00:21:03,719 Speaker 1: Bloomberg News joins us here in a Bloomberg Interactive Broker Studios. 374 00:21:03,760 --> 00:21:06,439 Speaker 1: Also a headline at that Roger Stone is guilty in 375 00:21:06,560 --> 00:21:10,040 Speaker 1: US trial overlies about the leagues. So the headlines continue 376 00:21:10,320 --> 00:21:13,640 Speaker 1: to break. But going back to WE Work, So what's 377 00:21:13,680 --> 00:21:14,760 Speaker 1: going on here? What do you think this is? The 378 00:21:14,800 --> 00:21:17,440 Speaker 1: SEC is really looking in here? So when the SEC 379 00:21:17,560 --> 00:21:20,840 Speaker 1: opens investigation, they're looking to see whether what was disclosed 380 00:21:20,840 --> 00:21:25,080 Speaker 1: to investors was reflected in you know, private discussions what 381 00:21:25,119 --> 00:21:28,639 Speaker 1: was going on in the company. So they're always looking for, um, 382 00:21:28,680 --> 00:21:31,159 Speaker 1: you know, if you're saying something publicly that it matches 383 00:21:31,160 --> 00:21:35,240 Speaker 1: what you're saying privately. And given the sort of fall 384 00:21:35,280 --> 00:21:37,800 Speaker 1: from grace from We Work over the last couple of months, certainly, 385 00:21:38,040 --> 00:21:40,399 Speaker 1: you know, um sort of enterprising for security lawyers to 386 00:21:40,400 --> 00:21:41,840 Speaker 1: be like they're going to make sure that they're kicking 387 00:21:41,840 --> 00:21:45,880 Speaker 1: the tires and that everything that was you know, going 388 00:21:45,880 --> 00:21:48,879 Speaker 1: on in the company was known to potential investors. So 389 00:21:49,080 --> 00:21:51,359 Speaker 1: there has been there have been other reports that the 390 00:21:51,480 --> 00:21:53,879 Speaker 1: SEC was in close contact with we were leading up 391 00:21:53,880 --> 00:21:56,600 Speaker 1: to the I p O saying your documents are insufficient. 392 00:21:56,640 --> 00:21:59,320 Speaker 1: The whole community adjusted a bit that they changed to 393 00:21:59,440 --> 00:22:02,240 Speaker 1: something else was problematic. You guys need to account for 394 00:22:02,280 --> 00:22:06,400 Speaker 1: your finances in a better way. How instrumental will that 395 00:22:06,560 --> 00:22:10,560 Speaker 1: be in this investigation? If at all? Well, you know, 396 00:22:10,640 --> 00:22:12,600 Speaker 1: for something like this. And another thing to point out 397 00:22:12,680 --> 00:22:16,480 Speaker 1: is that often with these kinds of investigations they last years. Um, 398 00:22:16,520 --> 00:22:18,440 Speaker 1: you know, the average investigation is like two or three 399 00:22:18,480 --> 00:22:21,760 Speaker 1: years for the SEC. And um, there you know, they're 400 00:22:21,760 --> 00:22:23,720 Speaker 1: sort of wrapping their arms around, like you know what 401 00:22:23,760 --> 00:22:25,679 Speaker 1: was disclosed. I mean there's a lot. I mean, you know, 402 00:22:25,880 --> 00:22:28,919 Speaker 1: the company was had to perspectus out for bonds. You know, 403 00:22:28,920 --> 00:22:31,360 Speaker 1: there's a lot of information to sort of dive into, 404 00:22:32,040 --> 00:22:35,000 Speaker 1: uh to make sure that, you know, investors were properly 405 00:22:35,000 --> 00:22:39,560 Speaker 1: informed of their business. So the deal never happened, okay, 406 00:22:39,600 --> 00:22:43,800 Speaker 1: But still the SEC can cite them for some issues 407 00:22:43,800 --> 00:22:46,360 Speaker 1: as it relates to just its registration statement and things 408 00:22:46,400 --> 00:22:49,040 Speaker 1: like right. Right, So anytime you're raising money for a venture, 409 00:22:49,200 --> 00:22:53,240 Speaker 1: that's a security. I mean that's a very general way 410 00:22:53,280 --> 00:22:55,240 Speaker 1: to uh to sort of talk about it. But you know, 411 00:22:55,320 --> 00:22:57,920 Speaker 1: venture capital m and if you're if you're raising money 412 00:22:57,960 --> 00:23:01,960 Speaker 1: for a venture and you're lying to sophisticate investors. That's 413 00:23:02,000 --> 00:23:05,399 Speaker 1: you know, the SEC has brought cases in recent years, 414 00:23:05,440 --> 00:23:09,080 Speaker 1: given how how much that market has been growing. What's 415 00:23:09,080 --> 00:23:12,040 Speaker 1: the potential penalty for we work? It's hard to say. 416 00:23:12,119 --> 00:23:14,520 Speaker 1: I mean, you know, this is something that's just just 417 00:23:14,560 --> 00:23:17,320 Speaker 1: getting started. Um, you know most of the time, you know, 418 00:23:17,320 --> 00:23:20,680 Speaker 1: the SEC is a civil regulator. They can't they look 419 00:23:20,680 --> 00:23:22,840 Speaker 1: at you know, it's penalties or hey, we want you 420 00:23:22,880 --> 00:23:26,880 Speaker 1: to improve this disclosure. Um, you know, so it's it's 421 00:23:26,920 --> 00:23:28,399 Speaker 1: it's very hard to say at this point though. So 422 00:23:28,440 --> 00:23:30,199 Speaker 1: but you know, can the SEC like one of the 423 00:23:30,200 --> 00:23:32,680 Speaker 1: things about we work when it did filets S one? 424 00:23:33,080 --> 00:23:36,240 Speaker 1: There's a lot of governance issues there, you know about 425 00:23:36,320 --> 00:23:40,119 Speaker 1: the UH corporate jets and leasing back space and so 426 00:23:40,200 --> 00:23:42,600 Speaker 1: on and so forth. Are those some of the things 427 00:23:42,600 --> 00:23:45,080 Speaker 1: now that those are disclosed? Are those some of the 428 00:23:45,080 --> 00:23:47,159 Speaker 1: things that the SEC might look at and say, was 429 00:23:47,200 --> 00:23:49,800 Speaker 1: it full disclosure? Or the you know, did you need 430 00:23:49,840 --> 00:23:52,600 Speaker 1: to do more? Right? Those? Are those are? Um, those 431 00:23:52,600 --> 00:23:54,719 Speaker 1: are good questions that the SEC is gonna be asking 432 00:23:54,880 --> 00:23:58,000 Speaker 1: because you know, those are sort of legal lawyer to 433 00:23:58,080 --> 00:24:00,680 Speaker 1: lawyer questions. You know, what how do you define material? 434 00:24:00,880 --> 00:24:04,639 Speaker 1: Was this you know explicit enough? But the SEC you know, 435 00:24:04,680 --> 00:24:07,240 Speaker 1: has in the past they look at those kinds of transactions. 436 00:24:07,320 --> 00:24:10,280 Speaker 1: Is this really a true arms length transaction? Is this 437 00:24:10,600 --> 00:24:12,960 Speaker 1: you know, separate from you know, would you have given 438 00:24:13,000 --> 00:24:16,520 Speaker 1: this deal or proposed deal to anyone else that you 439 00:24:16,560 --> 00:24:19,440 Speaker 1: know you didn't have a relationship with. Looking right now 440 00:24:19,520 --> 00:24:21,760 Speaker 1: at we work bonds, they are implying a yield of 441 00:24:21,800 --> 00:24:25,840 Speaker 1: fifteen percent or nearly fift seventy four a little bit 442 00:24:25,880 --> 00:24:27,840 Speaker 1: less than seventy five cents on the dollar. These are 443 00:24:27,880 --> 00:24:31,320 Speaker 1: bonds maturing in not long term day. They were trading 444 00:24:31,359 --> 00:24:34,520 Speaker 1: it back in August, Yes, it is absolutely Uh. Well, 445 00:24:34,560 --> 00:24:38,080 Speaker 1: actually they were trading back in September. They were trading 446 00:24:38,160 --> 00:24:41,280 Speaker 1: at a seven point two percent yields, So yes, more 447 00:24:41,359 --> 00:24:43,440 Speaker 1: than double. And I'm just looking right now, and it 448 00:24:43,560 --> 00:24:47,240 Speaker 1: raises questions about the financial feasibility of this company going forward. 449 00:24:47,280 --> 00:24:50,040 Speaker 1: And I'm thinking, Matt, as you talk two to three 450 00:24:50,119 --> 00:24:53,200 Speaker 1: year investigation by the SEC, is we work going to 451 00:24:53,280 --> 00:24:56,399 Speaker 1: be around in two to three years to uh to 452 00:24:56,560 --> 00:25:01,120 Speaker 1: account for whatever mouth feasans if there is any found. Yes, 453 00:25:01,280 --> 00:25:03,920 Speaker 1: I mean even if you know, if that scenario would 454 00:25:03,920 --> 00:25:05,720 Speaker 1: have happened you know, you're still obligated to deal with 455 00:25:06,080 --> 00:25:10,000 Speaker 1: you know, uh, securities laws. So I mean for um, 456 00:25:10,480 --> 00:25:12,040 Speaker 1: you know, for them, they're gonna want to, you know, 457 00:25:12,200 --> 00:25:13,560 Speaker 1: just be like, hey, you know, here is our full 458 00:25:13,600 --> 00:25:17,360 Speaker 1: disclosure um in um you know, in in raising cash. 459 00:25:17,440 --> 00:25:20,480 Speaker 1: It is already fallout for the investment banks and the 460 00:25:20,680 --> 00:25:24,080 Speaker 1: law firms that advised we work on this underrating processes. 461 00:25:24,119 --> 00:25:26,960 Speaker 1: It typically spill over to them generally. I mean, it 462 00:25:27,040 --> 00:25:30,399 Speaker 1: depends on what the government's looking at. If if uh, 463 00:25:30,520 --> 00:25:32,280 Speaker 1: if the story is is that you know, this was 464 00:25:32,520 --> 00:25:35,920 Speaker 1: a you know, a company that everyone was expecting great 465 00:25:35,960 --> 00:25:38,280 Speaker 1: growth and it was you know, people really thought this 466 00:25:38,440 --> 00:25:41,000 Speaker 1: was the value of the company, then it's it's hard 467 00:25:41,040 --> 00:25:44,800 Speaker 1: to say there was some misrepresentation, right, there's there's people 468 00:25:44,880 --> 00:25:47,640 Speaker 1: believed in this story at the time. But if if 469 00:25:47,720 --> 00:25:50,440 Speaker 1: in turn, it's like, well, actually they were you know, 470 00:25:50,600 --> 00:25:53,920 Speaker 1: they were not being as explicit about their business, then 471 00:25:54,200 --> 00:25:56,240 Speaker 1: you know, and and then who knew about that that 472 00:25:56,480 --> 00:25:58,200 Speaker 1: that those are the kinds of things that the government 473 00:25:58,240 --> 00:26:00,760 Speaker 1: wants to uh sort of investigate. Thank you so much 474 00:26:00,760 --> 00:26:04,879 Speaker 1: for being with us. Really an interesting, uh interesting story, 475 00:26:05,000 --> 00:26:08,679 Speaker 1: good Scoop. Thank you for joining Matt Robinson. Uh covers 476 00:26:08,720 --> 00:26:11,800 Speaker 1: all things related to financial regulation and the SEC. For 477 00:26:11,920 --> 00:26:15,639 Speaker 1: us here at Bloomberg. We Work is said to be 478 00:26:15,800 --> 00:26:20,040 Speaker 1: facing an SEC inquiry into rule violations, potentially over their 479 00:26:20,080 --> 00:26:24,200 Speaker 1: disclosures being perhaps a little incongruous depending on who they're 480 00:26:24,200 --> 00:26:25,800 Speaker 1: talking to. You. Yeah, it's interesting to see how this 481 00:26:25,800 --> 00:26:27,680 Speaker 1: will playoff. But it just just one more just the 482 00:26:27,840 --> 00:26:31,080 Speaker 1: news keeps coming for we Work. Um, you know, you know, 483 00:26:31,400 --> 00:26:33,520 Speaker 1: think about the fall from grace for this company we 484 00:26:33,640 --> 00:26:36,040 Speaker 1: started the year to where we are, uh now, it's 485 00:26:36,080 --> 00:26:38,760 Speaker 1: just extraordinary. And so the question really is, as you raised, 486 00:26:39,080 --> 00:26:40,720 Speaker 1: I think at some point if I think we may 487 00:26:40,760 --> 00:26:43,280 Speaker 1: be there right now, is what is the ongoing concern 488 00:26:43,960 --> 00:26:46,080 Speaker 1: story with we Work here as you look at the 489 00:26:46,119 --> 00:26:48,439 Speaker 1: balance sheet and you look at the cash burning, can 490 00:26:48,520 --> 00:26:51,720 Speaker 1: they cut cost fast enough to get the profitability? Now 491 00:26:51,760 --> 00:26:54,120 Speaker 1: they did bring you know, some of the profit forecasts 492 00:26:54,240 --> 00:26:57,000 Speaker 1: a little bit forward, but it's still it's really under 493 00:26:57,119 --> 00:26:59,879 Speaker 1: under question. The news keeps coming. Also from Washington, d C. 494 00:27:00,040 --> 00:27:01,760 Speaker 1: We should just say that Roger Stone, in the longtime 495 00:27:01,800 --> 00:27:05,760 Speaker 1: Republican operative and early Trump booster, was convicted to lying 496 00:27:05,880 --> 00:27:09,159 Speaker 1: to Congress, of lying to Congress, obstructing a Congressional probe, 497 00:27:09,320 --> 00:27:11,960 Speaker 1: and witness tampering. This is just two days after House 498 00:27:11,960 --> 00:27:15,320 Speaker 1: Democrats separately began public impeachment hearings, but this just came 499 00:27:15,359 --> 00:27:18,080 Speaker 1: down as well, and we wanted to bring that to you. 500 00:27:18,240 --> 00:27:21,680 Speaker 1: In the markets, we are seeing something of a rally, 501 00:27:21,760 --> 00:27:24,280 Speaker 1: although it's actually extending gains. You've got the Nastick up 502 00:27:24,280 --> 00:27:26,760 Speaker 1: sixtents of a percent, similar with the smp UH and 503 00:27:26,880 --> 00:27:29,880 Speaker 1: the DOAO, with optimism that there will be some sort 504 00:27:29,880 --> 00:27:30,560 Speaker 1: of trade deal.